Failing Tarp Banks Handed Out Billions in Bonuses

July 31, 2009

(ChattahBox)—You wouldn’t know that our economy was on the verge of a complete meltdown last year, by the way that Wall Street investment banks that received Tarp funds, handed out billions in bonus payments to their top employees. What’s even more perplexing, is that the sum total of many of the bonus amounts exceeded company earnings or worse, were paid out by banks in the black.

New York attorney general, Andrew Cuomo said, “There is no clear rhyme or reason to the way banks compensate and reward their employees,” “Compensation for bank employees has become unmoored from the banks’ financial performance,” added Cuomo. A recent report on Tarp banks’ bonus payments, prepared by Cuomo, details the culture of Wall Street bonuses that seem to defy logic.

As expected, JPMorgan Chase and Goldman Sachs, led the way in bonus payments, with JPMorgan handing out 1,626 million dollar bonuses and Goldman awarding 953 employees millions. Both banks were on the verge of failing last year and required Tarp bailout finds to stay afloat. They have since paid back the Tarp funds.

The actual numbers are even more illuminating. JPMorgan earned $5.6 billion in 2008, but set aside$8.7 billion for bonuses. Last year at Goldman, bonuses significantly exceeded earnings. Goldman, earned $2.3 billion in 2008, but managed to pay out $4.8 billion in bonuses. This year, Goldman posted record profits after paying back its Tarp funds.

Morgan Stanley earned just $1.7 billion for 2008, but still set aside $4.5 billion for bonus payments for over 500 employees. Morgan Stanley paid back $10 billion in Tarp funds last month.

Even banks that were leaking money like a sieve, found a way to pay out millions in bonuses. Citigroup lost $27.7 billion, but still paid million-dollar bonuses to 738 employees. Merrill lost $27.6 billion and paid 696 employees bonuses of at least $1million.

Meanwhile, the Congressional committee on government oversight and reform plans to hold hearings in the fall to investigate the out of control Wall Street bonuses.

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