Remind AGs Who They Work For

The big banks are headed to Washington D.C. in an effort to weaken any potential settlement stemming from complaints about the banks’ misbehavior in the foreclosure crisis.

Those of us who favor holding the banks accountable are taking a different route Tuesday – through the country’s 50 state capitals.

A coalition of homeowner and consumer advocates are encouraging people to contact their state attorney generals today in an effort to encourage them to conduct real robust investigations into the big banks’ foreclosure fraud, not just go through the motions.

The official response to disclosures of the big banks’ sloppiness and downright fraud in the foreclosure process has been a mishmosh. President Obama refused to declare a moratorium while the mess was sorted out; the state attorney generals promised a tough investigation but don’t appear to have followed through, and then the various federal bank regulators got involved in an effort to negotiate a settlement.

One strategy for the big banks and their Republican allies has been to demonize Elizabeth Warren, a strong homeowners’ advocate who has been working to set up the Consumer Financial Protection Bureau, which was created as part of the financial reform package passed last year. While the CFPB doesn’t exist yet, Warren has apparently been involved in the settlement process because that agency will have a hand in enforcing a settlement.

At the national level, it’s not just the Republicans that are covering for the bankers. The Obama administration in its present mood of bank coziness hasn’t been inclined to either prosecute bankers for violating the law or drive a hard bargain with them.

So that leaves it up to the attorneys general, several of whom, including Illinois’ Lisa Madigan, Iowa’s Tom Miller and California’s new attorney general have promised tough stances in protecting homeowners and holding banks accountable. Which means it’s up to us to call them – today – and remind them to hang tough.

 

 

Consumer Financial Protection Agency / Foreclosure / Martin Column - 03/28/2011

Top 4 Lesson Big Bankers Can Teach Us

America’s bankers have been extraordinarily effective in responding to a financial crisis that they created. They’ve worked hard to make sure that the response to the crisis didn’t threaten their fat bonuses or their awesome political power.

They succeeded in gutting the toughest aspects of financial reform. Then they started lobbying the regulators who will have the enforcement power.

Now they’re toiling to undermine a proposed settlement with authorities over widespread abuses in the foreclosure process, and demonizing consumer champion Elizabeth Warren and the Consumer Financial Protection Agency in the process.

Of course they’re getting plenty of help from their government enablers. As Gretchen Morgenstern reported in the New York Times, the 50 state attorney generals who are supposed to be spearheading the investigation into the foreclosures aren’t doing any actual investigating.

This puts them at a definite disadvantage when they sit down to negotiate with the banks.

Those of us who aren’t bankers and would like to see a different outcome could learn a few things from the bankers.

How do the bankers do it?

  1. They’re relentless. They don’t take no for an answer and they don’t know the meaning of defeat. They have lots of money and they’re not afraid to spend it on campaign contributions and lobbying. While we may not be able to match their cash, there’s no reason we can’t be as relentless as the big bankers. They wouldn’t still be in business, let alone raking in billions in bonuses, if we hadn’t bailed them out.
  2. They have no illusions about loyalty. They spent big to elect President Obama. But when it looked like they could get more from the Republicans, they switched sides. Nobody can take their support for granted.
  3. They have no shame. They never apologized for all the risk and fraud that created the collapse. They never offered to tighten their belts or pick up part of the tab. They just kept fighting for their selfish interests.
  4. They maintained their sense of humor. How else do you explain their carping about how anti-business the president is, while Obama’s team does whatever it can to prop up the “too big to fail banks” while wringing its hands that it just can’t do any more to help the unemployed or distressed homeowners?

 

Financial Crisis / Financial Reform Legislation / Foreclosure / Martin Column / Outrage - 03/19/2011

Cuomo report on bonuses: No rhyme or reason

http://www.oag.state.ny.us/media_center/2009/july/pdfs/Bonus%20Report%20Final%207.30.09.pdf

NO RHYME OR REASON:

The Heads I Win, Tails You Lose I Bank Bonus Culture
Andrew M. Cuomo

Attorney General

State of New York

NO RHYME OR REASON:
The Heads I Win, Tails You Lose I Bank Bonus Culture
Through various inquiries, the New York State Attorney General's Office has been examining the causes of last year's economic downturn. We have reviewed the failures of the credit rating agencies, the role of government regulators, the flaws of the credit default swap market, and the effects of over-leverage and fraud in the housing and mortgage markets, among others.

