Boom2Bust.com

27 Responses to “Wall Street Payouts And Bonuses Being Financed By Bailout Funds?”

1. P.O.ed Says:
   October 21st, 2008 at 7:53 pm

   Thank you!!!!!!!!

   I cannot express the overwhelming joy you have brought to me this day. I work with a few very right-wing conservatives that are in denial about this pay-out stating the following, “I don’t believe it, this cannot be true . . . I don’t even want to look at the article. What did you expect from Washington?!” etc. etc.

   I am trying to organize a “National Walk-Out” for all Americans to show their disgust/disapproval with this action. This will be a simple one-hour peaceful demonstration of American’s walking out of their places of employment, schools, stores, homes, apartments, whatever and wherever they may be, and just to say that we have had enough and we will no longer take it anymore. I do not want to condone any violence or ask those in positions of health care or public safety to compromise their duties for the protest. This is just a simple way of telling the lawmakers of this once great country that we, as Citizens of the United States of America, will no longer condone these activities.

   Once again, thank you very much!

2. Editor Says:
   October 21st, 2008 at 8:39 pm

   No P.O.ed— thank YOU very much. Readership participation is essential to this blog’s success. Keep us updated on the “National Walk-Out,” okay?

3. P.O.ed Says:
   October 22nd, 2008 at 5:15 am

   Will do!

4. P.O.ed Says:
   October 22nd, 2008 at 7:46 am

   This is what is going out via comments and email:

   Just yesterday there were about 3 – 5 links that came up while doing a general topic search on Google. Now there are dozens!! Think about this, when you have to pay your taxes, you are in essence, writing out your check to the Wall Street Banks to bankroll their $70 Billion in bonuses: Goldman, Merrill, Citi, Morgan, etc.

   Spread the word, “National Walk-Out Day” Monday, November 3, 2008, 2:00 p.m. CST.

   All Americans who are disgusted with this payoff are asked to stop whatever they are doing and walk out of their jobs, stores, schools, and any other place they may be at that time to show the elected officials, of this once great nation, that we the Citizens of the United States of America will no longer tolerate these actions. Only health care and public safety are not encouraged to participate due to the nature of their positions.

   Stand up and stay united as they cannot terminate, expel and neglect the fact that over 250,000,000 Americans are saying, “Enough is enough!”

5. Mammoth Says:
   October 22nd, 2008 at 9:59 am

   So, despite Wall Street’s disasterous performance and the subsequent $700+ Billion taxpayer-funded bailout, the fat cats will still receive bonuses.

   And people are surprised? Man, are they naive if they didn’t think this would happen!

   -Mammoth

6. John Says:
   October 22nd, 2008 at 10:01 am

   Things like this make me wish I was still working!
   Not unemployed, retired.

7. Days of Broken Arrows Says:
   October 22nd, 2008 at 12:51 pm

   Eh. I expected it. Months ago on this blog I pointed out that the gov’t would take everyone for a ride with this and get away with it.

   I cited the Clash’s “White Riot” because the point of the song is that white people don’t riot, and nothing ever changes. The song is just as potent 31 years later:

   “All the power’s in the hands of the people rich enough to buy it…” (Strummer/Jones, 1977)

8. Editor Says:
   October 22nd, 2008 at 6:59 pm

   Thanks for the info about “National Walk-Out Day” P.O.ed. I’ll write something about it this week.

9. Editor Says:
   October 22nd, 2008 at 7:03 pm

   Thanks for the comment Mammoth.

   “And people are surprised? Man, are they naive if they didn’t think this would happen!”

   To be fair, I wonder how many people know about this.

10. Editor Says:
    October 22nd, 2008 at 7:05 pm

    Thanks for the comment John. If you worked for one of the bailout fund recipients, then, yeah, I can see why you wish you were still working!

11. Editor Says:
    October 22nd, 2008 at 9:51 pm

    Thanks for the comment Days. I remember when you made that point about the Clash’s “White Riot.”

12. Daniel Voglesong Says:
    October 24th, 2008 at 2:24 am

    No Executive Bonuses should be allowed at ANY of the Wall Street Financial Firms bailed out by US Taxpayers. This US Government Bailout is paid for by poor US taxpayers for the casino gamblers/Rich “Executive-Class” on Wall Street who put us in this greatest US financial crisis since the Great Depression of 1929-1941 (12 years of extreme poverty).
    No taxpayer bailout money should be paid to any of these Wall Street gangsters at these Investment Banks and AIG Insurance. At the AIG, they have been throwing lavish parties in California and in England, using Taxpayers Bailout Funds.

13. Editor Says:
    October 24th, 2008 at 7:52 am

    Thanks for the comment Daniel. I read more about the AIG soirees just yesterday. Disturbing. Possible post for today.

14. Daniel Voglesong Says:
    November 12th, 2008 at 12:03 pm

    Investment Bankers and their bonuses in Britain
    by “First Post” November 3, 2008
    The dizzying sums paid out in bonuses are now being cited as one of the factors underlying the present world financial crisis
    Are banks still paying bonuses?
    Yes. In the year to last April, a period encompassing the nationalisation of Northern Rock, the collapse of Bear Stearns and multi-billion losses on subprime-linked investments, they paid out £8.5bn, much the same as during the boom year of 2006-07. Payouts will fall this year, but London bankers still expect to scoop £3.6bn. Yet that figure is dwarfed by the payouts on Wall Street, where bonuses in the six largest banks are forecast to top $70bn – a tenth of the US government’s $700bn bank bailout. Almost all the $25bn that Citigroup is to receive in state capital will be spent on salaries and bonuses. Lehman Brothers finalised a $6.12bn pay plan just days before it succumbed to bankruptcy.
    How important are these bonuses to bankers?
    Very. They account for at least 60 per cent of their pay. A divisional managing director at an investment bank, on a basic salary of £150,000, would expect an annual bonus of at least £1m; “rainmakers” (traders who drive a bank’s profits in lucrative new markets) would expect far more, with bonuses calculated as a generous percentage of the cash they bring in. The rule of thumb at most banks is to channel 45 to 50 per cent of net revenue into salary and “discretionary bonuses”. The exact sums are often clouded in secrecy: though directors of publicly quoted banks must disclose earnings, they don’t have to reveal what they pay star traders. The biggest disclosed bonus in the City last year was paid to Barclays’ investment banking chief, Bob Diamond, whose £21m package dwarfed the £3m earned by its chief executive, John Varley.
    And what are the alleged dangers of this bonus culture?
    Some claim that bankers spend so much time politicking over bonuses that business at investment banks virtually grinds to a halt towards the end of each year. Others say that the huge City payouts inflated the top end of the housing market, while contributing to a socially corrosive widening of inequality. But the biggest charge against bonuses is that, by encouraging bankers to take huge risks, they were a key factor in destabilising financial institutions and may even have precipitated the current crisis.
    Why does the system fuel extravagant risk-taking?
    Because it handsomely rewards strategies that focus on short-term profit-making, with no regard to long-term consequences. If traders pocketing mega-bonuses lost billions a few years later, tough luck: the bonuses were paid and consumed long before they could be held accountable. And banks rarely, if ever, took steps to claw them back. For the individual trader, the potential downside of engaging in excessive risk is thus far outweighed by the potential upside. In this perverse heads-I-win-tails-you-lose scenario, it was left to shareholders and, ultimately, taxpayers to shoulder the losses. The traditional capitalist balance between personal and corporate risk had been blown away completely.
    How did this system come about?
    Some date it to the early 1970s when a mass of Wall Street banks transformed their legal status from partnerships to corporations and then floated on the market. Until then, a bank’s partners were paid a percentage of the pre-tax profits but, crucially, their agreements also contained shared liability clauses. If one partner screwed up, they would all suffer. That natural brake was removed once the bulk of a bank’s capital was owned by external shareholders. And the emerging bonus culture received a further boost during the deregulatory splurge of the 1980s and 1990s.
    What happened then?
    London’s 1986 “Big Bang” saw the abolition of fixed commissions on trades; it also opened the doors to US brokerage houses with their more aggressive attitudes to risk and reward. The stakes became higher still following the 1999 repeal of the US Glass-Steagall Act, which had enforced a rigid separation between investment and commercial banking: suddenly bonus-driven investment bankers had giant balance sheets to play with. Ominously, this coincided with the development of ever more complex debt-based derivatives products which multiplied the scope for booking instant profits.
    And why did the authorities play along?
    Although the cult of the bonus was cited as a contributory factor in the 1987 stock market crash and the dotcom bubble, the rewards of light-touch regulation were felt to be greater than the risks. This was particularly so in London, which took advantage of America’s regulatory clampdown following the dotcom bust to challenge New York as a global financial hub, particularly in the booming derivatives market. By 2007, Britain’s financial services sector accounted for nearly 10 per cent of British GDP, generating crucial tax revenues for the Treasury. The then Chancellor, Gordon Brown, declared a “new Golden Age” in the City.
    Has British Prime Minister Gordon Brown changed his tune?
    Yes. The PM is leading the backlash against the “irresponsible” bonus culture and the “excessive risk-taking” it has spawned. Reform now looks inevitable, not least as it’s seen as a crucial step in restoring public confidence in the banking sector. The Financial Services Authority has already outlined some of the short-termist practices it would like stamped out. They include: linking bonuses to one year’s performance rather than average performance over a number of years; paying bonuses entirely in cash rather than in shares or share options; and allowing traders to assess the value of their own positions when bonuses are calculated. The City watchdog will also demand that banks which continue promoting risky incentive structures will be required to hold more capital. Yet the authorities are only too aware that they must tread carefully or risk hobbling the City permanently, particularly given rising competition from the new financial centres of the East.
    FIRST POSTED NOVEMBER 3, 2008

15. Editor Says:
    November 13th, 2008 at 10:12 am

    Thanks for sharing that Daniel. I’m all for bonuses— as long as they’re deserved.

