You heard of US having companies that are too big to fail.
Now, you hear of Wall Street greedy pigs who are too rich to fail. Of course, in Singapore, the copycat in Singapore is the famiLEE and their arselickers
Obama Slam on ’Shameful’ Bonuses May Trigger New Restrictions
By Dawn Kopecki
Jan. 30 (Bloomberg) -- President Barack Obama’s attack on “shameful” Wall Street bonuses may lead to new pay limits and management restrictions as the price for companies seeking more U.S. aid.
The $18.4 billion in bonuses handed out by banks are “the height of irresponsibility” after the companies took billions of dollars in bailout funds, Obama told reporters yesterday at the White House.
Obama responded after New York State Comptroller Thomas DiNapoli reported that the 2008 bonus pool at New York City financial companies was the sixth-largest ever. Senator Banking Committee Chairman Christopher Dodd went further, vowing to use “every possible legal means to get the money back.” At stake, Dodd said, is congressional approval for any additional money needed to shore up financial institutions.
“You know it’s coming politically,” said Paul Miller, an analyst with FBR Capital Markets in Arlington, Virginia, predicting restrictions on further aid. “You know it looks really bad giving someone $10 million.”
The administration is drafting a package of measures to arrest the worst financial crisis since the Depression and is likely to announce its plans next week, according to people familiar with the matter. Treasury Secretary Timothy Geithner met over the past two days with Federal Reserve Chairman Ben S. Bernanke, Federal Deposit Insurance Corp. chief Sheila Bair and other regulators to work out the details.
‘Bad Bank’
The initiative is likely to feature a concerted effort to remove the toxic assets clogging lenders’ balance sheets. The FDIC will probably run a so-called bad bank to take on some of the securities; others will be insured by the government against losses while remaining on lenders’ books, the people said. Further capital injections for the biggest banks are also planned. Some details may change.
Wall Street firms need to “show some restraint and show some discipline,” Obama said yesterday, with Geithner and Vice President Joe Biden at his side.
Banks and financial firms have fired 265,000 people since the collapse of the subprime mortgage market triggered the financial crisis. Bear Stearns Cos. and Lehman Brothers Holdings Inc. failed, while Merrill Lynch & Co. was taken over by Bank of America Corp. Goldman Sachs Group. and Morgan Stanley converted into bank holding companies.
The Treasury Department has injected about $200 billion into banks across the country through its Troubled Asset Relief Program.
Dodd, a Connecticut Democrat, said of the bonuses, “I’m going to be urging -- in fact not urging, demanding -- that the Treasury Department figures out some way to get the money back.
Summoning Executives
The senator said he will summon executives whose companies received taxpayer aid to testify before his committee and explain their bonuses.
“You’re never going to get any support for the continued tough decisions we have to make if this kind of behavior continues,” Dodd said. “We can’t be underwriting to the tune of billions of dollars, whether it was used directly or indirectly. This infuriates the American people.”
Former Salomon Brothers Inc. Chairman John Gutfreund dismissed “as political posturing” Dodd’s comments on recapturing bonuses already distributed to executives.
“They are not going to repay all their bonuses,” said Gutfreund, 79, in an interview with Bloomberg Television.
Charles Elson, director of the University of Delaware’s John Weinberg Center for Corporate Governance, said it would be “very difficult” for the Treasury to recoup bonuses.
Showing Bad Faith
“Usually these bonuses were contractually made and paid out based on a formula unless you can show bad faith, some intentional misconduct,” Elson said. “These are situations where monies were paid under a contract, and the worst you can accuse these people of is of making very bad decisions.”
Treasury has the authority under legislation that created the Troubled Asset Relief Program to issue regulations that “claw back” excessive executive compensation, and that may give the administration some authority to go after excessive pay, said Larry Hamermesh, a corporate law professor at Widener University in Wilmington, Delaware.
“It was pretty clear from TARP I that the secretary of the Treasury was supposed to establish a provision for executive claw-back,” Hamermesh said in a phone interview. “How the secretary has implemented that isn’t clear.”
The Treasury could require companies that request additional funds to repay excessive bonuses as a condition of the further financing, Hamermesh said.
‘Cough Up Bonuses’
“If they come around to ask again, they could say, ‘We’re going to deny it unless they cough up the bonuses,’” he said.
Miller, the FBR analyst, said he thinks Congress will apply pay restrictions for top executives and expand them to other employees.
“They’re also going to restrict what these guys can do,” he said. “Can they own a Learjet? Can you pay a common dividend if you take TARP money?”
Citigroup Inc. scrapped plans this week to buy a new $50 million jet that politicians called wasteful. Miller said that even though it’s more efficient for top executives to use corporate jets, “it doesn’t look good in the press.”
Employment in New York City’s securities industry fell to 168,600 in December 2008 from 187,800 in October 2007, a decline of 19,200 jobs, or 10.2 percent, DiNapoli’s report found.
The state will have lost as many as 225,000 jobs and $6.5 billion in securities industry-related tax revenue by Oct. 31, DiNapoli has said. Positions eliminated in the financial industry alone may total 38,000 by then, he said.
Biden said in an interview on CNBC yesterday that he would “like to throw these guys in the brig” for taking excessive bonuses.
“They are thinking of the same old thing that got us here: Greed,” Biden said. “They are thinking: Take care of me.”
