Once Again, Cuomo Demands Large Banks' Bonus Info

As the media speculate about how large banks (especially TARP beneficiaries) will compensate their top executives this year, New York Attorney General Andrew Cuomo has sent out a letter to eight TARP banks - Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, State Street and Wells Fargo - demanding information not only about how big their employee bonuses will be this year, but how their total compensation plans will be structured.When we heard about this, we had a sense of deja vu: hasn't this happened before? A quick Google check confirmed that sure enough, Cuomo's office conducted a similar investigation last year and in July 2009, released a report entitled, "No Rhyme Or Reason: The 'Heads I Win, Tails You Lose' Bank Bonus Culture." The report's main conclusion was that bank pay is no longer actually tied to performance. "Even a cursory examination of the data suggests that in these challenging economic times, compensation for bank employees has become unmoored from the banks' financial performance," the report stated. "Thus, when the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well."

Although bank performance improved in 2009, Cuomo's report will not necessarily be less critical this year if the huge pay packages planned - according to the New York Times, some top producers are due to receive seven- and eight-figure windfalls - come to pass. Goldman Sachs is expected to pay its employees an average of about $595,000 each for 2009, and the investment bank of JPMorgan Chase about $463,000 on average. All of these banks benefited from TARP money and therefore shouldn't be lavishing such enormous rewards on their bankers, many of whom helped caused the recession with their questionable lending and derivatives practices, the popular notion goes. Why should they reap such bounty while the recession continues, unemployment is at historic highs and credit for small businesses is still tight? Why isn't some of that money being put to better use, the public and the Attorney General may well ask.

The targeted banks have to provide detailed information about compensation and bonuses by February 8.