One of the main contributing factors of the spectacular implosion of AIG’s Financial Product unit was not knowing the real value of their assets. However, based on the behavior of AIGFP’s senior management, the value of at least one thing from the unit, a promise, is becoming crystal clear. Adding credibility to Bobby Benmosche’s contention that AIG is almost immune from Ken Feinberg’s reach, the Pay Czar issued a reminder to the four senior managers in the group who had promised to return their retention bonuses that he is still waiting.
But this shouldn’t come as any surprise. Given the amount of outrage at executive compensation this past year, it’s natural for people who received generous retention bonuses to think twice about giving them back. With the changing pay landscape, what are the chances they’d be able to recoup that money and who would go to bat for them? Even AIG must know when enough is enough when it comes to unjustified compensation.
Archive for October 2009
Also: the next time you people want to debate MBA v. CFA, know this– Greenlight’s new controller has both, in addition to a CPA, to say nothing of his kickball skills.
Wall Street Reacts With Skepticism, Anger on Moves to Reduce Executive Pay (Bloomberg)
The pay cuts are “sheer stupidity,” said Kenneth Langone, co-founder of Home Depot Inc. and a former New York Stock Exchange board member. “The taxpayers have an enormous financial risk in these companies, and very simply stated, I want the best person. If I needed neurosurgery, I would want the finest doctor I could get, no matter what I had to pay for it.”
GM CEO to get raise in compensation (Reuters)
Last year’s comp was $1.71 million, this year will be $5.45 million.
CIT Reaches Tentative Deal with Goldman (CNBC)
The new agreement calls for Goldman to reduce the loan to just over $2 billion, people said. CIT in turn would pay Goldman about $300 million if it files for bankruptcy.
Top employees leave financial firms ahead of pay cuts (WaPo)
So suck it, Feinberg!
Fed Hits Banks With Sweeping Limits Pay (WSJ)
While the Fed didn’t propose pay caps, it said it will review compensation policies at “28 large, complex banking organizations,” which it didn’t identify. It will be a “horizontal review” that in effect compares them to one another. The Fed also proposed that pay of traders and other employees be linked to the risks taken to achieve returns. So if two people generate $1 million in revenue each, one who took more chances could be paid less.
Man pleads guilty to DWI in motorized La-Z-Boy (AP)
Let this be a lesson to you all.
The administration’s commitment to transparency is coming along pretty well these days. For example, it’s becoming clearer and clearer what the standard is for considering anti-fraud measures for the home buyer tax credit program. Evidently we have breached the tolerance level for the number of individuals currently in kindergarten who were approved for the $8,000 credit on their tax returns. In addition to the one 4-year old who did his or her part to help the housing recovery efforts, 581 other individuals under the age of 18 were granted the credit as well.
Bank of America: People Would Be Banging Down The Doors To Work Here If It Weren’t For Ken Feinberg And His Freaky Ass Rules
By Bess LevinMary Thompson reports that Bank of America has taken the opportunity provided by the Comp Cop’s crackdown on pay to note that “people want to work at Bank of America.” They really do! But now, in light of the new rules, they might seek employment elsewhere. Also, this.
AIG’s bashful CEO Bobby Benmosche put the fear lurking inside each one of his employees to rest yesterday. When faced with the question ‘what is Ken Feinberg going to do to my paycheck’, BB made it crystal clear to his troops that they had nothing to fear. The rule of the Pay Czar does not extend very deep into the house the US taxpayer (re)built.
“It is important that all of you know that the Special Master’s jurisdiction is quite limited, and we expect Feinberg’s upcoming decisions on compensation to cover only the top 25 employees at AIG,” Benmosche said in an internal memo distributed around the company late on Wednesday.
If there is one thing Benmosche has been consistent and adamant about since starting it’s turning AIG around as fast as possible to repay the US taxpayer making sure his people get paid competitively. But the real question is what does the guy at the top think about how his pay package stacks up. His predecessor made good on $1/yr.
You people have really done it now. Yesterday Dick Bové went on CNBC right after Wells Fargo had announced earnings, at which time he described the bank as a “standout” and one that had its loan losses “under control.” Boves followed this up by downgrading WFC from neutral to sell. No big D, she thought, but apparently some people begged to differ! DiBo was taken to task for the sharp sell off in Wells (and the market in gen) and now, because the relentless bitching just will not quit, she’s decided she’s going to pack up her act and leave. According the Rochdale analyst, we will no longer be treated to her analysis of a company she hasn’t yet analyzed. Now, she’s going to start doing her homework before appearing on television to make recommendations and what’s more? She’s no longer going to play the game where Michelle Caruso Cabrera names a company and she blurts out the first word the comes into her head.
Prominent banking analyst Dick Bove, who caused a stir Wednesday with seemingly contradictory remarks on Wells Fargo, has decided he’ll no longer provide immediate earnings commentary on air.
“I’m not going to do it anymore. I’m going to have to see the numbers before I go on air,” Bove told Dow Jones Newswires Thursday. “It creates an untenable situation.”
There are more fun times ahead for Raj Rajaratnam. Forget about proving claims of insider trading are baseless. A New Jersey lawsuit wants RR to answer for the blood allegedly on his hands. Evidently Raj and his family’s foundation transferred millions to the Tamil Rehabilitation Organization over the years. Which is a bit of a problem considering the Treasury designated the organization as a front for the Tamil Tigers and the US, EU, and India tend to file things related to the TTs under the header ‘terrorist organizations’. There is little doubt the Tamil Tigers have done some pretty horrific things over time and somebody should pay. And now, thanks to the world learning about $20 million in illicit gains, that person may be Raj.
1. Aesthetically, it’s a piece of shit. Also, Salmon wouldn’t use the pages to line his birdcage.
2. Too much Charlie.
3. That the people publicizing it in included materials that might help sell the thing.
4. This wasn’t a Tweet (yet) but just speculation: that it wasn’t written by Sorkin?
Given the recent debate about the FHA’s overall financial condition, you’d think people would jump at the opportunity to slow down the pace of FHA-insured loans. Especially when the FHA believes they’ve identified a lender signing them up for loans they shouldn’t be touching. However, after hearing the details of one or two twelve alleged violations Ideal Mortgage Bankers made against the FHA, a federal judge decided to dismiss the request for a temporary restraining order which would have prohibited the lender from making new FHA insured loans.
