Shareholders Strike Back

by Gerri Willis

At Citigroup's annual meeting, owners of the stock voted 55 to 45 against a $50 million executive pay package, including $15 million for CEO Vikram Pandit.

This is all thanks to the Dodd-Frank financial overhaul law.

Buried in its 2,300 pages is a requirement for public companies to hold "say on pay" votes for executive compensation.

Now, the vote is non-binding, but the chairman of Citigroup Dick Parsons said he took it seriously, and promised the board would consider it carefully.

Shareholders have every right to be upset with Vikram.

Over the last decade, Citigroup has had the worst stock price performance of the big banks, but consistently had some of the highest executive compensation.

Citi shares up slightly today, but they're down more than 80% since the financial crisis hit.

They're down 93% from 2006.

Last year, Pandit got a $1.7 million salary, plus a $5.3 million cash bonus, and he got a $40 million retention package that pays out through 2015.

Getting a bonus should be a piece of cake for these execs, too, since the standard for the payout is an earnings track record half of what it was in 2009 and 2010 when the economy was in the tank.

Whoa! Don't get too ambitious!

Look, to be fair to Pandit, for 2009 and 2010, he accepted just a buck in salary.

But to be fair to shareholders, Citi's quarterly dividend is one penny.

At the start of this week, Citigroup announced its first-quarter profit had fallen two percent from a year earlier on a paltry one percent rise in revenue.

The Federal Reserve turned the company down on its request for a share buyback or dividend after Citi flunked the central bank's stress test in March. And don't forget the bank was one of many bailed out during the financial crisis.

Some people bridle at anyone earning millions of dollars a year, but not me.

If you can grow sales, boost the bottom line, raise the share price, then by all means you've earned a fat paycheck.

But what we can't do is reward mediocrity and failure.

There's a lot not to like about Dodd-Frank - about 2,299 pages' worth if you ask me - but shareholder "say on pay"? That's OK with me.

Last year shareholders voted down just two percent of executive pay plans. Maybe this is the start of a new trend.

Is the SEC Effective?

by Gerri Willis

Former US SEC General Counsel Becker testifies at a hearing on Capitol Hill in Washington. 09/22/2011. You might have heard the news recently that the victims of Bernie Madoff would get some of their money back. The news was bittersweet - that's because those folks are only getting some of the money, just $312 million was expected to be distributed. Total losses of victims? $17 billion.

It's still tough in this country to steal $17 billion without anyone noticing - and if you're wondering where the cops were - well, that is a smart question. Truth is, the announcement about payments to victims got lots of attention - but another announcement, this one from regulators at the Securities and the Exchange Commission, got too little attention this weekend.

Four years after Madoff's arrest - the SEC said it had disciplined eight employees for failing to uncover the pyramid scheme over a 16-year period. What's notable here? Nobody lost their job. The biggest Ponzi scheme in the world operates in plain sight right under the noses of the nation's biggest securities regulators - and everybody keeps their jobs. Unbelievable!

But frankly, it's not the first time that the SEC has missed a big fish. Allen Stanford, the Texas-based financier ran a Ponzi scheme for 12 years before the agency halted the fraud, potentially costing investors more than a billion dollars. That according to an agency watchdog's report.

In both cases, the SEC was given tips but couldn't translate the tips into a successful prosecution. Then there are the companies that commit violations. When the SEC manages to find one of those, the form of punishment is usually a few bucks and a vow to never do that bad thing again.

The New York Times recently conducted an analysis of the "punishments" handed down by the SEC over the past 15 years. At least 51 cases involved Wall Street firms breaking a law they had agreed never to break again!

Last month, Citigroup had to fork over $285 million to settle charges it defrauded customers -- they had to promise to never do it again - but guess what - that was them doing it again!

Citigroup had already agreed not to violate that exact antifraud statute in 2010, 2006, 2005, and 2000! Bank of America has promised not to violate that law four times since 2005, they made the same promises four times regarding a separate law. In fact, the list of repeat offenders goes on and on and on. A Wall Street who's who if you will. AIG, Credit Suisse, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Raymond James, UBS, Wells Fargo, etc.

So obviously this practice is not deterring the bad behavior - so why do they do it?

The SEC told the Times the "never-do-it-again promises" were a much cheaper form of punishment than taking big banks to court. Especially if they lose! And as if that wasn't bad enough, another problem plaguing the SEC? They don't actually make the company admit their mistakes or wrong-doings!

So Citigroup or Bank of America can simply shell out a few million dollars. And never have to face what they did wrong. The public is never the wiser. This is outrageous.

Don't forget this was the agency whose workers spent more time surfing porn then looking out for the consumer! If the SEC doesn't have the ability to actually catch warning signs or enforce the law - maybe it's time to streamline this process.

The Justice Department can throw these crooks behind bars - that sounds good to me!

Leaving Your Bank? Do Your Homework First

by Gerri Willis

We've focused a lot on this show on Bank of America's new $60-a-year debit card fee. But they are certainly not alone in raking up the costs for consumers. And the worst part? Higher bank fees are here to stay.

New rules have curtailed various kinds of traditional fees - such as overdraft and late fees - so banks are being forced to create brand spanking new charges.

In addition to Bank of America, Citigroup will charge $20 a month starting in December to some customers who don't keep a balance of $15,000 dollars or more.

Wells Fargo and JP Morgan Chase are testing three dollar monthly debit card fees in a handful of states. SunTrust started a $5 monthly debit card fee back in June.

Regions Financial kicked off a $4 fee this month.

These fees have become a hot-bed of anger and frustration among consumers - especially those camped out downtown Manhattan.

And for many - they could be enough to push customers to go through the hassle of switching banks.

A new survey by Research Intelligence Group says about a third of consumers will leave their bank if debit card fees are put in place.

And it's not just lip service - the weekend after Bank of America announced their new fees - the nation's largest credit union saw new account openings skyrocket more than 20% percent.

But as I said - switching banks can be a hassle - especially if you have direct deposit, online bill payments or you do a lot of business directly with your bank.

USA Today outlined some things to consider before making the switch.

For starters - you can save a lot of money if you go to an online bank.

Some of these banks have the lowest checking costs - and some even have high interest rates and will re-imburse you for using another banks ATM. Not ideal for those who use a lot of checks - something to keep in mind there.

Now those ATM fees are a major concern for those thinking of switching to a credit union or a small bank!

So do some research - find out if they have agreements - as many do - with larger ATM networks rr see if they waive such fees.

Also - just because you hear a headline about bank fees - don't automatically run to your local branch and close everything!

Some fees may not apply to you - such as if you use direct deposit - or meet a minimum balance - or pay online.

So again, I can't stress this enough - before leaving your bank - do your homework.

But don't be afraid to move your money around if there's something out there better for you and your family.


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