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Wall Street bonuses to rise 40%

November 7, 2009 / Klint Finley

There has been plenty of evidence that firms like Goldman Sachs (GS) have had such huge profits that their bonus payouts may be at all-time highs.

The federal government has systematically begun to control bank pay packages. The Treasury “pay czar” is effectively controlling compensation at companies which still owe TARP money. The Fed is pressuring other large financial firms to tie pay to risk.

None of those efforts seems to be working well, because bankers are ignoring the signals from Washington.

A new compensation survey described in The Wall Street Journal predicts that Wall Street incentive pay will rise 40% this year. For those in the fixed-income part of the industry, the increase could be closer to 60%.

MSN Money: Wall Street bonuses to rise 40%

(via Braincrowbar)

Goldman Sachs Official Says Jesus Embraced Greed

November 5, 2009 / Klint Finley

I didn’t believe this story was true at first — thought it had to be a spoof. But it turns out to be true. The great banks of the world have gone on a p.r. counteroffensive in Europe, and are sending spokescrooks in shiny suits into churches to persuade the masses that Christ would have approved of the latest round of obscene bonuses.

Goldman Sachs international adviser Brian Griffiths explains it this way: that Christ’s famous injunction to love others as one would love oneself actually means that one should love oneself as one would love oneself. This seemingly baffling outburst by a Goldman executive in what appears to have been a prepared speech — someone actually wrote this, and thought about it, before saying it out loud — gets even weirder when one tries to figure out what could possibly have motivated this person, and by extension his employer Goldman Sachs, to make such statements in such a place as St. Paul’s Cathedral.

Matt Taibbi: Goldman One-Ups Gordon Gekko, Says Jesus Embraced Greed

Update: Anyone who’s been reading this blog for a while will be familiar with The Family. Reader Joe points out in the comments:

This shouldn’t be surprising for anyone who has read Jeff Sharlet’s book _The Family_. This rhetoric is straight out of their play book. This guy is likely a member (he *spoke at* the funeral of Wallace Haines, The Family’s ‘man in Europe’, in 2007). http://www.wallacehaines.com/inmemoryof.htm

The plot sickens.

Dean Baker: Breaking up the banks is hard to do

November 2, 2009 / Klint Finley

Those who like banks that are too big to fail will love the latest financial reform proposals circulating in the US Congress. The bill put forward by Barney Frank, the chairman of the House finance committee, does little to change the current structure of the financial system.

The “too-big-to-fail” banks will be left in place, even bigger and less accountable than before. There will be nothing done to separate commercial and investment banking, so giants like Goldman Sachs will be free to speculate with money guaranteed by the Federal Deposit Insurance Corporation. The main difference is that the Federal Reserve Board will be granted even more power than it has now. And, we will tell the Fed to be smarter in the future, so that it doesn’t make the same stupid mistakes that gave us the current crisis. […]

The bottom line is that this bill is almost certain to leave the taxpayers holding the bag for future bailouts. Even worse, it does nothing about the moral hazard created by having institutions that are too big to fail. There is nothing in the bill to lead creditors to believe that the government will not make good on their loans to Goldman, JP Morgan and the other banking behemoths.

Guardian: Breaking up the banks is hard to do

The rise and fall of South Korea’s most popular economic pundit

October 26, 2009 / Klint Finley

minerva

Until the day he was outed, the most influential commentator on South Korea’s economy lived the life of a nobody. Park Dae-Sung owned a small apartment in a middle-class neighborhood of Seoul and freelanced part-time at a telecom company. Thirty years old, he still hoped to earn a four-year degree in economics. In the mornings, he would bicycle to the public library to study for the university entrance exam. His standard uniform was slacks, loafers, and wrinkle-free button-down shirts, as though he were going to work in an office. But with his slightly chubby moon face, glasses, and neatly parted hair, he easily blended in among the rows of students. While they worked through school assignments, he immersed himself in the text of his chosen profession.

In the evenings, Park would go online, frittering away the hours like millions of other geeks. He often played the simulation game Capitalism II, where he’d assume the role of a blue-chip investor, closing million-dollar deals and speculating on skyscrapers. Nothing that he did earned him any attention.

Then, in March 2008, Park opened an account on South Korea’s popular Daum Agora forum. Here, he decided, he would call himself Minerva, after the Roman goddess of wisdom, and write exclusively on economics, drawing on both public reports and his years in the stacks poring over Adam Smith and Joseph Stiglitz. Affecting the effortless command of a seasoned investor, he strove to project the authority that had eluded him in real life. The world economy is in the midst of collapse, he warned, so pay your debts and stock up on noodles and drinkable water. He made pronouncements on when to buy or sell a home, exchange Korean won for dollars, and pull out of the financial markets altogether.

