The Journal reports that in order to get around that pesky matter of not be allowed to give bonuses employees have become accustomed to in year’s past, Citi and Bank of America are “expected” to raise base salaries for investment bankers “soon.” This shouldn’t come as much of a shock to Ken Lewis’s underlings, as it’s been expected for some time (and may have actually already begun).* Of course, the banks could’ve been simply leaking maybe we’ll do this, maybe we’ll do that, maybe we’ll offer deeply discounted pony rides stories to the press in order to jerk the chains of their employees, so it’s nice to get a little confirmation from Bank of Amerillwide spokeslady Jessica Oppenheim (who said that “pressures in the investment-banking and capital-markets businesses continue to be intense” and that BAC would “take the steps necessary to retain key employees”) and to see Vikula possibly getting on board.
In related news, JPMorgan and Goldman are not worried about their employees leaving to go work at the two greatest banks in all the land (league table trainwreck edition), despite what must be highly amusing threats to the contrary, and are therefore, supposedly, not considering an increase in base pay. Which could also possibly be explained by the fact that a raise in base pay at JPM/GS is unnecessary ’cause it’ll be business as usual when bonus times comes around again, and the government can suck it. Thank you and good night.
*Nor should it be cause for celebration, since it most likely won’t translate to increased comp overall. Although perhaps it’s comforting to know total compensation won’t be coming out to a ten spot and an autographed headshot of Lewis or Pandit, which many legitimately thought would happen. In which case, party on.
Archive for May 2009
Comp Watch ’09: Citi And BoA Probably Base Raising Pay, JPMorgan And Goldman Calling Your Bluff
By Bess LevinGM Bondholder Offer Disappoints (WSJ)
“General Motors Corp. said it won’t repurchase any of the $27.2 billion of notes sought by the ailing auto maker, saying bondholder interest was far below the 90% threshold the company was seeking.
GM was seeking support for an effort to swap the debt load for a 10% stake in a restructured company that is on the brink of filing for bankruptcy.”
Roubini Comments On Recession Ending (NYT)
“We are not yet at the bottom of the U.S. and the global recession,” said Roubini. “The contraction is still occurring and the recession is going to be over more towards the end of the year rather than in the middle of the year.”
“There is still too much optimism that a recovery is just around the corner,” said Roubini, a professor at New York University’s Stern School of Business and chairman of RGE Monitor, an independent economic research firm.”
US Debt Downgrade Possible? (FT)
With the downgrade of British debt, the FT is looking into whether or not the United States could be next. While a downgrade is highly unlikely, recent events have proven just about anything is possible.
“Standard and Poor’s decision to downgrade its outlook for British sovereign debt from “stable” to “negative” should be a wake-up call for the US Congress and administration. Let us hope they wake up.
Under President Barack Obama’s budget plan, the federal debt is exploding. To be precise, it is rising – and will continue to rise – much faster than gross domestic product, a measure of America’s ability to service it. The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years.”
$$$ Scenes From the Hiring Front: ‘I’ll Work for Free‘ [Cityfile]
$$$ Lazard Predicts Close Call in Target-Ackman Battle [Dealbook]
$$$ From (Morgan Stanley) banker to yogi by way of skinny boyfriend [SC]
$$$ “Secured bank lenders to General Motors would get a full recovery on $6 billion in loans made to the auto maker, under the bankruptcy plan being finalized this week by the U.S. Treasury.
The Treasury plans to inject a fresh $50 billion in various financings to back a GM workout, most of which would take the form of company equity.
The hope is that a reorganized GM would have only about $10 billion to $12 billion in debt once it emerges from bankruptcy.” [WSJ]
That’s right, ladies, act quickly ’cause just like our boy toy CEO of choice, this hot piece of (real estate) ass(et) will not stay on the market for long. Jamie and his wife Judith are looking to unload their home in Chicago’s Gold Coast neighborhood, where they lived during the Bank One years. For $10.5 million you’ll get 15,700 square feet, 26 rooms, a 900 square foot rooftop terrace, and the stench of Black Widow wafting from the closet Jimmy Cayne’s been squatting in for the last year, unbeknownst to JD.
