Citigroup, one of the biggest recipients of government bailout money, gave employees $5.33 billion in bonuses for 2008, New York's attorney general said Thursday in a report detailing the payouts by nine big banks.
The report from Attorney General Andrew Cuomo's office focused on 2008 bonuses paid to the initial nine banks that received loans under the government's Troubled Asset Relief Program last fall. Cuomo has joined other government officials in criticizing the banks for paying out big bonuses while accepting taxpayer money.
Citigroup, which is now one-third owned by the government as a result of the bailout, gave 738 of its employees bonuses of at least $1 million, even after it lost $18.7 billion during the year, Cuomo's office said.
The New York-based bank received $45 billion in government money and guarantees to protect it against hundreds of billions of dollars on potential losses from risky investments.
"There is no clear rhyme or reason to the way banks compensate and reward their employees," Cuomo said in the report, noting banks have not in recent years actually tied pay to performance as they claim when describing their compensation programs. Cuomo added that when banks' performance deteriorated significantly, "they were bailed out by taxpayers and their employees were still paid well."
Bank of America, which also received $45 billion in TARP money, paid $3.3 billion in bonuses, with 172 employees receiving at least $1 million. Merrill Lynch, which Bank of America acquired during the credit crisis, paid out $3.6 billion.
Bank of America earned $2.56 billion in 2008, while Merrill lost $30.48 billion. Cuomo's office said Merrill Lynch doled out 696 bonuses of at least $1 million for 2008.
Bank of America has been sharply criticized for its acquisition of Merrill Lynch because of mounting losses at the Wall Street bank and the size of bonuses Merrill paid its employees. Of the $45 billion in bailout funds Bank of America received, $20 billion was to support the acquisition of Merrill. Neither Bank of America nor Citigroup have repaid their TARP loans.
A Bank of America spokesman declined to comment on the report. A spokesman for Citigroup did not return repeated calls for comment.
Banks have said they needed to pay their top performing employees to prevent them from defecting to competitors. Companies that accepted TARP money have faced intense government scrutiny and must now comply with restrictions on compensation, including bonuses.
Because of those restrictions, some banks began shifting how they pay their workers. In June, Citigroup said it would rebalance how it pays employees, by reducing bonuses for some and instead giving them larger salaries. The change does not effect total pay, just the mix in compensation.
President Obama last month named Kenneth Feinberg to oversee compensation given to the 100 highest-paid employees at banks and other firms that received the largest government bailouts, including Citigroup and Bank of America.
However, his oversight does not include reviewing bonus payments tied to 2008. He can only review plans starting with 2009 compensation. Companies have until Aug. 13 to submit compensation plans to Feinberg.
Asked about the attorney general's report, White House press secretary Robert Gibbs said he had not seen it.
"I think the president continues to believe that the American people don't begrudge people making money for what they do as long as ... we're not basically incentivizing wild risk-taking that somebody else picks up the tab for," Gibbs said.
Rep. Edolphus Towns, chairman of the House Oversight and Government Reform Committee, said Cuomo's report was appalling.
"This egregious behavior proves that Wall Street still doesn't get that times have changed and the old way of paying executives is long gone," said Towns, D-N.Y.
JPMorgan Chase and Goldman Sachs Group, which are considered among the healthiest banks and that have already repaid TARP funds they received, paid out the most bonuses of more than $1 million.
Goldman gave 953 workers bonuses of at least $1 million. JPMorgan gave 1,626 employees at least $1 million. The two banks each gave more than 200 employees bonuses in excess of $3 million.
JPMorgan spokesman Tom Kelly said the bank took TARP money "at the government's request, even though we didn't need it, because it was good for the overall financial system, and we paid it back as soon as we were allowed to."
JPMorgan repaid the $25 billion in TARP money it received last month. Goldman repaid the $10 billion it received.
A Goldman Sachs spokesman did not return repeated calls for comment.
The government launched the bailout program at the peak of the credit crisis last fall, shortly after investment bank Lehman Brothers Holdings failed and insurer American International Group only survived with the support of the government.
Democratic lawmakers say excessive salaries and bonuses encouraged risk-taking on Wall Street and contributed to the financial crisis.
They are pushing legislation, expected to pass the House on Friday, that would ban "incentive-based" pay that regulators determine could threaten the economy or viability of the institution. Regulators would be given 270 days after the bill is enacted to hash out the details.
Bank of New York Mellon, Morgan Stanley, State Street and Wells Fargo were the other four banks that initially received bailout money. All but Wells Fargo, which received $25 billion, repaid their loans last month.
Spokespeople from Morgan Stanley and Wells Fargo declined to comment on the attorney general's report. Spokespeople for BNY Mellon and State Street were not immediately available to comment.
AP Business Writer Ieva M. Augstums in Charlotte and Associated Press Writers Darlene Superville and Anne Flaherty in Washington contributed to this report.