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State AG Cuomo asks 8 banks for bonus information

Attorney General Andrew Cuomo said he hoped he

Attorney General Andrew Cuomo said he hoped he would not find that banks were paying bonuses for the kind of short-term profit that undermined the economy. (Sept. 30, 2009) Photo Credit: AP

State Attorney General Andrew Cuomo announced Monday that he is seeking information from the first eight banks to receive bailout money about the tens of millions of dollars in bonuses they are paying.

Cuomo, whose office does not regulate banks, acknowledged that the banks all paid back their bailout money last year, but he said any profitability or improved performance in 2009 was the result in part of the use of hundreds of millions of dollars in taxpayer money.

"The nation has learned, painfully I think, what happens when you have inadequate or ineffective regulation," Cuomo said, explaining his involvement. He said his office intends to ensure the banks disclose how they used public money.

The move comes as Cuomo considers a primary challenge against Gov. David A. Paterson, a fellow Democrat. Paterson in recent weeks has criticized attempts to cut Wall Street bonuses - which are expected to be high after a profitable 2009 - noting that they are the source of considerable income tax revenue.

Meanwhile, the Obama administration is considering imposing a fee on large banks to recoup the costs of bailing them out.

Bank officials declined to comment publicly about Cuomo's letter, but one official questioned what the point of it was, considering the Federal Reserve Bank, which does regulate the big banks, has sought the same information.

Cuomo said it was "simplistic" and misleading to suggest the banks did well solely because of better management.

"Do the taxpayers deserve a bonus for this profitability?" he said during a conference call with reporters. "Where's the return on the taxpayers' dollar for this investment?"

Cuomo was careful to note that he supports the use of bonuses to spur better performance. But he said he was particularly interested to find out what the basis is for any bonuses. He said he hoped he would not find that banks were paying bonuses for the kind of short-term profit that undermined the economy.

Instead, Cuomo said it would be good if banks were rewarding practices that built long-term growth and economic stability.

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