Updated:

Jan 14, 2019

Original:

May 11, 2009

Compensations Caps For PPIP Participants?

Author:

[via The Hill]
The words "hell fuck yeah" don't actually exit TARP Congressional Oversight Panel chair Elizabeth Warren's mouth but it sounds like she's thinking it!
Melissa Francis: What restrictions would you want to put on the hedge funds and PIMCO and everyone else that applied to be a manager? Would you want to restrict their compensation structure?
Warren: You know I'm going to go back to a more basic principle if you want to take taxpayer dollars then you cannot pretend it's business as usual. You are now involved in a giant government program in which we are spending taxpayer dollars to try and support a market that is clearly stumbling. Our job is to be outside that program, our job is to be cranky and to ask for accountability for every bit of it. I'm going to leave it in that structure.
Francis: So it's not off the table. You might talk about limiting Bill Gross's pay?
Warren: I think these are entirely appropriate questions.

Only in that senior people the bank worked hard to recruit are quitting en masse. Otherwise, it's great. Barclays spent a decade assembling a team of the most successful gas and power traders in Europe. It took less than 16 months to lose most of them. Mercuria Energy Trading SA, based in Geneva, hired five members from the group of about a dozen from March 2011 to June this year, including Phil Sutterby as head of U.K. and European gas and Roger Jones, the former global chief of commodities, according to people with knowledge of the moves. Another six left for companies including UBS, Noble Group Ltd. and Freepoint Commodities LLC. The departures from the U.K.’s second-biggest bank reflect bonus caps, limits on the amount of money traders can risk and shrinking revenue from the division that includes commodities. While hiring from hedge funds and rival lenders helped Barclays catch up with Goldman Sachs and Morgan Stanley in commodity derivatives, according to Greenwich Associates, a focus on deferred pay left the bank vulnerable to headhunters. “The significant amount of deferred compensation and the aggressive cap on cash payouts at Barclays has unsettled a number of individuals,” said Peter Henry, New York-based head of front-office research at Commodity Search Partners. “Add to that the fact they have been systematically targeted by privately held trading houses, specifically Mercuria, and it’s fairly understandable why senior traders are leaving.” Bonus Limits Spark Exodus At Barclays Trading Unit [Bloomberg]

I just. Gillian Tett has a book called "Fool's Gold: The Inside Story of J.P. Morgan and How Wall St. Greed Corrupted Its Bold Dream and Created a Financial Catastrophe." It's a pretty good book about the creation and rise to prominence of synthetic CDOs, and I'm sure the subtitle isn't her fault, but it's always bothered me, because how exactly was the "bold dream" of creating synthetic CDOs "corrupted" into ... like ... selling more synthetic CDOs? If you think synthetic CDOs are a Bad Thing, they were a Bad Thing at their creation. This is not an orphanage that was taken over by bandits and turned into a source of black-market organs. It was a financial derivative that was sold to people looking to buy financial derivatives. Similarly, Greg Smith spent twelve years flogging equity derivatives to "two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia" and is just now discovering that they're designed to make money for his employer? I imagine his contacts at these hedge funds reading his op-ed today and being like "holy shit, Goldman was trying to make money off of us?" Wait no I don't. I'm pretty sure they wanted to make money too.*

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