Posts Tagged executive bonuses

Federal Judge Jed S. Rakoff: A Lonely Soldier in the War Against Wall Street’s Financial Terrorists?

Judge Jed Rakoff

 

 

 

 

 

 

 

 

 

 

 

THE ONE MAN WITH BIG ENOUGH BALLS TO TAKE ON WALL STREET

 

Calling the Security and Exchange Commission’s legal settlement with Bank of America (BoA) “half-baked justice at best“, U.S. District Court Judge Jed S. Rakoff reluctantly signed-off on the agreement between the two parties on Monday, writing in his order that “[t]his court, while shaking its head, grants the S.E.C.’s motion and approves the proposed consent judgment.”

 Judge Rakoff is a true American Maverick, and a champion for American public shareholders.  

I am not talking about some half-baked Sarah “Pretender” Palin maverick.  This man is the real deal – and you can take that to the bank.  Just don’t deposit it with Bank of America.  Because when it comes to the truth, BoA  – like the rest of the Wall Street Financial Terrorists – has proven beyond a shadow of a doubt that it simply cannot be trusted.  

On several occasions this author has commented, here and here regarding the ongoing feud between that  limp-dicked, impotent icon of American investor protection - the U.S. Securities and Exchange Commission (S.E.C.) - and Judge Rakoff, over this settlement of Bank of America’s failure to disclose critical information in it’s SEC stock disclosure filings regarding the Merrill Lynch merger. 

BoA shareholders were entitled to know the scale of Merrill Lynch’s liabilities, as well as the size of the bonuses that were to be paid to Merrill’s top executives, before approving the merger.  However, none of that was disclosed in the filing, and BoA is blaming it’s former top legal counsel for it’s ostensibly innocent error in judgment. 

During one of those previous court hearings, the Judge voiced his utter contempt for claims by both BoA and the SEC that none of the BoA executives were culpable for the material non-disclosure.  He was further incensed over the irony that it would be BoA’s shareholders who would ultimately be the ones who were financially punished because the bank would have to pay the fines out of it’s profits, thus further diminishing the value of the shareholders stock.  The judge lamented this fact, having preferred that BoA’s top executives pay the fines.   Nonetheless, he begrudgingly approved the settlement.

Judge Rakoff is also currently presiding over a pending civil matter against J.P. Morgan Chase.  In the order he issued on January 28, 2010 in that case, the Judge wrote that “JP Morgan thereby violated, at a minimum, the covenant of good faith and fair dealing” when it obviously attempted to structure a deal with one client in an effort to position itself so as to benefit another client in the same industry – a clear conflict of interest.  The judge noted that “such an end run, if not a down right sham , is not permissable . . .”, insinuating J.P. Morgan committed fraud.

Felix Salmon, a well respected business writer and blogger, wrote a good analysis of Morgan’s corrupt business dealings in the matter titled How J.P. Morgan treats its clients: scandalously and in bad faith.  As another writer so eloquently put it, “[w]e have entered a period of grotesque decadence in the financial and business dealings of those who brought us the great financial calamities.”

In the final irony in the BoA case, both the S.E.C. and Bank of America expressed just how pleased they were with the settlement.  I’ll bet they were.  Now the question becomes, when will the S.E.C. lawyers who worked on this case retire from “government service”, and take jobs with BoA or one of the other of the Wall Street Terrorist Organizations ?  Anyone want to take a bet that this doesn’t happen? 

I welcome any and all takers.  And I will be laughing all the way to the bank when I win that bet.  Just hope you were smart enough to hedge that wager Goldman Sachs-style by betting that I won’t be depositing my winnings in BoA.  Because I won’t.  Judge Rakoff would be disgusted with me, and rightfully so.

Thank Goodness We Have At Least One Man With Balls On Our Side! 

Now the rest of you government weenies and politicians - grow some freakin’ testicles.

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Obama Meeting With Fat Cat Bankers Elicits Call for Guaranteed Loans?

