During the boom years, New York–based small-business lender CIT group went heavy into the risky subprime loan business, under the guidance of CEO Jeffrey Peek. This past year, after it all came crashing down, CIT accepted $2.3 billion in TARP money and then went and asked the administration for more. They were denied. ("Their Plan A was: Seek assistance from the government. And their Plan B was: Ask again," a senior Obama administration official told the Journal at the time.) Absent a plan, the company spiraled toward bankruptcy, and last week Peek was forced to resign. Now his wife,
Liz Peek, who had shared with the world the struggles of being a TARP wife, has apparently been forced to go back to work. And her first order of business? Taking the administration to task for their behavior toward Wall Street.
She writes on the broadblog Wowowow:
The administration has decided that it is politically expedient to fan the populist rage against Wall Street. To score points with Main Street, they have proposed to slash bankers’ pay, rather than undertake more meaningful but less splashy measures. Pay Czar Ken Feinberg’s draconian cuts in compensation for workers at the seven largest TARP recipients make for good headlines, but are of questionable value. Does anyone really think that preventing Bank of America from paying its top people competitively will strengthen the firm’s prospects? ...Feinberg knows better; word on the Street is that Rahm Emanuel is directing this play, and it’s all about politics. Unfortunately, taxpayers will be the losers.
Jeffrey Peek is also a loser, of course. Owing to some of the "draconian" bylaws in the Emergency Economic Stabilization Act of 2008, he will now be unable to collect the $20 million in severance pay that he would have once walked away with. All he'll get when he leaves at the end of the year will be about $5 million in pension benefits, which is, quite frankly, more than he deserves. Oh, and in case you are wondering, Wowowow does provide an editor’s note disclosing Liz Peek's background. It says: "Editor’s Note: Liz Peek is a financial columnist."