Posted on 02/11/2009 4:58:09 PM PST by dennisw
Four of the top executives at Merrill Lynch pocketed $121 million in bonuses just before taxpayers helped finance a takeover of the failing firm, the Daily News has learned.
The flush foursome each pocketed payments ranging from $18 million to $39 million, investigators from the state attorney general's office found.
Attorney General Andrew Cuomo for the past month has been examining the highly suspicious timing of the last-minute Merrill handouts.
In all, Merrill doled out $3.6 billion in bonuses just days before Bank of America finalized its deal to buy the collapsing firm - with the help of $45 billion in taxpayer money.
Cuomo presented his initial findings Tuesday to Rep. Barney Frank (D-Mass.), whose House Financial Services Committee holds hearings Wednesday in Washington on how banks are spending bailout funds.
"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," Cuomo wrote to Frank.
Cuomo's investigators have been particularly interested in Merrill's rush to pay the perks in December, a month before the usual January bonus timetable.
Cuomo called the decision to accelerate the bonuses "a surprising fit of corporate irresponsibility" that "richly rewarded their failed executives."
Cuomo has subpoenaed former Merrill Chief Executive Officer John Thain and Bank of America's chief administrative officer, Steele Alphin, about the bonuses.
When Cuomo first asked Merrill about its bonus plans back in October, Merrill claimed it hadn't finalized the total size of its bonus pool.
Soon after, it was revealed that Thain was angling for a $40 million bonus. When that embarrassing fact went public, Thain backed off.
Four of his top deputies faced no such change of fortune, however, pocketing a total of $121 million as Merrill evaporated.
One beneficiary was Peter Kraus, a Thain hire who started at Merrill in mid-September and quit Dec. 18, the day Bank of America took over.
He walked away with a $24.9 million bonus for those three months of work, which figures to about $249,000 a day. The day he quit, his wife closed on a $36 million luxury Park Ave. co-op, records show.
Kraus declined to answer questions, although a source familiar with the matter said the amount was guaranteed in his Merrill contract.
Cuomo's investigators want to know why Merrill thought such a guarantee was appropriate given the firm's collapse - and why Merrill didn't try to void it.
The bonuses were handed out just before Merrill announced a record $15 billion loss for the fourth quarter,which brought the year's total losses to nearly $27 billion.
How the firm will try to justify handing out bonuses with such a lousy record remains to be seen.
Bank of America spokesman Scott Silvestri said Merrill Lynch was an independent company when Merrill's compensation committee approved the bonuses.
Silvestri added that many of the Merrill bonuses were contractually guaranteed.
Bank of America's top eight executives took no incentive compensation for 2008. The next tier saw their bonuses cut 80%.
Executive bonuses have become a flash point for resentment as the economy continues to stumble and taxpayers find themselves footing the bill for Wall Street's failures.
Two weeks ago, President Obama called the $18 billion in bonuses Wall Street had just awarded itself "shameful."
I’m tired of using the word scum. These guys are just thieves and the Feds should find some way to seize these bonuses from them
Wall Street excesses paved the road to Comrade O’s socialism
“Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.” ~ F. Scott Fitzgerald
Tree/rope, problem solved.
Let me tell you about the very rich. They are different from you and me.
Yes, they have more money — Ernest Hemingway
Rush repeated it four times today-— “Wall Street is overwhelmingly Democrat”
The Democrat party is what all anarchists gravitate to and I’m including Wall St anarchists
Well...maybe these fellas should spend eternity in an IRS audit mode.
Here’s what Kraus bought with his loot:
http://www.nypost.com/seven/12302008/news/regionalnews/fat_cat_palace_is_a_crah_pad_146510.htm
Hey bankrupting a country, pouting and driving the market down almost 400 points to demonstrate their vast importance is really hard work you know.
Rush is wrong, I work for a Wall St firm and everyone in my office are hard core Republicans
Scratchin each others backs.
They say we should just pay mortgages and interests on time, and just shut the f*** up.
They say we should just pay mortgages and interests on time, and just shut the f*** up
Yup!! They'll accuse me of class warfare. But the only class warfare I see is the thieves on Wall Street versus the rest of America
"Claw back" is being discussed and if implemented some of these thieves will be forced to give back some of their ill gotten gain. That would hurt them the most
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