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Posts Tagged ‘bailout’

The Goldman Gang Rides Again (Part One)

September 11, 2009 (By Mark Faulk)

From “The Faulking Truth Blog”, by Mark Faulk

– At a banking conference in Frankfort, Germany on Wednesday, Goldman Sachs (NYSE: GS) CEO Lloyd Blankfein took what Reuters’ writer Edward Taylor described as a “hard line on bankers’ compensation.” According to Blankfein, “Compensation continues to generate controversy and anger, and, in many respects, much of it is understandable and appropriate. There is little justification for the payment of outsized discretionary compensation when a financial institution lost money for the year. Therefore, I and all other Goldman executives have decided to return 90% of all compensation received over the last ten years, which will make many of us merely rich as opposed to obscenely rich.”

Okay, I made that last part up. Of course, the key phrase in Blankfein’s comments was “when a financial institution lost money,” which exempted Goldman Sachs and fellow mega-banks JPMorgan Chase (NYSE: JPM), Wells Fargo, Bank of America (NYSE: BAC), and Citigroup (NYSE: C), all of whom reported healthy profits in their most recent quarters. Of course, Citigroup and Bank of America made the loin’s share of their profit by selling off assets, but then, a profit is a profit. [entire post]

Tags: 'new york post', aig, bailout, bank of america, citigroup, depression, fcic, goldman sachs, institutional, jpmorgan chase, lloyd lankfein, main street, richard friedman, richard kimball jr, tarp, taxpayer subsidies, wall street, wells fargo, white collar
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TARp Baby Bonuses

July 31, 2009 (By Susanne Trimbath, Ph.D.)

From “Outside The Ivory Tower”, by Dr. Susanne Trimbath

New York State Attorney General Andrew Cuomo released a new report on bonuses paid to the employees of nine recipients of the TARP bailout money. He called it “The ‘Heads I Win, Tails You Lose’ Bank Bonus Culture.” AG Cuomo concluded that even “in these challenging economics times, compensation for bank employees has become unmoored from the banks’ financial performance.” The report is only about banks, of course, since all the investment banks and brokerage firms changed their status to “bank” to become eligible for TARP bailout money.

Despite the hue and cry of the public, these bonuses have continued. In my view they will continue. Although we may think that sticking labels on the banks behavior, or asking Congress to enforce some discipline, will make a difference, it is unlikely to change anything. After the early 2009 bonuses were revealed, the banks claimed that the bonuses were required by contracts and could not be broken without violating the rule of law. They got away with this claim even as contracts with the United Auto Workers were being revised. Therefore, I offer you this modern fable, with a tip of the hat to Joel Chandler Harris. [entire post]

Tags: bailout, bank, bonus, congress, cuomo, tarp
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Company Failure Can Pay Investors More Than Success

July 11, 2009 (By Susanne Trimbath, Ph.D.)

From “Outside The Ivory Tower”, by Dr. Susanne Trimbath

Back in March, I wrote a piece for NewGeography.com called Burnin’ Down the House (www.newgrography.com/users/susanne-trimbath) on the financial crisis. I used data on derivatives outstanding made available by the Depository Trust and Clearing Corporation for publicly traded credit default swap contracts and compared that to the market value for public companies based on recent closing stock prices. In case after case, there are more derivatives than there are underlying assets — meaning you could buy all the equity to take control of a company, drive the company into default, and profit from the derivatives payoff. [entire post]

Tags: aig, apple, bailout, bank of america, boeing, citigroup, credit default swap, default, DTCC, general electric, google, junk bond, palm, sprint ntextel, taxpayers, wells fargo, yum!
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United Auto Workers As Employer?

May 28, 2009 (By Gary Vassalotti, LIFA)

From “Vassalotti’s View”, by Gary Vassalotti

If you’ve been following the auto industry, you can’t help but notice it’s going through a major transformation. And part of the transformation is a change of ownership. But, it’s not the normal change of ownership that companies go through when being put through the financial wringer. When Chrysler and GM come out of the wash, they won’t be owned by their respective creditors — secured or unsecured — or even the current shareholders (which, in a perfect world, would be the case).

Instead, they’ll be owned in large part by the UAW, an organization that most industry observers believe deserve a large part of the blame for the demise of the industry giants. Why, then, is the UAW getting any ownership position at all? How can it be that bond holders and other deserving parties — who should own the assets — are left-out in the cold?

But, let’s put those “minor”, “inconsequential” questions aside, and examine this (apparent) new industry structure more closely:

We’ll now have two of the three (US-owned?) automakers actually owned in large part by the same organization that’s responsible for negotiating labor costs? TWO out of THREE? Am I the only one that sees a major conflict of interest here? Or, to put it another way, are you invested in Ford? [entire post]

Tags: (un)employment, automobile, bailout, bankruptcy, capitalism, chrysler, conflict(s) of interest, ford, general motors, labor, shareholder, union(s), united auto workers
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