So, okay. Kenneth Feinberg said at a conference this morning that he is worried that the pay cuts he came up with will drive away talent from the companies on whose asses he’s placed caps.
Kenneth Feinberg, the Obama administration’s special master for executive compensation, said he is “very concerned” about the possibility his pay cuts may drive talent away from companies bailed out by U.S. taxpayers.
What’s happening here? Is this one of those situations where he’s being like I understand where you’re coming from, I’m not disagreeing with you, but it’s too late and you have only yourselves to blame. OR: is K.Fein starting to second guess himself? Is it possible in his moment of vulnerability he can be broken? OR (and this is this most likely scenario): are we witnessing a little passive aggression being thrown in the direction certain elvin colleagues at the Treasury, whose incessant sniveling has worked Feinberg’s last nerve? He likes the caps just fine but if it means undermining the world’s most famous tax-evader he’s willing to do what it takes?
Isn’t this rich? Bill Gates, the richest man in the whole country, thinks Wall Streeters are paid too much.
The compensation problem is a very interesting problem. I do think compensation is often too high, but it’s a very tough problem to solve.
Gates blamed a 1993 federal law capping executive salaries at $1 million–”a bad milestone”–which he said wound up backfiring, encouraging huge bonuses and stock option awards. He doesn’t like that, he said during a discussion on philanthropy in New York yesterday, but he’s wary of doing anything about it, worrying that, like the ’93 law, it will just make things worse.
Balyasny Ex-Analyst Under Probe (WSJ)
A complaint was filed last week alleging that an unnamed individual, supposedly Mark Adams, provided material non-public info about EMC Corp, where he once worked, in 2008 and 2009 while he was at Balyasny Asset Management (Adams previously worked at SAC Capital from July 2005 to December 2007). Bear Stearns Loss Echoes Long Line of U.S. Prosecution Defeats (Bloomberg)
Don’t worry, the Matthew Tannin/Ralph Cioffi case wasn’t the first time the Justice Department was made to look stupid: “The acquittals of two Bear Stearns Cos. hedge-fund managers in a test trial for prosecutions linked to the subprime crisis echo a long line of high-profile financial cases that blew up in the government’s face. The U.S. twice failed to jail ex-Credit Suisse banker Frank Quattrone for obstruction, in 2003 and 2004; HealthSouth Corp. founder Richard Scrushy eluded a fraud conviction in 2005; and many defendants walked free in the most notorious corporate fraud of the decade, the fall of Enron Corp. in 2001.” Bill Gates Says Wall Street Pay Is Too High (Reuters)
But he also doesn’t like the government putting caps on salary, getting up in people’s business, etc: “I do worry that when the government owns an entity like AIG that you can greatly devalue that entity by having it essentially have to behave as though it part of the government,” Gates said. “It’s an unnatural situation when the government owns a lot of a private company. Unfortunately there is a view that that should exist for a long term. There’s some devaluation of what that asset would have been worth if it hadn’t had to go through that kind of management structure. It’s unavoidable,” he said. Beijing’s Heaviest Snow in 54 Years Strands Thousands (Bloomberg)
The gov wanted a snow day and god damn it, they were going to get one: “The government induced snowfall in the capital on Nov. 10 by seeding clouds with silver iodide, the China Daily newspaper reported yesterday, citing an unidentified official at the Beijing Weather Modification Office.” White House Aims To Cut Deficit With TARP Cash (WSJ)
They’re serious about fixing this thing: “The idea is still a matter of debate within the administration and it is unclear how much impact it would have on the nation’s mounting deficit levels. Still, the potential move illustrates how the Obama administration is trying to find any way it can to bring down the deficit, which is turning into a political as well as an economic liability.”
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Admit it: You’re bummed that the Bear Stearns fraud trial has ended in a flash of prosecutorial incompetence and 12 potential clients for Ralph Cioffi and Matthew Tannin. We are, too. But fear not, friends, there’s an embarrassment of hedge fund fraud riches out there to continue to follow, and we thought we’d offer a Readers’ Digest of the (alleged) scams and scandals still making news. Madoff: Let’s start with the mother of them all. Bernie may be moldering away in Butner with the homosexual posse, but the fallout from Ponzi scheme to end all Ponzi schemes* continues. Last week, Madoff’s storefront accountant pleaded guilty to fraud, obstruction and false filings. But the court battles aren’t over: Swiss authorities have charged the former head of Banco Santander’s fund of hedge funds arm with criminal mismanagement for overseeing its $3.5 billion in Madoff losses.
Irving Picard is still busy, too. The court-appointed receiver, who said he’s promised to pay out $534 million to Madoff’s victims, has been forced to cut his claim against Madoff feeder fund magnate Ezra Merkin by one-third to $564 million. And then there’s the aftermath of the death of Madoff buddy and Picard target Jeffry Picower.
