The tireless Andrew Cuomo, current attorney general (and perhaps future governor) of New York, is still very upset with Bank of America. Last month, Cuomo sent a sternly-worded letter to the troubled banking giant, asking why Merrill Lynch, which it bought last year with the help of $20 billion in taxpayer money, doled out $3.6 billion in bonuses before revealing that it lost $15.31 billion in the fourth quarter of 2008. (Bank of America later received a further $25 billion in TARP funds.) Since his last letter didn’t get the results he wanted, Cuomo and Rep. Barney Frank (D-Mass.) have written a new one (PDF) demanding the names of the 700 employees that Merrill made into millionaires just weeks before announcing some of the worst corporate results in history. They write:
[T]he combined Bank of America-Merrill Lynch entity received $45 billion in taxpayer funds as well as $188 million in taxpayer-funded insurance. Despite this massive infusion of taxpayer money, Merrill Lynch paid out bonuses totaling approximately $3.6 billion and Bank of America distributed a pool of more than $3.3 billion.
Taxpayers who are footing the bill obviously demand accountability and want to know who received these funds and why.
Your refusal to reveal compensation information fuels distrust and cynicism at a most sensitive time.
It’s important to remember, as Cuomo noted in both letters, that Merrill Lynch knew its bad results were coming and gave the bonuses anyway:
As you know, late last year Merrill Lynch moved up its planned date to allocate bonuses and then richly rewarded many of its executives. Merrill Lynch did this knowing full well that they were going to suffer huge losses for the fourth quarter and the year. At the time of the bonus awards, Merrill was in the process of being acquired by Bank of America, a TARP recipient. Moreover, Merrill Lynch also knew at the time that they had received a credit line of billions of dollars in TARP funds.
Refusing to release the Merrill Lynch bonus data doesn’t seem to have helped Bank of America much. It seems to have encouraged Cuomo to redouble his efforts, and it’s brought Barney Frank, the chair of the House financial services committee and one of the most powerful members of Congress, into the fray. That kind of negative congressional attention can’t be good for business—indeed, Cuomo seems to have upped his demands. Before, he just wanted to know about Merrill’s bonuses. Now he wants bonus data for everyone at Merrill and Bank of America that got over $1 million in 2008. Maybe Bank of America should just wave the white flag now and turn over the information. Cuomo is serious about investigating this, and it doesn’t look like he’ll be letting up anytime soon.