The Associated Press reports that in letters to the boards of directors of Citigroup, Morgan Stanley and seven other banking giants, Cuomo said taxpayers have a right to know how their money is being spent. “Taxpayers are, in many ways, now like shareholders of your company, and your firm has a responsibility to them,” Cuomo wrote, according to the AP.
Those receiving help from the government’s $700-billion bailout must follow guidelines limiting executive pay, including a ban on golden parachutes for departing executives. No restrictions are placed on across-the-board pay.
The letters asked the boards to voluntarily turn over internal information describing how much money they plan to set aside for bonuses and how it will be distributed, and whether the bonus plans were adjusted after the bailout. The letters cited no abuses, but asked the boards to “step up to the plate and prevent wasteful expenditures of corporate funds on outsized executive bonuses and other unjustified compensation.”
Morgan Stanley spokesman Mark Lake told the AP the firm had not made any decisions about year-end compensation, and Citigroup said in a statement that it was cooperating with “federal and state inquiries about our global expenditures for wages, health insurance and other benefits, which we believe reflect compensation best practices.”
On Tuesday, the day before Cuomo’s letters, Representative Henry Waxman (D-California), chairman of the House Oversight Committee, sent similar letters asking the banks, which are getting a $125 billion infusion, to detail what they are paying their executives and employees, the AP said.
The AP said it reported last week that the nation’s biggest banks are preparing to pay their workers as much as last year or more, including bonuses tied to personal and company performance. In total, the nine banks had pay-related costs of $108 billion for the first three quarters of the year, and the average increase came to just shy of 3%, according to AP figures.
Earlier this month, Cuomo threatened to use state business laws to review and possibly rescind any inappropriate spending by American Insurance Group Inc. (AIG) amid reports the company was still lavishing luxuries on executives while taking government money to stay afloat, the news report said.