Even as Merrill Lynch & Co. bled money and warily eyed a merger with Bank of America, company executives were preparing for a windfall.
Following the federal government's promise of $10 billion in TARP funds to buoy the ailing firm through it's roll-up, Merrill paid out $3.6 billion in bonuses: a package 22 times larger than compensation given by AIG, said Congressman Dennis Kucinich's offices in a Monday release.
The congressman's staff sent letters to Ken Lewis, CEO of Bank of America, Ben Bernanke, Chairman of the Federal Reserve, and Neel Kashkari, Interim Assistant Director of Financial Stability, requesting documents related to communications on Merrill Lynch compensation packages.
Bank of America, which absorbed Merrill in 2008, received an additional $25 billion from the government to facilitate the merger.
"[T]he Merrill Lynch Compensation Committee awarded these payments on December 8, 2008, before the end of the fourth quarter, in which Merrill lost more than $15 billion, and after Merrill was informed that it would be allocated $10 billion in TARP funds," the congressman's office said in an advisory.
"These payments raise significant questions about what information Merrill Lynch and Bank of America executives shared with federal officials that oversaw the Merrill acquisition by Bank of America. Ordinary shareholders were unaware of the details of the bonus payments, but the U.S. government held 800,000 shares in preferred stock and warrants at the time and federal officials regularly met with both Bank of America and Merrill Lynch executives," the release read.