August 12, 2009
In the light of mega bank bailouts, and the bad P.R. that has haunted AIG and other institutions when they have held corporate events, this was probably the next step: These banks are still sponsoring events and holding retreats… only now as quietly and ashamedly as possible. According to the New York Times’ Leslie Wayne, at last week’s U.S. Open golf tournament, “Goldman Sachs, Bank of America, Merrill Lynch and Morgan Stanley all brought clients to watch the tournament and dine at a buffet and open bar.” Together, the banks paid $1/4 million for tables in the Heritage Club at the Bethpage Black private club. But they tried real hard not let anyone know they were there, for fear of public backlash. No logos, no big signs, no free coffee mugs. The biggest trend, says one event planner, “is Read More
March 5, 2009
When Bank of America CEO Ken Lewis purchased Countrywide Mortgage and then Merrill Lynch, he looked like a smart grabber of market share. Today he is under investigation by New York Attorney General Andrew Cuomo, stonewalling congress about billions of dollars of publically funded bonuses for Merrill executives, and may lose his job. What went wrong? Sydney Finkelstein, author of Why Smart Executives Fail, tries to figure that out in this Forbes magazine column. To quote from the article: “Bank of America has become a black hole. Read More
January 23, 2009
Should President Obama reconsider closing Guantanamo prison? He might need room there for Wall Street crooks such as ex-Merrill Lynch CEO John Thain. Bank of America purchased the debt-burdened disaster of an investment bank, led by Thain, last fall with Federal TARP bailout funds. Since then “the Merrill compensation committee accelerated $3-$4 billion in bonus payments by a month to make sure they were paid out before the BofA deal closed,” according to news first broken by The Financial Times. In other words, Merrill execs got their billions in bonuses before BofA could stop it (and while millions of people are losing their jobs partly because of these banks’ financial meltdowns.) Next it came to light that Thain used $1.22 million to refurbish his private office suite. That includes a $87,784 area rug and $25,713 mahogany pedestal table. Read More
December 5, 2008
The Associated Press reported this week that regulators and other watchdogs repeatedly warned the Bush administration, Treasury Department, banks and Wall Street about unsound lending practices years before this fall’s financial disaster. The Bush administration fought off all attempts to limit risky mortgages that were re-bundled and re-sold around the world.
Based on his exhaustive review of regulatory documents, reporter Matt Apuzzo writes, “Bowing to aggressive lobbying – along with assurances from banks that the troubled mortgages were OK – regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.” Read More
November 12, 2008
What is the future of economic development following the financial meltdown and the 2008 election? The first major re-assessment of where growth and development in Southern California is headed in the post-George-W.-Bush economy will come from ULI Los Angeles at its capital users and providers conference – “Emerging Trends in Real Estate 2009.” The conference is Thursday, Nov. 20, 2008, 7:30-a.m.-noon, at Japanese American National Museum, 369 E. First Street, Downtown Los Angeles.
Titled, “State of the Los Angeles Capital Markets,” this Emerging Trends conference includes reports from the most highly regarded economic forecast in U.S. real estate, provided by Urban Land Institute and PricewaterhouseCoopers. The event also offers survey responses of over 400 real estate professionals. Perhaps most significantly, participating in “State of Los Angeles Capital Markets” will be real estate experts who have been through previous down cycles providing their long-range insight on Read More
October 13, 2008
After weeks of lurching, the U.S. Treasury Department’s alliance with the World Bank and International Monetary Fund to solve the global financial crisis seems to have found solid ground. The plan is for the United States government to take an equity share in struggling banks, thereby: infusing them with cash, restoring confidence, thawing capital markets before they go into deep freeze, and, ultimately, passing the benefits along to consumers and taxpayers. The U.S. stock market has responded favorably – at least for a day. The same day that New York Times-based economist Paul Krugman received the Nobel Prize on economics. Krugman, who early-on warned about the housing bubble and radical deregulation, has advocated the approach that Treasury has now grasped following the bailout brouhaha. Last week he wrote, “The answer is… a bailout, yes, but Read More
October 8, 2008
Every sane person who has heard this is now seething with anger: Associates of fallen insurance giant AIG billed $440,000 for a posh retreat at Orange County’s St. Regis resort just days after the company received a taxpayer bailout of $85 billion. Representative Henry Waxman’s congressional hearings revealed that “the company paid more than $440,000 for the event, including nearly $200,000 for rooms, $150,000 for meals, $23,000 in spa charges and almost $7,000 for golf outings,” according to Los Angeles consumer columnist David Lazarus’ report. And that’s just the most sensational disgrace the committee dug up. It also exposed the termination agreement with the former head of AIG Financial Products Group, Joseph T. Cassano, “outlining a 9-month consulting contract under which he continued to be paid $1 million a month,” while he knew the company was going under. But wait, there’s more: Read More
October 6, 2008
Lehman Brothers handed out golden parachutes to top executives by banking on Congressional rescue even as they knew their company was going down the toilet. At least it sure looks like that. According to Congressional testimony, four days before the bank filed for bankruptcy protection, Lehman’s compensation committee granted $20 million in “special payments” for three executives bailing out of the company. As the New York Times reported, a document unveiled in Monday’s hearings showed that Lehman “executives were warned in a January 2008 meeting Read More
September 28, 2008
Henry Paulson: Before George W. Bush appointed him United States Treasury Secretary, and he ushered in the biggest bailout in history, “Hank” Paulson was CEO of Goldman Sachs, one of the most prominent and now most disgraced investment banks. When he jumped to Treasury, Paulson cashed in about $500 million in Goldman stocks. Its stock has since tumbled, of course, because of the mortgage meltdown (timing is everything). Why did Goldman sink? Partly because Paulson, before leaving, pushed the company into purchasing and re-selling some the most risky mortgage-backed securities out there: Second mortgages with no down payments. Brilliant! Thanks, Hank.
Lehman Brothers: The world’s largest bankruptcy filing has created perhaps the world’s largest crowd of creditors. Read More
September 26, 2008
Everyday headlines and righteous TV pundits have a distinct talent for making situations much too complex and difficult to understand. Never has this been truer than during this past week’s coverage of the Bush administration’s bailout package and the subsequent battle over its legitimacy. As one question is answered, two or three more burn wildly: “Does the bailout challenge our status as a free-market society?” ”Does this plan put honest taxpayers on the hook for greedy bankers’ overzealousness,” or “Will our economy completely crash and burn without immediate action?” Read More