16. Daniel Voglesong Says:
    January 27th, 2009 at 6:28 am

    January 27, 2009
    Op-Ed Contributor, New York Times
    “Money for Nothing”
    By DAVE KRASNE
    MERRILL LYNCH lost $27 billion last year, and yet still managed to rush through $4 billion worth of year-end bonuses in the days before it was taken over by Bank of America.

    Because both companies have been the beneficiaries of the Treasury’s Troubled Asset Relief Program, news of these bonuses was met with predictable uproar: Attorney General Andrew Cuomo of New York threatened to investigate; any elected official with access to a microphone joined in a chorus of “shame on you”; and around every water cooler and on every cable channel, pundits offered up scathing commentaries of Wall Street greed.

    Merrill Lynch is not the only irresponsible institution out there. Despite a year of record losses, despite all the taxpayer money being injected into our financial institutions, bonuses for 2008 were, in some cases, down less than 50 percent from those the previous year.

    This is shocking, of course, but what’s been missed in these discussions is how completely the culture of executive compensation has permeated the financial industry. One need not even be an executive to receive a bonus far in excess of the yearly salary of people in most other professions.

    Bonuses, which typically consist of some multiple of an employee’s base salary, are doled out to everyone from the 22-year-olds just out of college (these are called analysts) to managing directors (banker parlance for the most senior rank attainable).

    I spent much of my early career at Merrill Lynch, and I can still remember how I yearned for the holiday season, because it signified bonus time. And by “bonus time,” I mean that brilliant 10-minute conversation during which you learned how many zeros would be on that year’s check.

    The euphoria that followed justified the days on end of working into the wee hours, the months on end without a single day off, the never-ending “fire drills” — when a client wanted something and wanted it now, whether it was 7 p.m. or 7 a.m. — that kept the stress and adrenaline levels high.

    For some, euphoria quickly gave way to anger and envy upon hearing what their colleagues got paid. Luckily for management and shareholders, that anger twisted itself into motivation to work even harder, get even less sleep and put up with even more in order to get a better bonus next year. For others, the days after bonus distribution were the perfect time to jump to another firm for more responsibility, authority and, no surprise, more money.

    That’s not to say that bonuses are always bad. When I graduated from business school in early 2000 and returned to Wall Street, there was a war for talent raging. Without those bonuses, firms simply couldn’t attract the best and brightest and certainly couldn’t get 100-hour work weeks out of them. And when profit is created through ingenuity and hard work, it deserves to be rewarded handsomely — that is the American way.

    But we’ve come to the end of outsized paper profits generated from proprietary trading operations and 30-to-1 leverage. So too has the war for talent waned. Firms are disappearing or laying off thousands. In this environment of bleak job prospects, investment bankers who got a smaller bonus in 2008 than they did in 2007 won’t be running for the exits and the greener pastures of Lehman or Bear Stearns.

    Yet some institutions that begged for taxpayer aid to stave off bankruptcy — simply to stay alive — made 2008 compensation packages their first order of business after receiving their bailouts. This speaks to how completely foolhardy behavior has overtaken our industry. It certainly defies logic and sensible business practice. After all, it’s one thing to reap great rewards when creditors are being repaid and shareholders are earning a return; it’s quite another to reward failure almost as well.

    Year-end bonuses also undermine the efforts of the troubled assets program. The whole point of the program was to bolster the equity capital bases of recipients. But any bonuses paid just reduce the earnings or increase the losses sustained by the firms paying them, which in turn decreases the equity capital base of those firms. Shareholders are justifiably angry and have plenty to sue about; the case could certainly be made that management and compensation committees ignored their fiduciary duty when 2008 bonuses were scheduled and paid.

    Honestly, I’m not sure if I should be more offended as a taxpayer or as a shareholder of Merrill Lynch. I suppose there’s no difference nowadays, because we taxpayers are among the largest shareholders of many American financial institutions.

    Regardless, financial institutions clearly relied on Uncle Sam’s largess when they agreed to authorize 2008 incentive compensation packages. Politicians will continue to wag their fingers at the greedy executives, but Washington’s actions enabled these bonuses to occur.

    Without the United States government’s open wallet, after all, these teetering companies would have had to decide between offering healthy bonuses and complete insolvency.

    Luckily for them — and most unhappily for us — it was a choice they never had to make.

    Dave Krasne is a partner at a private equity firm.

17. Daniel Voglesong Says:
    January 27th, 2009 at 7:28 am

    January 27, 2009

    US bets on bank executives to fix this mess

    by MATT APUZZO and DANIEL WAGNER, ASSOCIATED PRESS
    WASHINGTON — They’ve been bailed out, but not kicked out. At banks that are receiving federal bailout money nearly nine out of every 10 of the most senior executives from 2006 are still on the job, according to an Associated Press analysis of regulatory and company documents.
    The AP’s review reveals one of the ironies of the bank bailout: The same executives who were at the controls as the banking system nearly collapsed are the ones the government is counting on to help save it.
    Even top executives whose banks made such risky loans they imperiled the economy have been largely spared any threat to their jobs, as Washington pumped billions in taxpayer money into the companies. Less fortunate are more than 100,000 bank employees laid off during a two-year stretch when industry unemployment nearly tripled, bank stocks plummeted and credit dried up.
    “The same people at the top are still there, the same people who made the decisions causing a lot of our financial crisis,” said Rebecca Trevino of Louisville, Ky., a mother of three who was laid off from her job as a Bank of America training coordinator in October. “But that’s what tends to happen in leadership. The people at the top, there’s always some other place to lay blame.”
    That workers and managers experience a recession differently is hardly a surprise. What’s new is that taxpayers are now shareholders in the nation’s bailed-out banks, yet they lack the usual shareholder power to question management decisions or demand house-cleaning in the executive suites.
    Wells Fargo & Co., for example, once was among the top lenders of subprime mortgages, or loans to buyers with low credit scores. The company received $25 billion in bailout money and plans layoffs in the coming months. But longtime CEO Richard Kovacevich remains the company’s chairman, and the board recently waived its mandatory retirement age for him. John Stumpf, the president since 2005, became chief executive in 2007.
    “Our senior leadership team of our CEO and his direct reports have an average tenure of almost a quarter-century with our company,” Wells Fargo spokeswoman Julia Tunis Bernard said in a prepared statement. “Our unchanging vision, values and time-tested business model will continue to guide our leaders and our team into the future, and are now more than ever a competitive advantage as our industry evolves.”
    Under the government’s no-strings-attached bailout plan, taxpayers must take it on faith that bank executives will make better decisions this time around, said Jamie Court, president of the California-based group Consumer Watchdog.
    “When you deal with the same dogs, you’re going to end up with the same fleas,” Court said.
    The bailout list includes banks of all sizes – from Wall Street giants to small community banks. Some led the rush into subprime mortgages. Others followed.
    Many executives on the list are small-town executives who don’t earn anything close to Wall Street salaries and who suffered alongside their communities when the economy turned sour. The trouble with the bailout is that nobody in government ever stopped to figure out who caused the avalanche and who simply got buried, said University of Maryland business professor Peter Morici.
    “If they got involved in questionable loans and contributed to the speculative bubble, they should be out,” Morici said. “These people should be removed and banned from banking, unless we wanted to make them all janitors. But the question then is, ‘Can they be trusted wandering around the offices at night?’”
    Barack Obama as president-elect and some in Congress have suggested auto company executives should lose their jobs as part of the bailout of that industry. But there has been no such suggestion about banks. Congress twice authorized $350 billion in bank bailout money. Both times, lawmakers set few conditions on the money.
    The president of the American Bankers Association, Ed Yingling, said he understands taxpayers are frustrated. But most banks had nothing to do with the subprime crisis, he said. As for whether taxpayers should demand management changes, he said that was never a condition of the bailout plan the government crafted.
    “Are we going to have the American people saying, ‘We’re invested in you, so now we should look at your margins, look at every loan you make, look at your lending policies?’ No. That was never discussed,” Yingling said. “You can’t micromanage banks.”
    In some cases the market held executives accountable for the mortgage crisis. When banks such as Washington Mutual, Merrill Lynch and Lehman Brothers were bought up, many executives lost their jobs. When the government took over mortgage giants Fannie Mae and Freddie Mac, directors and executives were fired.
    But the financial bailout has resulted in no such consequences. AP’s review of the more than 200 publicly traded banks that received federal bailout money found that about 87 percent of the top three executives in 2006 – typically the chief executive, operating and financial officers – still remain on the job.
    And that number is deceptively low, since those few executives who left their jobs often did so because they retired – or died. Several stayed on as directors or in consulting positions.
    Even banks that were involved in risky lending saw little turnover:
    -JPMorgan Chase & Co., which invested billions in subprime mortgages, has the same leadership team, led by CEO James Dimon. Dimon made about $28 million in 2007. The company is shedding about 10 percent of its investment bank staff.
    -Cleveland-based KeyCorp, which ran subprime lending subsidiary Champion Mortgage until late 2006, received $2.5 billion in bailout money. Its chairman and CEO, Henry Meyer, has been in charge since 2001. Jeffrey Weeden, the company’s chief financial officer, and Thomas Stevens, the administrative officer who oversaw the risk review group, have been on the job for years.
    KeyCorp has been cutting jobs over the past two years, including 200 announced this month at a Tacoma, Wash., call center. A company spokesman said the bank was too busy preparing its earnings report to answer questions about whether taxpayers should have confidence in the company’s management.
    “The on-the-record comment I would make is that we declined to comment even though we’d like to, because we don’t have time,” spokesman Bill Murschel said.
    -Capital One Financial Corp., one of the nation’s biggest credit-card providers, dove into the risky mortgage business when it bought GreenPoint Mortgage in 2006. GreenPoint made exotic loans to borrowers without verifying income or credit scores, then sold those loans to investors.
    A year later, Capital One shuttered GreenPoint, cutting 1,900 jobs. CEO Richard Fairbank and his top executives were not among them. The company received about $3.5 billion in bailout money.
    In Louisville, Trevino and her family are living mostly off credit cards and savings while she interviews for jobs. Her husband is in commercial real estate, which has slowed significantly. After what she described as a bare-bones Christmas, she said she looked over her household finances and realized they might lose their home.
    “That’s when I was just, ‘Lord, I know you have a plan. Can you just show me? I’d really like to know,’” she said.
    Trevino said she isn’t upset that her old boss, Bank of America CEO Ken Lewis, is still on the job. There are others in the industry with greater responsibility for the crisis, she said.
    Trevino agreed the federal government needed to rescue the banks but said there should have been some oversight.
    “It is surprising that leadership can make decisions that lead to financial ruin for so many,” she said, “and then get bailed out for it.”
    —
    Associated Press writer Bruce Schreiner in Louisville, Ky. contributed to this report.

