Jul 30, 2009 2:15 pm US/Central
Study: Bank Bonuses Far Exceeded Revenues
Bailed Out Financial Giants Paid Out Much More Money in Bonuses Than They Took In, According To N.Y. AG's Report
NEW YORK (AP) ―
Several financial giants that received federal bailout money in the last year paid out bonuses to employees in 2008 that greatly exceeded the amount of profit generated by the banks, according to a study on executive compensation released by New York Attorney General Andrew Cuomo Thursday.
Despite claims by bank executives that bonuses are tied to the company's performance, the report states that "there is no clear rhyme or reason to how the banks compensate or reward their employees."
Cuomo's investigation "suggests a disconnect between compensation and bank performance that resulted in a 'heads I win, tails you lose' bonus system."
According to the report (
read full report):
- Goldman Sachs, which earned $2.3 billion last year and received $10 billion in TARP funding, paid out $4.8 billion in bonuses in 2008 - more than double their net income.
- Morgan Stanley, which earned $1.7 billion last year and received $10 billion in bailout funds, handed out $4.475 billion in bonuses, nearly three times their net income.
- JPMorgan Chase, which earned $5.6 billion in 2008 and received $25 billion from the government, paid out $8.69 billion in bonus money.
- Citigroup and Merrill Lynch lost a combined $54 billion last year. They received a total of $55 billion in bailouts and paid out $9 billion in combined bonuses. ($5.33 billion for Citigroup; $3.6 billion for Merrill Lynch, which was subsequently acquired by Bank of America.)
The report does note that some of the banks claim to have accepted the government bailout money unwillingly.
And not all banks' bonuses topped their net income. Bank of America earned $4 billion in and paid out $3.3 billion in bonuses in 2008. The bank received $45 billion in TARP funds.
Other banks pared back bonuses even more amid the harsh downturn. State Street Corp. earned around $1.8 billion and paid out nearly $470 million in bonuses. They received $2 billion in bailout money.
Bank of New York Mellon made posted a net income of $1.4 billion and paid out $945 million in bonuses. They took $3 billion in government aid.
The report lists the banks, the number of bonuses issued and the total amount of bonus money. It does not give names of bonus recipients.
(© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
Timeline: U.S. Credit Crunch & Financial Failures
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