If you got paid for last year, you may think you dodged a bullet. Well, it's time to think again. If your total compensation exceeds $250,000, Washington and Albany (for starters) have your personal bank account in their sights, and are setting up to pull the trigger. Don't count on the courts to stop them.
The names of Merrill Lynch's 200 largest 2008 bonus recipients will be made public as early as Thursday, after a New York State judge ruled Wednesday that Andrew Cuomo, the state's Attorney General, can release the information. It isn't clear whether Cuomo has or will publish the names of Merrill's other 39,000 employees who received bonuses last December, immediately before the firm was absorbed into Bank of America.
Employees at AIG Financial Products are next in line to see their names blared across the TV screens and computer monitors. Cuomo plans to release the names of bonus recipients at that firm too, and considers Wednesday's ruling against Merrill a portent that he'll prevail, according to the New York Times. Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, also plans to subpoena bonus recipients' names from AIG and make them public.
Measure Would Tax Away Most 2008 Bonuses In TARP Firms
And that's just the beginning. Even as Congress and the Obama administration race to claw back $165 million of retention awards paid to some 400 AIG employees this month, the net they're building looks to extend far beyond AIG and Merrill to encompass virtually all of Wall Street and many large U.S. commercial banks.
The House of Representatives voted Thursday to confiscate (via a surtax) 90 percent of every bonus received after Dec. 31, 2008, by individuals working for taxpayer-supported institutions whose total compensation exceeded $250,000. Approved by a vote of 328-93, the measure covers all workers in firms that received at least $5 billion in federal government aid.
Separately, at least one lawmaker is trying to block Morgan Stanley and Citigroup's wealth management joint venture from making $3 billion in promised retention payments to brokers. The Journal reports that Sen. Robert Menendez (D-N.J.) has asked Treasury Secretary Geithner to "use every legal means available" to stop those payouts, which the senator called "misuse of taxpayer money and are an insult to hardworking families." Retention payments to executives at Fannie Mae also are drawing fire, the Journal says.
Individual Employees Face Exposure, Harassment...and Worse?
Meanwhile, some highly-paid employees within AIG Financial Products agreed to hand back their retention pay in full. They include Douglas Poling, James Haas and Jon Liebergall, the company said Wednesday. Poling, an executive vice president with responsibility for energy and infrastructure investments, received $6.4 million. Haas and Liebergall are co-heads of North American marketing for the financial-products unit.
For financial services workers, these developments portend even worse things than pressure to hand back last year's earnings. Large-scale publication of individual private-sector workers' pay would be unprecedented, and could subject many professionals and their families to personal harassment.
One U.S. senator recently called upon AIG executives to commit suicide. (The senator, Charles Grassley (R-Iowa), later apologized for that remark.) In testimony Wednesday, AIG Chief Executive Edward Liddy told Rep. Frank that employees have received death threats. Last October James Cramer, CNBC's famous stock-market commentator, publicly urged his viewers to "hound" AIG employees "everywhere they are." (Cramer, too, later apologized.)
Merrill Lynch employees at Bank of America also reportedly fear for their safety if their names and compensation are made public.
Both Frank and Cuomo said they'd take security threats against employees seriously. But they rejected Liddy's request to protect individuals' privacy.