18. Daniel Voglesong Says:
    January 27th, 2009 at 7:47 am

    January 18, 2009

    Bailout Is a Windfall to Banks, if Not to Borrowers

    By MIKE McINTIRE, New York Times
    At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.

    “Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”

    As the incoming Obama administration decides how to fix the economy, the troubles of the banking system have become particularly vexing.

    Congress approved the $700 billion rescue plan with the idea that banks would help struggling borrowers and increase lending to stimulate the economy, and many lawmakers want to know how the first half of that money has been spent before approving the second half. But many banks that have received bailout money so far are reluctant to lend, worrying that if new loans go bad, they will be in worse shape if the economy deteriorates.

    Indeed, as mounting losses at major banks like Citigroup and Bank of America in the last week have underscored, regulators are still searching for ways to stabilize the banking system. The Obama administration could be forced early on to come up with a systemic solution, getting bad loans off balance sheets as a way to encourage banks to begin lending, which most economists say is essential to get businesses and consumers spending again.

    Individually, banks that received some of the first $350 billion from the Treasury’s Troubled Asset Relief Program, or TARP, have offered few public details about how they plan to spend the money, and they are not required to disclose what they do with it. But in conversations behind closed doors with investment analysts, some bankers have been candid about their intentions.

    Most of the banks that received the money are far smaller than behemoths like Citigroup or Bank of America. A review of investor presentations and conference calls by executives of some two dozen banks around the country found that few cited lending as a priority. An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future.

    Speaking at the FBR Capital Markets conference in New York in December, Walter M. Pressey, president of Boston Private Wealth Management, a healthy bank with a mostly affluent clientele, said there were no immediate plans to do much with the $154 million it received from the Treasury.

    “With that capital in hand, not only do we feel comfortable that we can ride out the recession,” he said, “but we also feel that we’ll be in a position to take advantage of opportunities that present themselves once this recession is sorted out.”

    The bankers’ comments, while representing only a random sampling of the more than 200 financial institutions that have received TARP money so far, underscore a growing gulf between public expectations for how the $700 billion should be used and the decisions being made by many of the institutions that have taken part. The program does not dictate what banks should do with the money.

    The loose requirements in the original plan have contributed to confusion over what the Treasury intended when it abruptly shelved its first proposal — to buy up bad mortgages — in favor of making direct investments in individual banks in return for preferred shares of stock.

    The Treasury secretary, Henry M. Paulson Jr., said in October that banks should “deploy, not hoard” the money to build confidence and increase lending. He added: “We expect all participating banks to continue to strengthen their efforts to help struggling homeowners who can afford their homes avoid foreclosure.”

    But a Congressional oversight panel reported on Jan. 9 that it found no evidence the bailout program had been used to prevent foreclosures, raising questions about whether the Treasury has complied with the law’s requirement that it develop a “plan that seeks to maximize assistance for homeowners.”

    The report concluded that the Treasury’s top priority seemed to be to “stabilize financial markets” by simply giving healthy banks more money and letting them decide how best to use it. The report also said it was not clear how giving billions to banks “advances both the goal of financial stability and the well-being of taxpayers, including homeowners threatened by foreclosure, people losing their jobs, and families unable to pay their credit cards.”

    For the banks, fearful that the economic downturn could deepen and wary of risking additional losses, the question of what to do with the bailout money comes down to self-preservation.

    Mark Fitzgibbon, research director at Sandler O’Neill & Partners, which sponsored the Palm Beach conference, said banks seemed to be allocating the bailout money for four general purposes: increased lending, absorbing losses, bolstering capital and “opportunistic acquisitions.” He said those approaches made sense from a business perspective, even though they might not conform to popular expectations that the money would be immediately lent to consumers.

    “For the banking industry, this isn’t a sprint, this is a marathon,” Mr. Fitzgibbon said. “I think over time there will be pressure to lend that capital out and get a return for their shareholders. But they’re not going to rush out and lend all that money tomorrow. If they did, they could lose it.”

    For City National Bank in Los Angeles, the Treasury money “really doesn’t change our perspective about doing things,” said Christopher J. Carey, the bank’s chief financial officer, addressing the BancAnalysts Association of Boston Conference in November. He said that his bank would like to use it for lending and acquisitions but that the decision would depend on the economy.

    “Adding $400 million in capital gives us a chance to really have a totally fortressed balance sheet in case things get a lot worse than we think,” Mr. Carey said. “And if they don’t, we may end up just paying it back a little bit earlier.”

    In addition to wanting more lending, members of Congress have said TARP should not be used to fuel mergers and acquisitions, although Treasury officials say the financial system would be strengthened if healthy banks absorbed weaker ones. To that extent, bailout money has been useful for improving capital ratios — the amount of money available to absorb losses — for banks that merge.

    On Friday, Bank of America said it would receive $20 billion more from the Treasury to help it digest losses it took on by acquiring Merrill Lynch, a process begun in September.

    At least seven banks that received TARP money have since bought other companies, including one that had been encouraged to do so by federal regulators. That one, PNC Financial Services, took $7.7 billion from the Treasury and promptly acquired the struggling National City Bank for $5.2 billion in stock and $384 million in cash.

    Among the others, PlainsCapital Bank of Dallas announced in November, not long after the bailout program began, that it planned to merge with a healthy investment bank, First Southwest. PlainsCapital received $88 million from the Treasury on Dec. 19, and the all-stock merger was completed two weeks later. PlainsCapital’s chairman, Alan B. White, insisted in an interview that the two events were not connected.

    He said the bank had not yet decided what to do with its bailout money, which he called “opportunity capital.” Increased lending would be a priority, said Mr. White, who did not rule out using it for other acquisitions, adding that when regulators invited PlainsCapital to apply for federal dollars, there were no conditions attached.

    “They didn’t tell me I had to do anything particular with it,” he said.

    None of the bankers who appeared before recent investor conferences offered specific details about their intentions, but recurring themes emerged in their presentations. Two of the most often cited priorities were hanging on to the money as insurance against a prolonged recession and using it for mergers.

    At the Sandler O’Neill East Coast Financial Services Conference in Florida, bankers mingled with investment analysts at an ocean-front luxury hotel, where the agenda featured evening cocktails by the pool and a golf outing at a nearby country club.

    During his presentation, John R. Buran, the chief executive of Flushing Financial in New York, said the government money was a way to up the “ante for acquisitions” of other companies.

    “We can get $70 million in capital,” he said. “So, I would say the price of poker, so to speak, has gone up.”

    For Mr. Hope, the Whitney National Bank chairman, “the main motivation for TARP” was not more loans, but rather to safeguard against the “possibility things could get a lot worse.” He said Whitney would continue making loans “that we would have made with or without TARP.”

    “We see TARP as an insurance policy,” he said. “That when all this stuff is finally over, no matter how bad it gets, we’re going to be one of the remaining banks.”

19. Editor Says:
    January 28th, 2009 at 11:04 am

    Thanks for sharing that piece Daniel Voglesong.

20. Editor Says:
    January 28th, 2009 at 11:05 am

    Thanks for sharing that piece Daniel Voglesong. I’d say “unbelievable,” but nothing really surprises me these days anymore.

21. Editor Says:
    January 28th, 2009 at 11:10 am

    Thanks for sharing that piece, Daniel Voglesong. “An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future.” That about sums up TARP right there.

22. Daniel Voglesong Says:
    February 2nd, 2009 at 3:18 am

    On Wall Street, bonuses, not profits, were real
    By Louise Story, International Herald Tribune

    Thursday, December 18, 2008
    “As a result of the extraordinary growth at Merrill during my tenure as CEO, the board saw fit to increase my compensation each year.”

    — E. Stanley O’Neal, the former chief executive of Merrill Lynch, March 2008

    For Dow Kim, 2006 was a very good year. While his salary at Merrill Lynch was $350,000, his total compensation was 100 times that — $35 million.

