N.Y. AG Presses Banks to Disclose Bonuses

New York Attorney General Andrew Cuomo appears during a Law Day event in Albany, N.Y., Monday, April 30, 2007. AP

New York Attorney General Andrew Cuomo on Monday pressed the nation's eight biggest banks to reveal how much they plan to pay out in employee bonuses for 2009.

Cuomo told reporters that he also wants to know how the size of the banks' bonus pool would have been affected if the banks hadn't received a taxpayer rescue at the height of the financial crisis in late 2008.

The fact-finding effort comes as Wall Street banks this month prepare to hand out near-record compensation for last year's performance. Several banks earned huge profits in 2009, aided by billions in government bailout funds and a rebounding stock market.

"The banks made a lot of money, in some case only because taxpayers gave them a lot of money," Cuomo said.

It was less than a year ago that Wall Street's titans were before Congress taking the blame for the financial crisis. Now the nations six biggest banks are expected to pay out somewhere near $150 billion in bonuses this year, reports CBS News correspondent Jim Axelrod.

Many of the banks' record profits were made by taking advantage of the low interest rates set by the Federal Reserve, then lending that cheap money out at higher rates, reports Axelrod.

But the banks argue bonuses are only for top performers and come with strings attached that are designed to discourage short term risk and encourage long-term returns, such as a greater deferred stock component and less cash.

CBS MoneyWatch: Bonus Bingo Resumes

Meanwhile, the Securities and Exchange Commission announced Monday it had asked a federal judge in Manhattan to allow it to file the new charges against Bank of America over billions in bonuses paid at Merrill Lynch. The SEC is accusing the bank of failing to disclose mounting losses at Merrill before a shareholder vote approving the combination of the two firms.

But the SEC also said it wouldn't charge any individual Bank of America officials, directors or attorneys because they are not alleged to have "deliberately concealed" information from the bank's outside attorneys or otherwise acted with intent to mislead.

That pleased Bank of America, which said in a statement it was glad the regulators had found no basis to charge any individuals or to assert a charge of fraud against the bank. However, it added, "Despite this vindication, we believe the new claims the SEC seeks to bring are without merit and we will oppose this motion."

The SEC and Charlotte, North Carolina-based Bank of America are scheduled to go to trial on March 1.

The public anger over the bonuses has continued to smolder, prompting President Barack Obama to reportedly consider imposing a new fee on financial firms that would be used to reduce the federal deficit.

And despite efforts by many financial institutions, including Goldman Sachs, to try to mitigate the furor, rhetoric from public officials remains heated.

White House Council of Economic Advisors chairwoman Christina Romer said Sunday that the bonuses were "ridiculous" and predicted they would "offend the American people."

Service Employees International Union head Andy Stern told the Financial Times that banks "backed the truck up to Fort Knox in broad daylight. They emptied it out, we rescued them and they get $150 billion in bonuses."

And former New York Gov. Elior Spitzer blasted U.S. banks, telling CBS' "The Early Show" Monday their profits were built solely on taxpayer-funded bailouts. "They believe they are entitled to these crazy sums of money," Spitzer said. "It is inequitable, it is wrong."

Cuomo said he was only asking for information and didn't threaten legal action against the eight banks - Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo.

Cuomo asked the banks to provide bonus information by Feb. 8 in letters sent Monday. He didn't say what actions he would take if the banks don't comply.

Cuomo said he wants to ensure that banks are compensating employees in a way that doesn't encourage excessive risk-taking or endanger taxpayers.

"Any attempts to better tie compensation to long-term sustainable growth is a good thing in our opinion, as opposed to incentives that promote short-term profits," Cuomo said.

Major banks are expected to disclose their 2009 compensation costs in quarterly earnings reports due in the next two weeks, starting Friday with JPMorgan Chase.
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