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New York’s A.G. Subpoenas Bank Execs Over Bonuses

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Posted on Jan 27, 2009
Andrew Cuomo
thecrimson.com

New York Attorney General Andrew Cuomo is following the money trail to find out about bonuses paid to Merrill Lynch executives last December.

New York Attorney General Andrew Cuomo sent out subpoenas to Bank of America’s Chief Administrative Officer J. Steele Alphin and recently ousted Merrill Lynch Chief Executive John Thain on Tuesday to look into hefty bonuses paid to Merrill Lynch higher-ups late last year—even as the company was bleeding billions in losses.


AP via Google News:

Those bonuses were paid as Merrill was about to report a $15 billion fourth-quarter loss, and while Bank of America was seeking more federal funds to help it absorb the mounting losses at the New York-based investment bank.

Attorney General Andrew Cuomo’s investigation will center on trying to determine why the timetable for paying the bonuses was moved up to December from its normal period in January; who knew about the bonuses; and how Merrill could justify spending billions of dollars on bonuses knowing its was on the brink of reporting a multibillion loss for the quarter, a person familiar with the probe told The Associated Press. The person spoke on condition of anonymity because the investigation is ongoing.

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PatrickHenry's avatar

By PatrickHenry, January 28, 2009 at 2:50 pm Link to this comment

About time.

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Eric L. Prentis's avatar

By Eric L. Prentis, January 28, 2009 at 10:47 am Link to this comment

Merrill Lynch lost $27 billion dollars in 2008, received $10 billion in a government bailout yet paid out, early, $4 billion dollars in bonuses to their employees. Without the $55 billion dollars in government bailouts and $118 billion in government asset guarantees, both Bank of America and Merrill Lynch would be bankrupt and would be unable to pay any bonuses whatsoever. The sense of entitlement by the financial ruling class is outrageous, they are simply screwing the taxpayers while the slimy-on-the-take Congress says and does nothing. Lets make Eliot Spitzer a special prosecutor investigating financial system accounting fraud, executive compensation, bank regulation, lobbying, bank business practices and what to do about the Federal Reserve.

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By Myronh, January 28, 2009 at 9:00 am Link to this comment
(Unregistered commenter)

The US Constitution should be ammended to make bonuses illegal whenever a business is losing money. The Ammendment should also restrict bonuses to be of equal value to all empoyees of a profitable business; the CEO should not receive a penney more than the Janitor. The CEO is already recieving 10 to 400 times as much income as the worker. The Ammendment should limit the top Management salary to 10 times the average worker’s wage. Who in their right-mind actually believe any individual is worth several hundred times more than their workers? Without the Worker, the CEO is NOTHING.

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By frozenporklander, January 27, 2009 at 11:40 pm Link to this comment
(Unregistered commenter)

I smell another prostitution scandal coming up!

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By troublesum, January 27, 2009 at 5:40 pm Link to this comment

Where is Holder?  Why isn’t his office investigating this?  Did Obama get campaign contributions from BOA and Merrill Lynch?

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By mill, January 27, 2009 at 5:20 pm Link to this comment

Good for Mr Cuomo! 

It is a grossly-rigged compensation system that pays billions in bonuses even as a company loses tens of billions of shareholder worth.  If such systems are legal, either legislatures better act to change that or angry vigilantes may fill the void. 

How do executives justify taking bonuses - though the business flounders - as appropriate, moral conduct?

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