Cuomo releases ugly details on bank bonuses

July 30, 2009

NY Attorney General Andrew Cuomo released his report on bonuses at the TARP Top 9.  At these firms alone, over 800 people made north of $3 million in 2008.  That’s a lot of scharole.  See Appendix B for the bonus breakdown at each bank.

The key info is in one particular table, however:

(Click to enlarge in new window)

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The columns to the right list the number of employees that received bonuses in excess of $3 mil/$2 mil/ $1 mil.

Banks that are still sitting on their TARP money (Citi, BofA, Wells among them) have no business paying out big bonuses before paying back the government. For that matter, neither do the others, who all continue to benefit from FDIC guarantees on debt and Fed lending facilities through which they’ve traded toxic loans in exchange for perfectly liquid Treasuries. They can use the Treasuries for repo collateral, get cash and then put that on deposit at the Fed where they now get paid interest on their excess reserves. It’s a great scam. One that feeds lots of cash into the 2009 bonus pool.

(For ease of reading, click the “toggle full screen” button at the top right of the Scribd window)

Cuomo Bonus Report 7.30.09

16 comments

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This is despicable. Worst of all is the fact that most people will not even know that these bonuses were paid out. Most think that the “bailouts” are necessary to get these poor banks up on their feet. Disgusting.

Posted by Boris | Report as abusive

I never understood why we let these thieves do what they do. While the working people don’t work, the bankers, who screw everybody are rich. How about some jail time without due process?

Posted by AJ Franks | Report as abusive

Bust up this den of thieves, bring in the FBI to shut down the evil empire and walk the perps.

Posted by Bill | Report as abusive

Once again the same foul stench emanates from the boardrooms of Wall St, and the hallowed halls of the Federal Reserve.

Maybe now people will start to draw the lines between the lack of jobs created (now a net loss) over the past 10 years, the unprecedented 40% share of corporate profits of the financial institutions and the faltering GDP of this formerly great country.

Bernanke has admitted that we need ‘growth’ of 2.4% per year just to keep the jobs we have. With manufacturing industry at 12% of GDP, and being decimated, and massive debt deflation for both commercial banks and American citizens, we are unlikely to see significant GDP growth soon.

Posted by Jonathan | Report as abusive

The obscene level of bank bonuses is obviously wrong, but it has been that way for many years. I used to work for a large, non-bank enterprise that had billions in annual net income and not a single person, including the CEO, was awarded a bonus greater than $1 million. I’ve met and worked closely with investment bankers and even the high-priced ones with the private jets and multiple vacation villas didn’t really understand business from a strategic standpoint. Finally, the continuing greed and extremely poor compensation policies in the banking industry has caused me to largely stop investing in the financial markets. Bonuses should be directly tied to performance; stating the deadly obvious.

Posted by Charles | Report as abusive

Wall Street deserves its bashing but the big question is whether compensation reform on Wall Street is possible without reforming 2/20 charged by hedge funds, private equity funds? A Cuomo study on hedge funds and private equity funds’ compensation would be very inreresting

Posted by greedy123 | Report as abusive

Of course the bonus payments are absurd, but you should not forget that in the banking business, everything is herd mentality. If one bank doesnt pay these bonuses, their most valuable staff will simply pick up and go elsewhere – where huge bonuses are paid.
Banking assets are predominantly human. In order to maintain their “asset base”, they pay these extravagent bonuses. I think regulators would be better servicing the public by concetrating on reigning banks’ risk taking in, and not going for the easy target of bonuses.
If they get banks to lower bonuses, then what??? Big flipping deal, the problem is the risks taken!!!!!!

Posted by Jason | Report as abusive

[...] more unsurprising news on the TARP front. Cuomo releases ugly details on bank bonuses: NY Attorney General Andrew Cuomo released his report on bonuses at the TARP Top 9.  At these [...]

I would compare the bonuses that were paid in the past as a percentage. In an ideal world they should not pay bonuses but if the good employees are going to leave to go elswhere becuase they can get paid more then this is the cost of doing business. In most cases, not all, these are the people that are going to turn around the company and allow me to recoupe my stock losses in the future. Do not be so critical without knowing all the facts first. Just because the media makes it out to be some horrible abuse of the system, does not mean it is. Let them do their job so the stock price to can back up.

