Thursday, July 30, 2009

Tarp banks award billions in bonuses

A million dollars is 20 years of a median family income.

Via:  FT 

By Greg Farrell in New York

Published: July 30 2009 18:18 | Last updated: July 30 2009 21:46

Citigroup and Merrill Lynch, which lost $55bn in 2008, between them paid 1,400 employees bonuses of $1m or more each, according to a New York state report, released on Thursday, on banks propped up with taxpayer funds.

  Bonus breakdown

  See details of Tarp recipients’ bonus payments click through

The study, compiled by Andrew Cuomo, New York attorney-general, showed that JPMorgan Chase and Goldman Sachs, which both finished in the black last year, paid the most million-dollar bonuses - 1,626 and 953, respectively.

However, the totals at a profitable bank such as Goldman were nearly matched by two of the year’s biggest losers on Wall Street. Citi, which suffered a $27.7bn loss, paid million-dollar bonuses to 738 employees. Merrill, which lost $27.6bn, paid 696 bonuses of $1m or more.

“There is no clear rhyme or reason to the way banks compensate and reward their employees,” Mr Cuomo said. “Compensation for bank employees has become unmoored from the banks’ financial performance.”

Republican Edolphus Towns, head of the House committee on government oversight and reform, pledged to hold hearings in September on the matter, suggesting the controversy over bankers’ bonuses is likely to continue later this year.

Earlier, Mr Cuomo had detailed the number of million-dollar bonus payments made at Merrill in the last days of 2008, before it was acquired by Bank of America. In his new report, sent to Mr Towns’ committee, Mr Cuomo detailed the number and size of bonuses at eight other banks that received billions from the federal troubled asset relief programme fund last October.

JPMorgan, which earned $5.6bn in 2008, set aside a total of $8.7bn for bonuses. The report shows that JPMorgan paid out bonuses in excess of $3m to more than 200 employees The bank received $25bn in Tarp funds last year and paid the money back last month.

At Goldman, the bonus pool last year was $4.8bn, more than twice the $2.3bn it earned for the year. Goldman paid $3m or more to 212 employees. The bank paid back $10bn in Tarp funds last month.

Citigroup set aside $5.3bn for its bonus pool, and paid bonuses of $3m or more to 124 employees. Like Bank of America, Citigroup received a total of $45bn in Tarp funds in 2008 and has recently converted some of that funding into common equity.

BofA paid bonuses of $3m to 28 employees and million-dollar bonuses to 172. The Charlotte, North Carolina, bank reported a profit of $4bn in 2008 and set aside $3.3bn for bonuses.

Morgan Stanley earned $1.7bn last year and set aside $4.5bn for bonus payments. The firm paid bonuses of $3m to 101 employees and million-dollar bonuses to 428. Morgan Stanley received $10bn in Tarp funds last year, and paid back the money in June.

Among the other banks in Mr Cuomo’s report, Bank of New York Mellon paid 74 million-dolllar bonuses, Wells Fargo paid 62 and State Street paid 44.

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