Bank Bonus Tab: $33 Billion

JULY 31, 2009

Nine Lenders That Got Government Aid Paid at Least $1 Million to 5,000 Employees

By SUSANNE CRAIG and DEBORAH SOLOMON



Andrew Cuomo






Nine banks that received government aid money paid out bonuses of nearly $33 billion last year -- including more than $1 million apiece to nearly 5,000 employees -- despite huge losses that plunged the U.S. into economic turmoil.

The data, released Thursday by New York Attorney General Andrew Cuomo, provide a rare window into the pay culture of Wall Street, where top employees typically make 90% or more of their compensation in year-end bonuses.

The $32.6 billion in bonuses is one-third larger than California's budget deficit. Six of the nine banks paid out more in bonuses than they received in profit. One in every 270 employees at the banks received more than $1 million.

Overall compensation and benefits at the nine banks fell 11%, to $133.5 billion in 2008 from $149.3 billion in 2007, the Cuomo report said. But with net revenues falling, the percentage of the firms' revenues dedicated to compensation rose to 45% last year from 41% in 2007.

The report reignites long-simmering anger, on Capitol Hill and beyond, over big Wall Street payouts. The nine firms in the report had combined 2008 losses of nearly $100 billion. That helped push the financial system to the brink, leading the government to inject $175 billion into the firms through its Troubled Asset Relief Program.

The chairman of the U.S. House investigative panel, New York Democrat Edolphus Towns, called the pay figures "shocking and appalling" and announced a hearing into compensation practices at banks.

The White House was more muted. "The president continues to believe that the American people don't begrudge people making money for what they do as long as...we're not basically incentivizing wild risk-taking that somebody else picks up the tab for," said White House Spokesman Robert Gibbs.

More
Read the full report from the New York Attorney General's office.
Deal Journal
What Are Your Chances of Being a Millionaire?
Bonus Breakdown From Cuomo's Report



"These pay packages are pretty outrageous," said Michael Baldock, a partner at Stamford, Conn.-based boutique bank Ondra LLP, who has worked at a number of big investment banks. "But if you generate $10 million in revenue a year, another firm will always want that revenue and be willing to pay for it."

In releasing the report now, New York Attorney General Cuomo is vaulting ahead of federal efforts to assess and curb excessive pay. The office has been among the first to investigate and bring charges on several Wall Street abuses this decade.

The House of Representatives is preparing to vote as early as this week on a bill that would give shareholders nonbinding say on pay packages and give regulators more tools to prohibit risky pay practices at banks and other regulated financial firms. The Senate isn't expected to vote on the legislation until the fall.

The Obama administration, meanwhile, is preparing to vet pay at firms receiving "exceptional assistance" from the government. Institutions have until Aug. 13 to submit proposed compensation details for the 100 highest-paid employees at each. The proposals will be reviewed by the Treasury Department's pay czar, Kenneth Feinberg.

Andrew Williams, a Treasury spokesman, said Mr. Cuomo's report "focuses on strengthening the link between pay and performance -- a goal that we share."

Mr. Cuomo said Thursday he hopes his report will prompt the financial firms themselves to significantly overhaul their pay system to reward long-term performance rather than short-term gains. His report didn't release names of individual bonus recipients because of privacy concerns.

"The banks say they pay for performance," Mr. Cuomo said of the data. "Yet in 2008 there was no performance and they still continued to pay out huge sums of money."

Wall Street has shown little sign of slowing down the pay train this year. Goldman Sachs Group Inc. and Morgan Stanley recently disclosed that they have set aside $11 billion and $6 billion in compensation and benefits respectively for their employees so far this year. Goldman's second quarter was among its best ever. Morgan Stanley lost money for its third straight quarter.

Goldman and Morgan Stanley declined to comment on the report.

Meanwhile, some big banks that received government bailouts, including Citigroup Inc. and Bank of America Corp., are offering handsome pay packages to lure stars. Citigroup -- which received about 25% of the aid going to the nine banks -- has the No. 1 pay recipient. Andrew Hall, the trader who heads Citigroup's energy-trading unit Phibro LLC, received $98.9 million in 2008, according to a government official. Citigroup CEO Vikram Pandit, by comparison, received more than $38 million last year.

An early test for Mr. Feinberg will be the pay of Mr. Hall, whose profit-sharing contract with the bank could again entitle him to as much as $100 million, say people familiar with the matter.