To contact the reporters on this story: Dawn Kopecki in Washington at [email protected]; Julianna Goldman in Washington at [email protected]
Last Updated: January 30, 2009 00:00 EST
Now, you hear of Wall Street greedy pigs who are too rich to fail. Of course, in Singapore, the copycat in Singapore is the famiLEE and their arselickers
Obama Slam on ’Shameful’ Bonuses May Trigger New Restrictions
By Dawn Kopecki
Jan. 30 (Bloomberg) -- President Barack Obama’s attack on “shameful” Wall Street bonuses may lead to new pay limits and management restrictions as the price for companies seeking more U.S. aid.
The $18.4 billion in bonuses handed out by banks are “the height of irresponsibility” after the companies took billions of dollars in bailout funds, Obama told reporters yesterday at the White House.
Obama responded after New York State Comptroller Thomas DiNapoli reported that the 2008 bonus pool at New York City financial companies was the sixth-largest ever. Senator Banking Committee Chairman Christopher Dodd went further, vowing to use “every possible legal means to get the money back.” At stake, Dodd said, is congressional approval for any additional money needed to shore up financial institutions.
“You know it’s coming politically,” said Paul Miller, an analyst with FBR Capital Markets in Arlington, Virginia, predicting restrictions on further aid. “You know it looks really bad giving someone $10 million.”
The administration is drafting a package of measures to arrest the worst financial crisis since the Depression and is likely to announce its plans next week, according to people familiar with the matter. Treasury Secretary Timothy Geithner met over the past two days with Federal Reserve Chairman Ben S. Bernanke, Federal Deposit Insurance Corp. chief Sheila Bair and other regulators to work out the details.
‘Bad Bank’
The initiative is likely to feature a concerted effort to remove the toxic assets clogging lenders’ balance sheets. The FDIC will probably run a so-called bad bank to take on some of the securities; others will be insured by the government against losses while remaining on lenders’ books, the people said. Further capital injections for the biggest banks are also planned. Some details may change.
Wall Street firms need to “show some restraint and show some discipline,” Obama said yesterday, with Geithner and Vice President Joe Biden at his side.
Banks and financial firms have fired 265,000 people since the collapse of the subprime mortgage market triggered the financial crisis. Bear Stearns Cos. and Lehman Brothers Holdings Inc. failed, while Merrill Lynch & Co. was taken over by Bank of America Corp. Goldman Sachs Group. and Morgan Stanley converted into bank holding companies.
The Treasury Department has injected about $200 billion into banks across the country through its Troubled Asset Relief Program.
Dodd, a Connecticut Democrat, said of the bonuses, “I’m going to be urging -- in fact not urging, demanding -- that the Treasury Department figures out some way to get the money back.
Summoning Executives
The senator said he will summon executives whose companies received taxpayer aid to testify before his committee and explain their bonuses.
“You’re never going to get any support for the continued tough decisions we have to make if this kind of behavior continues,” Dodd said. “We can’t be underwriting to the tune of billions of dollars, whether it was used directly or indirectly. This infuriates the American people.”
Former Salomon Brothers Inc. Chairman John Gutfreund dismissed “as political posturing” Dodd’s comments on recapturing bonuses already distributed to executives.
“They are not going to repay all their bonuses,” said Gutfreund, 79, in an interview with Bloomberg Television.
Charles Elson, director of the University of Delaware’s John Weinberg Center for Corporate Governance, said it would be “very difficult” for the Treasury to recoup bonuses.
Showing Bad Faith
“Usually these bonuses were contractually made and paid out based on a formula unless you can show bad faith, some intentional misconduct,” Elson said. “These are situations where monies were paid under a contract, and the worst you can accuse these people of is of making very bad decisions.”
Treasury has the authority under legislation that created the Troubled Asset Relief Program to issue regulations that “claw back” excessive executive compensation, and that may give the administration some authority to go after excessive pay, said Larry Hamermesh, a corporate law professor at Widener University in Wilmington, Delaware.
“It was pretty clear from TARP I that the secretary of the Treasury was supposed to establish a provision for executive claw-back,” Hamermesh said in a phone interview. “How the secretary has implemented that isn’t clear.”
The Treasury could require companies that request additional funds to repay excessive bonuses as a condition of the further financing, Hamermesh said.
‘Cough Up Bonuses’
“If they come around to ask again, they could say, ‘We’re going to deny it unless they cough up the bonuses,’” he said.
Miller, the FBR analyst, said he thinks Congress will apply pay restrictions for top executives and expand them to other employees.
“They’re also going to restrict what these guys can do,” he said. “Can they own a Learjet? Can you pay a common dividend if you take TARP money?”
Citigroup Inc. scrapped plans this week to buy a new $50 million jet that politicians called wasteful. Miller said that even though it’s more efficient for top executives to use corporate jets, “it doesn’t look good in the press.”
Employment in New York City’s securities industry fell to 168,600 in December 2008 from 187,800 in October 2007, a decline of 19,200 jobs, or 10.2 percent, DiNapoli’s report found.
The state will have lost as many as 225,000 jobs and $6.5 billion in securities industry-related tax revenue by Oct. 31, DiNapoli has said. Positions eliminated in the financial industry alone may total 38,000 by then, he said.
Biden said in an interview on CNBC yesterday that he would “like to throw these guys in the brig” for taking excessive bonuses.
“They are thinking of the same old thing that got us here: Greed,” Biden said. “They are thinking: Take care of me.”
To contact the reporters on this story: Dawn Kopecki in Washington at [email protected]; Julianna Goldman in Washington at [email protected]
Last Updated: January 30, 2009 00:00 EST
