'No rhyme or reason' for bank pay

Compensation for bank employees has become 'unmoored' Wall Street banks that were bailed out by the government gave executives bonuses regardless of performance, it has been suggested in a report. The report by New York Attorney Andrew Cuomo's office said there was "no clear rhyme or reason" for pay and it had been disconnected from performance. Controversially, Congress is seeking to give government a direct say in what bank bosses are compensated.Top US banks paid out huge bonuses despite gaining taxpayer bail-outs. "Compensation for bank employees has become unmoored from the banks' financial performance" said the report.The report - prepared over nine months - argues that some banks paid out larger bonuses than their profits, while simultaneously taking exceptional state emergency funds. Difficult year Ten banks were given money as part of the government's $700bn financial stimulus plan. In 2008 Goldman Sachs paid $4.8bn in bonuses, representing more than twice its income. Similarly Morgan Stanley awarded bonuses of $4.475bn while earning just $1.7bn. All the while a painful global recession - partly caused by bankers' excess - was depriving less fortunate citizens of their livelihoods. Robert Peston, BBC business editor Read Robert's blog The government provided both firms with $10bn, as part of the its wider Troubled Asset Relief Program (Tarp). Goldman recently reported a better-than-expected net profit of $3.44bn for the three months to June. Citigroup and Merrill Lynch paid bonuses of $5.33bn and $3.6bn respectively while seeing losses of more than $27m each, said the report. "Other banks, like State Street and Bank of New York Mellon, paid bonuses that were more in line with their net income, which is certainly what one would expect in a difficult year like 2008". The proposal in Congress has been opposed by many Republicans who think it gives the state too much control over private firms' pay. "The problem with executive compensation is essentially, from the systemic standpoint, that it gives perverse incentives" said Barney Frank, chairman of the House Financial Services Committee. He said the lack of penalties meant "heads you win, tails you break even"