Labor chief hammers Wall St. over golden parachutes
AFL-CIO President Richard Trumka is calling on Wall Street to end the practice of giving golden parachutes to top executives leaving for government jobs.
Trumka sent a letter on Thursday to six top banking executives — at Goldman Sachs, Citi, JP Morgan, Morgan Stanley, Lazard and Bank of America — calling the policy “a highly controversial and dubious practice” intended to sway banking executives into providing favorable government treatment to their former firms.
“The acceleration of equity awards for executives who voluntarily resign to enter government service adds a new and outrageous wrinkle,” Trumka wrote.
“After all, how do Wall Street banks benefit from giving their executives a financial incentive to enter government service? Do they expect to receive favorable government treatment from their former executives? If not, why should bank shareholders be asked to bear the cost?”
Sen. Tammy Baldwin (D-Wis.) and Rep. Elijah Cummings (D-Md.) introduced legislation in July that would ban government-service bonuses.
Their legislation recently received an endorsement from Democratic front-runner Hillary Clinton.
Another outspoken Democrat, Sen. Elizabeth Warren (Mass.), said in July that the measure is one that “any presidential candidate should be able to cheer for.”
Trumka cited several prominent recipients, including Treasury Secretary Jack Lew (Citigroup), counselor to the Treasury secretary Antonio Weiss (Lazard), U.S. Trade Representative Michael Froman (Citigroup) and Stefan Selig (Bank of America), undersecretary for international trade at the Commerce Department.
Trumka argued in the letter that banks should take the initiative and stop the practice and that it should “not take the passage of a law defining them as bribery under the U.S. criminal code for you to do the right thing and stop offering them.”
“What was once an obscure executive compensation practice on Wall Street is now notorious and in the public eye,” Trumka said.
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