James Forese, Citigroup co-head of global markets, cited Phibro's "consistent track record of profitability" and said its contracts directly align compensation with performance. "That said, we are sensitive to the need for a full review of compensation practices in our industry," he said. "We are evaluating the best way forward for stakeholders."

The group of nine's No. 2 bonus for last year, according to a government official, was the $39.4 million that went to Bank of America's Thomas Montag. In 2008, Mr. Montag was sales and trading chief at Merrill Lynch, which got crushed by billions of dollars in mortgage-related losses and was sold last year to Bank of America. Mr. Montag's pay package included stock grants, which since have fallen in value.

Bank of America said bonuses for Merrill Lynch were shared among 30,000 employees and Bank of America's figures cover more than 200,000 employees.

The study found that pay at the banks remained near previous levels despite revenue declines. Merrill's net revenue fell by $23 billion in 2008, leading to a huge net loss. The firm's pay and benefits dropped by $1.1 billion, or 7%, according to the study. At Citigroup, revenue fell by $28 billion, or 34%. Pay and benefits dropped $2 billion, or 6%.

Similarly, at Goldman and J.P. Morgan Chase & Co., pay fell less sharply than revenue in 2008. Both firms have paid back the government loans they received under TARP.

J.P. Morgan declined to comment on the report.

Goldman, Morgan Stanley and Merrill, Wall Street's three largest securities firms in 2008, paid nearly $13 billion in bonuses last year, the report says. That was roughly one-third of their total pay and benefits of $38 billion, according to securities filings.

J.P. Morgan topped other banks in the number of employees receiving $1 million or more -- 1,626 out of its 224,961 employees. This figure includes bonus, salary and options; the numbers of other banks in the study includes bonuses only.

J.P. Morgan's top earner collected $29 million, more than James Dimon, the firm's chief executive, who received $19.7 million in total compensation last year.

Goldman paid the most per employee, about $160,000 each for more than 30,067 staffers. Some 212 Goldman bankers made $3 million or more. Goldman, which weathered the credit crisis better than most rivals and made $2.3 billion in 2008, also produced the most revenue per employee, $77,228.

Goldman has said that no partner got a bonus of more than $222,500 in cash. The rest was paid in deferred stock, with an extra year of service required for any of it to vest.

Morgan Stanley had 428 employees who received bonuses of $1 million or more. In addition, 10 people received bonuses of $10 million or more, for a combined $146.8 million.

Wells Fargo & Co., Bank of New York Mellon Corp. and State Street Corp. round out the nine banks. Each declined to comment.

—Aaron Lucchetti, Daniel Fitzpatrick and Robin Sidel contributed to this article.
Write to Susanne Craig at susanne.craig@wsj.com and Deborah Solomon at deborah.solomon@wsj.com

Printed in The Wall Street Journal, page A1





Source: http://online.wsj.com/article/SB124896891815094085.html

78

P.S. What do people expect?

.

The whole Bail-Out concept is a fraud and a travesty of law.

Who lends the Treasury the BILLIONS, so they can in turn lend it to the Banks?

.

It's the Federal Reserve, right?

.

Well, who is the Federal Reserve? A conglomerate of Banks. Some of which are the same banks to whom the billions of Bail-Out Dollars went to.

Such as JP Morgan Chase, CitiCorp, etc.

.

It's like the snake swallowing its tail. It's a win-win propositon.

.

Except, that in this case the taxpayers are left holding the bag, in debt with astronomical figures for ages to come.

No Bail-Out's for them, no BILLIONS, just bills for ever!

.

Meanwhile, the Banks "laugh all the way to the bank".

What a sham! What a scam!

.

Yet, they say: Make mine Bud-Light!

..

YEAH, VERY LIGHT, INDEED.

I'M BEGINNING TO SEE, THE LIGHT!

.

.

Power Players: Struggling Financial Firms Are Banking on Dodd

Power Players: Struggling Financial Firms Are Banking on Dodd

Published by Lindsay Renick Mayer on January 27, 2009 11:39 AM

Name: Sen. Chris Dodd (D-Conn.)Position: Although Dodd is chair of one of the more powerful congressional committees, he probably isn't the envy of his peers these days with an economic crisis growing larger by the day. Dodd has put in two years as chair of the Senate Committee on Banking, Housing and Urban Affairs and is now charged with shaping legislation to jump-start the economy and help floundering companies. His committee oversees the nation's financial institutions, housing and mass transit programs. Although he hasn't spent much time as chair, he's been in Congress for more than three decades.

