Bank of America Corp (BAC.N), which has received $45 billion of taxpayer money in the last four months, should not be paying out bonuses to its employees and must justify why it is doing so, the attorney general of North Carolina, the bank's home state, said.
"I am appalled that 2008 bonuses would be distributed, given the current circumstances," Attorney General Roy Cooper said in a February 12 letter to the largest U.S. bank. "I expect an explanation from the board as to the appropriateness of any bonuses while public money is being provided to the bank."
Cooper is also investigating the timing and scope of 2008 bonuses paid by Merrill Lynch & Co, which Bank of America bought on Jan 1. The Charlotte-based bank is due to pay bonuses on Sunday, Cooper said.
The bank is cooperating with the attorney general, bank spokesman Scott Silvestri said.
Big banks are under fire from investors, politicians and regulators over bonuses amid the multibillion-dollar bailout of the U.S. financial industry.
New York Attorney General Andrew Cuomo is also investigating the Merrill bonuses. In a letter to Rep. Barney Frank, who chairs the House of Representatives Financial Services Committee, Cuomo said Merrill gave at least $1 million to each of nearly 700 employees.
Silvestri said Bank of America is paying bonuses to associates based on the $4 billion it made in profit during 2008. Bonuses have been reduced by more than 60 percent, on average, from 2007, he said.
Chief Executive Kenneth Lewis and other top executives are receiving no bonuses, and the next rung of executives are seeing bonus payouts cut by 80 percent, Silvestri said.
Bank of America shares were down 2 percent at $5.75 in Friday afternoon trade.
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