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March 19, 2010

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US also to blame for big bonuses

BANKS in the United States weren't the only ones giving big bonuses in the boom years before the worst financial crisis in generations. The government also was handing out millions of dollars to bank regulators, rewarding "superior" work even as an avalanche of risky mortgages helped create the meltdown.

The payments, detailed in payroll data released to The Associated Press under the Freedom of Information Act, are the latest evidence of the government's false sense of security during the financial boom.

Just as bank executives got bonuses despite taking on dangerous amounts of risk, regulators got taxpayer-funded bonuses despite missing or ignoring signs that the system was on the verge of a meltdown.

The bonuses were part of a reward program little known outside the government. Some government regulators got tens of thousands of dollars in perks, boosting their salaries by almost 25 percent. Often, though, rewards amounted to just a few hundred dollars for employees who came up with good ideas.

During the 2003-06 boom, the three agencies that supervise most US banks - the Federal Deposit Insurance Corp, the Office of Thrift Supervision and the Office of the Comptroller of the Currency - gave out at least US$19 million in bonuses, records show.

Nearly all that money was spent recognizing "superior" performance.

The largest share, more than US$8.4 million, went to financial examiners.




 

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