Money Summary: Dodd has raised a total of $43.1 million since 1989 and has spent $43.2 million. His large war chest can be attributed, in part, to his presidential bid in 2008, which he abandoned after receiving less than 1 percent of the vote in the Iowa caucus that kicked off the primary season. He raised $18 million total in his attempt to win the White House. Overall, he's received 62 percent of his contributions from individuals (rather than the political action committees of unions and corporations) and is a popular Wall Street target, collecting $5.2 million from donors in New York, more than any other metro area. He's given other lawmakers and candidates 23 percent of the total $2.3 million that his leadership PAC, Chris PAC, has raised since the 2004 election cycle.

Campaigns Donors: Not surprisingly, Dodd's most generous sector is finance, insurance and real estate, which is filled with companies that are directly affected by legislation that comes out of the Banking Committee. The finance, insurance and real estate sector has given Dodd a total of $13.2 million since 1989, distantly followed by lawyers and law firms, which have given $3.7 million. The securities and investment industry, real estate industry, insurance companies, commercial banks, accountants and finance and credit companies all rank among his top 20 industry donors. In 2008, Dodd was among the top five recipients of money in the Senate from 21 industries, many of which are finance-related. He has received more money from hedge funds over time than all but two other lawmakers ($761,250), and expressed concern over a bill in 2007 that would have increased taxes on private-equity firms and hedge fund managers. Hedge funds are a big industry in Connecticut, his home state.

Dodd's most generous donors include many of the companies that have filed for bankruptcy or sought government help over the last six months: Citigroup ($428,300), Morgan Stanley ($211,300), American Insurance Group ($280,250) and Lehman Brothers ($154,300). Despite the companies' support, when the Senate was called on this month to release the second half of the $700 billion bailout money, Dodd called for stronger oversight provisions and limits on executive compensation for the companies receiving a handout.

Not all of Dodd's supporters come from Wall Street, however. Lobbyists, pharmaceutical companies and health professionals also rank among his most generous industries. During the race for the White House, the International Association of Fire Fighters (IAFF) endorsed Dodd and spent $202,300 independently to see him win. Dodd has sponsored bills to provide more funding to fire stations for equipment, training and staff.

Industry Favors: "No lawmaker has done more for firefighters in this nation than Chris Dodd," said Jeff Zack, spokesman for the IAFF. "Every time firefighters in this country say they need something, he's stood up and said 'I'm with you,' and he has not only said 'sign me on,' he's said 'let me write the bill.'

"Invests in: Compared to the rest of the Senate, Dodd is middle class. In 2007 he was worth between $629,019 and $2.1 million, ranking him 56th among all senators. At that time he had at least $100,001 invested in Blockbuster and drug makers Cardiome Pharma Corp. and Javelin Pharmaceuticals.

Other Money Matters: When mortgage buyers Freddie Mac and Fannie Mae were in dire financial straits last year and seeking help from the government, Dodd came under some fire for having received more money from the two companies' employees and political action committees than any other lawmaker over time, at $133,900. Dodd helped push through a rescue plan for the two companies last year, including better regulatory oversight in the measure.

In His Own Words: "This is not a time to be panicking about this. These are viable, strong institutions," Dodd said of Fannie Mae and Freddie Mac at a press conference in July 2008, when the federal government came to the rescue of the institutions. "These two are fundamentally, fundamentally strong. There's no reason for the kind of reaction we're getting."

Source: http://www.opensecrets.org/news/2009/01/power-players-struggling-finan.html

Oil prices: Buckle up for a wild ride

Outlook for crude depends largely on the health of the global economy. Analyst predictions range from a fall to $50 or a surge to $150 a barrel.