Fat Cat Banker

 

 

 

 

 

 

 

 

 

So President Obama chides the bankers on CBS’s 60 Minutes Sunday night, referring to them as “fat cats”.  On Monday morning he meets with them  – at least the ones who showed up – to tell them they need to step-up their lending.  What was their response?

Some of those in attendance said the government should “cut the red tape” in lending requirements for Small Business Administration (SBA) loans.

WTF?

We just gave these guys trillions of dollars interest-free in March of this year to lend back to Americans in order to prop up the economy.  Then they hoard the money, investing it in everything from bonds (very conservative returns), to credit card holders (then turned around and raised interest rates to all-time highs), to high-risk derivatives – you know, those insane and arcane financial instruments that broke the casino the last go around.  Thereafter, they paid themselves handsome bonuses for their genius (listen, give me a boatload of $$$ interest free and I can make a profit on it investing in high-grade bonds – the “spread” of 2% interest is a no-brainer; let’s see, 2% of $35 Billion – wow, nice freakin’ bonus, Lance; you are such a genius). 

Now when pressed to lend the money, they have the audacity to suggest that the government-backed SBA loans are the way to go about fixing this mess.  Let’s see.  I will loan the money you just gave me interest free to small businesses.  You guarantee 80% of the loan.  I get the borrower to pledge his business as an asset to back up the remaining 20%, of course, making sure that the appraised fire-sale value of the “hard assets” – real estate, equipment, etc, far exceeds the other 20% of the total loan.   Even if the deal goes South, the government pays me 80% of the money back (which they gave to me interest free, anyway), and I sell the business for 20 cents on the dollar and recover the other 20%.

What a deal!  I take NO risk, and get all of the rewards.  Isn’t Capitalism great?

Mr. President.  Wake up!!!  These guys are sandbagging us.  Good will has left the building.  The last remnants of Capitalism are gone, buried along side Adam Smith, who is rolling over in his grave as I speak.

P.S.  For those not familiar with Adam Smith, he was the author of Wealth of Nations – the book written in 1776 where he first forwarded the economic theory of Capitalism.

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Bank Of America’s Criminal Deception of U.S. Treasury on Bailout

 BoA bailout

 

 

 

 

 

 

 

 

 

Illustration from Deesillustration.com

 

The Chairman of the House Oversight and Government Reform Committee, Congressman Edopholus Towns (D -Brooklyn, N.Y.) is leading the investigation into whether executives for Bank of America made misrepresentations based on false claims to the government in December 2008 regarding it’s agreed takeover of Merrill Lynch in order to receive significant taxpayer bailouts.

The committee has acquired thousands of documents that included handwritten notes from lawyers representing BoA in it’s takeover of Merrill Lynch that indicated the bank’s claim of a “Material Adverse Change” in circumstances regarding the takeover was unfounded.  Nonetheless, it appears executives for the bank used this legal clause as a veiled threat to withdraw from the takeover in order to to persuade the U.S. Treasury and then Secretary Hank Paulson to give them more bailout money.  If true, this would be tantamount to extortion – which is a criminal offense – let alone fraudulent misrepresentation.

BofA spokesman Larry Di Rita said that BoA’s actions “were based on our desire to make the best decision for our shareholders . . .”

This self-serving statement is utterly laughable in light of U.S. District Court Judge Jed A. Rakoff’s take on BoA’s behavior in the suit brought by the SEC against the bank.  BoA screwed it’s shareholders by intentionally withholding information regarding the Merrill Lynch bonuses and then blaming their lawyers.  Now we learn the high likelihood that these same executives ignored the advice of their lawyers and wilfully mislead the U.S. Treasury when they looked to the government for financial bailouts.  Why BoA is allowed to perpetuate this ongoing charade defies logic and reason. 

These men are financial terrorists! 

When will they be made to answer for their crimes against the American people?

