Tuesday, January 27, 2009

Cuomo subpoenas Thain in Merrill bonus investigation

Today, as part of our ongoing inquiry into executive compensation issues at institutions who have received TARP funds, my Office issued subpoenas seeking the testimony of former Merrill Lynch CEO John Thain, as well as the testimony of Bank of America Chief Administrative Officer J. Steele Alphin. These subpoenas are part of an ongoing inquiry into billions of dollars in bonuses paid by Merrill Lynch late last year just days before Merrill was taken over by Bank of America. The fact that Merrill Lynch appears to have moved up the timetable to pay bonuses before its merger with Bank of America is troubling to say the least and warrants further investigation.

With that in mind, I am also pleased to announce that our ongoing inquiry into executive compensation practices at TARP funded institutions, including this matter, will be conducted cooperatively and in coordination with the TARP Special Inspector General Neil Barofsky. Our offices have already begun working together and I look forward to a continuing and productive working relationship with the Special Inspector General. Our cooperative efforts set a perfect example for how federal and state authorities should be working together on behalf of taxpayers.

Wall Street Employees Unhappy About 2008 Bonuses (Naked Capitalism)

A major caveat: the survey cited below comes from a "financial jobs website." Presumably, users of that sort of site either have no job or are looking to change jobs and therefore are not particularly happy. Nevertheless, the last few years were particularly fat, and the young 'uns appeared to have gotten conditioned to the idea of big money.

From Bloomberg:

About 79 percent of Wall Street employees responding to an online poll this month said they received a bonus for 2008, more than the 66 percent who expected to get a reward in October, according to eFinancialCareers.Com.

Of the people who said they received a bonus, 46 percent said it was higher than last year, eFinancialCareers, a unit of Dice Holdings Inc.....46 percent of people responding to the poll said they were dissatisfied with their bonus
Yves here. Presumably, those two 46% groups don't overlap too much. Back to the artilce:
“What it shows is the bonus culture is very deep-set in the securities industry,” said John Benson, founder and chief executive officer of the Web site. “There’s an entitlement culture amongst a number of people in the industry, which I think in the current environment is very misplaced.”...

“I have been a defender of the bonus system in the past because it provides banks with a degree of flexibility on their cost structure,” Benson said. “I think most people on Main Street would say their organization incurred losses of this size that very few people in the organization if anybody would receive bonuses at all.”

Most of the people who reported a drop in their bonus said it fell between 11 percent and 50 percent, while the biggest portion of increases were 10 percent or less, the survey found.
In the stone ages on Wall Street, most everyone understood it was better to lodge a C performance in an A year than an A performance in a C year. Clearly, the clock is being rolled back.

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