By Karen Freifeld (Bloomberg)
New York Attorney General Andrew Cuomo’s office said it sent letters to Bank of America Corp., Goldman Sachs Group Inc. and six other U.S. financial institutions that received federal taxpayer bailout funds demanding information on executive compensation.

Cuomo is seeking a description of each firm’s 2009 bonus pool, how it was established, how compensation is tied to performance, and how the bonus pools have changed, if at all, as a result of the firm receiving and/or repaying taxpayer funds. Almost all the banks have repaid the money.

Cuomo’s announcement comes amid reports that Wall Street’s 2009 bonus season may be one of its largest, sparking a public and political backlash. Cuomo, who also asked for a list of the top 200 bonuses paid by each firm, set a deadline of Feb. 8 for the banks to respond. He also asked for a description of each bank’s rate of lending over the last three years.

“Transparency and disclosure of the banks’ practices and plans are essential especially at this time,” Cuomo said. “Trying to hide and secret information never works.”

Cuomo also demanded the information from JPMorgan Chase & Co., Bank of New York Mellon Corp., Citigroup Inc., Morgan Stanley, State Street Corp. and Wells Fargo & Co.

Jurisdiction

Cuomo said his office had a right to the information “to make sure they are following the law, that there is no fraud, that there’s adequate disclosure.” He said his jurisdiction was the state’s Martin Act, the state securities law.

Last year Cuomo demanded similar information from the same banks, and found that they paid $32.6 billion in bonuses in 2008 while receiving $175 billion in taxpayer funds. Cuomo’s report was called “No Rhyme or Reason: The ‘Heads I Win, Tails You Lose’ Bank Bonus Culture.”

“As we informed your firm last year, when you received TARP funding, your firm took on a new responsibility to taxpayers,” Cuomo said in his Jan. 11 letter to Bank of New York Mellon. “While your firm has now paid the TARP money back, it is not clear that your firm would have been in the same position now had you not received that TARP money.”

Bank of America hasn’t finalized its year-end incentives, which won’t be done until the end of the month, spokesman Scott Silvestri said. The bank hasn’t received Cuomo’s letter yet.

“When we receive the letter we’ll study the request and provide a response by his deadline,” Silvestri said.

Headlines

Street Street spokeswoman Arlene Roberts, Citigroup spokesman Stephen Cohen and Wells Fargo spokeswoman Mary Eshet didn’t immediately respond to messages seeking comment. Morgan Stanley spokeswoman Jeanmarie McFadden, Goldman Sachs spokesman Michael Duvally and JPMorgan spokesman Joe Evangelisti declined to comment. Kevin Heine, a spokesman for Bank of New York Mellon, also declined to immediately comment.

Mark Borges, a compensation consultant at Compensia Inc. in Corte Madera, California, said it was not a bad thing for Cuomo to ask for the information, though it also smacked of political grandstanding.

“It’s obviously a popular issue right now, so seeking additional information keeps it in the headlines,” Borges said. “At the same time, it puts pressure on the banks to think through their compensation arrangements and decisions, as to form as well as amount — something that they should be doing anyway.”

Outrageous

On Sunday, Christina Romer, chair of the White House Council of Economic Advisers, said she hoped banks and other companies that received federal bailout money will show restraint on bonuses. “The idea that as the financial system heals they just go back to business as usual is simply outrageous,” she said.

Wall Street firms’ pay has traditionally been tied closely to performance of the companies, which is why employees receive most of their compensation at the end of the year after final results are known. Depending on seniority and performance, bonuses for traders, bankers and executives can be a multiple of their salaries, which range from about $80,000 to $600,000.

To contact the reporter on this story: Karen Freifeld in New York at kfreifeld@bloomberg.net

If you enjoyed this post then Subscribe to Savvy Investor via RSS