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Do Wall Street Vampires Really Need H1N1 Vaccinations?

bankers

 

 

 

 

 

 

 

It is a fair assumption that people without hearts and souls are immortal, and not subject to the vicissitudes of Mother Nature’s nasty flu viruses that she visits on us annually.  So why does Wall Street get first crack at these vaccinations?

I guess women, children, and the elderly are dispensable in comparison.  Now that is real evidence of rationing health care and Death Panels - - just not quite in the form that the Tea Baggers envisioned.  And it only cost Wall Street $5 Billion in campaign contributions over the past decade to the Washington politicians in order to buy protection from their own malfeasance, and the random cruelty of Mother Nature.

As well as unjustifiably obscene bonuses, to wit.

What a bargain.

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Small Business Finally Gets the Attention It Deserves

 Small Business Owner

 

 

 

 

 

 

 

 

The sector of our economy that is treated like a step-child in comparison to Big Business is finally getting it’s just due.  Small businesses in America generate over 65% of the jobs in an economy that has recently been hit with an unemployment rate of 10%.  President Obama announced today that the bailout will be “refocused” on this segment of the U.S. economy

One question Mr. President?  What took you so long?  Guess Tim Geithner and Larry Summers first had to take care of their old buddies at Goldman Sachs, et. al., just like Henry Paulson and Alan Greenspan did with the Bush Administration during the global economic collapse these greedy animals created.  Meanwhile, the real heroes of the American economy who are still in business keep on shoveling coal down in the engine room, while those businesses that could not go on quietly close their doors in the vacuum of unavailable lending capital being horded by the rapacious bankers.

 Makes one wonder how many of those unemployed people Goldman Sachs is going to hire after announcing this week its record-breaking $16 Billion employee compensation package for the first nine months of 2009?   It is a safe bet that any money the Mammoth Financial Institutions are going to “put back into the economy” is going straight into the campaign coffers of the Democrats and Republicans who are currently sitting on the House and Senate sub-committees that will protect them from proposed regulatory legislation.

You can take that bet straight to the bank – just don’t deposit your winnings, because they will piss it all away.

Too bad we cannot “refocus” that money towards small businesses in America.  The impact of even that ”modest” amount of capital directed towards a few thousand struggling small business would truly have a stimulative impact on our economy, and specifically abate the rising unemployment in this country.

But, remember. 

“It’s all about Wall Street, Stupid.”

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Greed is Good!

 Greed is Good [1]

 

 

 

 

 

 

 

 

Remember the mantra ”Greed is Good” ?

Thank you Brian Griffiths for resurrecting the ghost of Gordon Gecko (Michael Douglas) from the movie Wallstreet.

Mr. Griffiths is an international advisor for Goldman Sachs (at least he is as of this moment – tomorrow is another story).  He spoke at an economic conference held in London yesterday where the topic of discussion was  . . . oh this is really good . . .

 “What is the place of morality in the marketplace?”

From there, it gets even more surreal.

Mr. Griffiths defended this weeks report coming out of Goldman Sachs that record compensation packages of $16.7 billion were being paid out to the company’s employees for the first nine months of 2009, an increase of 46 percent from a year earlier.  If you think that obscene information just made your blood pressure go through the proverbial ceiling, his comment justifying these compensation figures will absolutely cause you to ”blow a gasket”. 

“We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all.”

Yes!  That is how he rationalized this unconscionable decision from a financial institution that the U.S. taxpayer just bailed out. 

But Mr. Griffiths is not done.  He concedes that “[i]t was the failed moral compass of bankers which was primarily responsible for why we had this crisis.  The question is: what can we do in the culture of institutions to make them behave in a more socially responsible way?”

Ahhhhhhh . . . Give them more money????  Yea, that’s the ticket!  That should stop this ever-escalating climb into the stratosphere of economic insanity.  Right?

But he ends on a very positive note, telling the audience that “To whom much is given much is expected,” he said. “There is a sense that if you make money you are expected to give.”