By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: October 8, 2008: 1:48 PM ET


NEW YORK (CNNMoney.com) -- Expect nothing but volatility for oil prices over the next year or two - with the fate of the global economy largely dictating whether crude will fall to $50 or shoot up to $150 a barrel.
The global economy is teetering on the edge, and no one really knows if it will muscle through this credit crunch or succumb to a pronounced recession.
With crude prices so closely linked to the health of the economy - unemployed people tend to drive a lot less - oil analysts don't really know where oil prices are headed either.
The case for $50
Oil prices have fallen over 40% since July and are currently trading around $86 a barrel, but if the $700 billion government bailout for financial sector doesn't work and the world's economy plunges into a serious recession prices could still fall further - as low as $50 a barrel.
With the U.S. stock market's steep losses following the approval of the economic bailout plan, and bank failures in Europe prompting a $350 billion-plus bailout in Britain and talk of more to come across the Continent, it's a scenario that shouldn't be quickly discounted.
"Should we enter a synchronous global recession...oil prices could fall further to $50 a barrel next year," Francisco Blanch, head of global commodities research for Merrill Lynch, wrote in a recent research report.
Blanch doesn't think such a recession is likely, nor does Citigroup futures analyst Tim Evans.
But in the event of a deep global recession, Evans also said "The market would find value at $50 a barrel."
The global recession scenario only exaggerates the trend of falling demand seen recently.
In the United States it's been quite dramatic. Oil demand fell over 6% in July, according to the Department of Energy. Europe has also witnessed a drop in demand, while in the red hot economies of China and India oil use is growing slower than previously thought.
Evans said the main causes for the U.S. decline weren't the slowing economy, but government policies promoting biofuels and greater fuel efficiency, as well as consumers buying more efficient cars and driving less.
"This is not a token shift," he said. "There is hard work that goes into decreasing demand by that extent."
Plus, this decline in demand is coupled with an expected increase in supply.
Merrill estimates new OPEC investments will boost production capacity by 3 million barrels a day - or nearly 4% of current world output, over the next 18 months.
This picture of falling demand and rising supply - coupled with a strengthening dollar and investor flight from oil futures - has led to oil's rapid decline in price over the last couple months.
The case for $150
Now, if the bailout works and a global recession is averted and the world's economies come roaring back to life, dreams of $50 oil will certainly be dashed.
Crude would once again run into the same supply and demand scenario that helped push it to nearly $150 a barrel this July - namely, growing demand from the billions of people in China and India gaining middle class lifestyles butting against a global oil industry that struggles to produce much more than the current 85 million barrels a day.
It's this scenario that caused oil bulls like Goldman Sachs and Boon Pickens to to declare as recently as July that we'll likely see $150-$200 a barrel oil in the next year.
Even post credit crunch, Goldman is still predicting oil to average $110 a barrel in 2009.
"Investors appear to be placing greater weight on the demand concerns rather than the supply shortfalls," Goldman said in a research note.
If the U.S. goes through a mild recession, but the world economy chugs along and eventually heats up, oil is likely to trade back in the triple digits at some point in the next couple of years, according to Merrill's Blanch.
The bank bailout is likely to cause higher inflation as massive amounts of cash enters the market - pushing up oil prices as investors buy it as a hedge.
But again, analysts turn back to strong demand and tight supplies once economies pick up speed.
"As economic activity starts to recover in the emerging markets, their energy demand will likely start to strengthen again," wrote Blanch. "Energy and commodity demand growth is a secular investment theme that probably has decades to run."
The middle road
With so much uncertainty, it's not surprising that most analysts are taking a middle-of-the-road approach, predicting prices somewhere in the $70 to $100 range for 2009.
This is predicated on the expectation of a middle-of-the-road performance for the economy.
Most economists see the U.S. economy slumping into an official recession in the later part of 2008 and the first part of 2009 before recovering, and see global growth slowing but not contracting.
Citi's Evans thinks $70 to $80 is a reasonable range for the next year, low enough to not draw the ire of consumers but high enough to satisfy OPEC and encourage new production and alternative sources.
Merrill also lowered its 2009 oil price forecast from $107 a barrel to $90.
Deutsche Bank recently reduced it's late 2008/early 2009 oil price forecast to $85 a barrel, citing a weak global economy.
"We believe crude oil prices have further downside as the fall-out of the financial crisis spreads into the real economy and ultimately global oil demand," Adam Sieminski, the bank's chief energy economist, wrote in a recent research note.
Sieminski also noted how credit-related trouble in Europe, exemplified by this week's sharp selloff in European shares, is boosting the dollar and lowering oil prices.
"For the past few days, European equities have been underperforming their U.S. counterparts," he said, "possibly signaling the markets concerns that European authorities may find it more difficult than the US to coordinate a rescue package in the event of a large-scale banking failure."
First Published: October 8, 2008: 12:31 PM ET

Source: http://money.cnn.com/2008/10/07/news/economy/oil_prices/?postversion=2008100813

Financial Crises Spread in Europe

By CARTER DOUGHERTY, NELSON SCHWARTZ and FLOYD NORRIS
Published: October 5, 2008

This article was reported by Carter Dougherty, Nelson Schwartz and Floyd Norris and written by Mr. Norris.

