New York Attorney General Hits Banks on Executive Pay
Companies set aside billions for management bonuses.
October 29, 2008— -- New York Attorney General Andrew Cuomo says nine financial services firms must provide "detailed accounting" of expected bonus payments to top management. In a letter sent today to the banks' boards of directors, Cuomo requested "any and all information" concerning the firm's expected 2008 bonus pool both before and after they learned that they would be receiving taxpayer funds. Click here to see the letter to Morgan Stanley.
The banks, including 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, have reportedly set aside $108 billion for employee compensation this year, despite being beneficiaries of a $250 billion federal bailout program. Experts have said bonuses at the rescued major banks will be higher because of the injection of taxpayer money.
"Obviously, we will have grave concerns if your expected bonus pool has increased in any way as a result of your receipt...of taxpayers funds," Cuomo wrote to the boards. "Boards of directors must step up to the plate and prevent wasteful expenditures of corporate funds on outsized executive bonuses and other unjustified compensation.
Attorney General Cuomo has been investigating executive compensation at Wall Street firms. His office recently reached an agreement with the insurance firm AIG where the company said it would freeze millions of dollars of payments to former CEO Martin Sullivan and other executives.
In recent days Congress too has taken up the issue of executive bonuses. A House committee has opened an investigation into the matter, and today Sen. Bernie Sanders, I-Vt., said he planned to introduce a bill to cap executive salaries at banks receiving federal aid.
This post has been updated.