Yes.  That’s what they will do.  Engage in an ignoble and altruistic charitable  act in order to wash away the sins of avarice, greed, and excess so that one can tolerate the inequality of his lifestyle compared to those less fortunate so as to inspire prosperity and opportunity in them, that they might become like him and do the same for others in a long cycle of never-ending prosperity and go on tolerating this inequitable way of living so that even more will prosper, all in the hopes that someday we will all be equally filthy rich and working ever harder each day to make more money to show the opportunities that await others who aspire to our level of greed and avarice.

I like it.  I think I can handle the job.  Let me check . . . no pulse, no heart, ice in my veins and in my glass of 20 year old scotch, no conscience, not a moral fiber in my body.  Please hand me a cigar.  When can I start?

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Mean-spirited to Take Away Bank of America CEO’s Salary?

 banker [umbrella]

 

 

 

 

 

 

 

 

Do you know the definition of a banker?  It is a person who will lend you an umbrella on a sunny day, and then ask for it back when the rain starts falling. 

Ken Lewis is retiring as CEO of Bank of America after overseeing the rapid implosion of one of the largest financial institutions in the country. 

As the global financial collapse was getting started last year, he decided to purchase both Country Wide Mortgage and Merrill Lynch so that he could really become a player in the global financial casino.  When BoA teetered on the verge of bankruptcy as a result of “biting off more than it could chew”, the government bailed his bank out, while Lewis engineered the payout of huge financial bonuses for former Merrill Lynch employees behind every one’s back. 

Later, when it was discovered that BoA had failed to disclose this fact in SEC filings,  the SEC brought civil charges against the bank, wherein an agreement that was reached that would have resulted in the bank paying a record $33 Million fine – which meant shareholders, not the executives, would ultimately be the one’s who would suffer the consequences.  The federal judge overseeing that matter angrily denied to sign off on the settlement, openly stating that was incensed over the fact that no one was taking responsibility and that the government had not brought criminal charges (the civil case is now set for trial in February 2010). 

In the wake of all of this,  BoA shareholders then demanded that Lewis voluntarily resign.  Furthermore, as a result of this unprecedented business debacle, Kenneth Feinberg, the government pay czar overseeing executive compensation of financial institutions that received TARP (government bailout) funds, recommended that Lewis relinquish his 2009 salary and bonus.  Rather than fight the issue, Lewis has agreed to take no compensation for 2009, and pay back the $1 million dollars in salary that he has already received for the year.

OK, so you are saying to yourself, “Finally, one of these guys will not get paid for screwing up!”

Well, not everyone is in agreement with you.  Greg Donaldson, chairman of Donaldson Capital Management in Evansville, Ind., responded to the news of Lewis’ not being paid his salary for 2009, by saying, “[i]t’s punitive and it’s mean-spirited, and it’s an attitude that will send shivers through every person who does business with the government or is regulated by the government.”

After a comment like Mr. Donaldson’s, I just hope bankers never have the audacity to come asking for an umbrella from the U.S. taxpayers one more time.  It will be a cold day in Hell when we ever quietly acquiesce to our government bailing them out again.

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Congress Ignores the Financial Trevails of Small Business

 small business

 

 

 

 

 

 

 

As was noted in yesterday’s blog, Wall Street Boys collect fat bonuses for moving money around the world at the speed of light, creating nothing of real value, while still continuing to intentionally deceive the government and shareholders about their business transactions with no substantive consequences.  Even Federal District Court Judge Jed A. Rakoff obviously wondered why the SEC was not investigating and prosecuting apparent criminally fraudulent behavior?  A $33 million fine is meaningless for Bank of America – especially if it’s executives who committed the fraud are not going to pay for it, either financially or by criminal punishment (as usual, the shareholders, bank customers, and tax payers are all going to “take it in the shorts” on this one). 

Now today it is reported that the major financial credit rating agencies – Standard and Poor, Moody’s, etc. – are still intentionally inflating the ratings of the securities of the Wall Street firms who pay them fees.   Anyone familiar with the term “Conflict of Interest”?  While testifying yesterday before the House Committee on Oversight and Government Reform, former Moody’s managing director, Eric Kolchinsky, asserted that his firm was criminally deceiving investors.   This was one of the principle underlying causes of last years financial meltdown, and yet they are they are doing it again? 