Wired: The Troubles of Korea’s Influential Economic Pundit

Why Are Contracts for AIG Execs Different Than Contracts for Autoworkers?

October 23, 2009 / Klint Finley

Back in the spring, the Obama administration had no problem insisting that union autoworkers give up some of the health care benefits that they were entitled to in their contract. In some cases, workers had already put in more than 30 years earning these benefits. Note that this was before any of the manufacturers went into bankruptcy.

While these workers were forced to make large concessions on contractually promised benefits, we are told yet again that AIG, an effectively bankrupt company, has a contractual obligation to pay big bonuses to its top executives and traders. It would be interesting to hear why this would be the case and if it is legally committed, why shouldn’t the company just go into bankruptcy now that the immediate post-Lehman panic is over.

Dean Baker: Why Are Contracts for AIG Execs Different Than Contracts for Autoworkers?

The question answers itself.

Who owns the United States’s debt?

October 21, 2009 / Klint Finley

who owns america

From: Financial Services Technology: Federal deficit: who owns what?

(Via Contexts via Brainsturbator)

Pay your bills on time? There’s a fee for that.

October 20, 2009 / Klint Finley

You floss regularly, yield to oncoming traffic and use your credit cards judiciously, dutifully paying off your balance every month.

You may believe that your exemplary behavior shields you from unexpected credit card fees. Sadly, that is no longer the case.

Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.

Citigroup, meanwhile, has started charging annual fees to card holders who don’t put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don’t use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.

USA Today: Pay your bills on time? There’s a charge for that.

Also: Citibank is randomly closing credit cards without warning.

Matt Taibbi on naked short-selling

October 18, 2009 / Klint Finley

Here’s how naked short-selling works: Imagine you travel to a small foreign island on vacation. Instead of going to an exchange office in your hotel to turn your dollars into Island Rubles, the country instead gives you a small printing press and makes you a deal: Print as many Island Rubles as you like, then on the way out of the country you can settle your account. So you take your printing press, print out gigantic quantities of Rubles and start buying goods and services. Before long, the cash you’ve churned out floods the market, and the currency’s value plummets. Do this long enough and you’ll crack the currency entirely; the loaf of bread that cost the equivalent of one American dollar the day you arrived now costs less than a cent.

With prices completely depressed, you keep printing money and buy everything of value — homes, cars, priceless works of art. You then load it all into a cargo ship and head home. On the way out of the country, you have to settle your account with the currency office. But the Island Rubles you printed are now worthless, so it takes just a handful of U.S. dollars to settle your debt. Arriving home with your cargo ship, you sell all the island riches you bought at a discount and make a fortune.

This is the basic outline for how to seize the assets of a publicly traded company using counterfeit stock. What naked short-sellers do is sell large quantities of stock they don’t actually have, flooding the market with “phantom” shares that, just like those Island Rubles, depress a company’s share price by making the shares less scarce and therefore less valuable.

Rolling Stone: Wall Street’s Naked Swindle

SEC hires Goldman vice president for enforcement

October 18, 2009 / Klint Finley

Talk about putting wolves in charge of protecting sheep…

A former Goldman Sachs (GS.N) vice president has been named the chief operating officer of the U.S. Securities and Exchange Commission’s enforcement division, the regulator said on Friday.

Adam Storch, who was a vice president in Goldman’s “business intelligence group,” will be responsible for managing projects and other operational aspects of the SEC’s enforcement division, the agency said.

Reuters: US SEC hires Goldman vice president for enforcement

Democrats Are Jarred by Drop In Fundraising

September 25, 2009 / Klint Finley

One would think the financial elites would be well pleased with the Democrats right now. Not so. It just doesn’t stop:

Democratic political committees have seen a decline in their fundraising fortunes this year, a result of complacency among their rank-and-file donors and a de facto boycott by many of their wealthiest givers, who have been put off by the party’s harsh rhetoric about big business.

The trend is a marked reversal from recent history, in which Democrats have erased the GOP’s long-standing fundraising advantage. In the first six months of 2009, Democratic campaign committees’ receipts have dropped compared with the same period two years earlier.

The vast majority of those declines were accounted for by the absence of large donors who, strategists say, have shut their checkbooks in part because Democrats have heightened their attacks on the conduct of major financial firms and set their sights on rewriting the laws that regulate their behavior.

Washington Post: Democrats Are Jarred by Drop In Fundraising

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