The financial titans receiving huge portions of federal bailout cash are sitting on some massive IOUs, but they aren’t to taxpayers or shareholders—the banks owe billions to their own executives for previous years' pay and pensions. Under the rules of the bailout, they can be paid with taxpayer dollars. At some firms, executives’ past pay dwarfs what the banks owe in pensions to their entire workforces, the Wall Street Journal reports.
Many of the obligations are tied to stock, and therefore have shrunk along with the market in recent months. However, Goldman owes execs $11.8 billion, J.P. Morgan owes $10 billion, and Morgan Stanley $12 billion. While the $125 billion the Treasury is injecting into nine big banks comes with conditions barring “golden parachutes” for executives going forward, past pay obligations are not restricted.