MEMO TO: Attorney General Eric Holder . . .

Where is the deterrence?!?!?

Meanwhile, honest, hardworking small business people try to fund retirement plans for themselves and their employees through the trusting hands of financial advisers, insurance companies, and former IRS agents.  Thanks to Congress, and even the IRS in some cases, that trust was sorely misplaced by a number of small business owners.  The mere fact that a business or individual may have inadvertantly failed to file one form, or even IF the existence of the retirement plan was reported in a business tax return, but not a personal return - any violation triggers enormous penalties and fines.   Some of these honest business people even relied upon IRS “determination letters”  that tacitly give initial approval to their plans. 

Guess What?  WRONG!  According to a complex set of tax rules and formulas established by Congress, if the IRS later determines that the plan was not in compliance, you are subject to penalties and fines for any number of “violations”.   One would think it reasonable that if you’re intentions are honest, that your reliance on expertise is reasonably placed, and there is obviously no intention to commit fraud, you will not be driven to bankruptcy.  You would be WRONG AGAIN!

What is most galling is the fact that the fines and penalties are not even commensurate with the violations.   It’s like giving the Death Penalty for speeding on the highway.  Congress takes the view that Wall Street is TBTF (To Big To Fail) even if they fraudulently screw things up, but your small business can be allowed to go bankrupt if you make an honest mistake.

The powerful Wall Street firms and financial institutions, their executive management, their rating agencies, and the minions who do their bidding (lawyers, lobbyists and politicians) suffer insignificant consequences for their criminally fraudulent  behavior, primarily by pouring millions of dollars into the political campaigns of the most powerful Democrats and Republicans sitting on Congressional Committees overseeing Banking, Finance and Business Regulation.

Meanwhile small businesses, which generate approximately 50% of the business income in this country, are treated like step-children.

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Bank of America Execs Still Duckin’ and Dodging Responsibility

Shawshank Redemption Prison yard [my lawyer fucked me]

 

 

 

 

 

 

“What’ch you in here for?”

“Armed Robbery.”

“Guilty?”

“Nope.  My lawyer fucked me.”

- from The Shawshank Redemption

 

Buried in the news this past week was a compelling story that personifies the degree to which the men and women of Wall Street and the financial world continue to evade responsibility for the personal destruction of trillions of dollars worth of shareholders wealth, all the while continuing to collect millions of dollars in compensation as they simultaneously took bailouts from American taxpayers, and avoid prosecution for their criminally fraudulent  behavior.

“There is no individual liability in this case; there is no evidence that any individual is culpable.”

- Bank of America’s statement in a federal court filing

A U.S. District Court Judge thinks otherwise. 

When Bank of America (BoA) was in the process of acquiring Merrill Lynch after the financial meltdown late last year, it intentionally failed to disclose to it’s shareholders that millions of dollars in executive bonuses where being paid to Merrill Lynch executives.  When BoA tried to settle it’s litigation with the Securities and Exchange Commission (SEC) for $33 million this week over it’s corporate malfeasance, guess who they blamed?

Their lawyers! 

The federal judge overseeing the case viewed all of this with a healthy degree of skepticism, and questioned why the SEC was NOT prosecuting even one of the BoA executives for it’s failure to disclose this bonus payout arrangement to it’s shareholders, intimating that someone is responsible for leaving that important piece of information out of an SEC document regarding financial disclosures.  BoA executives say they authorized the filing of the disclosure upon the advice of staff and outside counsel, and that it was the lawyers that prepared the document.   The judge rejected the settlement and decided that all BoA had to do was waive attorney-client privilege  – - presumably so that an inquiry could be made to determine who advised BoA to file the document, what did the executives know (or should have known).

