In any normal year, top executives at leading banks would be getting together in coming weeks to figure out just how happy to make the holiday season for their star performers. They’d be reviewing the numbers, coming up with formulas, selecting favorites and preparing to stroke checks for millions of bonus dollars.
This year will prove very different, especially for the top nine banks who have signed on to the government bailout programs. Washington politicians and state attorney generals are putting a spotlight on what the bankers will do.
Barney Frank, head of the House Financial Services Committee, along with Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi, are on the prowl to make sure that bankers participating in the $700 billion Troubled Asset Relief Program (TARP) don’t use public money for personal bonuses. Frank will hold a hearing Nov. 18 to ctach up with the bailout deal.
Taking things a step further, New York Attorney General Andrew M. Cuomo has mailed letters to nine of the top banks where the federal government is investing $125 billion in their preferred shares. Cuomo, playing Eliot Spitzer, wants detailed information on what they intend to do this bonus season. Banks include the Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JP Morgan Chase, Merrill Lynch, State Street and Wells Fargo.
While there’s some question about whether a state attorney general has the jurisdiction to oversee a federal bailout, there’s no question what Cuomo’s political motives are.
And, frankly, after all the public has been through in the financial crisis, it might be political suicide for bankers to do something incredibly dumb at the present time. But then, do bankers really care about how they look politically?