Eliot Spitzer is scheduled to deliver a lecture tomorrow at Harvard. The topic: ethics. Unfortunately, some people would rather the event not come to pass. Namely, Kristin Davis, the hedge fund employee-cum-Madam who personally scheduled a slew of Spitzer’s appointments back in the day. What has she done about it? Written a letter to Harvard protesting the whole thing, that’s what! In her missive, David apparently lists seven reasons why this shit should not go down and says, I think sarcastically, that she is “greatly intrigued as to what Mr. Spitzer could contribute to an ethical discussion.”
Leave it to the World Bank to rain on everybody’s parade. The president of the root of all evil, in ignorance or in spite of Larry Fink, sees a bubble burgeoning to the east.
Mr Zoellick said on the margins of the Asia-Pacific Economic Co-operation summit in Singapore: “Traditionally the central banks in east Asia will follow the [US] Federal Reserve because if they raise interest rates [independently], that will draw capital and appreciate their currencies.
“In the US and Europe, because things are still relatively weak, I don’t see any likely inflationary effects at this stage. In east Asia, if you start to get a strong rebound in growth and you’ve got a lot of liquidity, there is a question of whether you start to face asset bubbles,” he said.
Zoellick’s warnings come hot on the heels of his partners-in-crime at the International Monetary Fund doubling their estimates for Asian economic growth this year.
Update: Fuck the below and headline above: CNBC reports that Bob has sent a memo to employees promising he’ll never leave them.
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Obviously it goes without saying that we sincerely hope Bobby B’s threat to walk out of AIG and never come back was just that. Hopefully the board will coax him down from the ledge and Ken Feinberg, understanding that no one else has the panache to get the job, will lift these silly compensation restrictions, and give ‘Mosche the room to work. We need Bobby AIG if only so that he can taunt Andrew Cuomo into a fistfight, and tell us how he really feels about the “crazies in Washington.” Yes, he could do all this from one of his finely appointed bathrooms in Croatia, but a slightly loftier perch would be nice. But: it’s possible he might actually have been serious when he said he’s “had enough of this” and so we must prepare ourselves. Deal Journal reports that the following AIG board members are possibilities:
- Douglas Steenland, the former Northwest Airlines Corp. chief executive
- Robert “Steve” Miller, the former CEO of Delphi Corp,
- Arthur Martinez, the former CEO of Sears, Roebuck & Co.
- Harvey Golub, the former CEO of American Express Co.
But they might not care for the gig. So, let’s add a few more names to the short list. Ken Lewis will need work soon but I think they stopped letting AIG employees booze on the job a few months ago. Hank Greenberg? I’m thinking he’d love that and it would spare him the effort of making AIG: The Sequel. Who else? AIG’s Benmosche Is A Drama Queen [The Deal]
Yesterday, together as a joint effort, we and SAC cleared the most majestic hedge fund in all the land of any possible wrongdoing vis-à-vis the insider trading case du jour. First, the firm conducted its own thorough investigation of the trades in question (and found no evidence of shady dealings). Then, we came along and finished things off with a brief but clear message: nobody fucks with the king. Nothing else needed to be said but unfortunately, some people felt the need to pipe up and remind everyone that “the determination by the big hedge fund is preliminary because a number of the stocks involved in the insider-trading case remain secret as criminal and civil investigations continue.” Obviously these people, and maybe yourselves, still don’t get it. So, today, we have no choice but to continue. For those of you– and I’m talking about the SEC, I’m talking about the Feds, I’m talking about anyone looking to make trouble– even ENTERTAINING the thought of messing with our lord, go back from whence you came. The king is busy.
They haven’t said anything yet but I think it’s pretty obvious it’s coming. Yesterday, when the dream team in charge of the two ridiculously named Bear Stearns funds–High Grade Structured Credit Strategies Fund and High Grade Structured Credit Strategies Enhanced Leverage Fund– emerged from a Brooklyn courthouse, Matthew Tannin had the shit-eating grin pictured at left on his face. He was happy, of course, that he and his co-conspirator, Ralph Cioffi had gotten off counts of conspiracy, securities and wire fraud, and dodged 20 years each in the big house. Because honestly, even MT didn’t see that coming (you read the e-mails). But mostly, he was psyched to learn that his career as a money manager is not over. People aren’t planning on holding this (apparently baseless) duping of investors stuff against him and his colleague and in fact? Some are pretty impressed with how the dream team conducted their business.
Aram Hong, a juror from Woodside, Queens, said the exchanges between Cioffi and Tannin shown to the jury proved to her that the two men were working “24-7″ to save the funds in the months before they collapsed. She noted a defense exhibit that showed the fund managers were working at 4 a.m.
Laurence Fink kindly asks all you financial journalists, bearish money managers and talking heads to shut the hell up about a stock market bubble.
Everything’s fine, the BlackRock chief wants to assure. Totally normal. “I think things are playing out as they should,” he told a Wall Street Journal executive-breakfast session. So stop talking about things going wrong, damnit: The Finkster promises us that the old crisis is basically history and that we won’t see two crises in a row.
So, okay. Kenneth Feinberg said at a conference this morning that he is worried that the pay cuts he came up with will drive away talent from the companies on whose asses he’s placed caps.