Farewell, poor Connecticut, we barely knew ye. Next stop: Vegas, baby.
Prompted by the Bernard Madoff investment scandal and other financial failures, Democratic senators called Tuesday for Connecticut to become the first state in the nation to require more disclosure and transparency for hedge funds, private-equity firms, and venture capitalists.
Led by Senator Bob Duff of Norwalk, senators said the move was necessary in order to protect consumers and investors. The bill, which is supported by the Managed Fund Association, states that any firm that is not registered with the Securities and Exchange Commission must still abide by the SEC rules that state that material conflicts of interest must be disclosed to the investors.
“We’re not changing the rules. These are the rules the SEC has,” said Duff, who has been pushing for legislation for three years.
We are looking forward to seeing all the hedge funds move to Nevada. Actually, when you think about it, the convenience factor alone is reason enough to make the move. A lack of proximity to Washington is also a major point for the trip West. Then there are the amazing deals on hotels that the credit crunch has created. And do I even have to mention the ease of parking?
Senate Debates First State Hedge Fund Regulation in USA [courant.com]
Above, an artist’s rendering of Valery and Olga Kogan’s would-be Greenwich manse. Dealbreaker readers know the place for its role in ToiletGate, wherein a Fairfield County transplant attempted, almost exactly a year ago, to out-toilet the Toilet King of Greenwich (Kogan wanted to equip his home with 26 commodes, which would have beaten the pants off of a certain someone’s 23, and broken Section 182, clause 17 of the Greenwich town code, which clearly states that “no home shall exceed the number of waste-removal stations as are found at Casa Cohen”). Koges, a Russian billionaire, was unsuccessful, having clearly underestimated our guy’s influence with the plumbing community and the collective WASPian outrage of his neighbors at the idea of having to stare at the 39,000-square-foot monstrosity. The Russkies appeared before the town’s Planning and Zoning Commission in January practically begging to be allowed to build an essentially neutered home at 18 Simmons Lane outfitted with a mere 15 toilets, and from there, fears that our majesty would be dethroned having been put to bed, we stopped caring and lost sight the story. But today brings news that we cannot ignore.
After Einhorn’s Lehman pan last year, the Ira Sohn Research Investment Conference is sure to be a madhouse this time around. Tomorrow. Time Warner Center. $2,000 a head. Don’t whine. Times may be tough but you are getting some hot hedge fund manager action for the price of a weekend supply of mid-budget hooker and iffy (but moderately effective) blow. Your favorites (and ours) will all be there. Einhorn is attending again, along with Ackman and Chanos. Our guess (and that of New York Magzine)? Good time to go long SKF (after consulting with your professional advisors, of course).
What could possibly happen this year to rival last year? Here’s our wild guess — another assault on the financials. Because despite the carnage of the last year, there remains a great deal of enmity toward the banks. Hedge-fund guys don’t much care for the way they’ve gotten to bend the rules to their own advantage, like with that short-selling ban. The question is, if an investor is brave enough to restart this war, what’s the most suitable target?
At this point, going after a crippled giant like Citigroup or Bank of America is cheap sport. Sure, both stocks have enjoyed an improbable run-up in recent weeks, but seriously — does anyone actually believe in the health of these institutions? Intellectually, it’s an easy case to make that they’re screwed, and Ackman has already made it. The big regional banks seem equally screwed, but who can even keep their names straight? Fifth Third? What? Who?
Making a lasting impression would mean going after one of the financial untouchables, of which, as far as we can tell, there are but three: Goldman Sachs, JPMorgan, and Wells Fargo.
Goldman? GOLDMAN? Fortunately, we’ve stocked up on canned goods and ammo and all that time our last intern spent digging the basement shelter looks like it might pay off.
Hedge Funds Sharpen Blades in Preparation for Annual Conference [New York Magazine]
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