Cuomo turns up pressure on Wall Street banks as they prepare to hand out bonuses
As Wall Street prepares for a bounteous bonus season, New York Atty. Gen. Andrew Cuomo wants to make sure bankers are doing enough to stimulate the economy.
In a letter today to eight major banks, Cuomo requested a litany of information about 2009 bonuses, including how much money they have lent to borrowers over the last three years.
Among other things, Cuomo wants to make sure bankers are making enough loans, especially to businesses, to justify their lavish paydays.
Cuomo also is seeking extensive details about the bonuses themselves, including how much is being paid out, how allocations to top executives are determined and whether the banks would have been able to shell out as much if they hadn’t received government bailouts last year through the Troubled Asset Relief Program.
“While your firm has now paid the TARP money back, it is not clear that your firm would have been in the same position now had you not received that TARP money,” Cuomo wrote to Bank of New York Mellon Corp.
Goldman Sachs Group and JPMorgan Chase & Co. are among the banks expected to dole out rich paydays to employees this month. Even troubled institutions such as Citigroup Inc. that received enormous TARP assistance will pay out billions in bonuses.
Banks have tried to quell the furor over bonuses by increasing the percentage paid out in stock rather than cash. That theoretically ties an employee’s fortunes to those of the institution and reduces the temptation for risk-taking that can backfire long after an employee has gotten paid.
It seems unlikely that Cuomo can directly force banks to lower pay packages, but it adds to the pressure on the institutions to rein themselves in.
-- Walter Hamilton
Photo: New York Atty. Gen. Andrew Cuomo. Credit: Mike Groll / Associated Press