A couple of words come to mind. We will spare you, we’re sure you can come up with your own..
One more reason for temporary nationalization. No further comment warranted. The story speaks for itself..
Bank of America fights to hide bonus payouts
Christine Seib in New York
Bank of America (BoA) will launch a legal battle to keep secret the details of $3.6billion (£2.5billion) in bonus payments after John Thain, the former chief executive of BoA’s newly acquired Merrill Lynch business, was questioned for a second time by the New York attorney-general’s office.
It is the latest chapter in a tit-for-tat fight between Mr Thain and BoA over the bonuses, which were rushed through by Merrill Lynch in December, weeks before Merrill’s disclosure of a $15.3billion fourth-quarter loss.
Mr Thain, who was ousted from Merrill three weeks after its $50billion takeover by BoA, completed last month, yesterday gave the attorney-general’s investigators information on payments made to individuals in the investment bank.
BoA must now submit legal arguments to the New York State Supreme Court to prevent Andrew Cuomo, the attorney-general, from making public the details of the multimillion-dollar bonuses.
The bank is expected to hand in its arguments by March 4. A BoA spokesman said that specifics on compensation “should remain private to protect the rights of the individuals and the competitive position of the company“.
Mr Cuomo has until March 11 to submit a counter-argument for revealing the details of Mr Thain’s testimony, before Supreme Court Justice Bernard Fried makes a decision on March 13 on the issue.
Mr Cuomo is investigating whether the two banks breached securities law by failing to tell shareholders last September that they had agreed a bonus payout of up to $5.8billion to Merrill Lynch bankers as part of their takeover deal.
The bonuses, which eventually came to $3.6billion, infuriated investors when it emerged that the money was paid in the face of the huge fourth-quarter loss.
Mr Thain was interviewed by investigators for six hours last Thursday, but declined to give Mr Cuomo information on individual bonuses, citing the threat of legal action from BoA and the bankers themselves if he breached privacy laws.
On Monday, Justice Fried granted Mr Cuomo a court order compelling Mr Thain to divulge the information.
Mr Thain’s claim that he was gagged by BoA was at odds with statements by Kenneth Lewis, BoA’s chief executive, who previously had distanced himself from the payments.
BoA was forced to ask the US Government for an additional $20billion in taxpayer assistance to help it to cope with Merrill’s larger than expected slide into the red.
Mr Lewis told Congress this month that he could urge Merrill Lynch to reduce the bonus payments in the light of its losses but could not prevent them being handed out. Mr Lewis is expected to be interviewed by Mr Cuomo’s investigators this week.
Mr Cuomo also asked Mr Thain why, when Merrill’s impending loss became clear, he did not reduce bonus payments.
Lawyers for Mr Thain have argued that although Merrill made a loss in the third quarter, much of the red ink came from writedowns in goodwill rather than from market-related activity.
Also, the investment bank’s performance picked up in December after a tough October and November.