As part of this review we have also been examining the compensation structures employed by various banks and firms. Accordingly, over the past nine months this Office has been conducting an investigation into compensation practices in the American banking system. We have reviewed historic and current data on numerous banks' compensation and bonus plans. We have taken testimony from participants in all aspects of,the process, including bank executives who set and administer the compensation process, members of boards of directors who review company salary and bonus structures, compensation consultants who advise the companies, and the recipients of bonuses.
As one would expect, in describing their compensation programs, most banks emphasize the importance of tying pay to performance. Indeed, one senior bank executive noted recently that individual compensation should hot be set without taking into strong consideration the performance of the business unit and the overall firm. As this executive put it, "employees should share in the upside when overall performance is strong and they should all share in the downside when overall performance is weak."
But despite such claims, one thing is clear from this investigation to date: there is no clear rhyme or reason to the way banks compensate and reward their employ~es. In many ways, the past three years have provided a virtual laboratory in which to test the hypothesis that compensation in the financial industry was performance-based. But even a cursory examination of the data suggests that in these challenging economic times, compensation for bank employees has become unmoored from the banks' financial performance.
Thus, when the banks did well, their employees were paid well. When the banks did poorly,
their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.
An analysis of the 2008 bonuses and earnings at the original nine TARP recipients illustrates the point. Two firms, Citigroup and Merrill Lynch suffered massive losses of more than $27 billion at each firm. Nevertheless, Citigroup paid out $5.33 billion in bonuses and Merrill paid $3.6 billion in bonuses. Together, they lost $54 billion, paid out nearly $9 billion in bonuses and then received TA~ bailouts totaling $55 billion.
For three other firms - Goldman 8achs, Morgan Stanley, and JP. Morgan Chase - 2008 bonus payments were substantially greater than the banks' net income. Goldman earned $2.3 biHion, paid out $4.8 billion in bonuses, and received $10 billion in TARP funding. Morgan Stanley earned $1.7 billion, paid $4.475 billion in bonuses, and received $10 billion in TARP funding. JP. Morgan Chase earned $5.6 billion, paid $8.69 bil1ion in bonuses, and received $25 billion in TARP funding. Combined, these three firms earned $9.6 billion, paid bonuses of nearly $18 billion, and received TARP taxpayer funds worth $45 bil1ion. Appendices A and B, attached hereto, provide further information on the 2008 earnings, bonus pools, and TARP funding for the nine original TARP recipients. We note that some ofthe nine recipients maintain that they did not request or desire TARP funding. Other banks, like State Street and Bank of New York Menon, paid bonuses that were more in
line with their net income, which is certainly what one would expect in a difficult year like 2008;
For example, State Street earned $1.8 billion, paid bonuses totaling approximately $470 million, and received $2 billion in TARP funding. Thus, the relationship between performance of the firms and bonuses varied immensely and the bonus incentive system does not appear to have been tethered to any consistent principles tying compensation to performance or risk metrics.
Historical financial filings support the same conclusions. At many banks, for example,
compensation and benefits steadily increased during the bull market years between 2003 and 2006. However, when the sub-prime crisis emerged in 2007, followed by the current recession, compensation and benefits stayed at bull-market levels even though bank performance plummeted. For instance, at Bank of America, compensation and benefit payments increased from more than $10 billion to more than $18 billion in between 2003 and 2006. Yet, in 2008, when Bank of America's net income fell from $14 billion to $4 billion, Bank of America's compensation payments remained at the $18 billion level. Bank of America paid $18 billion in compensation and benefit payments again in 2008, even though 2008 performance was dismal when compared to the 2003-2006 bull market. Similar patterns are clear at Citigroup, where bull-market compensation payments increased from $20 billion to $30 billion. When the recession hit in 2007, Citigroup's compensation payouts remained at bull-market levels - well­ over $30 billion, even though the firm faced a significant financial crisis. Appendix C, attached hereto, provides further historical data.
