Citigroup, Bank of America, JPMorgan Criticize Limits (Update1)
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By Elizabeth Hester
March 21 (Bloomberg) -- Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., recipients of more than $100 billion in U.S. rescue funds, criticized congressional proposals to tax Wall Street bonuses.
Bank of America Chief Executive Officer Kenneth Lewis called the tax “unfair” in a memo to employees yesterday, while Citigroup’s Vikram Pandit said his bank is “working in every appropriate way with policymakers.” JPMorgan’s Jamie Dimon held a conference call with about 200 executives, saying the firm is concerned about retention and is working with lawmakers.
The banks are responding to an outcry in Congress over $165 million in bonuses paid by American International Group Inc. after the insurer received $173 billion in federal bailout funds. The Senate will vote next week on levies on bonuses after the House of Representatives approved a 90 percent tax on bonuses at companies that received bailout funds.
“People are very anxious about this getting too widespread, this notion that no one on Wall Street or in banking deserves any money,” said Seamus McMahon, a consultant with Booz & Co. in New York, who works with financial firms.
Banks, worried that the proposals are distracting employees, are trying to reassure staff and keep them focused on clients. Lewis said the taxes could cause “unintended harm” and delay the recovery of the financial system. Dimon urged workers to call politicians and voice their opinions, a spokesman said.
‘Talented People’
“The work we have all done to try to stabilize the financial system and to get this economy moving again would be significantly set back if we lose our talented people because Congress imposes a special tax on financial services employees,” Pandit said in the memo, whose contents were confirmed by a Citigroup spokesman.
Citigroup removed the people who caused its financial distress and acted quickly to strengthen the business, Pandit wrote. “You have been invaluable in our collective efforts to put the company on solid footing,” he wrote, saying the legislation would affect people who would find it “difficult, if not impossible,” to repay bonuses.
The House bill would affect employees whose household income is more than $250,000 at companies that received more than $5 billion. JPMorgan took $25 billion as part of the first round of infusions. Citigroup got $45 billion and agreed to allow the government to become its biggest shareholder. Bank of America, including Merrill Lynch, has received $45 billion in cash and a backstop on $118 billion in assets.
Paying Back
Firms that repay enough bailout funds to reduce the government’s investment below $5 billion will be exempt, said Laurence Tribe, a constitutional law professor at Harvard Law School.
“I am very concerned about our ability to retain some of our most valuable associates,” Lewis wrote in his memo to employees obtained by Bloomberg. “The very best performers on our team will always have offers from competitors.”
In a separate e-mail to his own employees, Jes Staley, head of JPMorgan’s asset-management unit, said that the bank is “working hard on all of the challenges we are currently facing.”
JPMorgan’s e-mail, whose contents were confirmed by spokeswoman Mary Sedarat, didn’t offer any detail about the New York-based firm’s position on pending legislation.
“While it is necessary and appropriate to keep my comments brief, given the evolving issues, please know that the Operating Committee and Government Relations are working hard on all of the challenges we are currently facing,” the e-mail from Staley said. “Thank you sincerely for staying focused on our clients and our business.”
AIG, whose compensation policies before and after its U.S. bailout are being investigated, has turned over information on its executive bonuses to Connecticut’s attorney general.
To contact the reporter on this story: Elizabeth Hester in New York at [email protected].
Last Updated: March 21, 2009 01:00 EDT
Share | Email | Print | A A A
By Elizabeth Hester
March 21 (Bloomberg) -- Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., recipients of more than $100 billion in U.S. rescue funds, criticized congressional proposals to tax Wall Street bonuses.
Bank of America Chief Executive Officer Kenneth Lewis called the tax “unfair” in a memo to employees yesterday, while Citigroup’s Vikram Pandit said his bank is “working in every appropriate way with policymakers.” JPMorgan’s Jamie Dimon held a conference call with about 200 executives, saying the firm is concerned about retention and is working with lawmakers.
The banks are responding to an outcry in Congress over $165 million in bonuses paid by American International Group Inc. after the insurer received $173 billion in federal bailout funds. The Senate will vote next week on levies on bonuses after the House of Representatives approved a 90 percent tax on bonuses at companies that received bailout funds.
“People are very anxious about this getting too widespread, this notion that no one on Wall Street or in banking deserves any money,” said Seamus McMahon, a consultant with Booz & Co. in New York, who works with financial firms.
Banks, worried that the proposals are distracting employees, are trying to reassure staff and keep them focused on clients. Lewis said the taxes could cause “unintended harm” and delay the recovery of the financial system. Dimon urged workers to call politicians and voice their opinions, a spokesman said.
‘Talented People’
“The work we have all done to try to stabilize the financial system and to get this economy moving again would be significantly set back if we lose our talented people because Congress imposes a special tax on financial services employees,” Pandit said in the memo, whose contents were confirmed by a Citigroup spokesman.
Citigroup removed the people who caused its financial distress and acted quickly to strengthen the business, Pandit wrote. “You have been invaluable in our collective efforts to put the company on solid footing,” he wrote, saying the legislation would affect people who would find it “difficult, if not impossible,” to repay bonuses.
The House bill would affect employees whose household income is more than $250,000 at companies that received more than $5 billion. JPMorgan took $25 billion as part of the first round of infusions. Citigroup got $45 billion and agreed to allow the government to become its biggest shareholder. Bank of America, including Merrill Lynch, has received $45 billion in cash and a backstop on $118 billion in assets.
Paying Back
Firms that repay enough bailout funds to reduce the government’s investment below $5 billion will be exempt, said Laurence Tribe, a constitutional law professor at Harvard Law School.
“I am very concerned about our ability to retain some of our most valuable associates,” Lewis wrote in his memo to employees obtained by Bloomberg. “The very best performers on our team will always have offers from competitors.”
In a separate e-mail to his own employees, Jes Staley, head of JPMorgan’s asset-management unit, said that the bank is “working hard on all of the challenges we are currently facing.”
JPMorgan’s e-mail, whose contents were confirmed by spokeswoman Mary Sedarat, didn’t offer any detail about the New York-based firm’s position on pending legislation.
“While it is necessary and appropriate to keep my comments brief, given the evolving issues, please know that the Operating Committee and Government Relations are working hard on all of the challenges we are currently facing,” the e-mail from Staley said. “Thank you sincerely for staying focused on our clients and our business.”
AIG, whose compensation policies before and after its U.S. bailout are being investigated, has turned over information on its executive bonuses to Connecticut’s attorney general.
To contact the reporter on this story: Elizabeth Hester in New York at [email protected].
Last Updated: March 21, 2009 01:00 EDT
