Nine giant banks whose risky behavior crippled the American economy shelled out $33 billion in bonuses last year even as taxpayers kept them alive with a $175 billion bailout, a new report released Thursday found.
Three firms slathered their executives with bonuses that outstripped their net profits, while three others doled out huge payouts even as they chalked up astronomical losses,
Attorney General Andrew Cuomo disclosed.
Blasting what he called
Wall Street's "heads I win, tails you lose" culture, Cuomo said that
Citigroup brass shared a $5.3 billion bonus pool in 2008 - despite posting a $28 billion loss and devouring a $45 billion rescue package.
"There is no clear rhyme or reason to the way banks compensate and reward their employees," he said.
"When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers - and their employees were still paid well."
How well? Despite the economic meltdown, the nine big banks that were the first recipients of billions of rescue cash from the
Troubled Asset Relief Program (TARP) forked over bonus bonanzas of $1 million or more to 4,793 employees last year, Cuomo found.
Luckier still were the 873 executives who grabbed $2 million or more and the 836 who pulled down $3 million or more.
The withering report caught the attention of the
White House: "
President Obama believes the American people don't begrudge people making money, as long as we're not incentivizing wild risk-taking that somebody else picks up the tab for," said
Press Secretary Robert Gibbs. Expect new hearings on pay practices in the wake of the report, congressional leaders vowed.
"Compensation practices of TARP recipients have a track record of yielding short-term profits - and long-term catastrophes," said
Rep. Ed Towns (D-
Brooklyn), who chairs the
House Committee on Oversight and Government Reform.
Of the nine banks whose excesses were highlighted, seven are headquartered in
New York. Among the report's findings:
- Citigroup - which is now 35% owned by the U.S. taxpayer - showered bonuses of $5 million or more on 44 employees in 2008 and $1 million or more on 738.
- Merrill Lynch - which vaporized $27 billion in wealth and gorged on $10 billion in TARP funds - paid out $3.6 billion in bonuses. It handed $5 million or more to 53 staffers and $1 million-plus to 696.
- JPMorgan Chase - which glommed a $25 billion bailout - boasted 1,626 workers who got $1 million or more in bonus pay, leading its rivals in payouts. Its bonus pool hit $8.7 billion - dwarfing its profits of $5.6 billion.
"The scary thing is we're about to see the cycle repeat itself - and it will lead to near insolvency at another firm too big to fail," said
John Coffee, a
Columbia law professor.
"High-risk, high return trading - where managers share in the upside, but not in the downside - has already returned to
Goldman Sachs, and other banks will say they have to do the same thing so they can compete with Goldman."
dfeiden@nydailynews.com
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