WASHINGTON (Legal Newsline) - An investment firm that has scrutinized Bank of America's recent actions concerning executive bonuses is asking for an audit to determine if the financial industry has wrongly used taxpayer funding.
CtW Investment Group made the request to the Office of the Special Inspecctor General for the Troubled Asset Relief Program Tuesday in an effort to see if federal bailout funds were used to protect executive bonuses.
American International Group, a beneficiary of TARP funds, recently gave out $165 million in retention bonuses. A lobbying effort killed a bill that required a 90 percent tax on bonuses given out in 2009.
And New York Attorney General Andrew Cuomo has alleged that Bank of America withheld information regarding $3.6 billion in Merrill Lynch bonuses from BOA shareholders who voted Dec. 5 to purchase Merrill Lynch.
Specifically, CtW wants to know if bailout funds were used in the lobbying effort.
"On April 1, the House approved a softened measure. Instead of a tax and instead of actions aimed at the excessive bonuses already paid, it called on a committee of financial regulators to prohibit what they would determine to be excessive compensation in the future," CtW chairman Anna Burger wrote.
"The lobbying by TARP recipients apparently paid off. The question now is whether this lobbying was itself paid for with TARP funds."
The letter cites Congressional testimony from BOA CEO Ken Lewis.
"As a practical matter, we cannot tell you whether the next loan we make is funded by that $45 billion of TARP preferred stock, or our approximately $32 billion of preferred stock placed with other investors, or the approximately $163 billion of common equity that we hold, or the remaining approximately $2.2 trillion of other obligations that make up our balance sheet," he said.
Burger wrote that if Lewis can't tell if a loan is funded by bailout funds, it is possible that its lobbying and contributions were funded by them.
The five questions to which CtW seeks answers are:
-What lobbying resources did firms such as Merrill Lynch and Bank of America deploy in defense of the bonus pool?;
-Can these firms provide evidence that no TARP funds were used for its political efforts regarding the bonuses?;
-What resources did the Financial Services Roundtable (FSR) expend to lobby against the TARP recipient executive compensation claw-back?;
-How much of the FSR's membership dues are now being subsidized by TARP funds?; and
-What information can be requested from the FSR's and other Wall Street lobbying associations' members companies to ensure TARP funds are not being used for lobbying efforts?
CtW works with pension funds sponsored by unions affiliated with Change to Win, a coalition of unions with 6 million members. Those funds are long-term BOA shareholders.
From Legal Newsline: Reach John O'Brien by e-mail at firstname.lastname@example.org.