    The difference between the two amounts was his bonus, a rich reward for the robust earnings made by the traders he oversaw in Merrill’s mortgage business.

    Kim’s colleagues, not only at his level, but far down the ranks, also pocketed large paychecks. In all, Merrill handed out $5 billion to $6 billion in bonuses that year. A 20-something analyst with a base salary of $130,000 collected a bonus of $250,000. And a 30-something trader with a $180,000 salary got $5 million.

    But Merrill’s record earnings in 2006 — $7.5 billion — turned out to be a mirage. The company has since lost three times that amount, largely because the mortgage investments that supposedly had powered some of those profits plunged in value.

    Unlike the earnings, however, the bonuses have not been reversed.

    As regulators and shareholders sift through the rubble of the financial crisis, questions are being asked about what role lavish bonuses played in the debacle. Scrutiny over pay is intensifying as banks like Merrill prepare to dole out bonuses even after they have had to be propped up with billions of dollars of taxpayers’ money. While bonuses are expected to be half of what they were a year ago, some bankers could still collect millions of dollars.

    Critics say bonuses never should have been so big in the first place, because they were based on ephemeral earnings. These people contend that Wall Street’s pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino — and let them collect their winnings while the roulette wheel was still spinning.

    “Compensation was flawed top to bottom,” said Lucian Bebchuk, a professor at Harvard Law School and an expert on compensation. “The whole organization was responding to distorted incentives.”

    Even Wall Streeters concede they were dazzled by the money. To earn bigger bonuses, many traders ignored or played down the risks they took until their bonuses were paid. Their bosses often turned a blind eye because it was in their interest as well.

    “That’s a call that senior management or risk management should question, but of course their pay was tied to it too,” said Brian Lin, a former mortgage trader at Merrill Lynch.

    The highest-ranking executives at four firms have agreed under pressure to go without their bonuses, including John Thain, who initially wanted a bonus this year since he joined Merrill Lynch as chief executive after its ill-fated mortgage bets were made. And four former executives at one hard-hit bank, UBS of Switzerland, recently volunteered to return some of the bonuses they were paid before the financial crisis. But few think others on Wall Street will follow that lead.

    For now, most banks are looking forward rather than backward. Morgan Stanley and UBS are attaching new strings to bonuses, allowing them to pull back part of workers’ payouts if they turn out to have been based on illusory profits. Those policies, had they been in place in recent years, might have clawed back hundreds of millions of dollars of compensation paid out in 2006 to employees at all levels, including senior executives who are still at those banks.

    A Bonus Bonanza

    For Wall Street, much of this decade represented a new Gilded Age. Salaries were merely play money — a pittance compared to bonuses. Bonus season became an annual celebration of the riches to be had in the markets. That was especially so in the New York area, where nearly $1 out of every $4 that companies paid employees last year went to someone in the financial industry. Bankers celebrated with five-figure dinners, vied to outspend each other at charity auctions and spent their newfound fortunes on new homes, cars and art.

    The bonanza redefined success for an entire generation. Graduates of top universities sought their fortunes in banking, rather than in careers like medicine, engineering or teaching. Wall Street worked its rookies hard, but it held out the promise of rich rewards. In college dorms, tales of 30-year-olds pulling down $5 million a year were legion.

    While top executives received the biggest bonuses, what is striking is how many employees throughout the ranks took home large paychecks. On Wall Street, the first goal was to make “a buck” — a million dollars. More than 100 people in Merrill’s bond unit alone broke the million-dollar mark in 2006. Goldman Sachs paid more than $20 million apiece to more than 50 people that year, according to a person familiar with the matter. Goldman declined to comment.

    Pay was tied to profit, and profit to the easy, borrowed money that could be invested in markets like mortgage securities. As the financial industry’s role in the economy grew, workers’ pay ballooned, leaping sixfold since 1975, nearly twice as much as the increase in pay for the average American worker.

    “The financial services industry was in a bubble,” said Mark Zandi, chief economist at Moody’s Economy.com. “The industry got a bigger share of the economic pie.”

    A Money Machine

    Dow Kim stepped into this milieu in the mid-1980s, fresh from the Wharton School at the University of Pennsylvania. Born in Seoul and raised there and in Singapore, Kim moved to the United States at 16 to attend Phillips Academy in Andover, Massachusetts A quiet workaholic in an industry of workaholics, he seemed to rise through the ranks by sheer will. After a stint trading bonds in Tokyo, he moved to New York to oversee Merrill’s fixed-income business in 2001. Two years later, he became co-president.

    Even as tremors began to reverberate through the housing market and his own company, Kim exuded optimism.

    After several of his key deputies left the firm in the summer of 2006, he appointed a former colleague from Asia, Osman Semerci, as his deputy, and beneath Semerci he installed Dale Lattanzio and Douglas Mallach. Lattanzio promptly purchased a $5 million home, as well as oceanfront property in Mantoloking, a wealthy enclave in New Jersey, according to county records.

    Merrill and the executives in this article declined to comment or say whether they would return past bonuses. Mallach did not return telephone calls.

    Semerci, Lattanzio and Mallach joined Kim as Merrill entered a new phase in its mortgage buildup. That September, the bank spent $1.3 billion to buy the First Franklin Financial Corporation, a mortgage lender in California, in part so it could bundle its mortgages into lucrative bonds.

    Yet Kim was growing restless. That same month, he told E. Stanley O’Neal, Merrill’s chief executive, that he was considering starting his own hedge fund. His traders were stunned. But O’Neal persuaded Kim to stay, assuring him that the future was bright for Merrill’s mortgage business, and, by extension, for Kim.

    Kim stepped to the lectern on the bond trading floor and told his anxious traders that he was not going anywhere, and that business was looking up, according to four former employees who were there. The traders erupted in applause.

    “No one wanted to stop this thing,” said a former mortgage analyst at Merrill. “It was a machine, and we all knew it was going to be a very, very good year.”

    Merrill Lynch celebrated its success even before the year was over. In November, the company hosted a three-day golf tournament at Pebble Beach, California

    Kim, an avid golfer, played alongside William Gross, a founder of Pimco, the big bond house; and Ralph Cioffi, who oversaw two Bear Stearns hedge funds whose subsequent collapse in 2007 would send shock waves through the financial world.

    “There didn’t seem to be an end in sight,” said a person who attended the tournament.

    Back in New York, Kim’s team was eagerly bundling risky home mortgages into bonds. One of the last deals they put together that year was called “Costa Bella,” or beautiful coast — a name that recalls Pebble Beach. The $500 million bundle of loans, a type of investment known as a collateralized debt obligation, was managed by Gross’s Pimco.

    Merrill Lynch collected about $5 million in fees for concocting Costa Bella, which included mortgages originated by First Franklin.

    But Costa Bella, like so many other CDO’s, was filled with loans that borrowers could not repay. Initially part of it was rated AAA, but Costa Bella is now deeply troubled. The losses on the investment far exceed the money Merrill collected for putting the deal together.

    So Much for So Few

    By the time Costa Bella ran into trouble, the Merrill bankers who had devised it had collected their bonuses for 2006. Kim’s fixed-income unit generated more than half of Merrill’s revenue that year, according to people with direct knowledge of the matter. As a reward, O’Neal and Kim paid nearly a third of Merrill’s $5 billion to $6 billion bonus pool to the 2,000 professionals in the division.

    O’Neal himself was paid $46 million, according to Equilar, an executive compensation research firm and data provider in California. Kim received $35 million. About 57 percent of their pay was in stock, which would lose much of its value over the next two years, but even the cash portions of their bonus were generous: $18.5 million for O’Neal, and $14.5 million for Kim, according to Equilar.

    Kim and his deputies were given wide discretion about how to dole out their pot of money. Semerci was among the highest earners in 2006, at more than $20 million. Below him, Mallach and Lattanzio each earned more than $10 million. They were among just over 100 people who accounted for some $500 million of the pool, according to people with direct knowledge of the matter.

    After that blowout, Merrill pushed even deeper into the mortgage business, despite growing signs that the housing bubble was starting to burst. That decision proved disastrous. As the problems in the subprime mortgage market exploded into a full-blown crisis, the value of Merrill’s investments plummeted. The firm has since written down its investments by more than $54 billion, selling some of them for pennies on the dollar.

    Lin, the former Merrill trader, arrived late to the party. He was one of the last people hired onto Merrill’s mortgage desk, in the summer of 2007. Even then, Merrill guaranteed Lin a bonus if he joined the firm. Lin would not disclose his bonus, but such payouts were often in the seven figures.

    Lin said he quickly noticed that traders across Wall Street were reluctant to admit what now seems so obvious: Their mortgage investments were worth far less than they had thought.

    “It’s always human nature,” said Lin, who lost his job at Merrill last summer and now works at RRMS Advisors, a consulting firm that advises investors in troubled mortgage investments. “You want to pull for the market to do well because you’re vested.”

    But critics question why Wall Street embraced the risky deals even as the housing and mortgage markets began to weaken.

    “What happened to their investments was of no interest to them, because they would already be paid,” said Paul Hodgson, senior research associate at the Corporate Library, a shareholder activist group. Some Wall Street executives argue that paying a larger portion of bonuses in the form of stock, rather than in cash, might keep employees from making short-sighted decision. But Hodgson contended that would not go far enough, in part because the cash rewards alone were so high. Kim, for example, was paid a total of $116.6 million in cash and stock from 2001 to 2007. Of that, $55 million was in cash, according to Equilar.

