New York state's top legal officer and U.S. Rep. Barney Frank demanded on Monday that Bank of America Corp provide more details on $6.9 billion in bonuses paid in 2008, including $3.6 billion at the former Merrill Lynch & Co.
The billions of dollars paid to executives is a controversial issue in the recession, and New York Attorney General Andrew Cuomo has been putting pressure for months on the banks that received U.S. government money to stay afloat.
A legal tussle between Cuomo's office and the bank has wound up in state court, with Bank of America telling a judge it would suffer grave harm if forced to reveal bonus data, citing concerns over competitors poaching staff and privacy.
Cuomo and Frank, the House Financial Services Committee chairman, demanded in a letter to Bank of America Chief Executive Kenneth Lewis that the lender provide information on all individuals who received more than $1 million in bonuses at both the bank and Merrill.
As a matter of transparency and disclosure, taxpayers have a right to know where their tax dollars go once received by TARP recipients, Cuomo and Frank wrote, referring to the Troubled Asset Relief Program.
Merrill awarded bonuses just days before Bank of America completed its acquisition of the Wall Street investment bank and brokerage on January 1. Merrill's net loss was $27.6 billion last year.
Bank of America said Monday's letter is far broader, and goes beyond Merrill Lynch to include all recipients of money from TARP.
Bank of America has continued to offer to share Merrill Lynch bonus information with the New York Attorney General's office subject to a reasonable confidentially agreement, the bank said in a statement.
Cuomo is probing whether the bank broke securities laws on public disclosure of executive pay. Bank of America has taken $45 billion from TARP, including $20 billion in a January bailout that also included a government sharing in losses on some toxic assets.
The Wall Street Journal reported last week that Merrill's 10 highest-paid employees received a total of $209 million in cash and stock in 2008, compared with $201 million paid to the top 10 in 2007. It said 11 top executives were each paid more than $10 million in cash and stock last year.
It seems shameful to me that the government has such little understanding of the business reasons to justify why personnel issues should be kept confidential, said Gary Townsend, co-founder of money manager Hill-Townsend Capital in Chevy Chase, Maryland, who said he owns Bank of America preferred shares.
A New York state judge has scheduled a March 13 hearing on whether the bonus data can be disclosed.
Bank of America shares were up 50 cents, or 16 percent, at $3.64 in afternoon trading on the New York Stock Exchange. They have lost close to 90 percent of their value since the Merrill acquisition was announced last September 15.
The case is Cuomo v. Thain, New York State Supreme Court (Manhattan), No. 400381/09.
(Additional reporting by Jonathan Stempel; Editing by Andre Grenon and Jeffrey Benkoe)