NY AG: Before Losing $15 Billion, Merrill Lynch Quietly Made 696 Employees Millionaires
New York Attorney General Andrew Cuomo wrote a letter yesterday to Rep. Barney Frank (D-Mass.), head of the House Financial Services Committee, (which is currently holding hearings Washington on how banks are spending bailout funds.) In the letter, Cuomo expresses concern that Merrill Lynch moved up their bonus schedule so that they could make sure that taxpayers would get the bill.
As you probably know, Merrill Lynch posted a $15.31 billion loss in the 4th quarter, which forced taxpayers to help Bank of America acquire the firm.
Cuomo writes:
One disturbing question that must be answered is whether Merrill Lynch and Bank of America timed the bonuses in such a way as to force taxpayers to pay for them through the deal funding. We plan to require top officials at both Merrill Lynch and Bank of America to answer this question and to provide justifications for the massive bonuses they paid ahead of their massive losses. As you know, my Office recently issued subpoenas seeking the testimony of former Merrill Lynch CEO John Thain, as well as the testimony of Bank of America Chief Administrative Officer J. Steele Alphin. I expect we will also be seeking the testimony of other top executives at these firms.
In addition, the AG goes on to bust the myth that Merrill's hefty bonuses were spread out among a wide swath of employees, and were therefor actually quite modest. It turns out that while they did pay bonuses to some 39,000 employees, Merrill made 700 employees millionaires overnight. Cuomo says, "the vast majority of these funds were disproportionately distributed to a small number of individuals."
Cuomo writes:
Bearing in mind that Merrill moved up its bonus payments in advance of its announced $15 billion quarterly loss and $27 billion annual loss, we have determined that Merrill Lynch made the following bonus payments:
- The top four bonus recipients received a combined $121 million;
- The next four bonus recipients received a combined $62 million;
- The next six bonus recipients received a combined $66 million;
- Fourteen individuals received bonuses of $1 0 million or more and combined they received more than $250 million;
- 20 individuals received bonuses of $8 million or more;
- 53 individuals received bonuses of $5 million or more;
- 149 individuals received bonuses of $3 million or more;
- Overall, the top 149 bonus recipients received a combined $858 million;
- 696 individuals received bonuses of $1 million or more.
Again, these payments and their curious timing raise serious questions as to whether the Merrill Lynch and Bank of America Boards of Directors were derelict in their duties and violated their fiduciary obligations.
You can read the full letter here. (PDF)
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Comments:
I don't see how you can continue to bad mouth these banks and investment firms without some comment about the idiots in Washington who thought it was a good idea to enslave our children so they could give billions to Wall Street.
@t-r0y: I agree that blame goes both ways here. No oversight up front, and now everyone is screaming. Idiot govt. and greedy corps = mortgage our children s future so the idiots who cant do business can stay in business.
WTF!!!
If this is true, this is really bad.
_______________________________
Dear upper management,
We "worker bees" are running out of patience.
-Ax
but....but....but.....The free market....it will oversee itself!? right?
I would like to thank Merrill Lynch for helping to wreck the US economy. I'm glad that you choose to use my tax money in order to feed the personal greed of your top executives.
As I go to work every morning and wonder if I have a job by the end of the day, I'll be thinking of you sitting in your mansions and counting the money that you earned off our backs.
Enjoy!
@t-r0y:
Newsflash, GW already enslaved them with the biggest deficit of all time and a quagmire war that will cost us 3 trillion.
I just love how Congress cuts out things in the stimulus package that will actually improve the lives of Americans. "Education? Museums? Healthcare? BROADBAND INTERNET??? Do you think this is Japan? We only subsidize big businesses and wars in this country, not the American people! Hrmph!"
All the way to the bank...or maybe the swiss bank account since the American banks are shot.
I am Jack's utter lack of surprise.
This is EXACTLY why we shouldn't have bailed them out at all. They are all lying, stealing, conniving, .
I just can't fathom how people can be so greedy!
Hrmm, it sounds to me like a lot of these people were probably already millionaires. I was expecting to see information on how many people received bonuses that moved their net worth from below 1 mil to above.
As part of the conditions for taxpayer support of these banking institutions, can we arrange to have these guys hunted with hounds? We could auction off the privilege to help offset costs.
viva la revolution!
You guys don't get it. All 700 of those employees have bills to pay just like you. The mortgage on their 7 homes, the private jet payments, private school tuition, and country club memberships. By not paying them, the economy of Manhattan would collapse! ;P
@Saboth: A free market would not have permitted artificially high stock prices like this to begin with.
@Saboth: Come on now! I don't knwo about you, but the Frisbee park in the new stimulus package will make everything better! Just think if the Frisbee park made it, what kinda pork was cut out of it? Like President O said "there is no pork in this stimulus plan" He's right, there's no pork, beef or chicken in it anywhere, is straight paper!
Talk about Billionaire Boys Club. Rub elbows with the right people and who needs to actually work for a living? Here's a trust fund and a Bonus!
@pockygt: We seriously need to bring back the pillory. I really want to throw rocks as these people.
To play the Devil's Advocate:
I love seeing jackasses like Jack Cafferty bitch and read emails about how these guys are whining about the new federal $500k limits. When's the last time you made $500K, Jack? How would you feel if your pay was suddenly cut by 90%? How would you pay for those professional bald-head-waxing sessions?
