"No frills" is right. At the meeting Friday at the White House between President Barack Obama and 15 bankers representing the nation's most prominent financial institutions, the president offered his guests only water, the Wall Street Journal reports in its top story. While outlining a tenuous resolution reached by Wall Street and the White House—the Bankers did offer support for Obama's rescue plans, but are reportedly still irked by his "tough rhetoric" in recent weeks—the article offers juicy tidbits of what took place. "J.P. Morgan CEO James Dimon jokingly offered Treasury Secretary Timothy Geithner a check for $25 billion—the amount his bank owes the government. Camden Fine, head of the Independent Community Bankers of America, gave Mr. Obama a foam Ben Bernanke doll and suggested the president squeeze the Federal Reserve chairman during stressful moments," the paper says. Adding to that, Bloomberg quotes Fine, who said of the talks: "Clearly, the president said: 'Look you can help me by helping yourselves and moderating this behavior and bringing scale to this and making sense out of it so the administration doesn't have to step in.' "
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Bloomberg also reports today that Bank of America is set to increase investment bankers' pay by as much as 70 percent annually in a step to reduce the amount that is rewarded in bonuses, following public ire over bonuses doled out at AIG after the insurer received government rescue funds. The information comes from a memo written by Brian Moynihan, Bank of America's president of investment banking and wealth management, that was leaked to the press.
ReplyDelete"The concepts we are considering would not increase total compensation," Moynihan wrote. Annual base pay for some managing directors could be raised to about $300,000 from $180,000, and less-senior directors could get as much as $250,000, up from $125,000. "We believe it is responsible, and consistent with the emerging public consensus, that a greater percentage of overall compensation come from fixed base salary," the memo stated.
In a less prominent story, but one rife with intrigue, the New York Times and the WSJ report that two Goldman Sachs executives received a total of $58 million for their ownership in several of the bank's employee funds, which invest in highly illiquid hedge funds and private equity funds. Goldman paid Co-President Jon Winkelried, who is retiring at the end of this month, $19.7 million, and Goldman General Counsel Gregory Palm $38.3 million. The executives could've also sold their shares in Goldman. "Neither we nor the executives involved thought it was in the interest of the firm for them to sell shares in an extraordinarily turbulent market. We thought that to do so would send the wrong signal," a spokesman for Goldman told the WSJ, later adding that the decision to buy out the executives was made before Goldman accepted government funds in September.
The NYT calls the exchange a "bail out" and says it took place because the two men were "short on cash." "The executives are not the only Goldman employees who have faced a liquidity squeeze. Goldman also offered loans earlier this month to more than 1,000 employees who invested in its internal investment funds. About 10 percent of those employees have indicated interest in the loans," according to NYT, which sources anonymous people. "The employees will use the loans to meet their contractual obligations to put more money into the bank's internal investment funds."
CNNMoney describes in its lead story how some states are being pressured into expanding their unemployment benefits to receive federal funds, citing in particular Gov. Jim Gibbons of Nevada, who was "chastised" by state legislators for "even considering turning down the $77 million in funds at a time when one in 10 state residents are out of work." Under the American Recovery and Reinvestment Act, state legislatures are required to broaden unemployment qualifications to allow more women, part-timers, and low-wage workers to participate. By doing so, the states will get a portion of a $7 billion federal grant to help unemployed workers.
"The benefits expansion is among the most controversial components of the stimulus package, and it comes at a time when millions of people across the nation are losing their jobs," the article says. The unemployment rate was 8.1 percent in February and is expected to climb to 8.5 percent when the March figures are released.
Reuters reports that Obama will announce Monday what he plans to do to help General Motors and Chrysler after six weeks of closed-door talks about how to handle the floundering automakers. The administration is likely to give "more aid to the embattled automakers while also setting a short-term deadline for the companies to reach deals to cut their debt with creditors and the United Auto Workers union," the story said. GM and Chrysler have received $17.4 billion from Treasury and have requested an additional $22 billion to complete cost-cutting programs and "ride out the weakest market for new cars in almost three decades."