Restrictions on financial industry bonuses heading to a vote in the U.S. House may be rejected by the Senate and the Obama administration, which are reluctant to increase government’s role in deciding compensation.
The House, emboldened by New York Attorney General Andrew Cuomo’s report yesterday that showed nine banks getting U.S. aid paid $32.6 billion in bonuses last year, will probably pass a bill requiring regulators to ban pay practices that encourage “inappropriate risks.” A panel in the House, where Democrats hold a 256-178 advantage, approved it along party lines July 28, Bloomberg reports.
Meanwhile, Citigroup and Merrill Lynch lost more than $55 billion combined last year, adding to the massive wreckage on Wall Street that took the nation's financial system to the brink of collapse , Los Angeles Times reports.
However, the data, released Thursday by New York Attorney General Andrew Cuomo, provide a rare window into the pay culture of Wall Street, where top employees typically make 90% or more of their compensation in year-end bonuses.
The $32.6 billion in bonuses is one-third larger than California's budget deficit. Six of the nine banks paid out more in bonuses than they received in profit. One in every 270 employees at the banks received more than $1 million , Wall Street Journal reports.