In some senses, large payouts became a cultural expectation at banks and a source of competition among the firms. For example, as Merrill Lynch's performance plummeted, Merrill severed the tie between paying based on performance and set its bonus pool based on what it expected its competitors would do. Accordingly, Merrill paid out close to $16 billion in 2007 while losing more than $7 billion and paid close to $15 billion in 2008 while facing near collapse. Moreover, Merrill's losses in 2007 and 2008 more than erased Merrill's earnings between 2003 and 2006.
Clearly, the compensation structures in the boom years did not account for long-term risk, andhuge paydays continued while the firm faced extinction.
Thus, rather than abiding by steady principles to guide compensation decisions year in and year out, bank executives did just the opposite by delivering high compensation every year. For example, testimony from the head of Merrill Lynch's compensation committee revealed that in 2007, Merrill changed its compensation rationale resulting in huge bonuses in it difficult year:
Q: In 2008 was Merrill Lynch looking at the bonuses as a percent of revenue?
A: No. In 2007 we diverted from that for reasons. We set out in a proxy that Merrill had
suffered substantial losses largely related to one unit of the corporation. Overall financial
performance is usually a key ingredient. We had to balance that with the need to pay our
employees in units that performed....
Q: Did there come a time in 2008 when you revisited that approach that you need to consider
having bonuses in some way reflect the economic performance of Merrill year to date?
A: I think we always looked at financial performance, but [beginning in 2007] I think we
thought it would jeopardize the long-term health of the firm - and certainly later jeopardize the franchise value of Bank of America - if we didn't pay people who performed and contributed for their performance in the face oflarge losses on legacy assets in some units....] . The information contained in the three appendices attached hereto set out, in stark terms, the failure of the compensation structures at many of our nation's largest financial institutions to follow any objective and consistent principles. To the contrary, what these statistics portray is an ad hoc system that does not come dose to meeting the goal of having employees share in the upside and the downside of their firm's performance. We emphasize that the problems we have found relate to problems with banking compensation system-wide and should not be taken as criticism of any particular individual's conduct.
We recognize, of course, that there can be situations where the distribution of profits to
employees who created real profits would be appropriate even though the overall firm may have lost money. This might be the case, for example, where one division of a firm earned large profits but another division lost profits. A principled and consistent approach would, however, balance the need to reward and retain those who created profits with the need for bonuses to reflect the overall performance of the firm. In any event, our investigations have shown numerous instances where large bonuses were paid to individuals in money-losing divisions at firms who saw either substantially reduced profits or losses in 2008.
In sum, as we seek to learn lessons from this economic crisis and repair the damage it has
wrought, it will be vital to develop and implement sound principles and rationales for executive compensation and bonuses that promote sustainable and rational economic growth. The repeated explanation from bank executives that bonuses are tied to performance in a manner designed to promote such growth does not appear to be accurate. Indeed, our investigation suggests a disconnect between compensation and bank performance that resulted in a "heads I win, tails you lose" bonus system. In other words, bank compensation structures lacked consistent principles and tended to result in a compensation system that was all "upside."

