Nine US banks asked to justify bonuses

Waxman demands US global banks explain billions in employee remuneration

WASHINGTON, DC – In letters to nine US banks, Henry Waxman, chairman of the House Committee on Oversight and Government Reform, has demanded they justify billions of dollars in compensation and bonuses paid out after they accepted $125 billion as part of a taxpayer-funded bail-out.

In the letter, sent to Citigroup, Goldman Sachs, Bank of America, Bank of New York Mellon, JP Morgan, Merrill Lynch, Morgan Stanley, State Street and Wells Fargo, Waxman said they collectively will pay $108 billion in employee compensation and bonuses in the first nine months of this year, almost the same amount as last year.

“I question the appropriateness of depleting the capital that taxpayers have just injected into the banks through the payment of billions of dollars in bonuses, especially after one of the financial industry's worst years on record,” Waxman wrote. He also referred to a Bloomberg News article of October 27 that detailed how Goldman, Morgan Stanley and Merrill Lynch had already accrued $20 billion to pay bonuses this year.

Waxman wants banks to divulge their total company compensation arrangements, including the average compensation for each employee broken down by salaries, bonuses, and benefits, as well as the number of employees paid or projected to be paid more than $500,000 in each year from 2006 to 2008. Waxman has asked the firms to supply the information by November 10.

Goldman Sachs indicated that it will co-operate with Waxman’s request, while a Citigroup spokesperson confirmed the bank would “adhere to the requirements in the government programme, including restrictions on executive compensation”.