US congressman Dennis Kucinich has called for an inquiry into remuneration proposals at Wall Street's top banks, after a Guardian report revealed that six distressed institutions had drawn up pay plans, including substantial discretionary bonuses, worth more than $70bn for the first nine months of the year.

Kucinich, an outspoken Democratic opponent of the US taxpayer's $700bn bank bail-out, said his staff would immediately begin asking Wall Street firms set to benefit what plans they had to distribute bonuses.

"When Congress placed restrictions on excessive executive pay, it had no intention of permitting business as usual with respect to bonus structures," he said. "It would add insult to injury to ask taxpayers not only to bail out a firm, but to pay for bonuses as well. The Guardian's report necessitates an immediate inquiry."

Banks continue to peg pay deals to net income. One banking source said 45-50% of net revenue - paid largely in salary and discretionary bonuses - remained an industry standard. This formula does not take into account the huge losses by bank shareholders, many of them pension funds, as firms have queued up to slash the carrying value in their accounts of toxic assets, predominantly sub-prime mortgage-backed securities.

Leading the asset write-downs and losses has been Citigroup, which booked a $55.1bn hit. Merrill Lynch, rescued from collapse last month by a takeover offer from Bank of America, has booked $52.2bn to date. Morgan Stanley, JP Morgan Chase, Lehman Brothers and Goldman Sachs have respectively reported write-downs and losses related to the sub-prime market of $15.7bn, $14.3bn, $13.8bn and $4.9bn.

All six banks have as a result been forced to seek multibillion-dollar cash injections to shore up their capital cushions, further denting the holdings of loyal investors.

Despite these moves, the banks failed to end panic selling. In a last-ditch attempt to save the system, five of them this month sought bail-out cash from the US taxpayer as part of a $700bn rescue package. The sixth, Lehman, had already collapsed.

Third-quarter earnings updates for four of the six Wall Street firms surveyed by the Guardian showed the amount earmarked for salary and bonuses was down on the previous year. Citigroup and JP Morgan were exceptions, with nine-month staff remuneration rising by 4% to $25.9bn, and 2% to $6.53bn respectively. Citigroup's figures include pay for many staff outside the high-risk banking disciplines.

The figure for JP Morgan, a division of JP Morgan Chase, rose in large part because of its acquisition of failed rival Bear Stearns and related severance costs.

At Goldman Sachs the nine-month pay pot was down 32% to $11.4bn; at Morgan Stanley it was down 20% at $10.73bn, and Merrill Lynch's was down 3% at $11.7bn.

Days before Lehman collapsed last month, executives issued an earnings update revealing a $6.12bn pay pot. Administrators in the US allowed $2bn of discretionary bonuses to be distributed to staff before it was acquired by Barclays; banking sources said a sale would have been unlikely without this. However, accrued Lehman bonuses were held back in the disposal of certain European operations to the Japanese bank Nomura.

Many European investment banks use the bonuses of US firms as a benchmark for their remuneration policies.

HSBC's chairman, Stephen Green, told a Dubai conference yesterday: "The market and [banking] industry will need to consider whether badly aligned incentives contributed to the crisis: both the market incentives which, until recently, encouraged banks to grow fast and gear up [debt levels], persuading them to take on higher risk than was sustainable, and compensation structures, which have so often encouraged too much opacity and excessive risk taking."

From the bloggers

Baylord When will someone call these crooks to book? ... the very people responsible for bringing down the global economy are filling their boots while hundreds of thousands of families are turfed on to the streets.

martinusher Cheeky sods, aren't they? I'd tax them at source at 99% or more.

PCsimon Some who work in banking do responsible jobs, lending to consumers and businesses, but trading is a zero-sum game. The best way perhaps to solve this is to move our money from banks to building societies, credit unions and the like. They don't play silly games with other people's money. We should also get our pension funds to do the same.

Jiri The bankers deserve every penny of their bonuses. After all, they managed to attract an investment of $700bn plus from the US government. This is a bonus of less than 10%.