Dylan Ratigan of CNBC’s Fast Money has been calling for clawbacks of financial CEO pay for months, and today he got closer than ever.  For years, nearly every financial institution in the country has been paying out billions of dollars in executive bonus compensation to their CEO’s and other executives.  Those bonus payments were based on record profits and record performances during the “boom” years.  It’s now widely known that those record  “profits” were completely fraudulent, based solely on “mark to myth” accounting methods.   Yet the bonuses were real, and now nearly every financial institution in the country has either already collapsed, or is hanging on by the thread from taxpayer donations.

Clawback provisions are extremely controversial, but in the case of the on going financial collapse, they have more support than ever.  The idea is for the government to demand that executives in charge of Citibank, JP Morgan, Washington Mutual, Bear Sterns, Lehman Brothers, etc. over the last 5 or more years must forfeit a portion of the total compensation they received over the years.  When asked about the potential for clawback provisions, Senator Schumer stated “I think there’s a real thirst to deal with this issue.. and the people who made high salaries should pay a price.“  Probed further, he mentioned that he and other senators were “looking into it”.

It’s not clear whether Schumer will make any progress in getting clawbacks enacted to recover a portion of the largest financial theft ever carried out by CEO’s everywhere.  But if he does not, there is still some hope that companies may voluntarily change their pay practices to encourage more realistic longer term goals.  Up until recently, financial CEO’s were encouraged to steal additional compensation based on falsifying short term asset valuations.  There are now signs that once comatose boards of directors will revise bonus structures to more meaningful longer term financial goals spanning multiple years.  Going forward, a $10 billion quarterly profit in one quarter will not count towards executive bonus payments unless that company is still solvent, and not begging for taxpayer money years later.

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