2nd UPDATE: NY Attorney General Asks About Banks' '09 Bonuses
January 11 2010 - 5:23PM
Dow Jones News
New York Attorney General Andrew Cuomo said Monday that his
office has requested information from the nation's largest banks
and Wall Street firms on their compensation and bonus plans for
fiscal year 2009.
On a conference call with reporters, Cuomo said his office sent
letters Monday to eight banks and Wall Street firms that received
bailout funds in 2008 under the U.S. government's Troubled Asset
Relief Program, or TARP. The TARP money has since been repaid.
The attorney general said he's seeking details on the
compensation paid by the banks for 2009, as well as information on
how the compensation and bonus plans were determined and the scope
and magnitude of lending by those firms.
Compensation and bonuses should "be based on incentives that
build strong institutions, not built on incentives that bring the
nation to knees economically and are based on short-term, fictional
profits," Cuomo said.
The banks and Wall Street firms are Bank of America Corp. (BAC),
Bank of New York Mellon Corp. (BK), Citigroup Inc. (C), Goldman
Sachs Group Inc. (GS), J.P. Morgan Chase & Co. (JPM), Morgan
Stanley Inc. (MS), State Street Corp.(STT) and Wells Fargo Corp.
(WFC).
J.P. Morgan Chase, Goldman Sachs, Citigroup and Morgan Stanley
declined comment Monday. A spokesman for Bank of New York Mellon
didn't immediately have a comment.
A Wells Fargo spokeswoman said the bank is reviewing the letter.
"We're accountable to and in compliance with all rules as they
pertain to TARP companies," she said.
Wall Street firms and the nation's largest banks, which are
facing criticism over potential record payouts while the U.S.
economy continues to struggle, are expected to begin awarding 2009
bonuses to employees in the coming weeks. The financial
institutions have recovered more quickly than the overall
economy.
The Wall Street Journal reported Monday that banks and
securities firms have told their employees to expect a higher
percentage of their year-end bonuses to be composed of stock,
rather than cash.
Cuomo said the banks would not be in the healthy financial
position they're currently in without unprecedented assistance by
the federal government.
"The taxpayer paid a terrible price for this economic
recession," Cuomo said. "The average New Yorker, average American
is still paying the price for this terrible economic debacle."
However, Cuomo wants to see the data from the banks before
making a judgment on the 2009 compensation and bonus structure.
He said his role as a law enforcement official is to make sure
there is no fraud and that compensation is properly disclosed to
shareholders and the public.
That is why he feels he has the right to examine the banks'
compensation plans despite the TARP money being repaid to the
federal government, Cuomo said.
-By Chad Bray, Dow Jones Newswires; 212-227-2017;
chad.bray@dowjones.com
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