Banks Paid $32.6 Billion in Bonuses Amid U.S. Bailout (Update4)

July 30 (Bloomberg) — Citigroup Inc., Merrill Lynch & Co. and seven other U.S. banks paid $32.6 billion in bonuses in 2008 while receiving $175 billion in taxpayer funds, according to a report by New York Attorney General Andrew Cuomo.

Cuomo analyzed 2008 bonuses at nine banks that received Trouble Asset Relief Program financing from the U.S. government. New York-based Citigroup and Merrill, which has since been taken over by Bank of America Corp., received TARP funding totaling $55 billion, Cuomo said.

“When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well,” Cuomo’s office said in the 22-page report. “When the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.”

The study, called “No Rhyme or Reason: The ‘Heads I Win, Tails You Lose’ Bank Bonus Culture,” comes as Congress and the Securities and Exchange Commission examine whether to limit the compensation paid to top corporate executives.

“One senior bank executive noted recently that individual compensation should not be set without taking into strong consideration the performance of the business unit and the overall firm,” according to the Cuomo report.

Upside, Downside

“As this executive put it, ‘employees should share in the upside when overall performance is strong and they should all share in the downside when overall performance is weak.” But despite such claims, one thing is clear from this investigation to date: there is no clear rhyme or reason to the way banks compensate and reward their employees,” the report said.

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Banks Paid $32.6 Billion in Bonuses Amid U.S. Bailout (Update4)