    Leaving the Scene

    As the damage at Merrill became clear in 2007, Kim, his deputies and finally O’Neal left the firm. Kim opened a hedge fund, but it quickly closed. Semerci and Lattanzio landed at a hedge fund in London.

    All three departed without collecting bonuses in 2007. O’Neal, however, got even richer by leaving Merrill Lynch. He was awarded an exit package worth $161 million.

    Clawing back the 2006 bonuses at Merrill would not come close to making up for the company’s losses, which exceed all the profits that the firm earned over the previous 20 years. This fall, the once-proud firm was sold to Bank of America, ending its 94-year history as an independent firm.

    Bebchuk of Harvard Law School said investment banks like Merrill were brought to their knees because their employees chased after the rich rewards that executives promised them.

    “They were trying to get as much of this or that paper, they were doing it with excitement and vigor, and that was because they knew they would be making huge amounts of money by the end of the year,” he said.

23. Editor Says:
    February 3rd, 2009 at 7:56 am

    Thanks for sharing that article Daniel Voglesong.

24. Daniel Voglesong Says:
    February 23rd, 2009 at 6:19 am

    02/20/2009 “SHAMELESS GREED”
    Global Rage at Bankers’ Bonus Excesses
    By “DER SPIEGEL” in Germany

    Banks around the world may have made huge losses and be reliant on state bailouts to survive, but they’re still paying out huge bonuses to their top staff. The popular outcry against the greed is growing — but few bankers are willing to go without the cash.

    Investment banker Stefan Jentzsch was far away, recovering from the exertions of the previous year on a yacht somewhere in the Caribbean, when the banks almost collapsed — and his world fell apart.

    The past has since caught up with him back at home, where his name is in the papers almost every day. Jentzsch, 48, has suddenly gained notoriety as the man who was still raking in millions after his bank had lost billions, and as the man who is responsible for bonus payments that amounted to €400 million ($520 million) — costs that German taxpayers will now have to bear.

    Jentzsch was the head of Dresdner Kleinwort, an investment bank that was never terribly successful and, in fact, did particularly poorly last year. For the first nine months of 2008, it registered a loss of €2.2 billion ($2.86 billion). The bank’s loss for the entire year will be significantly higher, because the decline only accelerated in the fourth quarter. Dresdner Bank, Kleinwort’s parent company, ran into financial difficulties and was acquired by rival Commerzbank, which had its own problems and had to be bailed out twice by the government.

    By that time, Jentzsch had already said his goodbyes and had taken with him a severance payment of about €8 million ($10.4 million), a golden handshake that was completely legal and to which he was entitled. He is also entitled to a bonus worth an unknown amount. But now that he has become a household name, Jentzsch claims that he no longer wants the bonus.

    When Jentzsch was still at the helm of Dresdner Kleinwort, he made sure that its then-owner, insurance giant Allianz, guaranteed its investment bankers bonus payments for 2008 totaling €400 million ($520 million).

    The bonuses are now due, even though the government has since acquired 25 percent of Commerzbank and has had to spend €18.2 billion ($23.7 billion) bailing out the bank, an amount that could still end up not being enough.

    Jentzsch has become the face of public outrage over bankers who destroyed billions and ruined the economy, all the while taking steps to ensure that they were sitting pretty — bankers who have unloaded the disastrous results of their actions on the public’s doorsteps but are doing nothing to help alleviate the problems. In fact, some are even reaching into the government’s pockets.

    There are many people like Jentzsch nowadays, all over the world. Every country has its own Jentzsch, and citizens everywhere have been overcome with anger and helpless fury. The bonus payments are an especially sore point. Though small compared with the total extent of the damage caused by investment bankers, which numbers in the trillions, they exemplify the greed and shamelessness of a profession once seen as part of society’s elite.

    “The common good depends on a certain level of moderation in the individual,” says German Interior Minister Wolfgang Schäuble, a member of the conservative Christian Democratic Union (CDU). “Such excesses are the expression of a loss of connection with reality, and they threaten the basic consensus of our society.”

    Social Democratic Party (SPD) chancellor candidate Frank-Walter Steinmeier agrees: “I keep being shocked by the loss of any sense of reality and the cynicism of some leading executives. Executives are role models — in both good and bad aspects.”

    Rarely has public outrage been so unanimous, reaching from the citizen on the street into the cabinet, from Chancellor Angela Merkel to US President Barack Obama.

    “It is incomprehensible that banks helped out by the state in many cases pay out huge sums in bonuses,” says Merkel. Executive bonuses will also be a subject of discussion at the G-20 summit in London in early April. “Overall the bonus system must be linked to the truly sustainable success of the banks in an internationally more transparent way.”

    The subject of bonuses has given a new impetus to the discussion of executive salaries and compensation that has long worried the politicians in the two parties that make up Berlin’s grand coalition government, the SPD and the CDU. Federal Justice Minister Brigitte Zypries, who earns a net monthly salary of about €8,000 ($10,400) and, as the daughter of a pharmacy owner, tends to favor the pro-business wing of the SPD, wants to see more “social responsibility” and the “awareness of an honorable businessperson” among Germany’s business elite.

    Zypries said she is astonished that “bonuses are paid essentially as part of fixed salaries, and they are even earned when a company is on the brink of bankruptcy.”

    Labor Minister Olaf Scholz has been traveling around Germany for weeks, meeting with company executives and urging them not to lay off employees despite the crisis and declining orders and sales. Scholz too finds executive greed hard to believe, saying that in firms “where employees are accepting reduced working hours and wages, generous bonuses cannot be paid.”

    For Consumer Protection Minister Ilse Aigner, the bonus payments represent one of the triggers of the crisis. “When bank customers must accept losses, those responsible for the losses should not be rewarded,” says Aigner, a member of the conservative Christian Social Union (CSU).

    The grand coalition has rarely been this united. Bankers have now gambled away any moral capital they may once have had, so much so that some now refer to members of the profession as “banksters” — gangsters in pinstriped suits. They were once known in German as Bankiers and were considered the gentlemen of the business world. Then Germans began using the English word “banker,” which sounded more modern. But as the name changed, so did the profession’s self-image. The new bankers emulated their Anglo-American role models, the luminaries of Wall Street.

    DER SPIEGEL
    Graphic: Wall Street bonus payments, 1985-2008
    Banks shifted their focus to making profits instead of supplying credit to the economy. As returns rose, so did the risks. Avoiding those very risks had been the profession’s supreme objective in the age of the gentlemen bankers.

    But in the age of investment bankers, a new rule applied: the bigger the risks, the better. Risk seemed manageable, thanks to sophisticated products and mathematical models. But the complexity of those models only gave the illusion of security.

    Didn’t anyone ever step back and ask themselves whether this brave new world where there were no real risks could even be possible? Or were such questions simply suppressed because an honest answer would have jeopardized the bankers’ own lifestyle?

    For a long time, everyone benefited from the system, including investors both large and small. But most of all the investment bankers themselves profited. With the help of increasingly absurd salary- and bonus systems, they managed to funnel 50 percent of all profits into their pockets. The sums involved ran into billions.

    What began as a perfectly sensible way to share profits developed more and more into a system of unrestrained greed.

    The Illusion of Value

    When Henry Paulson resigned from his job as CEO of the investment bank Goldman Sachs in June 2006 to serve as the US treasury secretary, he received a generous bonus of $18.7 million (€14.4 million). He was also permitted to sell his accumulated Goldman stock, worth $480 million (€369 million), earlier than had originally been stipulated.

    Half a billion dollars, for one person, earned in only a few years — what kind of work could be worth that much money?

    None, not even honest work. But the activities of investment bankers had nothing to do with honest work, because the value that they created was merely an illusion. It was achieved on the basis of risks that would eventually bring down the entire system.

    It is an irony of history that it was Henry “Hank” Paulson who, as treasury secretary of the United States, was called upon to fix the problems that members of his own profession created in the first place. Following the bankruptcy of Lehman Brothers, one investment bank after another began to falter, and they were forced to flee into mergers or modify their business models and accept government money.

    Paulson drummed up $700 billion (€538 billion) to avert the worst, but it wasn’t enough. Now his successor, Timothy Geithner, plans to invest another $2 trillion (€1.5 trillion) in the ailing financial system — money that the government doesn’t have. No one knows whether it will help prevent the economic collapse of the country and the global economy. And no one knows how the government will ever be able to pay off the debt it must now take on.

    The situation in Great Britain and Germany is not all that different. The governments there are approving bailout packages for previously unheard of sums, and they are investing in banks, some of which are being more or less nationalized.

    The coalition government in Berlin has even drafted a law that would allow the country to expropriate shareholders of Hypo Real Estate. The crisis-ridden Munich-based mortgage lender is constantly requiring new government loan guarantees and aid and has already received €102 billion ($131 billion) from the state.

    Even if the governments manage to avert the worst and stabilize the banks, the world economy is experiencing its worst crisis since the Great Depression of the 1930s. All of this is the consequence of a system that investment bankers invented, and from which they have benefited the most.

    But the bankers deny their own culpability and refuse to do anything to atone for their sins. Even though many banks would have gone under without government help, it has only occurred to a very few bankers that they should pay back their bonuses, which are based, after all, on illusionary results.

    Last November, German President Horst Köhler gave bank executives a piece of his mind. In a speech at the European Banking Congress in Frankfurt, he called upon the assembled members of the banking elite to go without their bonuses and use the money to help those affected most by the crisis instead.