RelatedManaging Globalization: How Do You Create Confidence?

European nations scrambled on Sunday night to prevent a growing credit crisis from bringing down major banks and alarming savers as troubles in financial markets spread around the world, accelerating economic downturns on three continents.
The German government moved to guarantee all private savings accounts in the country on Sunday, hoping to reassure depositors who had grown nervous as efforts to bail out a large German lender and a major European financial company failed.
Late Sunday, it was disclosed that new bailouts had been arranged for both of those companies, Hypo Real Estate, the German lender, and Fortis, a large banking and insurance company based in Belgium but active across much of the Continent.
The spreading worries came days after the United States Congress approved a $700 billion bailout package that officials had hoped would calm financial markets globally.
The moves came as federal regulators were trying to help resolve a merger fight in the United States that could make investors more uneasy. Court hearings were under way in New York on Sunday over competing efforts by Citigroup and Wells Fargo to acquire Wachovia, a large bank that nearly failed a week ago.
In Europe, meanwhile, the crisis appears to be the most serious one to face the Continent since a common currency, the euro, was created in 1999. Jean Pisani-Ferry, director of the Bruegel research group in Brussels, said Europe confronted “our first real financial crisis, and it’s not just any crisis. It’s a big one.”
The European Central Bank has aggressively lent money to banks as the crisis has grown. It had resisted lowering interest rates, but signaled on Thursday that it might cut rates soon. The extra money, aimed at ensuring that banks would have adequate access to cash, has not reassured savers or investors, and European stock markets have performed even worse than the American markets.
In Iceland, government officials and banking chiefs were discussing a possible rescue plan for the country's commercial banks. In Berlin, Chancellor Angela Merkel and her finance minister, Peer Steinbrück, appeared before television cameras to promise that all bank deposits would be protected, although it was not clear whether legislation would be needed to make that promise good.
Mindful of the rising public anger at the use of public money to buttress the business of high-earning bankers, Mrs. Merkel promised a day of reckoning for them as well. “We are also saying that those who engaged in irresponsible behavior will be held responsible,” she said. “The government will ensure that. We owe it to taxpayers.”
Stock markets fell sharply in early trading on Monday in Asia on growing fears about the health of European banks and the resilience of the global economy.
The Nikkei 225 index dropped 3.4 percent in Tokyo on Monday, the Kospi index in Seoul fell 3.7 percent and the Standard and Poor’s/Australian Stock Exchange 200 index in Sydney declined 3.3 percent. The events in Berlin and Brussels underscored the failure of Europe’s case-by-case approach to restoring confidence in the Continent’s increasingly jittery banking sector. A European summit meeting Saturday did little to calm worries.
President Nicolas Sarkozy of France and his counterparts from Germany, Britain and Italy vowed to prevent a Lehman-like bankruptcy in Europe but they did not offer an American-style bailout package.
The crisis has underlined the difficulty of taking concerted action in Europe because its economies are far more integrated than its governing structures.
“We are not a political federation,” Jean-Claude Trichet, the president of the European Central Bank, said. “We do not have a federal budget.”
Last week, Ireland moved to guarantee both deposits and other liabilities at six major banks. There was grumbling in London and Berlin about the move giving those banks an unfair advantage. But Germany proposed its deposit guarantee Sunday after Britain raised its guarantee to £50,000, or almost $90,000, from £35,000.
Unlike in the United States, where deposits are fully guaranteed up to a limit of $250,000 — a figure that was raised from $100,000 last week — deposits in most European countries have been only partially guaranteed, sometimes by groups of banks rather than governments. In Germany, the first 90 percent of deposits up to 20,000 euros, or about $27,000, was guaranteed.
The Paris meeting produced a promise that European leaders would work together to halt the financial crisis and reassure nervous investors, but even before the meeting began it was becoming clear that two bailouts announced the week before had not succeeded and that a major Italian bank might be in trouble. That bank, Unicredit, announced plans on Sunday to raise as much as 6.6 billion euros, or $9 billion, in capital.
Fortis, which only a week ago received 11.2 billion euros from the governments of the Netherlands, Belgium and Luxembourg, was unable to continue its operations. On Friday, the Dutch government seized its operations in that country, and Sunday night the Belgian government helped to arrange for BNP-Paribas, the French bank, to take over what was left of the company.
