AG Cuomo Has the Goods—What Will Come of Merrill Bonuses?
Ken Lewis had a date with New York Attorney General, Andrew Cuomo, today. He was called to testify on what he knew about the $3.6 billion in bonuses paid out to Merrill Lynch employees late last year. The bonuses were paid just as Merrill was racking up its $27 billion in losses for 2008 and BofA was asking the Feds for $20 billion in TARP money. Former Merrill CEO John Thain testified before the AG for the second time on Tuesday, abiding by a court order that he share the names of bonus recipients with the AG after he initially declined to do so.
Cuomo wants to know from the two men the names of the individuals who received the bonus payments as well as whether Merrill broke any securities laws by making the payments—$121 million of which went to four executives. Cuomo is cooperating with the U.S. Special Investigator General, Neil Barofsky, who is conducting a probe of executive pay at TARP-recipient banks. Both Merrill and Bank of America have received roughly $45 billion in TARP money thus far. (TARP recipient banks are being very careful these days about spending money, especially if it involves fun things, like rounds of golf.)
When the bonuses were first disclosed in January after the Merrill deal closed, BofA issued a statement blaming them on Thain. Thain subsequently shot back on air and in writing saying that he was not responsible. Since then, evidence has emerged that BofA’s executives may have been involved in setting the bonus payments. Bank of America's chief administrative officer, J. Steele Alphin, has also been subpoenaed to testify before Cuomo.
Lewis took to the airwaves Wednesday in an interview with Bloomberg Television and—aside from praising Thain in one instance—said of his upcoming chat with the AG that he “looked forward to the chance to speak candidly and forthrightly and honestly and tell the story.” Astonishingly, he also fawned over his bank’s purchases of both Merrill and Countrywide, calling them “stars” and insisting that Merrill would one day be “a thing of beauty.” (Watch the video here.)
