Rep. Edolphus Towns, Chairman of the House Committee on Oversight and Government Reform, came out in support of Attorney General Andrew Cuomo on Thursday, saying he had directed his attorneys to investigate the Merrill Lynch bonus saga.
Cuomo has been looking into $3.6 billion in bonuses Merrill Lynch paid out last year, just weeks before unveiling a $15.8 billion loss. The bonus payments were also handed out just prior to the bank's acquisition by Bank of America.
Executives at Merrill and Bank of America have refused to disclose the names of the bonus recipients, which include about 700 bankers that received at least $1 million each.
On Wednesday, Cuomo released filings that included a letter from Merrill Lynch dated November 24, 2008 to the House committee that said a decision on the bonuses would not be made until year end. But according to testimony taken by Cuomo, the bank's compensation committee had, in fact, already decided on the bonuses on November 11.
"The Committee takes very seriously Attorney General Cuomo's allegation that Merrill Lynch provided misleading information to Congress regarding bonuses for its top executives."
He continued: "These filings raise the disturbing possibility that Merrill Lynch executives may have obstructed this Committee's investigation into executive compensation practices and the awarding of bonuses at the company."
Towns has directed his attorneys to focus on whether Merrill executives tried to cover up the decision to pay out bonuses, and as part of the cover up, whether the bank's executives deliberately mislead the House committee.
In addition, the lawyers "are also reviewing the responses of other major financial institutions to our October 2008 letters regarding executive compensation and the use of TARP funds."