In Berlin, the government arranged a week ago for major banks to lend 35 billion euros to Hypo, but that fell apart when the banks concluded that more money would be needed. Late Sunday, the government said a 50 billion euro package had been arranged, with the government and other banks participating.
The credit crisis began in the United States, a fact that has led European politicians to claim superiority for their country’s financial systems, in contrast to what Silvio Berlusconi, Italy’s prime minister, called the “speculative capitalism” of the United States. On Saturday, Gordon Brown, the British prime minister, said the crisis “has come from America,” and Mr. Berlusconi bemoaned the lack of business ethics that had been exposed by the crisis.
Many of the European banks’ problems have stemmed from bad loans in Europe, and Fortis got into trouble in part by borrowing money to make a major acquisition. But activities in the United States have played a role. Bankers said Sunday that the additional need for funds at Hypo came from newly discovered guarantees it had issued to back American municipal bonds that it had sold to investors.
The credit market worries came on top of heightening concerns about economic growth in Europe and the United States. Many economists think there are recessions in both areas, and one also appears to have started in Japan, where the Nikkei newspaper reported Monday that a poll of corporate executives found that 94 percent thought the country’s economy was deteriorating.
“Unless there is a material easing of credit conditions,” said Bob Elliott of Bridgewater Associates, an American money management firm, after the retail sales figures were announced, “it is unlikely that demand will turn around soon.”
Almost unnoticed as the United States Congress approved a $700 billion bailout for banks last week, it also agreed to guarantee $25 billion in loans for America’s troubled automakers. European automakers said Sunday they would seek similar aid from the European Commission.
Henry M. Paulson Jr., the United States Treasury secretary, hoped that approval of the American bailout, which will involve buying securities from banks at more than their current market value, would free up credit by making cash available for banks to lend and by reassuring participants in the credit markets.
But that did not happen last week. Instead, credit grew more expensive and harder to get as investors became more skittish about buying commercial paper, essentially short-term loans to companies. Rates on such loans rose so fast that some feared the market could essentially close, leaving it to already-stressed banks to provide short-term corporate loans.
Altria, the parent company of the cigarette maker Philip Morris, said lenders wanted it to delay its planned $10.3 billion acquisition of UST, another tobacco maker, until 2009, but promised it would complete the deal.
Europe’s need to scramble is in part the legacy of a decision to establish the euro, which 15 countries now use, but not follow up with a parallel system of cross-border regulation and oversight of private banks.
“First we had economic integration, then we had monetary integration,” said Sylvester Eijffinger, a member of the monetary expert panel advising the European parliament. “But we never developed the parallel political and regulatory integration that would allow us to face a crisis like the one we are facing today,” he added.
In Brussels, Daniel Gros, director of the Center for European Policy Studies, agreed. “Maybe they will be shocked into thinking more strategically instead of running behind events,” he said. “The later you come, the higher the bill.”
While the European Central Bank has power over interest rates and broader monetary policy, it was never granted parallel oversight of private banks, leaving that task to dozens of regulators across the Continent.
This patchwork system includes national central banks in each of the euro-zone’s 15 members and they still retain broad powers within their own borders, further complicating any regional approach to problem-solving.
The European economic landscape today bears little resemblance to the 1990s, when the groundwork for the euro was laid. Back then, Mr. Pisani-Ferry recalled, few banks in Europe had cross-border operations on a significant scale.
A wave of mergers over the last decade created giants like HSBC and Deutsche Bank, which straddle continents and have major American exposure.
“The European banking landscape was transformed fairly recently,” Mr. Pisani-Ferry said. “When the euro was first introduced, the question of cross-border regulation didn’t really arise.”
Optimists say one potential long-term benefit from the current turmoil is that it often takes a crisis to propel European integration forward.
“Progress in Europe is usually the result of a crisis,” Mr. Eijffinger said. “This could be one of those rare moments in E.U. history.”
Mr. Dougherty reported from Frankfurt, Mr. Schwartz from Paris and Mr. Norris from New York. Katrin Bennhold and David Jolly contributed reporting from Paris.

