NEW YORK (Reuters) - New York’s attorney general asked eight major U.S. banks to turn over data on planned bonuses for 2009, amid a growing public outcry over payouts in light of the industry’s role in the near-collapse of the financial system and recession.
Andrew Cuomo made the demand Monday to the banks that were first to receive federal bailout money in the fall of 2008: Bank of America Corp, Bank of New York Mellon Corp, Citigroup Inc, Goldman Sachs Group Inc, JPMorgan Chase & Co, Morgan Stanley, State Street Corp and Wells Fargo & Co.
These banks have all repaid infusions taken from the government’s much-maligned Troubled Asset Relief Program (TARP), though some of the U.S. investment in Citigroup has been converted into common stock.
In letters to the banks, Cuomo requested details by February 8 about bonus pools, whether cash or stock is being used in awards, mechanisms designed to tie pay to performance, how TARP money affected the payouts, and whether any awards can be recouped in case the banks’ fortunes later sour.
“Some banks made a lot of money because, in some cases, taxpayers gave them a lot of money,” Cuomo said at a news conference. Citing the nation’s 10 percent unemployment rate, he added: “The taxpayer is still paying that cost.”
Cuomo said he favors bonuses that encourage business practices that can spur “long-term sustainable growth,” not the “fictional” short-term profits that he said “brought this nation to its knees” in 2008.
Bonuses typically comprise the bulk of annual compensation for the most highly-paid bankers and traders, regularly reaching seven-figure and, occasionally, eight-figure sums.
The eight banks were not immediately available for comment.
While some bonuses may this year contain a larger percentage of stock, to reduce any temptation to take outsized risk, large payouts are likely to provoke the ire of Congress, governance critics and shareholders.
Many banks, in contrast, say high payouts are necessary to keep top talent that might otherwise defect to rivals.
White House spokesman Robert Gibbs said on Monday that some executives at Wall Street firms “continue not to get it” when it comes to big bonuses at banks that got taxpayer bailouts.
He declined to comment on news reports that the Obama administration is weighing a fee on banks to recoup more taxpayer funds spent on the financial system rescue.
A congressional commission is expected on Wednesday to begin a hearing into causes of the financial crisis, including whether the desire for high pay drove outsized risk-taking.
Speakers are expected to include Bank of America Chief Executive Brian Moynihan, Goldman Chief Executive Lloyd Blankfein, JPMorgan Chief Executive Jamie Dimon, and Morgan Stanley Chairman John Mack.
Reporting by Elinor Comlay, Joan Gralla, Christian Plumb and Jonathan Stempel; Editing by John Wallace and Tim Dobbyn
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