    “Those in your industry who made a lot of money as a result of the developments of the last few years could send a special message of solidarity by contributing to a fund,” Köhler said at the time. Last week, he reiterated his proposal and noted how disappointed he was to see that not one bank executive had taken him up on his idea.

    There are many, on the other hand, who are doing their utmost to hang on to their cash.

    In the summer of 2007, IKB, a bank that lent money primarily to small and medium-sized businesses, was the first German bank to be hit by the financial storm. The provincial bankers had gambled in the US mortgage market, and IKB was only saved with the help of a bailout package paid for by banks and the government. After that, almost the entire management had to go.

    The new management had IKB’s balance sheet recalculated for the critical period 2006-2007. Suddenly the bottom line was much worse than before. The logical consequence was to demand repayment of bonuses that had already been paid out. But the then-chairman, Stefan Ortseifen, sued the bank over his dismissal and refused to repay €805,000 ($1,046,000) in performance-based bonuses. Joachim Neupel, another former member of the executive board, also refuses to relinquish his €451,000 ($586,000) bonus, which was to be deducted from his pension. A court in Düsseldorf ruled in Neupel’s favor.

    While Neupel and Ortseifen have challenged their employers’ demands for repayment of bonuses, other former colleagues are more understanding. At the end of last year, Volker Doberanzke and Markus Guthoff each returned about €500,000 ($650,000) to IKB — naturally without acknowledging any guilt whatsoever.

    In Switzerland, Peter Wuffli, the former CEO of UBS, returned €8 million ($10.4 million), and in late November former UBS president Marcel Ospel and two other senior executives agreed to waive their claims to payments totaling €22 million.

    DER SPIEGEL
    Graphic: Wall Street bonus payments, 1985-2008
    But what is this compared with the sums these bankers earned throughout their careers, and compared with the massive loss of more than €12 billion ($15.6 billion) that the bank made last year? The Swiss government was also forced to step in, and yet the bank, to the dismay of citizens and politicians, is paying out €1.4 billion ($1.8 billion) in bonuses for 2008.

    “One can only distribute what one has earned,” says Martin Blessing, the CEO of the now partially government-owned Commerzbank. “Companies that lost money should not be handing out bonuses.”

    A bonus, Blessing said in a speech to owners of small and medium-sized businesses, is “a supplementary payment that is based primarily on a company’s overall economic success, and secondarily on personal performance — in that order.”

    This sounds obvious enough, and yet it isn’t, especially not in Blessing’s case. Dresdner Kleinwort’s 5,500 investment bankers received a commitment from their old employer, and now they are waiting for their last, big check.

    The investment bankers at Dresdner Bank are not amused by the fact that Commerzbank is now reexamining each employment contract, partly in response to pressure from the federal government. “Allianz promised us a bonus pool. This was included in the purchase price for Dresdner Bank,” says one senior manager.

    The executive personally expects a bonus worth millions, because business, he says, was not all that bad in his division. If he does not receive the bonus, he plans to sue. His former co-workers are also gearing up for litigation, and he predicts that the labor courts will be flooded with “hundreds of cases.”

    Most investment bankers have little left to lose. According to one human resources consultant, 88 of the bank’s 90 stock analysts in London were let go last week. Commerzbank plans to slash a total of 1,300 jobs in Dresdner’s investment banking division. The bankers, for their part, acknowledge the brutality of the business with a shrug of the shoulders. Nevertheless, they insist on the pay to which they believe they are entitled. Even those who have already lost their jobs are still waiting for their bonus letters, which usually consist of a single sentence and a number.

    At Deutsche Bank, most of the letters have already been distributed, as part of a ritual that takes place every year. The department manager summons each individual trader into his small glass box next to the trading room and hands over an envelope. Anyone who does not receive a bonus basically knows that he should start looking for a new job.

    Instead of the €400 million ($520 million) distributed at Dresdner Kleinwort, Deutsche Bank handed out €3.5 billion ($2.7 billion) to its investment bankers. From secretaries to derivatives specialists, employees received an average of €234,085 ($180,065) each. This amount also includes base salaries, which often make up only 10 to 20 percent of total compensation at the upper levels of management.

    Is €234,085 a lot of money or a little? It depends on one’s point of view. In the previous year, the average at Deutsche Bank was €413,204 ($317,849). Investment bankers are not unaffected by a drop of more than 40 percent.

    On the other hand, Deutsche Bank’s investment bankers were responsible for a pretax loss of €7.4 billion ($9.6 billion). CEO Josef Ackermann owes it to his more stabile business units, like the consumer-banking division, that the overall loss was limited to €3.9 billion ($5.1 billion).

    Top Deutsche Bank executives like Anshu Jain or Michael Cohrs, who can earn up to €20 million ($26 million) in a good year, are going without their bonuses this year. “Many others didn’t receive a bonus either,” says Ackermann. Traders who speculated with the bank’s capital in stock markets or with structured loans went home empty-handed this time. The stars, some of whom earned more than Ackermann in past years, are now leaving the bank.

    Other investment bankers continued to make a killing. Those who traded in German government bonds were able to earn a lot of money. Liquid securities like government bonds were in demand, as were smart traders with contacts. Hardly anyone seemed to care that the securities trading business managed by Jain was incurring high losses.

    Deutsche Bank can do as it pleases, especially since it has not applied for government bailout money. Nevertheless, it relies indirectly on the fact that governments around the world have used trillions in public funds to protect the financial system from total collapse — otherwise Deutsche Bank would no longer exist. Besides, Deutsche Bank was one of the major players in the market for the highly speculative transactions that ultimately triggered the financial crisis.

    Sorry Seems to Be the Hardest Word

    People like Boaz Weinstein, 35, helped to shape the bank’s image. The New York-based banker is a talented chess player and a gifted gambler. Late at night, when the screens in the trading room went dark, he and his boys played poker. Whoever put a $100 bill on the table could be in the game.

    Weinstein started working for Deutsche Bank at the age of 24 as a specialist for credit insurance, and at 27 he became one of the youngest directors Deutsche Bank had ever had. The market in credit derivatives, or CDS, was young and exciting, and hardly anyone in faraway Frankfurt understood it. It sounded like insurance. Weinstein used mathematical formulas to map out risk. Everything seemed great.

    Because business was going so well, the bank kept funneling more and more capital to its star trader. It also took on risk of its own; after all, the dull business of consumer banking was something any neighborhood savings bank could do.

    Deutsche Bank’s dealers were entrusted with funds running into tens of billions to go on gambling sprees in the world’s markets. Their orders comprised up to 20 percent of the bank’s securities business.

    Weinstein was one of the best. He raked in enormous profits for the bank and, of course, for himself. Investment bankers expect half of the profits they make to end up in their own bank accounts. According to the Wall Street Journal, Weinstein was earning about $40 million in annual pay for himself.

    Last year, Weinstein was promoted to co-head of global credit trading at Deutsche Bank. When the global financial system collapsed in mid-September, it turned out that his bets were not quite as safe as he had expected. His department incurred losses estimated at $1.8 billion (€1.38 billion). The bank’s risk managers are still in the process of liquidating his trading positions, some of which were for very long terms.

    He will not be getting a bonus this year. But the news is not exactly disastrous for Weinstein, who left Deutsche Bank a few days ago to set up a hedge fund together with 15 other traders. The bank has even considered investing seed capital in the new fund.

    For talented traders, Deutsche Bank represents the best of all worlds. The best of them were able to speculate with the bank’s capital and maximum their incomes. The more risk they were able to take on, the higher the potential return. Until the system collapsed, that is.

    None of the big banks is completely innocent. But who is willing to take the blame? How can the industry regain the trust it gambled away if it does not accept responsibility?

    ‘A Reversal of Robin Hood’

    When top banking executives were summoned before the British parliament’s finance committee last week, they repeatedly used the little word “sorry.” Their PR consultants had done their homework. But the executives still insisted that the crisis has nothing to do with the bonus culture and over-inflated salaries.

    In fact, the opposite was the case, said Andy Hornby, the former CEO of the bank HBOS, who claimed to have lost a lot of money himself. He received his bonuses in the form of stock options, and their value plummeted when the bank ran into difficulties. HBOS has since been taken over by another bank, LloydsTSB. The government owns 43 percent of the new entity.

    Former Deputy Prime Minister John Prescott is leading the crusade against bonus payments by those banks that had to be rescued with billions in taxpayer money. “Using the contracts argument is absolutely nonsense,” he said recently. “These contracts would have been worthless without the government. Without the government, these bankers would have been on the dole. We are seeing a reversal of Robin Hood — rob the poor to pay the rich.” Last week Prescott submitted to the House of Commons a petition with almost 30,000 signatures as part of his initiative to protest against the high payments.

    In London’s financial district, 3.6 billion pounds ($5.1 billion) in bonuses are scheduled to be paid out soon for the disastrous year of 2008. As large as this sum is, it is still only 40 percent of the total bonuses paid out in the previous year. Nevertheless, Schools Secretary Ed Balls, formerly current Prime Minister Gordon Brown’s closest adviser when Brown was Chancellor of the Exchequer, warns that the current crisis will be the worst global recession in more than 100 years. “These are seismic events that are going to change the political landscape,” he said. “The economy is going to define our politics … in Britain in the next five years, the next 10 years and even the next 15 years.”

    It is no surprise that most Britons are furious. One of the principal targets of their outrage is the Royal Bank of Scotland (RBS), which was so massively mismanaged by its former CEO Sir Fred Goodwin — nicknamed “Fred the Shred” — that it had to report a loss of close to 28 billion pounds ($40 billion) for 2008.

