In an exclusive report, The Wall Street Journal writes that "Citigroup Inc. (C) has told about five former top executives that it won't pay them tens of millions of dollars in promised severance payouts."
Citigroup clearly wants to avoid the negative publicity of making huge payments to departed management, especially because it has taken so much TARP money, but it does have contracts with the people who left and it appears that the bank is simply willing to renege on them. While the bank's viewpoint may be compelling, its ethics are not.
The government bailout has caused an unjustified shift in the morality of many financial institutions. To save themselves from the wrath of the government, shareholders, and the public they are simply willing to walk away from firm obligations to management past and present.
Citigroup may be gambling that the executives due the withheld pay will not sue the bank . That may be a poor bet. A contract is a contract.
Douglas A. McIntyre is an editor at 24/7 Wall St.