Wednesday, January 21, 2009

Merrill Delivered Bonuses Before BofA Deal

Looks like Thain has manage to find billions to honor a quarterly loss of $ 21.5 billion at the expense of the taxpayer...... The imprudence is just unbelievable.......But with no restrictions from government i don´t know if Thain & Co are really the ones to blame.....? I somewhat surprised that the "outrage" in the public is still muted........ See update at the end of post....

Sieht ganz so aus als wenn Thain es geschafft für sein Unternehmen ohne die Übernahme durch Bank Of America längst Pleite gegangen wäre noch mal ordentlich auf Kosten des US Steuerzahlers abkassiert hat...... Diese Dreistigkeit bei einem Quartalsverlust von $ 21,5 Mrd $ verschlägt einem fast den Atem.... Schön zu sehen das die Bedingungen der Rettungsprogarmme ( TARP ) anscheinend keinerlei Sanktionen beinhalten und so diese Selbstbedienungsmentalität keinerlei Einhalt gebieten....Die wirklich Schuldigen sind also nicht ausschließlich bei Thain & Co zu suchen...... Das ganze wirkt natürlich besonders pervers wenn zur gleichen Zeit Gelder für anderen Industrien nicht oder nur zögerlich bereit gestellt werden..... Ich bin nicht nur in diesem Fall mehr als verwundert das der öffentliche Aufschrei immer noch mehr als verhalten ist...... Beachtet bitte das Update am Ende.....

FT Merrill Lynch took the unusual step of accelerating bonus payments by a month last year, doling out billions of dollars to employees just three days before the closing of its sale to Bank of America.

The timing is notable because the money was paid as Merrill’s losses were mounting and Ken Lewis, BofA’s chief executive, was seeking additional funds from the government’s troubled asset recovery programme to help close the deal

Merrill and BofA shareholders voted to approve the takeover on December 5. Three days later, Merrill’s compensation committee approved the bonuses, which were paid on December 29. In past years, Merrill had paid bonuses later – usually late January or early February, according to company officials.

Within days of the compensation committee meeting, BofA officials said they became aware that Merrill’s fourth-quarter losses would be greater than expected and began talks with the US Treasury on securing additional Tarp money.

Last week, BofA said it would be receiving $20bn in Tarp money, in addition to the $25bn that had been earmarked for it and Merrill last year. It was then revealed that Merrill had suffered a $21.5bn operating loss in the fourth quarter.

Despite the magnitude of the losses, Merrill had set aside $15bn for 2008 compensation, a sum that was only 6 per cent lower than the total in 2007, when the investment bank’s losses were smaller.
The bulk of $15bn in compensation was paid out as salary and benefits throughout the course of the year.
A person familiar with the matter estimated that about $3bn to $4bn was paid out in bonuses in December

Nancy Bush, an analyst with NAB Research, described the size of the 2008 Merrill bonus payments as “ridiculous”.

BofA said: “Merrill Lynch was an independent company until January 1 2009. John Thain (Merrill’s chief executive) decided to pay year-end incentives in December as opposed to their normal date in January. BofA was informed of his decision.”

BofA declined to specify when Mr Thain informed the bank of his decision.

A source familiar with the matter says Mr Thain, in the weeks leading up to the December 8 compensation committee meeting, had been weighing the possibility of requesting a bonus of at least $10m for himself before ultimately deciding against such a move.


Thain Forced Out, NY Attorney General Cuomo Investigating Merrill Bonuses....

But the noise about Thain's compensation is probably less important than how it unintentionally serves to divert attention from the real issue. Many (all?) of the big players in the financial sector are insolvent, period. Their credit losses (whether marked to market or a realistic cash flow basis) are bigger than their net worth. These firms are therefore wards of the state.

Yet we keep pretending that they are still private concerns, still keep the managements in place that created the mess, still allow them to pay themselves orders of magnitude more than average workers. As we have discussed, this is looting and the looting continues

AMEN! Yves from Naked Capitalism nails it one more..... Another good piece comes from Floy Norris

Amen! Denke Yves von Naked Capitalism sagt es wie es ist..... Floyd Norris steht dem in nichts nach.....

Wall Street Paychecks May Wither

It is one thing when the best-paid people seem to be the smartest and the most accomplished. Those who make much less may not like it, but the differential seems understandable. It is another thing when those people are shown to have committed huge blunders that would have driven their companies out of business, and them into the unemployment line, but for government bailouts.So it is now with Wall Street.

In both Europe and the United States, antipathy toward the bailout is rising amid complaints that the money has not helped the economy by encouraging loans, but has kept the bankers in Champagne and caviar

Financial Sector Wages Relative to Other Industries

I have to reiterate my view that i still think the "outrage" so far is very very "muted"....

Muß mich wiederholen und darauf hinweisen das ich nach wie vor finde das die bisherige "Empörung" noch immer unverständlich gemäßigt ist......

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Anonymous Anonymous said...

Don't worry the senators don't really care they aren't in any hurry to help, they have the best health care and are well payed, "Let them eat cake"

8:08 PM  

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