More Articles in Business » A version of this article appeared in print on October 6, 2008, on page A1 of the New York edition.

Source: http://www.nytimes.com/2008/10/06/business/06markets.html?_r=1&th&emc=th&oref=slogin

Not One Dime!

Mike Whitney – ICH October 1, 2008

For nearly a year, we have been asking ourselves why the investors and foreign banks that bought up hundreds of billions of dollars of worthless mortgage-backed securities (MBS) from US investment banks have not taken legal action against these same banks or initiated a boycott of US financial products to prevent more people from getting ripped off? Now we know the answer. It's because, behind the scenes, Henry Paulson and Co. were working out a deal to dump the whole trillion dollar mess on the US taxpayer. That's what this whole $700 billion boondoggle is all about; wiping out the massive debts that were generated in the biggest incident of fraud in history. Rep Brad Sherman explained it like this last night to Larry Kudlow: "It (The bill) provides hundreds of billions of dollars of bailouts to foreign investors. It provides no real control of Paulson's power. There is a critique board but not really a board that can step in and change what he does. It's a $700 billion program run by a part-time temporary employee and there is no limit on million dollar a month salaries....... It's very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn't owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can't buy it. It was rejected. The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20th that it can't be sold to the Treasury. Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure it can happen." So, why hasn't the Treasury Secretary explained the real purpose of the bailout to the American people? Could it be that he knows that his $700 billion bailout would end up like the Hindenburg, vanishing in sheets of flames? This is a terrible bill, and it confers absolute authority on one of the central players in the scandal, Henry Paulson, who was the Chairman of Goldman Sachs at the time this MBS garbage was being peddled around the planet to credulous investors. Now Paulson will be in a position to buy up any "troubled asset" he that he believes could pose a threat to "financial market stability". That's just great! It is clear that Paulson will use his unchecked powers to wipe the slate clean and remove any possibility that foreign investors will take legal action against the real perpetrators; the giant Wall Street investment banks. So, how do the American people like paying off Paulson and Co. future legal bills? Is that how taxpayer revenue should be spent instead of on education, health care and infrastructure? There's another reason why Paulson is working so hard to pass the Bailout for Tycoons Bill; it's a windfall for the banking giants. Citi did not simply pick up Wachovia by happenstance nor did JP Morgan purchase Washington Mutual because it wanted to perform its civic duty and prevent a full-system meltdown. No way; they were clearly aware of the way the wind was blowing. In fact, neither case manages to pass the smell test. This is from AP's Sara Lepro: "Citigroup agreed Monday to purchase Wachovia's banking operations for $2.1 billion in a deal arranged by federal regulators, making the Charlotte-based bank the latest casualty of the widening global financial crisis. The deal greatly expands Citigroup's retail franchise—giving it a total of more than 4,300 U.S. branches and $600 billion in deposits—and secures its place among the U.S. banking industry's Big Three, along with Bank of America Corp. and JP Morgan Chase & Co. But it comes at a cost: Citigroup Inc. said it will slash its quarterly dividend in half to 16 cents. It also will dilute existing shareholders by selling $10 billion in common stock to shore up its capital position. In addition to assuming $53 billion worth of debt, Citigroup will absorb up to $42 billion of losses from Wachovia's $312 billion loan portfolio, with the Federal Deposit Insurance Corp. agreeing to cover any remaining losses. Citigroup also will issue $12 billion in preferred stock and warrants to the FDIC. (Ed; Here's the punch line) "The government's proposed $700 billion rescue plan for financial institution, being voted on Monday by the House of Representatives, likely will prove of added benefit to Citi. While the plan broadly aims to prevent banks from profiting on the sale of troubled assets to the government, there is an exception made for assets acquired in a merger or buyout, or from companies that have filed for bankruptcy. This could allow Citigroup to sell toxic mortgages and other assets it gained from Wachovia for a higher price than the bank actually paid for them." ("Citigroup to buy Wachovia banking operations" Huh?!? So Citi not only gets an army of depositors (the cheapest capital available!) but, at the same time, is going to be able to dump it's mortgage-backed junk on the taxpayer? And, guess what? The JP Morgan deal looks nearly identical. Is this "insider baseball" or not? Does anyone want to wager that G-Sax will also get a privileged spot at the public trough sucking up billions of taxpayer dollars to patch together its tattered balance sheet? And what will the net result of Paulson's Bailout for Fraudsters be; more consolidation of the financial industry and the utter annihilation of local and regional banks. That's a sure thing. The mom and pop banks across the country are going to take it in the stern sheets if this bill is passed. Bet on it. The country has no time for this cynical scavenger-hunt. The system is listing badly and we have ONE chance to get this emergency bill right. There is no way an industry rep like Henry Paulson, who has spent his entire career feathering his own nest and handing out plums to his buddies, can operate in the best interests of the American people. Paulson has got to go! According to Bloomberg News , Sept 29: "The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression. The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone." (Bloomberg) Get it? The Fed has ALREADY brushed aside Congress's "No" vote and pumped money into the system; and look what happened. Nothing! Libor is still at historic highs, the Ted spread has widened to record levels and interbank lending is grinding to a standstill. There's a run on the money markets that is reducing the ability of businesses to turn over short term debt. The system is shutting down, folks, and Paulson's snake oil won't help. Why throw another $700 billion down a rathole? 400 reputable economists--not the "faith based" industry hacks that work for the Bush administration--are opposed to this bailout. It has to be stopped. This is a "real time" meltdown and it requires real solutions, not bailouts for foreign creditors and Wall Street Goliaths. (Foreign victims of this scam will have to sue the perpetrators not the US taxpayer) As Nouriel Roubini, chairman of Roubini Global Economics, points out, we are on the verge of the "mother of all bank runs", a cross-border savaging of reserves that would crash the entire financial system. Here's Roubini on the next shoe to drop: "The next step of this panic could become the mother of all bank runs, i.e. a run on the trillion dollar plus of the cross border short-term interbank liabilities of the US banking and financial system as foreign banks as starting to worry about the safety of their liquid exposures to US financial institutions; such a silent cross border bank run has already started as foreign banks are worried about the solvency of US banks and are starting to reduce their exposure. And if this run accelerates - as it may now - a total meltdown of the US financial system could occur. We are thus now in a generalized panic mode and back to the risk of a systemic meltdown of the entire financial system. And US and foreign policy authorities seem to be clueless about what needs to be done next. Maybe they should today start with a coordinated 100 bps reduction in policy rates in all the major economies in the world to show that they are starting to seriously recognize and address this rapidly worsening financial crisis." (Nouriel Roubini's EconoMonitor) We have no time for Paulson's self serving shenanigans. This is not how one goes about recapitalizing the banking system or bringing stability to the financial system. It's time to get rid of the lobbyists and banking vermin and bring in the economists and the people with real experience. Paulson's plan is loser. Not one dime should go to this latest Wall Street swindle. No bailout!

