The 116 banks that are receiving billions in taxpayer-provided bailout money this year actually paid out $1.6 billion in compensation and benefits to their top executives last year – even though the results at some of these institutions were so poor that they would soon have to turn to Washington for a government-engineered rescue.

The $1.6 billion was paid out to nearly 600 executives at the 116 banks that have so far accepted federal money to bolster their financial foundations, The Associated Press concluded after a review of U.S. securities filings. In addition to salary, the compensation included bonuses paid in both cash and stock. The benefits reaped by top executives included the use of company jets for personal purposes, personal chauffeurs, home-security services, country-club memberships and professional-wealth-management services, the news service said.

U.S. Rep. Barney Frank, D-Mass., a longtime critic of the fat pay packages given to U.S. executives, said the bonuses and perks tallied by The AP review amounted to a bribe paid “to get [CEOs] to do the jobs for which they are well paid in the first place.”

“Most of us sign on to do jobs and we do them best we can,” Frank, chairman of the House Financial Services committee, told the news service. But “we’re told that some of the most highly paid people in executive positions are different. They need extra money to be motivated!”

The AP review is just the latest in a series of media investigations that have questioned the effectiveness of – and banks’ commitment to – the so-called “Troubled Assets Relief Program” (TARP), part of an overall $700 billion bailout plan that was originally unveiled in late September.

The plan was originally conceived to boost the strength of U.S. financial institutions by having the federal government purchase non-performing mortgages and other bad assets. In November, the Bush administration changed TARP’s objectives, instructing the U.S. Treasury Department to pump tax dollars directly into banks in a bid to prevent wholesale economic collapse.

Ideally, TARP was supposed to jumpstart bank-to-bank and bank-to-consumer lending, helping to unfreeze a credit crisis that may be the worst the U.S. economy has experienced since the Great Depression. But that hasn’t happened. Instead, as a Money Morning investigation has shown, banks are using the money to buy other banks in a dual effort to build market share for when the economy recovers, and to perhaps make themselves “too big to fail” in the interim, many experts say.

TARP did set restrictions on some executive compensation for participating banks, but it did not limit salaries and bonuses unless they had the effect of encouraging excessive risk to the institution. Banks were barred from presenting so-called “golden parachute” financial packages to departing or ousted executives and from deducting some executive pay for tax purposes.

The AP study found that the 116 banks received $188 billion in TARP money. The study also discovered that:

• The average amount paid to each of the 116 banks’ top executives was $2.6 million in salary, bonuses and benefits.

• Lloyd C. Blankfein, president and chief executive officer of Goldman Sachs Group Inc. (GS), took home nearly $54 million in compensation in 2007. The company’s top five executives received a total of $242 million. On Oct. 28, Goldman received $10 billion in federal bailout money. On Dec. 16, Goldman reported a $2.12 billion quarterly loss, its first since it went public back in 1999. So for 2008, Goldman’s seven top-paid execs will work for their base salaries of $600,000 each, but will forgo any cash and stock bonuses, the company said. Facing increasing concern by its own shareholders on executive payments, the company described its pay plan in a written report back in the spring as being essential to retain and motivate executives “whose efforts and judgments are vital to our continued success, by setting their compensation at appropriate and competitive levels.” Goldman spokesman Ed Canaday would not elaborate beyond that written report.

• Even where banks slashed pay, some executives still reaped a payday of seven – or even eight – figures. Richard D. Fairbank, the chairman of Capital One Financial Corp. (COF), which received $3.56 billion in bailout money back on Nov. 14, took a $1 million hit in compensation after his company had a disappointing year, but still got $17 million in stock options.

• Merrill Lynch & Co. (MER) CEO John A. Thain topped all banking chieftains with more than $83 million in total earnings in 2007. Thain, a former chief operating officer for Goldman Sachs, took over the top job at Merrill in December 2007, avoiding the blame for a year in which Merrill lost $7.8 billion. Since he began work late in the year, he landed a $15 million signing bonus, $57,692 in salary, and an additional $68 million in stock options. Like Goldman, Merrill got $10 billion from taxpayers on Oct. 28. Merrill shareholders have approved its sale to Bank of America Corp. (BAC), though the value of the deal has plunged to $20 billion (from $50 billion at the time the deal was announced) as a result of the stock market decline. BofA will reportedly slash 35,000 jobs as a result of the combination.

• JPMorgan Chase & Co. (JPM) CEO James Dimon ran up a $211,182 private jet travel tab last year, because his family lived in Chicago and he was commuting to New York. JP Morgan received $25 billion in bailout funds.

• Bank of New York Mellon Corp., (BK) CEO Robert P. Kelly received $66,748 for financial services – on top of his $975,000 salary and $7.5 million bonus. His car and driver cost $178,879. Kelly also received $846,000 in relocation expenses, including help selling his home in Pittsburgh and purchasing one in Manhattan, the company said. At Goldman, the bill for leased cars and drivers ran as high as $233,000 per executive. The firm told its shareholders this year that financial counseling and chauffeurs are important because it grants executives more time to focus on their jobs.

• Wells Fargo & Co. (WFC), which received $25 billion in bailout cash, gave its top executives as much as $20,000 each for personal financial planners. When asked to justify the personal use of company aircraft for some executives, banks cite security as a key reason. But U.S. Rep. Brad Sherman, D-Calif., questioned that rationale, saying executives visit many locations more vulnerable than the nation’s security-conscious commercial air terminals.U.S. Rep. Brad Sherman, D-Calif., a member of the House Financial Services Committee, said excessive pay and perks undermines the development of good economic policies at banks and fuels an already problematic pay spiral in the U.S. financial sector. And that’s especially difficult for shareholders and taxpayers to accept when virtually the entire sector needs bailing out

  Sherman told The AP that he wants the banks to appear before Congress, like the automakers did, and spell out their spending plans for the bailout money.

  Said Sherman: “The tougher we are on the executives that come to Washington, the fewer will come for a bailout.”

  Source: Banks That Got $188 Billion in Bailout Money This Year Paid Out $1.6 Billion to Top Execs Last Year