|Andrew Cuomo: ‘There is no clear rhyme or reason to the way banks compensate and reward their employees.’|
Cuomo details bonuses paid by banks that got federal bailout funds
NEW YORK - Citigroup Inc., one of the biggest recipients of government bailout money, gave employees $5.33 billion in bonuses for 2008, New York Attorney General Andrew Cuomo said yesterday.
The report focused on bonuses paid to the initial nine banks that received loans last fall under the government’s Troubled Asset Relief Program. Cuomo has joined others in criticizing banks for paying big bonuses while accepting taxpayer money.
Citigroup, which is now one-third owned by the government as a result of the bailout, gave 738 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 got $45 billion in government money and guarantees.
“There is no clear rhyme or reason to the way banks compensate and reward their employees,’’ Cuomo said in the report, noting that banks have not in recent years actually tied pay to performance, as they claim.
Bank of America Corp., which also received $45 billion in TARP money, paid $3.3 billion in bonuses, with 172 employees getting 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. 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.
Bank of America declined to comment. Citigroup did not return calls for comment.
Banks have said they needed to pay their top performers to prevent them from defecting to competitors. Those that took 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 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 affect total pay, just the mix in compensation.