The Service Employees International Union (SEIU), a top US labor group, has urged the Obama administration's pay czar Kenneth Feinberg to stop any retirement payments to Bank of America (BoA) chief executive Ken Lewis.
Bank of America announced last week that Lewis will leave the company by year-end.
In a letter to Feinberg, the union says Lewis should not receive any retirement or severance package until the bank stops foreclosures and increases lending.
Feinberg, a Washington lawyer, was appointed by US president Barack Obama in June to review the pay packages for the highest-paid employees of companies that received extraordinary government assistance
He is expected to begin releasing a first wave of pay rulings by mid-October.
"Taxpayers have already provided nearly $200 billion in bailouts and backstops to Bank of America," the letter said, adding that this enormous public investment entitles taxpayers to have a say in the bank's executive compensation practices.
The bank received only $45 billion in federal assistance through the Troubled Asset Relief Programme (TARP).
A proposed $118 billion of taxpayer funds, known as the Asset Guarantee Term Sheet, meant to share losses on the bank's purchase of Merrill Lynch was never initiated, and on 21 September the company agreed to pay $425 million to exit the preliminary term sheet.
The bank in September 2008 announced that it will acquire troubled brokerage firm Merrill Lynch as part of an all-stock deal that is valued around $50 billion (See: Bank of America buys Merrill Lynch).
However, several lawsuits were filed in New York and Georgia by shareholders challenging the bank's acquisition of the Merrill Lynch. They say they have been misled about the deal and the bank failed to disclose the true financial health of the brokerage firm at the time of the acquisition (See: Shareholders see red in BoA-Merrill deal; sue bank).
Lewis is expected to receive $125 million in severance, including $53.2 million, mostly from a pension programme frozen years ago, and $72.8 million in accumulated stock and other compensation.
Feinberg, serving as the government's pay czar for the financial bailout programme, does not necessarily have explicit authority over Lewis' severance package because the contract may pre-date his authority.
But Congress gave Feinberg broad authority to issue advisory opinions that could impact Lewis.
SEIU noted in its letter that under Lewis, BoA has restricted lending to consumers and small business
while raising interest rates and failing to modify distressed home loans.
The group said Feinberg should stop any severance payments to Lewis until Bank of America commits to stop foreclosures, provide more affordable loans, lower interest rates on credit cards, and reform pay practices so they are in line with shareholder interests.
"The American people are counting on you to reform the reckless culture of Wall Street that allows bank executives to drive our economy into the ground and walk away with millions," the letter said.
Lewis' retirement package is on a par with what other ex-Wall Street CEOs have received.
Merrill Lynch & Co Inc's Stanley O'Neal left with $161.5 million, and Citigroup Inc's Charles Prince left with $39.5 million in stock, options, bonus and perks.
The fact that Bank of America needed a $45 billion taxpayer bailout complicates the question of whether Lewis should receive such a lucrative package.
His 2008 compensation was $9.95 million, according to regulatory filings. Over the past three years, he received more than $62 million.
According to reports, more than two dozen names have been floated as potential successor of Lewis.
However, two insiders, Brian Moynihan, who leads consumer and small-business operations, and chief risk officer Greg Curl, are thought to be neck-in-neck for the top spot.