Andrew Cuomo is out with the results of his investigation Wall Street bonuses. To say the least it is disquieting.

From the report:

As one would expect, in describing their compensation programs, most banks emphasize the importance of tying pay to performance. Indeed, one senior bank executive noted recently that individual compensation should hot be set without taking into strong consideration the performance of the business unit and the overall firm. As this executive put it, “employees should share in the upside when overall performance is strong and they should all share in the downside when overall performance is weak.”

But despite such claims, one thing is clear from this investigation to date: there is no clear rhyme or reason to the way banks compensate and reward their employ~es. In many ways, the past three years have provided a virtual laboratory in which to test the hypothesis that compensation in the financial industry was performance-based. But even a cursory examination of the data suggests that in these challenging economic times, compensation for bank employees has become unmoored from the banks’ financial performance.

Thus, when the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.

This report is all about numbers. There isn’t a lot of moralizing going on and the numbers are striking. They pretty clearly show an industry, that despite massive losses and salvation at the hands of the taxpayer, was intent on preserving the compensation status quo. Compensation seems to have become divorced from any relationship to performance and one is hard pressed to discern a rational, coherent compensation policy.

Some time ago I had a discussion with another blogger about why the banks were so determined to pay outsized bonuses in the face of so much public anger. My point was that it was hardly smart politically and I would have thought they would lay low for awhile and then get back to business as usual once things simmered down. He’s a veteran Wall Street lawyer and his response was that they were resigned to compensation caps coming from Washington and were just going to get the money while they could.

It appears that might be the case, and, despite previous arguments I’ve advanced against that policy, I think that the industry probably deserves whatever it gets.

more: here (Link to the full report)