Now BoA is defiantly refusing to waive attorney-client privilege.  Why?

Sounds like their lawyers not only screwed BoA, they all now likely screwed themselves and one another.  

Oh damn, that pesky law of unintended consequences even applies to “really smart people”.

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One year after the Wall Street Bailout . . . nothing has changed

The Bosses of the Senate [original]

 

 

 

 

 

 

 

 

 

 

 THE BOSSES OF THE SENATE [Keppler, political cartoon, circa 1889]

On the one year anniversary of the global economic collapse, there are thousands of news articles and blogs being written about the Wall Street bailout.  Personally, I have read over one hundred articles written by financial analysts, economists, business people and academics just in the past two months.  What many of them have to say about this economic crisis is mind-boggling – - the information is beyond the understanding of many Americans (and for most of the others, they simply do not want to take the time to really learn the complex intricacies of modern business and economics).  I do not say that with any degree of arrogance or contempt.  The fact of the matter is that in this era of cable news programming, radio talk show hosts, blogs, and other “resources”, Americans have resigned themselves to simplistic answers for very complex problems.  And most of those conclusions are drawn down partisan lines.

However, just this morning I read one of the most direct indictments of the bailout and it’s consequences from someone with obviously no partisan score to settle, and no vested economic agenda.  Dylan Ratigan,  a financial writer, reporter, and now the host of MSNBC’s “Morning Meeting”, wrote an Op-Ed piece titled  ”A year after bailout, Congress hostage to banks“, and the byline,  “Corporate greed has taught our government nothing.

In it, he writes that the economic system “all of us, left, right and center, need to demand that our politicians stop serving” business interests that steal from us, and produce nothing of any value for our economy.

In the wake of all that has occurred, I have been researching and preparing a series of essays on the problem with the American political system and the direct correlation with money.  To put it bluntly, there is a river of money running through Washington, D.C., and the source is primarily a very powerful Corporate America.  If you want to see the most direct evidence of this problem, look at the campaign contributions by major banking and financial services firms to BOTH the Democrat and Republican members of the of the Senate Banking Committee (unfortunately I cannot find a link to the information at the moment, but will update this post later).

Many people reading this will say, “Yea, we all know what you are talking about, so what’s your point.”  The point of this website, ScrewedUS, is to identify those blind spots that we all have, both Republicans and Democrats, Liberals and Conservatives, which keep us polarized, as well as oblivious to most central issue that faces this country today – - the United States of America DOES NOT belong to its citizens anymore.  It has been bought by some very powerful interests in this country (and around the world) in order to do it’s bidding.

Open both your mind and your eyes.  If we continute to engage in rank political bickering while the politicians fiddle, their powerful business interests loot the national treasury, and “Rome burns”, we will have no one to blame but ourselves.  Calling each other names, or personally attacking one another by saying “You lie”, will not change one thing. 

Wresting control of this country back from the powerful monied-interests who have hijacked it for their own devices is the only way to save it from a long, painful decline into poverty and irrelevance.

NOTE:  The cartoon at the top of the post, The Bosses of the Senate,  can be found at the U.S. Senate website.   Here is the language from the website describing the drawing and what it portrays:

“This frequently reproduced cartoon, long a staple of textbooks and studies of Congress, depicts corporate interests–from steel, copper, oil, iron, sugar, tin, and coal to paper bags, envelopes, and salt–as giant money bags looming over the tiny senators at their desks in the Chamber. Joseph Keppler drew the cartoon, which appeared in Puck on January 23, 1889, showing a door to the gallery, the “people’s entrance,” bolted and barred. The galleries stand empty while the special interests have floor privileges, operating below the motto: “This is the Senate of the Monopolists by the Monopolists and for the Monopolists!”

Keppler’s cartoon reflected the phenomenal growth of American industry in the 1880s, but also the disturbing trend toward concentration of industry to the point of monopoly, and its undue influence on politics. This popular perception contributed to Congress’s passage of the Sherman Anti-Trust Act in 1890.”

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