Archive for January 2009

  • 30 Jan 2009 at 6:17 PM

Write-Offs: 01.30.09

$$$ Egret-smuggler pleads not guilty. [FINalternatives]
$$$ Spitzer Madams’ Fortunes: One Goes Up, the Other Goes Down [NYP]
$$$ Jobs of the Day: Morgan Stanley needs an equity research associate. [DB Career Center]

  • 30 Jan 2009 at 5:55 PM

No More Than The President Of The United States

On further reflection, we aren’t so opposed to “fairing up” executive compensation to be more in line with our national executive. Senator Claire McCaskill might be on to something here.
Let’s see here…
Cash Compensation:
Salary: $400,000
Cash Subtotal: $400,000
Room and Board:
55,000 square foot mansion, in historic Washington, D.C.: @ $100/sqft: $5,500,000/yr
Personal Chef / Kitchen Staff: $300,000 / year
Other Servants / Attendants: $500,000 / year
Subtotal: $6,300,000
Discretionary Use Of Private Aircraft:
(One of 2 Boeing 747-200Bs “Air Force One”):
Annual Costs: 120 hours @ $65,000/hr: $7,800,000
Annual Costs: 700 hours @ $65,000/hr: $45,500,000
Helicopter Fleet:
Annual Costs: 50 hours @ $5200/hr: $260,000
Aircraft Subtotal: $8,060,000
Aircraft Subtotal: $45,760,000
Other Personnel:
Personal Driver On Retainer (Defensive Tactical Driving Trained) @ $300/day $109,500
Personal Body Guards 35 @ $500/day $6,387,500
Use Of Personal Car 60 days @ $2000/day $120,000
Personnel Subtotal: $6,617,000
Annual Benefits Total: $59,077,000
Four Years of Same: $236,308,000
Pension And Related Benefits:
Present value of Pension Benefits ($200,000 per year): $2,251,556
Total Benefits: $238,559,556
Average Annual Benefits: $59,639,889
Also, think we need to strongly consider “pay for performance” here. This is a lot of compensation and I think clawbacks if the executive fails to pull us out of this recession are called for. I propose we institute a temporary “efficiency in government court” empowered to enforce pay for performance in the executive branch. The time to reward these employees for non-performance is over. Some accountability needs to be put in place. We won’t have them kicking sand in the face of taxpayers any longer.

  • 30 Jan 2009 at 5:28 PM

Bonus Watch ’09: BAC

Numbers came out today for most groups at Bank of Amerillwide, including capital markets and investment banking, with debt portfolio management coming next week.
– First year associates: 10k stub
-2nd/3rd year associates, VPs, MDs: down 75-80 percent, across the board, with associates to principals in global structured products receiving zero (and some MDs receiving basically zero); Conduit group– which had a record year– got zero; Real estate syndications got zero.
*We’re reminded that structured finance got zero last year as well. Give it up for just base, no bonus for 24 straight months and counting!

  • 30 Jan 2009 at 4:48 PM

Make Way For The Overseer!

Germany and Britain called on Friday for a global economic watchdog with strengthened powers to prevent rather than react to financial crises that can spiral into worldwide recession.
Cooperation amongst international financial institutions has failed to ward off the worst financial crisis in decades and a new charter should be forged, German Chancellor Angela Merkel told the World Economic Forum in this Swiss ski resort.
“This may even lead to a U.N. Economic Council, just as the Security Council was created after the Second World War,” she said.

Will Russia and China get a veto?
Germany, UK urge global economic overseer [Reuters]

To: Global Investment Banking, Global Markets Group, Registered Global Commercial Banking & Global Product Solutions Associates, and Registered Technology & Operations Support Partners
From: GCIB Compliance & Operational Risk Management and GCIB Legal
Subject: Compliance Advisory – Block of Social Networking Sites, Wikis and Blogs

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  • 30 Jan 2009 at 3:52 PM

Your Asses: Possibly Capped

Pay and bonuses for executives at companies receiving federal bailouts would be limited in total to the U.S. president’s $400,000 salary, and a court would be created to restrain their “massive self-indulgences,” under legislation introduced by two senators.
“We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer” by taking multimillion-dollar bonuses, said Democratic Senator Claire McCaskill of Missouri. Her proposed $400,000 pay cap for executives would cover salary, bonuses and stock options.


Bill Would Cap Salaries at Companies Taking Bailout
[Bloomberg]

Picture 656.pngLots and lots of things (and stuff). Some of it conflicting, some not. All of it fluid. Sayeth Gasparino:

I can’t remember the Treasury Department bailing out Steve Cohen and Art Sandberg. They’re bailing out Citigroup and Bank of America and the bailout plan they have on the table right now, at least one that’s been recently teed up in the press which is essentially this aggregator bad bank where you buy all the bad assets between $1 and 2 trillion. It’s been leaked out they’re looking to do this.
This thing, according to sources, telling CNBC, this thing is now officially been put on hold. It’s hit a major snag. They can’t figure out how exactly to make it work. It was the same problem back in September when we broke the story about the TARP when the market went up 500 points because it makes great conceptual sense. If the government cancome in and buy up all the bad stuff off the balance sheets of all the big banks. If this stuff can trade up it’s worth 50 cents on a dollar and not 22 cents on the dollar. Everybody’s happy.
Making that thing work has proven very difficult. The Treasury Department, the FDIC and the Feds recently, the last couple of days, have been having meetings with senior CEOs at the major Wall Street firms to price the stuff sold to this aggregator bank. You know, they’re more confused now than ever before. The feeling I get, at least these talks are ongoing. There was talk about a meeting this weekend with all the CEOs to try to do this thing. I heard that. That is not happening, at least as of 10 minutes ago. No meeting called. No way Wall Street expects that meeting to be called. They can’t figure out how to make this thing work. The pricing is at issue. If you hold the stuff, Wall Street holds it on the balance sheet, they can mark it up to their model 50 cents on the dollar. Or they sell it, the market says it’s 22 cents on the dollar. If the government buys it at 22 cents, most of the banks would take major losses. We’ll be back to where we were a couple of weeks ago. If the government buys it at 50 cents on the dollar, the taxpayer could be taking it on the chin. That’s the problem we have here. While they may shelve this aggregator bank, they may come up with some other alternative like insurance or some sort of guarantees on this stuff blanket across the board.

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  • 30 Jan 2009 at 2:45 PM

Has Lewis’ Time Come?

We suppose that just by asking the question the Financial Times seems to think so. To wit:

There is a popular cry for Ken Lewis to do a far, far better thing than he has ever done. But why should the boss of Bank of America’s head roll? There are two thrusts to the argument. The first is retrospective: Mr Lewis should be punished for inadequate due diligence before buying Merrill Lynch, which lost $15.3bn last quarter and sent BofA’s shares tumbling. The second argument looks ahead: Mr Lewis has so inflamed employee passions at both BofA and Merrill that he can no longer lead the combined bank.

Well fine. If the court of Bank of American Merrilwide can vote on it, so can Dealbreaker.

Bank of America’s CEO [The Financial Times]