Support the news
Citigroup Inc., 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.
"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."
Citigroup, which gave 738 of its employees bonuses of at least $1 million, is now one-third owned by government as a result of its bailout. It paid bonuses of at least $3 million to 124 of those employees, 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.
Bank of America Corp., which also received $45 billion in TARP money, paid $3.3 billion in bonuses, with 172 employees receiving at least $1 million. Of those, 28 received bonuses of more than $3 million. Merrill Lynch, which Charlotte, N.C.-based 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 $27.61 billion.
Cuomo's office said Merrill Lynch doled out 696 bonuses of at least $1 million for 2008, with 149 of those workers getting bonuses of at least $3 million.
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 came 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 was not immediately available to comment on the report.
The banks have said they needed to pay their top performing employees to prevent them from defecting to competitors. Companies that accepted TARP money have had to comply with government restrictions on employee compensation, including bonuses.
As bonus payments increasingly came under government scrutiny, 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 highest-paid employees at banks and other firms that received the largest government bailouts. Feinberg will have power to review compensation for the 100 top-paid employees at Bank of America and Citigroup in the new position.
However, his oversight does not include reviewing bonus payments tied to 2008. He can only review plans starting with 2009 compensation. Citi and Bank of America have until Aug. 13 to submit compensation plans to Feinberg for 2009.
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.
JPMorgan Chase & Co. and Goldman Sachs Group Inc., which have already repaid TARP funds they received, paid out the most bonuses of more than $1 million, the report said. However, they were considered among the healthiest of the bailed-out companies.
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."
The government launched the bailout program at the peak of the credit crisis last fall, shortly after investment bank Lehman Brothers Holdings Inc. failed and insurer American International Group Inc. only survived with the support of the government.
JPMorgan repaid the $25 billion in TARP money it received last month. Goldman, which received $10 billion in money, also paid back the government in June.
A Goldman Sachs spokesman was not immediately available for comment.
Bank of New York Mellon, Morgan Stanley, State Street Corp. and Wells Fargo & Co. were the other four banks that initially received bailout money. All but Wells Fargo repaid their loans last month.
Wells Fargo received $25 billion in money as part of the program. It gave 62 employees bonuses of at least $1 million, including employees at Wachovia, which it acquired at the end of 2008.
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.
This program aired on July 30, 2009. The audio for this program is not available.
Support the news