CNN report that New York District Attorney Andrew Cuomo has just served a subpoena on Ken Lewis, CEO of Bank of America, over Merrill Lynch's bonuses and dealings.
That's slightly more serious than a Congressional Hearing.
The Financial Times expands upon the issue by saying that when "Merrill paid out
close to $4bn in bonuses in the last days of December, BofA issued a
statement blaming the payments squarely on Mr Thain (former CEO of Merrill Lynch). The bonus payments
were significant not only because they were paid out during a year in
which Merrill racked up $41bn in operating losses, but because BofA
needed an emergency infusion of $20bn in capital from the government in
order to consummate its purchase of Merrill.
"Critics felt that Mr
Thain was essentially using taxpayer money to lavish bonuses on
favoured employees. Mr Lewis dismissed Mr Thain on the day the story
was published.
"But in recent weeks, evidence has emerged showing
that the early payment of bonuses at Merrill Lynch was not only written
into the merger contract signed by Mr Lewis and My Thain in September,
but that Mr Alphin and another BofA executive, Andrea Smith, were
actively involved in the size and scope of the bonus payments."
This could be a lot more serious than a Congressional Hearing.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...
