B of A subpoenaed over Merrill bonuses
Bank of America CEO Kenneth Lewis
TEXT OF STORY
Steve Chiotakis: New York's Attorney General has subpoenaed Bank of America CEO Kenneth Lewis. Andrew Cuomo is investigating whether the bank misled investors about bonuses and losses at Merrill Lynch. From North Carolina Public Radio, here's Marketplace's Janet Babin.
Janet Babin: The investigation focuses on nearly $4 billion in bonuses that Merrill Lynch paid to executives last December. That was right around the time the company reported a huge fourth-quarter loss. And just before Bank of America took over.
Portfolio manager Anton Schutz with Mendon Capital says the bonuses appear excessive. But he questions whether Bank of America could have stopped them:
Anton Schutz: Merrill Lynch guys wanted to make sure they took care of their own, and Bank of America doesn't technically control the company until the deal closes. So, you know, their direct influence is questioned until the time of the closing.
New York Attorney General Andrew Cuomo also subpoenaed former Merrill Lynch CEO John Thain.
Duke University professor Campbell Harvey says the investigation into bonuses gets in the way of a bigger issue:
Campbell Harvey: The $45 billion dropped by the American taxpayer on Bank of America, and we've got very little in return.
A Bank of America spokesman declined comment this morning.
I'm Janet Babin for Marketplace.