Big banks paid billions in bonuses last year

7/31/2009

NEW YORK - Citigroup Inc., one of the biggest recipients of government bailout money, gave employees $5.33 billion in bonuses for 2008, New York's attorney general said yesterday in a report detailing the payouts by nine big banks.

The report from Attorney General Andrew Cuomo's office focused on 2008 bonuses paid to the initial nine banks that received loans under the government's Troubled Asset Relief Program last fall. Mr. Cuomo has joined other government officials in criticizing the banks for paying out big bonuses while accepting taxpayer money.

"There is no clear rhyme or reason to the way banks compensate and reward their employees," Mr. Cuomo said, noting banks have not in recent years tied pay to performance as they claim when describing their compensation programs.

He said that when banks' performance deteriorated significantly, "they were bailed out by taxpayers and their employees were still paid well."

Citigroup, which gave 738 of its employees bonuses of at least $1 million, is now one-third owned by the government as a result of its bailout. It paid bonuses of at least $3 million to 124 of those employees, even after it lost $18.7 billion during the year, Mr. Cuomo's office said.

Bank of America Corp., which like Citigroup received $45 billion in bailout money, paid $3.3 billion in bonuses, with 172 employees receiving at least $1 million. Of those, 28 received bonuses of more than $3 million. Merrill Lynch, which Bank of America acquired during the credit crisis, paid out $3.6 billion.

Bank of America earned $2.56 billion in 2008, while Merrill lost $27.61 billion.

Mr. Cuomo's office said Merrill Lynch doled out 696 bonuses of at least $1 million for 2008, with 149 of the workers getting bonuses of at least $3 million.

The banks have said they needed to pay their top-performing employees to prevent them from defecting to competitors. Companies that accepted bailout money must comply with government restrictions on employee compensation, including bonuses.

President Obama named Kenneth Feinberg to oversee compensation for the highest-paid employees at banks and other firms that received the largest government bailouts. Mr. Feinberg will have power to review compensation for the 100 top-paid employees at Bank of America and Citigroup. His oversight does not include reviewing bonuses tied to 2008.