New York’s top financial regulator has called on the city to “immediately” stop issuing $200,000 cash bonuses to top bankers who have been charged with financial crimes.
“I’m not sure what it is, but we can’t afford to have people with a $200k to $250k bonus,” said Richard Cordray, director of the Consumer Financial Protection Bureau, in an interview with CNN.
The bureau’s top official also said that it was “very important” to “get a real cost estimate” of what the bonuses would do to the city’s economy, and called on regulators to “find a better way to get this right.”
Cordray said he hoped the city would “take the right actions” and that the bureau would be “in the position to make sure we are paying the right people.”
The New York State Department of Financial Services issued a notice last week that charged more than two dozen people with securities fraud, wire fraud and other crimes.
Many of the individuals were paid cash bonuses for not paying their taxes or other obligations.
The announcement came as regulators around the country are facing calls to cut back on bonuses.
In recent months, the Federal Reserve has been urging the Federal Deposit Insurance Corporation to give greater discretion to banks to decide when to reward certain types of misconduct.
The bank recently asked the Federal Communications Commission to give the Feds more flexibility in giving bonuses to employees who “serve a critical role in overseeing financial institutions.”
In addition to the bonuses, the Fs are also seeking to force banks to disclose the salaries and bonuses of top executives, to make it clear when bonuses are paid to top managers and to disclose how the money is spent.
The Fs is also pushing to require financial firms to provide employees with annual reports on the bonuses they receive, and for them to be able to appeal the bonuses.
Cordray has been one of the most outspoken critics of the bonuses in recent years, calling them a “pervasive culture of corruption” that has created “a culture of fear, and a culture of reward, and an culture of not reporting things.”
Cordrey, who has also been a vocal critic of the federal financial watchdog, called for a “meaningful reexamination of the rules governing pay and bonuses.”
He said the bonuses are “inappropriate and counterproductive” because they are paid without the need for people to do anything but show up at meetings, attend business conferences and work.