I try not to read articles like this, because it pisses me off, to no end. The worst part about it, is that we will never ever get that money back.
Organized theft, nothing else. Disgusting.
So when's that uprising of the lower class gonna happen? I need to loot me some of these bastards commodes.
@dcarrington01: Well, people hired to build the Frisbee park might think it's a good idea, as I'm sure the people using the Frisbee park would. So, by your definition of "pork," it is now impossible to build anything, anywhere because...well, just because you decide to call it pork? Such righteousness.
o.O
I wonder what it would be like to get a 'bonus' at the end of the year for $1 million dollars.
I wonder what it was like for them... How many of them said, "Whoa?! That's awesome"........
....
Or rather, how many said..., "That's it?!"
It's just werid... our buisness is failing, let's give out tons of bonuses to add to our losses so we get more money! Whoohoo!
@opsomath: I suggested this last week to a friend. Round them all up at one end of Central Park. Give them a head start and then let the hounds and horses loose. Alternately a public stoning would work. Free rocks to anyone who had their house foreclosed by these banks or lost their job due to their actions.
New York Attorney General Andrew Cuomo is starting his campaign to become New York Governor Andrew Cuomo. Hopefully the voters of the Empire State will remember the last time the state's Attorney General became governor.
it's obvious that this is just a game theory scenario that allows the few to maintain control over the many.
Unfortunately, the greed is overwhelming and must be put into perspective. Like so many other fields, an example should be made of them so that others in positions of power to not resort to abuse.
It's is utterly disheartening to hear that people are to gain from such a global, not just national, situation. It promotes dissent, and completely abolishes trust. What COULD have been a good precedence for a free market model has been violated to satiate the need for some to feel significant.
These are no longer exceptions in this situations, we have seen overwhelming evidence that check and balances must be enforced and that the overseers are subject to checks and balances as well.
It is not a new situation, and we have not proven the wiser, even though we have had the advantage of learning from our history.
How long can we keep a blind eye to this gouging?
What's the minimum sentence for something like this?
Also; can we sneak something into the stimulus bill that someone who does something like this should always be sent to "Federal, pound-me-in-the-ass prison"?
It's going to be difficult to recover from all of the huge, widespread, economy destroying fraud. Especially since our elected officials are co-conspirators.
@nataku83: I'm guessing none of them weren't millionaires before. You can't join their club if you're not already there.
In some ways though I think that a lot of those people may have been previously millionaires from actual hard work, intelligence, and most importantly excellent timing and luck. I think all of that has run it's course for them though
@gyroball:
I truly hope they get to respond for these actions, this must be the greatest robbery ever and its happening right now in our faces and we are allowing it.
@snowburnt: Not necessarily, but I'd be willing to bet some of it went to the McCain/Palin campaign.
Somebody's ass or asses, as the case may be, needs to sit in a jail cell for a very, very, very long time. Assuming this is all true, of course. Where in the hell was the "oversight?" Was everyone asleep at the wheel?
When is someone going to do something about these jerks??? ...and I'm being nice!
I wonder if it would be worth attempting to get people all across the country to send these banks a message. What would happen if, on the same day, tens or hundreds of thousands of people all went and closed their accounts with BoA or Merrill Lynch? I'd be more than happy to close my BoA accounts and move them to local/regional banks, not only as a form of protest but as a way to show my support for my local economy. As one person this wouldn't do much but imagine if a significant percentage of their customers did this, and all on the same day.
Also, no one will even get in trouble. Maybe a slap on the wrist for 1-2 guys a the top.
If this were China, heads would roll.
@logicalnoise: Yes, a free market would oversee itself - resulting in the failing of the bank. However, the Government hates a free market, so will now do everything it can to prevent it.
Strange, the bank appears to be doing everything it can to fail, and the government is doing everything it can to keep it from doing so. This is not a "win-win" situation.
I see a lot of looting going on here. Didn't Russia do the same thing before they collapsed? The people who knew collapse was imminent simply looted the government for all they could. Or maybe there's nothing to see here.
@Saboth: Just because GW/Repubs (and Dems too) did a lot to screw things up (war, TARP), that doesn't mean it's okay to continue putting our country deeper into debt. I'm all for getting out of Iraq and canceling the rest of TARP!
The government shouldn't be subsidizing anything or anyone. They should be the referees in the game, not the players -- and certainly not BOTH!
@Segador: I understand what you are saying, at least about Jack Cafferty and having pay cut by 90%.
Personally though, I couldn't fathom trying to spend $5 million let alone $5 million a year. I guarantee they can survive trying to get their company profitable. If they need to sell off some assets then so be it. $500k is also more money than I could imagine trying to live off of also.
Were I a CEO, I'd suggest most of my compensation be from a profit standpoint or stock options rather than a salary. That way if I'm not making money, I'm doing something wrong.
Hopefully this will be considered some kind of theft. They basically cleared company bank accounts before the companies debt ate up the money.
@bohemian: We have the FBI trying to hunt down "organized crime syndicates". If I stole a car I'd be paying more in restitution than these people who stole millions. Madoff will probably get off easier than some guy caught smoking marijuana
I'm past jailtime. These abuses are flagrant. Time to take a page from the French Revolution playbook. [ka-shunk!]
I hate to be "that guy" but, woah. Fuck those guys.