www.informationclearinghouse.info/article20915.htm

Last updated 02/10/2008

Source: http://thetruthseeker.co.uk/article.asp?ID=9441

CITIGROUP PLANS 9,000 MORE JOB CUTS IN 2Q

Citi Plans 9,000 More Job Cuts In 2Q

April 18, 2008: 09:53 AM EST

NEW YORK-(Dow Jones)- Citigroup Inc.(C) plans to cut 9,000 more jobs during the second quarter, according to Gary Crittenden, the bank's chief financial officer.

Crittenden said the new round of layoffs will come on top of the 4,200 job cuts that Citi made in the last quarter, Crittenden said during the New York bank's quarterly conference call to review its first-quarter earnings, which it reported Friday.

"We're focused on expense management," Crittenden said.

One day ago, the Financial Times published an interview with Citi's Chief Executive Vikram Pandit in which he said the bank could cut its expense base by as much as 20%, which suggests that more rounds of job cuts could be in the offing throughout 2008.

Citi announced on Friday that it lost $5.1 billion during the first quarter as a result of nearly $14 billion in asset write-downs that stem from high delinquencies in subprime mortgage and consumer loans.

Citi shares recently were up 6% to $25.47.

-Marshall Eckblad, Dow Jones Newswires; 201-938-4306; marshall.eckblad@ dowjones.com

  (END) Dow Jones Newswires

  04-18-08 0953ET

  Copyright (c) 2008 Dow Jones & Company, Inc.

Source: http://money.cnn.com/news/newsfeeds/articles/djf500/200804180953DOWJONESDJONLINE000717_FORTUNE5.htm