Posted by Pete | Report as abusive

BofA rumoured to have paid enormous guarantee to Sanaz Zaimi. efinancialcareers / Sarah Butcher. 14-Jul-2009 (one comment) …
iranian.com/…/bofa-rumoured-have-paid-en ormous-guarantee-sanaz-zaimi

Posted by martin | Report as abusive

[...] releases ugly details on bank bonuses Rolfe Winkler Blog Archive Cuomo releases ugly details on bank bonuses | Blogs | NY Attorney General Andrew Cuomo released his report on bonuses at the TARP Top 9. At these firms [...]

This article forgot to mention the $80 BILLION dollars the Federal Reserve used to bail out AIG which was then given by AIG to some of these very banks.

How much money did Goldman, BoA, … get from the Fed/AIG conduit bailout scam? What would their profit/loss be without it? It would be nice to see a column in your excellent summary table reflecting the AIG conduit facet of the bail out.

Posted by Joe | Report as abusive

The anger over bonuses is a red herring.

In a free market, bonuses are a common way of rewarding performance. There is nothing wrong with the idea of paying people for success. From the perspective of the balance sheets of the bailed out companies, the bonuses are well deserved, given that these companies are getting billions of dollars for “free.”

The problem is that the money these companies are getting was stolen from dollar users (not just taxpayers, since the debt is being paid by printing new currency), and is keeping unproductive, financially irresponsible companies afloat. By virtue of being bankrupt in the first place, these companies have demonstrated that they are consuming more resources than they are creating – and ought to be bankrupt.

What we should really be angry about is that the political class is punishing success and rewarding failure by taking money from productive people and businesses and giving it to unproductive ones.

[...] [Graph via Rolfe Winkler] [...]

To DavidV, I agree bonuses are a great way of rewarding performance. But you don’t see anything wrong with the fact that JP Morgan had $5.6 billion of net income, but paid out bonuses of $8.6 billion? Do you think that they deserve $1.50 of bonus for each $1 of income?

Wish I could get in on that!

Posted by Steveo | Report as abusive

We can do a lot of talking and a lot of regulating, but the problem is still with us. Any business that causes hardship upon the nation is bound to fail. We are all governed by a much greater power than our government. Basic laws are being broken and when this happens it is only a matter of time before the system breaks down. We have seen many other abuses such as no bid contracts. Until we get rid of the lobby system at all levels of Government and bring our representatives home to be placed under the watchful eye of their people we will just be spitting into the wind.

Posted by f belz | Report as abusive

Why would any person choose to live in a country in which they do not support the ‘ism…whether capitalism or socialism or any other ‘ism. If you do not like pay for preformance then hide behind a union or a govt agency. Better yet try living in Eastern Europe when they were social or communistic.

If you don’t use the the product or service a company provides then there will be no “reward” for decision makers ie: bonus for preformance.

Posted by Robert | Report as abusive

can you imagine this the peoples money is also use to pay bonussen ?????the new administration are realy incompetend people .Please Mr President ,Joe and all give them our money large and broad and let us, the out of work,the retired etc rot.they will pay bonusses,loot the customers accounts charge high interest rate ??? we give you back your promise please take a hike, thank you

Posted by louis laureyssens | Report as abusive

Even CIT Group—who is teetering on the brink of bankruptcy—paid bonuses earlier this year, as well as last year. This is a company that had EIGHT CONSECUTIVE QUARTERS OF LOSSES.
After they took $2.33 billion of taxpayer money in December 2008 they promptly paid out cash and retention bonuses to numerous employees in February 2009.

NOW, they discover they have no business model that is viable and so what do they do?
Go back to the government and ask for more money!!
CIT took taxpayer money when they knew they had no viable business model and still paid bonuses for that “talent” and “performance.”
And they still may end up filing for bankruptcy. If the feds cave and pay out more taxpayer funds to save the company, CIT will probably pay out more bonuses.

Posted by ex-banker | Report as abusive