The private market place is, and should be responsible for setting compensation structures.

However, compensation packages should be designed to promote long-term, sustainable growth and actual increases in value. This would drive firms towards decision-making that promotes long-term actual growth and performance rather than the dangerous combination of short-term booked profits and blow-up deferral caused by the current bonus culture. Moreover, if market participants begin following sounder and more principled bonus systems, firms would be less susceptible to the "poaching" of their employees by other firms offering unreasonably large compensation packages. Such poaching has too often resulted in irrational bonus bidding wars that harm the entire industry by forcing firms to continually increase bonus levels and leading to a compensation system that is simply a one-way ratchet up.

This rationalization of the compensation and bonus system must be accomplished now. Hopefully, the private sector sees the problem and addresses it quickly. The private sector is the appropriate forum for such reform, and some firms have already taken steps in the right direction.

If the private sector does not act, such reform should be discussed as part of the federal regulatory reform effort, and, where appropriate, taken into account by the Obama Administration's pay czar.

APPENDIX A
-,
TARP RECIPIENTS' 2008 BONUS CHART
Below is a chart of the original nine TARP recipients for 2008 highlighting each banks earnings/losses, bonus pool, number of
employees, earnings per employee, bonus per employee, amount ofTARP funds received and the amount of bonus payments in excess
of $3 million, $2 million and $1 million.
:::$2
M__:::~lM·
Bank of America $4,000,000,000 $3,300,000,000 243)000 $16,461 $13,580 $45 B 28 65 172

.. Bank of New York Mellon $1,400,000,000 $945,000,000 42,900 $32,634 $22,028 $3 B 12 22 74

Citigroup, Inc. ($27,700,000,000) $5,330,000,000 322,800 ($85,812) $16,512 $45 B 124 176 738

Goldman Sachs Group $2,322,000,000 $4,823,358,763 30,067 $77,228 $160,420 $10 B 212 391 953

,J.P. Morgan Chase & Co.. $5,600,000,000 $8,693,000,000 224,961 $24,893 $38,642 $25 B >200 1,626

-
I,Merrill Lynch ($27,600,000,000) $3,600,000,000 59,000 ($467,797) $61,017 $10 B 1~9 696
Morgan Stanley $1,707,000,000 $4,475,000,000 46,964 $36,347 $95,286 $10 B 101 189 428
-
'State Street Corp. $1,811,000,900 $469,970,000 2~.475 $63,600 $16,505 $2 B 3 8 44
~Well§Fargo & Co:. _ $42,933,000,000) $977,500,000 281,000 ($152,786) $3,479 $25 B 7 22 62
* Wells Fargo & Company's 2008 losses include Wachovia's 2008 losses.
5
APPENDIX B
TARP RECIPIENTS' 2008 COMPENSATION SUMMARY
WITH BONUS BREAKDOWN
Below is a summary of the original nine TARP recipients highlighting the total amount of
TARP funds received by each bank, the total 2008 earnings, the total 2008 bonuses, the number of
employees receiving a bonus over a $1 mil1ion, the total number of employees and a breakdown of
the bonus' payments.
. 1. Bank of America
TARP: $45 billion ($15 billion on 10/28/08 under the Capital Purchasing
Program; $10 billion on 1/9/09 under the Capital Purchasing
Program [for Merrill Lynch]); $20 billion on 1/16/09 under the
Targeted Investment Program (1/16/09 Treasury and other
government organizations agrees to backstop $118 billion in
assets)
2008 Earnings: $4.0 billion, or $0.55 per diluted common share.
2008 Total Bonuses: $3.33 billion in cash and equity ($2.9 billion of the mixed cash and
equity bonuses were discretionary and $337 million of the mixed
cash and equity bonuses were guaranteed)
172 employees: at least $1 million
Total Workforcel: 243,000
BODUS Breakdown
.The top four recipients received a combined $64.01 million.
The next four bonus recipients received a combined $36.85 million.
The next six bonus recipients received a combined $31.39 million.
Four individuals received bonuses of $1 0 million or more and combined they received
$64.01 million.
8 individuals received bonuses of $8 million or more.
1 All Workforce numbers were taken from the companies' l(}K's for the year 2008.
6

10 individuals received bonuses of $5 million or more.
28 individuals received bonuses of $3 million or more.
65 individuals received bonuses of $2 million or more.
Overall, the top 28 bonus recipients received a combined $183.16 million.
2. Bank of New York Mellon
TARP: $3 billion
2008 Earnings: $1.4 billion, or $1.20 per diluted share.
2008 Total Bonuses: $945 million
74 employees: at least $1 million
Total Workforce: 42,900
Bonus Breakdown
The top five executives received no cash bonuses.
The remaining 12 members of the 17 member "Executive Committee" received a
combined $16 million, which is an average bonus of $1 ,333,750 a person.
Other employees, totaling 30,521 individuals, received a combined $928.57 million,
which is an average bonus of $30,424 a person.
12 individuals received bonuses of $3 million or more.
22 individuals received bonuses of $2 million or more.
3. Citigroup, Inc.
TARP:     $45 billion ($25 billion on 10/28/08 underthe Capital Purchasing
Program; $20 billion on 12/30/08 under the Targeted Investment
Program) (11/23/08 Treasury and other goverrunent organizations
agrees to backstop $306 billion in assets)
7

2008 Net Losses: $27.7 billion, or $5.59 per share.
2008 Total Bonuses:     $5.33 billion in cash and equity ($4.6 billion of the mixed cash and
equity bonuses were discretionary and $704 million of the mixed
cash and equity bonuses were formulaic)
738 employees: at least $1 million
Total Workforce: 322,800
Bonus Breakdown
11 executives received a combined $77.25 million in cash, def~rred cash, performance
vesting stock, and performance priced options.
The Senior Leadership Committee (excluding members who are also executives)
received a combined $126.26 million in cash, deferred cash, and equity.
The top four recipients received a combined $43.66 million.