    After spending 20 billion pounds ($28.4 billion) in taxpayer money to rescue RBS in the fall, the government now owns 68 percent of the bank. Nevertheless, the bank still plans to issue bonuses worth 340 million pounds ($484 million), albeit less than the 1 billion pounds ($1.42 billion) originally planned in bonuses. Chancellor of the Exchequer Alistair Darling explained Tuesday that the bank would pay “the minimum it can with regard to its legal obligations,” in reference to the fact that some employees are obliged by contract to receive bonuses.

    The opposition, as well as Labour MPs like Prescott, called upon the government to prohibit the bonus payments despite the contractual agreements. At the same time, Prescott wrote an open letter to the new CEO of RBS, Stephen Hester, in which he criticized the bonus payments as “morally and economically outrageous.” And although Hester told a parliamentary committee that he empathized “100 percent with the public mood” when it came to bonuses, the payouts will still be disbursed.

    Hester’s predecessor Fred Goodwin told the committee that he “could not be more sorry” for what had happened. Goodwin, who the Labour government had knighted in 2004, collected 13 million pounds ($18.5 billion) in bonuses himself over a 10-year period.

    Disasters of the Universe

    Not even bankers in the United States are excused for such excesses. Even in the motherland of unbridled capitalism, the mood has now shifted.

    In the past, Americans had no objections to seven-figure salaries and giant bonuses. Wall Street was always at the core of the American dream, the place where anyone could make a lot of money in a very short time.

    But they have taken it too far this time. Take, for example, former Merrill Lynch CEO John Thain, who had his office redecorated for $1.2 million (€920,000) — $1,400 (€1,070) waste basket included — in the middle of the crisis. And even though his bank could only be saved by an emergency sale, Thain, who was forced to resign in January, refused to go without his $10 million (€7.7 million) bonus.

    Or Richard Fuld, the former CEO of Lehman Brothers, who secretly sold his beachside villa in Florida to his wife for $100 (€77) to shelter some of his assets from pending civil suits. Fuld had originally bought the estate for $14 million (€10.8 million).

    And then there were the executives at insurance giant AIG, rescued from bankruptcy with government funds, who had no qualms about rewarding top-performing employees with a hunting trip to England.

    Then, of course, there was Bernard Madoff. The former head of the Nasdaq Stock Market allegedly cheated investors out of $50 billion (€38 billion) with an illegal pyramid scheme. On the day before Madoff’s arrest, his wife withdrew $15 million (€11.5 million) from an account at a firm co-owned by her husband.

    For many Americans, Wall Street executives now fall into one of two categories: those in the first group are arrogant and greedy, and those in the second are criminals and frauds.

    The New York Times wrote that the former stars of Wall Street have now become star villains. Even author Tom Wolfe, who called the Wall Street gurus the “masters of the universe” in his novel “Bonfire of the Vanities,” says he is “shocked” by the level of audacity.

    A few weeks ago, when it was revealed that Wall Street had distributed bonuses worth $18.1 billion (€13.9 billion) in 2008, even the president could no longer hold his tongue. “That is the height of irresponsibility,” said a visibly angry Barack Obama, who must now sell the American public yet another enormous bank bailout package to prevent the US economy from collapsing altogether.

    In recent days, it was revealed that Merrill Lynch handed out bonuses of $1 million (€770,000) to each of 696 managers at the end of last year, even though the investment bank incurred a loss of $15 billion (€11.5 billion) in the fourth quarter alone and had to be bailed out by the government.

    “It is abundantly clear that we are here amidst broad public anger at our industry,” Lloyd Blankfein, CEO of Goldman Sachs, said in a hearing before the House Financial Services Committee last week. “Many people believe — and, in many cases, justifiably so — that Wall Street lost sight of its larger public obligations and allowed certain trends and practices to undermine the financial system’s stability.”

    The Wall Street luminaries had to submit to the committee’s embarrassing questions for a full seven hours. They were asked questions like: “Why do you own a company jet?” or “Why on earth do you need bonuses? Do you get up earlier in the morning?”

    Much of today’s bonus system was established in the 1970s. At that time, investment banks were similar to law firms, with partners who divided up the profits. Employees with no share of the profits received a relatively modest bonus. Risk was generally kept within limits, because the partners, as principal owners, tended to favor more conservative policies.

    But then large commercial banks like Citigroup and Deutsche Bank forced their way into the exclusive world of investment bankers, fighting hard for the business and the employees of the Wall Street investment houses.

    One after another, the investment banks Morgan Stanley, Merrill Lynch, Lehman Brothers, Bear Stearns and Goldman Sachs became publicly traded companies, so as to improve their capitalization and distribute risk more broadly.

    Everything had changed. They were now large, publicly traded financial corporations, and they had a new business model. Instead of relying solely on the highly volatile mergers and acquisitions business, as they had in the past, they began to speculate for themselves.

    DER SPIEGEL
    Graphic: Wall Street bonuses 1985-2008
    For investment bankers, the rule of thumb was simple: the bigger the profit from these speculative transactions, the bigger the bonus. In only two decades, the total amount of bonuses paid out by Wall Street banks increased by a whopping 1,695 percent, from $1.9 billion (€1.46 billion) in 1985 to $34.1 billion (€26.2 billion) in the peak year, 2006. Some top executives were collecting bonuses worth 10 to 20 times their base salaries.

    The bonus system acted as an “accelerant,” says Nikolaus von Bomhard, head of the Münchner Rück insurance group, but others started the fires.

    For Joseph Stiglitz, winner of the Nobel Prize in Economics, the arsonist-in-chief is a household name: Alan Greenspan. The hot era began in 1987, when Greenspan was named chairman of the US central bank, the Federal Reserve. Then-President Ronald Reagan wanted to get rid of Fed Chairman Paul Volcker. Although Volcker had successfully combated inflation, he could not be dissuaded from the idea that financial markets must be kept on a tight rein. Greenspan, an admirer of the author and philosopher Ayn Rand, who espoused laissez-faire capitalism, was of a different persuasion altogether.

    The new Fed chairman loosened regulations and opened up the money supply further and further in the coming years. It was called “financial innovation” at the time, and no one wanted to, or was even permitted to stand in the way of “innovation.”

    In 2003, then-President George W. Bush, who was enthusiastic about all forms of deregulation, and representatives of various regulatory agencies posed for journalists as the liberators of the markets, armed with hedge clippers and chainsaws. From then on, Washington blocked attempts by state governments to impose tighter controls on mortgage lenders.

    This was followed by the next step in the disaster, the loosening of equity capital requirements. In 2004, the agency that regulates US markets, the Securities and Exchange Commission (SEC), began allowing the major investment banks to take on three times as much debt as before. This enabled them to buy large numbers of mortgage-backed securities, inflating the mortgage bubble even further.

    The structure of the US financial system changed fundamentally in the next few years. The once-dominant commercial banks lost more and more ground to the reckless financial wizards in New York. They, in turn, invented increasingly fanciful products, with ever-more opaque names and ever-riskier structures.

    At the beginning of 2007, the five largest US investment banks managed a combined portfolio worth $4 trillion (€3.1 trillion). Roughly 40 percent of all banking activity in the United States was now taking place in a high-risk zone.

    But who cared? Investment money was abundant, coming from places like China and Dubai, as a result of Greenspan’s low-interest-rate policies. Once banks began bundling credit risk into attractive packages which they immediately re-sold, they lost the incentive to scrutinize their borrowers. After all, they got their money back as soon as they sold on the loans.

    The investment banks put more and more of their shareholders’ money in questionable investments. But they were raking in enormous profits, and they kept charging ahead. Gradually, they divorced themselves from the real world and disappeared into a parallel universe of wealth, self-indulgence and unshakeable faith in their own infallibility.

    All that counted was the transaction, because it served as the basis for the banker’s longed-for bonus at the end of the year. Reservations about the system were pointless: No one got a bonus for preventing a crisis.

    On the other hand, those who took high risks could have it made in just a few years. What was there to lose? If their bets paid off, they received the bonus. If not, it was the shareholders’ problem. It was this mechanism of greed that was partially responsible for the financial crisis.

    ‘I Hate Investment Banking’

    In the world of investment banking, everything revolved around the bonus. The base salary, which could easily amount to $150,000 (€115,000) even for newcomers, was treated as little more than compensation for expenses. The true pay for an 80-hour week, for giving up one’s personal life and living a life of nerve-wracking stress was the bonus, which could be five or 10 times as much as the base salary. The bonus paid for the luxury, for the Ferraris, the villas and an assortment of excesses.

    In the past few years, luxurious condominium buildings have shot up all across Manhattan, futuristic glass towers with small apartments selling for the “starter” price of $2-3 million (€1.5-2.3 million). Their owners were junior traders, most of them Harvard or Princeton graduates in the early- to mid-20s who had found jobs with hedge funds.

    Their bosses bought apartments in the most desirable spots along Central Park, where penthouse apartments sold for upwards of $70 million (€54 million). In what is probably the world’s most expensive condominium building, a new, neoclassical structure worth a total of $2 billion (€1.5 billion), people like Goldman Sachs CEO Lloyd Blankfein and Citigroup patriarch Sandy Weill live under the same roof with actor Denzel Washington — who had to make do with an apartment on a lower floor.

    Even a Hollywood star can seem downright poor when measured against the earnings of some investment bankers. Year after year, enormous sums of money were being extracted from companies in the form of bonuses.

