Overpaid CEOs Got FDIC Debt Guarantees

41 Pages Posted: 28 Dec 2011  

Linus Wilson

University of Louisiana at Lafayette - College of Business Administration

Yan Wendy Wu

Wilfrid Laurier University

Date Written: December 27, 2011

Abstract

From 2008 to 2009, the FDIC guaranteed hundreds of billions of dollars of newly issued bank debt through the Temporary Liquidity Guarantee Program (TLGP). We find that CEOs making more than their peer groups were significantly more likely to steer their companies to obtain federal guarantees for their banks’ debt. The average bank in our sample with a debt guarantee had a CEO who was paid $1.6 million per year more than the average CEO in his or her peer group. In addition, there is strong evidence that large, systemically important banks were more likely to obtain FDIC debt guarantees.

Keywords: bailout, banks, CDS, Citigroup, CEO Compensation, corporate governance, credit default swaps, debt, debt guarantees, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, emergency lending, FDIC, Federal Deposit Insurance Corporation, Federal Reserve, financial crisis, FOIA, Freedom

JEL Classification: G01, G18, G2, G28

Suggested Citation

Wilson, Linus and Wu, Yan Wendy, Overpaid CEOs Got FDIC Debt Guarantees (December 27, 2011). Available at SSRN: https://ssrn.com/abstract=1977345 or http://dx.doi.org/10.2139/ssrn.1977345

Linus Wilson (Contact Author)

University of Louisiana at Lafayette - College of Business Administration ( email )

Department of Economics & Finance
214 Hebrard Blvd., Room 326
Lafayette, LA 70504-0200
United States
(337) 482-6209 (Phone)
(337) 482-6675 (Fax)

HOME PAGE: http://www.linuswilson.com

Yan Wendy Wu

Wilfrid Laurier University ( email )

75 University Ave W
Waterloo, Ontario N2L 3C5
Canada

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