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July 31, 2009
Big Banks Paid Billions in Bonuses Amid Wall St. Crisis
By ERIC DASH
The Wall Street millionaire club had nearly 5,000 members in 2008.
At least 4,793 bankers and traders were paid more than $1 million in bonuses last year even as profits at the biggest banks dwindled and they accepted tens of billions of dollars of taxpayer money, according to a report released on Thursday by the New York attorney general’s office.
Wall Street bonuses have come under intense scrutiny from lawmakers and regulators who say they believe that freewheeling pay practices
contributed to the financial crisis. Banks have long paid their executives bonuses to supplement smaller salaries, but governance experts say that the nine-figure payouts during Wall Street’s worst year in decades shows the link between pay and performance has been frayed.
The House of Representatives is scheduled to vote on Friday, ahead of its August recess, on a compensation reform bill. The new rules call for a “say-on-pay” vote for all public companies and additional requirements that compensation committees be made up of independent directors, and would order regulators to restrict "inappropriate or imprudently risky" pay packages at larger banks.
Ever since public furor erupted last spring over bonuses at the troubled insurance giant American International Group, lawmakers have paid close attention to Wall Street pay. Both Congress and the Obama administration introduced tough pay guidelines for financial executives, and the Treasury Department created a position of a federal compensation czar to review pay packages at companies that received multiple bailouts.
Kenneth Feinberg, who reviewed the payouts to victims of the terrorist attacks on Sept. 11, 2001, has recently been meeting with several Wall Street firms. The pay for the top 100 highest-compensated employees at the General Motors, Chrysler and five of the most deeply troubled financial companies must win his approval.
The figures released on Thursday by the New York attorney general, Andrew M. Cuomo, provided the most detailed accounting yet of Wall Street’s millionaire ranks. In the report, Mr. Cuomo said that 738 bankers and traders at Citigroup took home bonuses of $1 million or more in 2008 even as the bank posted a $27.7 billion loss. In all, Citigroup paid $5.33 billion in bonuses; it received $45 billion in bailout funds.
Bank of America and Merrill Lynch, whose merger brought the combined company to the brink of collapse, paid 868 employees bonuses worth at least $1 million. Both banks, whose compensation packages are being reviewed by a federal pay czar, turned to the government twice for bailouts, receiving a total of $45 billion.
Merrill’s bonuses totaled $3.6 billion in a year that it lost $27.6 billion, the report said, while Bank of America paid $3.3 billion in bonuses on $4 billion in earnings.
Wall Street’s more profitable firms were more generous, even though they also received government support. At Goldman Sachs, 953 bankers and traders took home bonuses worth at least $1 million last year, including 212 employees who received more than $3 million. The investment bank paid a total of $4.8 billion in bonuses last year, the report said, more than twice its earnings of $2.3 billion. The bank got $10 billion in bailout funds.
Morgan Stanley paid nearly 428 employees bonuses of at least $1 million, including 290 who received more than $2 million. Morgan Stanley, which earned $1.7 billion last year and received $10 billion in federal aid, paid $4.5 billion in bonuses.
JPMorgan Chase paid 1,626 employees bonuses of more than $1 million in 2008 and received $25 billion in federal assistance. The bank earned $5.6 billion, while its bonuses totaled $8.69 billion.
http://www.nytimes.com/2009/07/31/bu.../31pay.html?hp
At least 4,793 bankers and traders were paid more than $1 million in bonuses last year even as profits at the biggest banks dwindled and they accepted tens of billions of dollars of taxpayer money, according to a report released on Thursday by the New York attorney general’s office.
Wall Street bonuses have come under intense scrutiny from lawmakers and regulators who say they believe that freewheeling pay practices
contributed to the financial crisis. Banks have long paid their executives bonuses to supplement smaller salaries, but governance experts say that the nine-figure payouts during Wall Street’s worst year in decades shows the link between pay and performance has been frayed.
The House of Representatives is scheduled to vote on Friday, ahead of its August recess, on a compensation reform bill. The new rules call for a “say-on-pay” vote for all public companies and additional requirements that compensation committees be made up of independent directors, and would order regulators to restrict "inappropriate or imprudently risky" pay packages at larger banks.
Ever since public furor erupted last spring over bonuses at the troubled insurance giant American International Group, lawmakers have paid close attention to Wall Street pay. Both Congress and the Obama administration introduced tough pay guidelines for financial executives, and the Treasury Department created a position of a federal compensation czar to review pay packages at companies that received multiple bailouts.
Kenneth Feinberg, who reviewed the payouts to victims of the terrorist attacks on Sept. 11, 2001, has recently been meeting with several Wall Street firms. The pay for the top 100 highest-compensated employees at the General Motors, Chrysler and five of the most deeply troubled financial companies must win his approval.
The figures released on Thursday by the New York attorney general, Andrew M. Cuomo, provided the most detailed accounting yet of Wall Street’s millionaire ranks. In the report, Mr. Cuomo said that 738 bankers and traders at Citigroup took home bonuses of $1 million or more in 2008 even as the bank posted a $27.7 billion loss. In all, Citigroup paid $5.33 billion in bonuses; it received $45 billion in bailout funds.
Bank of America and Merrill Lynch, whose merger brought the combined company to the brink of collapse, paid 868 employees bonuses worth at least $1 million. Both banks, whose compensation packages are being reviewed by a federal pay czar, turned to the government twice for bailouts, receiving a total of $45 billion.
Merrill’s bonuses totaled $3.6 billion in a year that it lost $27.6 billion, the report said, while Bank of America paid $3.3 billion in bonuses on $4 billion in earnings.
Wall Street’s more profitable firms were more generous, even though they also received government support. At Goldman Sachs, 953 bankers and traders took home bonuses worth at least $1 million last year, including 212 employees who received more than $3 million. The investment bank paid a total of $4.8 billion in bonuses last year, the report said, more than twice its earnings of $2.3 billion. The bank got $10 billion in bailout funds.
Morgan Stanley paid nearly 428 employees bonuses of at least $1 million, including 290 who received more than $2 million. Morgan Stanley, which earned $1.7 billion last year and received $10 billion in federal aid, paid $4.5 billion in bonuses.
JPMorgan Chase paid 1,626 employees bonuses of more than $1 million in 2008 and received $25 billion in federal assistance. The bank earned $5.6 billion, while its bonuses totaled $8.69 billion.
http://www.nytimes.com/2009/07/31/bu.../31pay.html?hp
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