    The bonus mania being pursued by the banks and their employee was so obscene that in December 2006, the climax of the boom, the CEO of Goldman Sachs, Lloyd Blankfein, became concerned about his company’s image and urged his employees to practice moderation. “As stewards of the firm’s reputation, I ask each of you to remember that our actions — inside and outside of the office — reflect on Goldman Sachs,” he told employees in a voice mail message. “Even a perception of arrogance hurts all of us.”

    At the same time, Blankfein was collecting an unbelievable personal bonus of $53 million (€41 million), in addition to his annual salary of $220,000 (€169,000).

    Goldman Sachs reported record earnings in 2007. The company expressed its appreciation by paying its employees a total of $18 billion (€13.8 billion) — an average of $623,000 (€479,000) for each employee. Blankfein earned close to $70 million (€54 million).

    In 2007, Lehman Brothers also celebrated the joys of making money and rewarded its employees by paying them $9.5 billion (€7.3 billion), $800 million (€615 million) more than in the previous year.

    Not to be undone, Morgan Stanley, despite setbacks resulting from the beginnings of the banking crisis, paid $16.5 billion (€12.7 billion) in bonuses, an 18 percent increase over the previous year. CEO John Mack, who took home $40 million (€31 million) in 2006, had to make do with a modest $800,000 (€615,000) in 2007.

    That year, Merrill Lynch CEO Stan O’Neal was sent home — with a $161 million (€124 million) severance payment. His successor, John Thain, was paid $83 million (€64 million) in his first year on the job.

    In 2007, Wall Street paid out more than $30 billion (€23 billion) and London’s City €12 billion ($15.6 billion) in bonuses. Was there a financial crisis on the horizon? Perhaps, but the executives kept their cool. Even though his bank was in trouble, James Cayne, the then-CEO of Bear Stearns, remained calm as a cucumber. When his bank reported billions in losses, he was attending a 12-day bridge tournament in Nashville, and he was irritated at having to break it off and hurry back to New York. In the end, he quickly sold off his own Bear Stearns shares for well over $60 million (€46 million), before his life’s work fell apart. Half of the money was just enough to buy two apartments in the converted Plaza Hotel on Fifth Avenue, one for his wife and one for himself.

    The financial crisis hit Wall Street with full force in 2008, when Lehman Brothers and other big names disappeared. Unmoved, the bankers who had brought on the disaster paid themselves $18.4 billion (€14.2 billion) — the sixth-largest bonus amount ever paid. In December 2008, the Associated Press reported that $1.6 billion (€1.23 billion) of the money that US taxpayers coughed up to bail out their banks ended up in the pockets of top executives.

    Merrill Lynch, sold with an injection of about $230 billion (€177 billion) in government funds, still paid bonuses to its top performers. It quickly decided to pay bonuses worth $3.6 billion (€2.8 billion) early, in December, just before the shareholders approved the sale of Merrill Lynch to Bank of America.

    Today the banking industry’s reputation is ruined. T-shirts featuring the slogan “I Hate Investment Banking” are currently selling like hotcakes in New York. For years, the Wall Street banks could attract the best and brightest of any university’s graduates, but those students will likely look elsewhere in the future. After all, the government now determines what bankers earn — at least at those banks which are taking money from the government. And that number is growing.

    The new bailout plan for the financial industry unveiled by Treasury Secretary Geithner last week expressly put a cap on executive compensation. In the future, banks that accept public funds will not be permitted to pay their senior executives more than $500,000 (€385,000) in annual compensation, bonuses included. Executives in those banks will not be permitted to cash in their stock options until the government’s money has been repaid. Even such customary perks as the use of company jets will be subject to radical restrictions.

    At the same time, President Obama tried to make it clear that he has no intention of shaking the country’s cultural roots. “This is America. We don’t disparage wealth,” Obama said. “We don’t begrudge anybody for achieving success, and we certainly believe that success should be rewarded. But what gets people upset, and rightfully so, are executives being rewarded for failure.”

    Sources in Washington way that some of Obama’s top advisers would have preferred to take things a step further. There was apparently a lengthy debate before Treasury Secretary Geithner managed to prevail over proponents of even tighter restrictions on banker compensation. One proposal under discussion was not only to impose salary limits on executives, but on all bank employees.

    For Wall Street, on the other hand, even the watered-down rules go too far. In a recent essay for the Wall Street Journal entitled “Greed is Good,” Roy C. Smith, a finance professor at New York University’s Stern School of Business and a former Goldman Sachs partner, wrote that bonuses are “an important and necessary part of the fast-moving, high-pressure industry.” Wall Street employees “flourish with strong performance incentives,” he wrote.

    Gordon Brown’s close ties to the country’s financial elite are probably one of the reasons why the British prime minister has been reserved on the question of bonuses. The government plans to limit such payments to 25,000 pounds ($35,500) for this year. The rest can be paid out in stock, which cannot be sold until all government money has been repaid. Under the program, this would also apply to private banks that take advantage of the government’s insurance coverage for bad risks in the future.

    With the approval of the next budget in late April, Brown wants to see new laws enacted to ensure that the way bankers are paid is changed. “We are leading the world in sweeping away the old short-term bonus culture of the past and replacing it with a determination that there are no rewards for failure and rewards only for long-term success,” he said.

25. Editor Says:
    February 23rd, 2009 at 11:09 am

    Thanks for digging up that Der Spiegel article Daniel. Interesting.

26. Daniel Voglesong Says:
    March 17th, 2009 at 4:17 am

    AIG Executives’ $165M In Bonus Money Draws Ire
    by Robert Smith, National Public Radio/NPR

    All Things Considered, March 15, 2009 · When word got out that insurance powerhouse AIG was going ahead with massive bonuses to some executives, despite the company’s acceptance of federal bailout money, the reaction from the White House and Congress was immediate.

    “There are a lot of terrible things that have happened in the last 18 months, but what’s happened at AIG is the most outrageous,” said Larry Summers, President Obama’s chief economic adviser, speaking on ABC’s This Week with George Stephanopoulos.

    AIG will pay bonuses totaling $165 million. The money comes from taxpayers, funneled through the multibillion dollar bailout plan, but the president’s top advisers and congressional leaders say they can’t do anything about it.

    AIG executives made trillions of dollars of bets that subprime mortgages could never go bad. When they tanked, the government felt compelled to prop up the company with $170 billion in taxpayers’ funds. Even with the money, AIG recently posted a loss of nearly $62 billion — the largest corporate loss in history.

    Summers, however, can’t blame the owners of AIG: After the bailout, taxpayers now control 80 percent of the company. And Summers says those bonuses must be given to the people who ran the company into the ground — because they signed contracts before the company crashed.

    “We are a country of law. There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by [Treasury] Secretary [Timothy] Geithner,” Summers said.

    Geithner reportedly had some stern words with the company’s chairman this week.

    Edward Liddy, who was chosen by the government to run AIG, wrote in a letter Saturday that he, too, thought the bonuses were distasteful, but that his hands were tied.

    And, Liddy added, AIG needs to retain the best and brightest talent if it’s ever going to pay back the American taxpayers.

    Lawmakers on Capitol Hill aren’t buying that argument. Republican Sen. Mitch McConnell, also speaking on ABC’s This Week, raised the idea that perhaps the bonuses could be rescinded if there were some sort fraud involved.

    “Did they enter into these contracts knowing full well that, as a practical matter, the taxpayers of the United States were going to be reimbursing their employees? Particularly employees who got them into this mess in the first place,” McConnell said.

    Democratic Rep. Barney Frank agreed that the government has to do everything to try to recover the bonuses. Speaking on Fox News Sunday, Frank said if the government can’t get the money back, it should at least get the people responsible.

    “Who said, and at what point, ‘We’re going to give those bonuses no matter what’? And I do think it’s inappropriate to let those people stay in power at that company.”

    Should some executives at AIG lose their jobs over the bonuses, at least they’ll have a cushion to fall back on. According to The New York Times, the highest bonus guaranteed under the contract is $6.5 million. Seven executives in the very same unit that brought down the company will get more than $3 million each.

27. Editor Says:
    March 17th, 2009 at 6:24 am

    Thanks for sharing this Daniel Voglesong. Crazy, huh?

• 
  
  

  33,731 Visits
  21,099 Unique Visitors
  Per Month (Jan-Jun 09)
  
  See "Resources" Page
  For Advertising Info
  
  

  
  
  

  
  
  

  
  
  
  
  Receive By E-Mail

  ---

  
  
  
  

  "Change I'm still
  waiting for..."
  
  U.S. H1N1 Flu data
  (Source: CDC)
  Cases= 33,902
  Deaths= 170
  
  Welcome To Boom2Bust.com
  "The Most Hated Blog
  On Wall Street"
  
  Sounding The Alarm
  Since Memorial Day
  Weekend 2007
  
  Your Host
  Christopher E. Hill
  Editor
  
  Visit Our Sister Blog!
  Investorazzi.com
  "Tracking The World's
  Greatest Investors"
  
  Best Viewed With
  Internet Explorer
  
  Questions/Comments?
  info(AT)boom2bust(DOT)com
  
  Please Help With My
  Blog Rankings!
  
  
  

  Thank You!
  
  
  
  As Quoted By MSNBC.com
  
  As Featured On:
  
  Reuters.com
  420 Posts
  Palm Beach Post
  222 Posts
  Chicago Sun-Times Group
  126 Posts
  Wall Street Journal
  27 Posts
  FOXBusiness.com
  24 Posts
  IBS
  6 Posts
  Computer Shopper
  3 Posts
  USA Today
  2 Posts
  Freedom's Phoenix
  Nielsen
  West Orlando News