October 28, 2007— -- Democratic lawmakers are joining the chorus of Americans asking how slumping banks could hand out executive bonuses during the worst economic crisis since the Great Depression.
Following a letter from Rep. Dennis Kucinich (D-Ohio), House Oversight and Government Reform Committee chairman Henry Waxman (D-Calif.), has opened an investigation into the matter, according to a release from his office.
In letters to the heads of nine major U.S. banks getting propped up with billions of taxpayer dollars, Waxman said he "question[s] the appropriateness of depleting the capital that taxpayers just injected into the banks through the payment of billions of dollars in bonuses, especially after one of the financial industry's worst years on record."
Those banks have spent or set aside $108 billion to pay out bonuses to top executives, Waxman said, referencing the firms' public filings.
The bonuses would reportedly range from around $100,000 for a lower-level employee to over $1 million for senior employees. Experts have said the payouts will be plumper than they would have been in such a disastrous year because of the taxpayer money flowing into the institutions.
Financial personnel experts have said the bonuses were necessary to retain top talent. Last week, House Financial Services Committee chairman Barney Frank (D-Mass.), called for a moratorium on executive bonuses. "If nobody gave them, there wouldn't be a competitive aspect," he told Bloomberg News.
Sen. Bernie Sanders, I-Vt., has also called for a ban on executive bonuses at the banks.
In his letters to Bank of America, Bank of New York Mellon, Citigroup, JPMorgan Chase & Co., Merrill Lynch & Co., Morgan Stanley, State Street Corporation, Wells Fargo & Company, and Goldman Sachs, Waxman requested compensation data and bonus policies for the past three years.
"We look forward to cooperating with Chairman Waxman's request," said a spokesperson for Goldman Sachs. In a statement, Citibank said it "will adhere to the requirements in the government program including restrictions on executive compensation." Wells Fargo, Bank of America, Merrill Lynch, Morgan Stanley and Bank of New York Mellon declined to comment on the letter. JP Morgan Chase and State Street did not respond to requests for comment.
This story has been updated.