Corporate Governance

New York Democrat Charles Schumer said he is pressing the Treasury Department to issue a rule that prohibits airlines from tacking on carry-on bag fees.

The change would close a loophole in current airline regulations that allows a fee for carry-on baggage. The plea is in response to an announcement last week by Spirit Air to charge passengers between $20 and $45 for carry-on luggage on top of checked-bag fees. 

The administrative rule would define carry-on baggage for air travelers as a "reasonable necessity". He said the fees would weigh most heavily on middle-class families that need to carry items onto the airplane.

If Treasury won't make the change, Schumer said he'll introduce legislation to close the loophole. 

Safety regulators may seek a second penalty against Toyota because of indications there were two separate problems with recalled pedals. 

Former Treasury Secretary and Citigroup executive Robert Rubin is expected to be grilled by a panel investigating the financial crisis.

The Obama administration is seeking a $16.4 million fine against Toyota for problems associated with the sudden acceleration of vehicles.

The federal government's pay czar has slashed compensation packages for executives at five firms that received large taxpayer bailouts.

Kenneth Feinberg, the special paymaster, cut overall cash payouts by an average of 33 percent from 2009 levels. The cuts affect the top 25 executives at companies that received a heavy amount of assistance. Those five companies are: American International Group (AIG), Chrysler, Chrysler Financial, General Motors and GMAC.

Total pay packages for those same executives were cut by 15 percent on average. And cash salaries for 82 percent of executives remained at $500,000.

Separately, Feinberg is seeking compensation information for possibly thousands of executives at firms that received taxpayer bailouts.

In a letter on Tuesday, Feinberg requested information about pay practices for the top 25 executives at 419 firms that received aid. Feinberg is conducting a review of pay practices during the months between when the bailout recipient received aid and when his office was created in February 2009. The bailout package passed Congress in October 2008.

Feinberg is limiting the review to executives who made more than $500,000 to reduce burdens on small banks, many of which received assistance.

Feinberg said he may pursue compensation adjustments if he determines the payments were contrary to the public interest.

Financial overhaul legislation that passed the Senate Banking Committee on Monday requires publicly-traded companies to report how much average employees earn compared with company executives. 

The legislation would require publicly-listed companies to submit more detailed reports on compensation to the Securities and Exchange Commission (SEC) than under current rules. The reports would include median employee salary, CEO compensation and the ratio of the two.

The requirement was added in an amendment that passed easily on Monday on a party-line vote. The change was sought by Sen. Robert Menendez (D-N.J.).

Lawmakers are looking to rein in executive pay practices that lead to excessive risk and discourage long-term investments. The ratio of average and CEO pay could provide a stark comparison of pay practices across industries.  

Menendez also successfully sought a change in the legislation that bans brokers from voting uninstructed client shares in "say on pay" decisions at the corporate level. Labor unions have been critical of the practice, arguing that it allows brokers to unduly influence corporate votes.

Republican senators are publicly questioning why executives for the Boys and Girls Club of America are raking in high salaries while budget shortfalls force clubs to close nationwide.

Sens. Chuck Grassley (R-Iowa), Tom Coburn (R-Okla.), Jon Kyl (R-Ariz.) and John Cornyn (R-Texas) last week sent a letter to the organization noting that 40 percent of its revenue on 2008 tax forms came from the Federal government. The forms also showed a $13 million loss for the year while its president received $900,000 in compensation.

“We find it hard to reconcile this loss when the amount spent on executive salaries,” the letter states.

Legislation has been drafted to address this issue. Senators have also requested  additional information from the organization to support the level of compensation to executives.  

“[I]t is a matter of transparency and accountability in the use of taxpayer dollars and program integrity for the young Americans who are supposed to benefit from these resources,” the senators stated in prepared remarks.

Sen. Charles Schumer (D-N.Y.) blasted China on Friday and said a restriction on the country's currency manipulation is the, "single biggest step," lawmakers could take to boost U.S. jobs.

Schumer has been a longstanding critic of China's alleged currency manipulation and has argued that it harms U.S. manufacturing by making Chinese products appear cheaper. Schumer said lawmakers would look to introduce legislation in coming days.

"Now more than ever, there is a consensus to finally confront China's currency manipulation," Schumer said. "It is the single biggest step we can take to promote U.S. job creation, particularly in the manufacturing sector."

The government could have let GMAC, the bank with longstanding ties to General Motors, go bankrupt instead of bailing it out with tens of billions in taxpayer dollars, a government watchdog said Thursday.

The Congressional Oversight Panel over the $700 billion bailout said there was nothing to prevent the government from pursuing a "strategic bankruptcy" for GMAC.

"A company that apparently posed no systemic risk to the financial system, that did not seem to be too big to fail, too interconnected to fail, or indeed, of any systemic significance, was assisted to the extent of a total of $17.2 billion of taxpayers’ money and became one of the five largest wards of state," the report said.