$$$ Egret-smuggler pleads not guilty. [FINalternatives]
$$$ Spitzer Madams’ Fortunes: One Goes Up, the Other Goes Down [NYP]
$$$ Jobs of the Day: Morgan Stanley needs an equity research associate. [DB Career Center]
Archive for January 2009
$$$ Egret-smuggler pleads not guilty. [FINalternatives]
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 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
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
Annual Costs: 50 hours @ $5200/hr: $260,000
Aircraft Subtotal: $8,060,000
Aircraft Subtotal: $45,760,000
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.
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!
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
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.
Lots 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.
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]
The Justice Department says it foiled a plot by a fired Fannie Mae contract worker in Maryland to destroy all the data on the mortgage giant’s 4,000 computer servers nationwide.
The U.S. Attorney’s Office says 35-year-old Rajendrasinh Makwana, of Glen Allen, Va., is scheduled for arraignment Friday in U.S. District Court in Baltimore on one count of computer intrusion.
U.S. Attorney Rod Rosenstein says Makwana was fired Oct. 24.
Rosenstein says that on that day, Makwana programmed a computer with a malicious code that was set to spread throughout the Fannie Mae network and destroy all data this Saturday.
Bloomberg is reporting that change, she is in the wind for the infamous “insurance like products.”
Dealers plan to overhaul credit- default swaps in March to curb risks in the $28 trillion market, making the derivatives more like bonds and creating a committee that will arbitrate disputes.
For the first time, the market will have a committee of dealers and investors making binding decisions that determine when buyers of the insurance-like derivatives can demand payment and could influence how much they get, industry leaders said yesterday at a conference in New York. Traders also will revamp the way the contracts are traded, requiring upfront payments to make them more like the actual bonds they’re linked to.
We are big fans of credit default swaps, and not only because we think John Paulson is so sexy. (He has this sort of quiet-genius charm that reminds us of someone, but we aren’t quite sure who). Of course, since they are the cause of the downfall of AIG, Lehman Brothers, the income inequality situation, the breakup of your favorite band, cats and dogs living together, or, in short, all that ills this country and the world, they might be legislated right out of existence. (We doubt this, but it is a wonderful dramatic lead in to the third act of the piece here).
We are looking forward to the world where the only finance products permitted go up forever, and where everyone makes above average returns. That future is before us, and Chairman Harkin will take you there. Hold on, the first drop is a bit bracing.
Credit Swaps Overhaul Planned for March as Dealers Curb Risks [Bloomberg]
A tipster hints that UBS, having now effectively gelded Investment Banking compensation but has not done much to the other units, in particular, Wealth Management. The story goes that UBS has been escrowing IB bonuses for some time, since they only pay once a year, and that while many of these are contractually guaranteed, a long sitskrieg between the Swiss monster and its employees, who are unlikely to quit until paid, has begun. UBS is sort of stuck in a political bind. Paying bonuses would be politically explosive (the Swiss National Bank is shareholder) but they are contractually committed to do so. Ouch.
One would think that UBS would just sell the Investment Bank if they wanted to be rid of it, but given the market, that might not be a viable alternative. So is it better to let the IB wither of its own accord?
At the same time, we are told, but cannot confirm, that UBS is on a Wealth Management hiring spree. This would make some sense, given the degree to which this unit has grown, and the fact that, certain tax evasion indiscretions that we pretty much expect of the Swiss aside, it has mostly kept its nose clean. It would, however, seem to conflict with the public appearance that the bank is suffering. Perhaps it would be better to say the investment bank, now quarantined like an Ebola patient, is suffering?
What the hell is going on over there at UBS anyway?
We don’t have to tell you that times are extremely tough. With so many individuals and institutions taking it up the A, it should come as no surprise that even the once most successful among us are cutting corners, where they think they can get away with it. Employees at Morgan Stanley are sharing computers, the staff at Citi are sharing pencils, and the ladies at SAC have been allotted ONE pair of stilettos per portfolio team. So Blackstone founder Steve Schwarzman probably didn’t think it was a big deal when he (or one of his deputies) decided to try and scam the FT, in a cost cutting effort. But Crab Hands THOUGHT WRONG. Cityfile reports that CH, I shit you not, is being sued by the FT for allowing employees to all share one log-in, rather than pay for separate online subscriptions.