Cuomo vs. Merrill: Piling It On

In the news earlier in the week, New York attorney general Andrew Cuomo accused Merrill of misleading Congress about bonuses:

Merrill Lynch & Co may have misled Congress in representing last November that it planned to pay out bonuses at year end, when in fact it decided to accelerate those payouts, New York Attorney General Andrew Cuomo said on Wednesday.

He added that [emphasis mine]:

The attorney general also said Merrill traders may have delayed taking hefty losses late last year until after the company decided to pay out $3.62 billion of overall bonuses.

I qualify these remarks with the disclosure that I worked at Merrill’s research department until early 2007 and I don’t personally know any of the people involved.

There are ways of showing a profit and temporarily hiding losses in complex derivative books, but Cuomo’s accusations of traders manipulating their own P&L for to boost their own bonuses is a serious charge. It is certainly possible given this characterization of investment bankers, the obscene bonuses paid before the BofA takeover and how risk is managed at investment banks. I believe that the business model of Wall Street i-banks needs reform, but for Cuomo to level these charges without substantiation seems like a case of politically piling on to me.

We need specifics, Mr. Cuomo. Who? When? What did they do?

Comments

[smlcap:]

Mr. Cuomo..............

Keep piling it on. Pile and pile and pile it on.

When you're done piling it on Merrill, move on to the next bunch of Wall Street thieves and pile it on them too.

Mar 15 11:48 AM

[InnocentsAb...:]

Is it possible that Mr. Cuomo is betting on the idiocy of the New York state electorate by looking at the bonuses, rather than the Federal Reserve and U.S. Treasury transactions (which are more complex and several orders of magnitude greater in size) ?

By the way, both sets of issues are Federal matters, not state matters.

Mar 15 05:52 PM

[youngolf:]

You can rest assured that whatever these crooks can possible conceive to do, they have and are doing. Forget a smoking gun, just dig Cuomo. You'll find more s___ than anyone ever thought there could be.

This bunch knows no morality. The financial industry has been going to h___ for years. No one cared when everyone was making money. Now, it is all about to become as they say 'more transparent', seamlessly, integrated, and sustainable.

Mar 15 10:01 PM

[cfal:]

In my view Cuomo is like his predecessor. A political hack with one interest only, advancing his career. The persons with no morallity are the elected officials. The seeds to our crises were planted and nurished by politicans not the banks. This not to say banks do not share the blame.

Mar 16 01:16 PM