Finally, it pays to be Kenneth Feinberg’s special-needs CEO. You get this insider info before everyone else. The Times reports:
Under the plan, which will be announced in the next few days by the Treasury Department, the seven companies that received the most assistance will have to cut the annual salaries of their 25 best-paid executives by an average of about 90 percent from last year. The executive’s total compensation — including bonuses and retirement contributions — will drop, on average, by about 50 percent. The companies are Citigroup, Bank of America, the American International Group, General Motors, Chrysler and the financing arms of the two automakers.
The debate about what to do with large institutions that were directly responsible for the massive loss of financial life over the past two years has been heating up again recently. From Alan Greenspan to Paul Volcker, there is a growing chorus of people calling for the elimination of certain large organizations in their current form to avoid the economy taking another tumble while also bringing back the idea that nobody is too big to fail. One UK lawmaker is vowing to take that concept to the one area previously left out of the discussion: regulators.
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After a solid half-century of excellence falling behind their foreign counterparts in efficiency and surviving on credit bubbles, you’d think the former head of the mighty GM empire, Rick Wagoner, might have had some sense of urgency to position the company in a direction other than a government orchestrated bankruptcy. According to Steve Rattner, the well-placed sense of self at GM under Wagoner rule can be summed up by two words: friendly arrogance. From the outside world, that may seem a bit off target for a company whose financial performance mimicked that of a crash test dummy, but Rattner got a in-depth look at GM. Maybe he saw evidence of its inner excellence.
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Just like he claims to have never touched marijuana despite the fact that former colleagues describe his office at 383 Madison as a “straight-up grow house.” Wall Street Marijuana and Cough Syrup Expert Charlie Gasparino, however, is not convinced, and implies as much in The Sell-Out. CG knows an addict when he sees one, and what’s more, his sources in the world of crack-slinging are second to none.
Cohen recalls one such incident of Cayne’s free-living lifestyle: Cayne called him to his forty-eighth floor corner office with its great view of the East River in Lower Manhattan to discuss some firm business. After a couple minutes of small talk, Cohen says Cayne reached down into his desk and pulled out a blue Bromo Seltzer bottle. (Bromo Seltzer is a white powdery antacid.) “What do you think’s in here?” Cayne said, according to Cohen’s recollection. “Bromo Seltzer?” Cohen asked, slightly bewildered. “No, it’s filled with cocaine,” Cayne said with a smile. Cohen never checked to see if that was true, and Cayne in an interview says he has never done coke (he also called Cohen’s account “patent bullshit”).
The Financial Crisis Lit Cheat Sheet [NYM]
I told her that it was intended to be a compliment à la you’re the Money Honey but powerful and in leather and carrying a whip but I don’t think it helped much. MDubs did concede, however, that “it could be worse” and that her mother “loves” the moniker which really? Is all we’re after here: the mom endorsement. Unfortunately Vikram Pandit was not present at the party last night for Andrew Ross Sorkin’s new book, Too Big To Fail, as a demo on the spreader and truss bar would’ve been nice but maybe next time. John Mack was there, though not offering himself up for an impromptu primer. JM held court in the back room for most of the evening, where he told us that contrary to popular belief he is “not retiring” but merely shedding the CEO title. Being Chairman of Morgan Stanley is a full-time job, and he will be in the office everyday come January, for those of you thinking he’d be taking it easy in North Carolina. No Lloyd Blankfein, which stung, but his loss, right? We don’t need that guy and his blood sucking ways. Jamie Dimon did his part repping for the “hot piece of ass” CEO contingent and fresh off an afternoon set at the Laugh Factory was Bill Ackman, on a roll with the prison warden jokes. Also working the room:
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Paying $30k per head for the privilege to attend a dinner where your employer is the only thing truly feasted upon is a bit steep even by Manhattan standards. The brave few from the big banks who attended last night’s Democratic fund-raiser probably had a good idea of what the President had on the menu beforehand ,but may not have expected a full three courses of what Wall Street did wrong.
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Everytime we try and get off the Berns Beat this guy reels us back in. Not content to let Raj Rajaratnam and his little insider trading case dominate the limelight, Madoff sees your “Sri Lankan scandal” and raises you a “I eat Italian food prepared by a pervert.” The Daily News reports that inside the Butler, NC prison he calls home, the Ponz Master bunks with a 21 year-old drug dealer and eats pizza “prepared by a child molester.” That should be enough to hold our attention but in case you were considering spending your morning discussing the implications of Raj-Raj winding down his fund, Big Big goes on:
New additions to a lawsuit against the jailed Ponzi schemer charge that he presided over an office so fueled by the drug that it was known as the “North Pole.”
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Raj Rajaratnam maintains allegations are baseless. In related news, who wants to buy a hedge fund?
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Chiesi Search For Investor Edge Went To Far, Say Prosecutors (WSJ)
Danielle’s attorney begs to differ: Mr. Kaufman said that all Ms. Chiesi was doing was trying to get better information than most people have, which is “what thousands and thousands of people in the financial community try to do,” He added, “I did not see any allegations that Danielle was trading for her own account or that she personally profited from this.”
Bank of America Saw Merrill Losses in November, E-Mails Show (Bloomberg)
“Read and weep,” Chief Accounting Officer Neil Cotty wrote in a Nov. 5 e-mail to Chief Financial Officer Joe Price that included Merrill’s October financial report.
Galleon Moves Assets Into Cash (FT)
Most investors are redeeming ASAP though one charitably offered: “Liquidation would be the objective thing to do,” adding that he would be “looking to see what happens this week.”
Goldman Sachs Exec Defends Bonuses At Ethics Debate (Reuters)
Brian Griffiths said he was not “ashamed” of his bank’s compensation package.
King Suggests Splitting Up Largest Banks to Stem Risk (Bloomberg)
Mervyn says chop ‘em up.
Fed Chooses Staff Economist as Head of Bank Supervision (WSJ)
“As an economist with deep expertise in financial markets, Pat Parkinson will be an important asset at a time when we are focusing on a multidisciplinary approach to banking supervision and regulation,” Mr. Bernanke said. “We’re working to supervise the banking sector in a way that focuses not just on individual institutions, but on how those institutions are interconnected and are integrated into the financial system and the economy.”