The next four bonus recipients received a combined $37.47 million.

The next six bonus recipients received a combined $49.81 million.

Three individuals received bonuses of $1 0 million or more and combined they received
$33.88 million.
13 individuals received bonuses of $8 million or more.
44 individuals received bonuses of $5 million or more.
69 individuals received bonuses of $4 million or more.
124 individuals received bonuses of$3 million or more.
176 individuals received bonuses of $2 million or more.
Overall, the top 124 bonus recipients received a combined $609.10 million.
4. Goldman Sachs Group, Inc.
TARP:     $10 billion
8

2008 Earnings: $2.322 billion, or $4.47 in diluted earnings per common share
2008 Total Bonuses: $4.82 billion ($2.24 billion in cash)
oemployees received more than $884,193 in cash, but combined
cash and equity:
953 employees: at least $1 million
Total Workforce: 30,067
Bonus Breakdown
The top four recipients received a combined $45.90 million.

The next four bonus recipients received a combined $40.81 million.

The next six bonus recipients received a combined $56.40 million.

6 individuals received bonuses of $1 0 million or more and combined they received
$67.70 million.
21 individuals received bonuses of $8 million or more.
78 individuals received bonuses of $5 million or more.
95 individuals received bonuses of $4 million or more.
212 individuals received bonuses of $3 million or more.
391 individuals received bonuses of $2 million or more.
Overall, the top 200 bonus recipients received a combined $994.68 million.
5. J.P. Morgan Chase & Co.
TARP: $25 billion
2008 Earnings: $5.6 billion, or $1.37 per share
2008 Total Bonuses: $8.693 billion ($5.908 billion in cash)
9

1,626 employees: at least $1 million
Total Workforce: 224,961
Bonus Breakdown
The top four recipients received a combined $74.80 million.
The next four bonus recipients received a combined $49.18 million.
The next six bonus recipients received a combined $60.96 million.
Ten individuals received bonuses in cash and equity of $1 0 million or more and
combined they received $145.50 million.
29 individuals received bonuses of $8 million or more.
84 individuals received bonuses of $5 million or more.
130 individuals received bonuses of $4 million or more.
Over 200 individuals received bonuses of $3 million or more.
Overall, the top 200 bonus recipients received a combined $1.119 billion.
6. Merrill Lynch
TARP: $10 billion (was never drawn down by Merrill Lynch; instead, it
was given to Bank of America on 1/09/09)
2008 Net Losses: $27.6 billion, or $24.82 per diluted share
2008 Total Bonuses: $3.6 billion
696 employees: at least $1 million
Total Workforce: 59,000
Bonus Breakdown
The top four recipients received a combined $121 million.

The next four bonus recipients received a combined $62 million.

10

The next six bonus recipients received a combined $66 million.

Fourteen individuals received bonuses of $1 0 million or more and combined they

received $250 million.

20 individuals received bonuses of $8 million or more.

53 individuals received bonuses of $5 million or more.

149 individuals received bonuses of $3 million or more.

Overall, the top 149 bonus recipients received a combined $858 million..
7. Morgan Stanley
TARP: $10 billion
2008 Earnings: $1.707 billion, or $1.45 in diluted earnings per share
Total Bonuses: $4.475 billion
428 employees: at least $1 million
Total Workforce: 46,964
Bonus Breakdown
The top four recipients received a combined $73.04 million.

The next four bonus recipients received a combined $51.08 million.

The next six bonus recipients received a combined $59.62 million.

Ten individuals received bonuses of $1 0 million or more and combined they received

$146.80 million.

15 individuals received bonuses of $8 million or more.

40 individuals received bonuses of $5 million or more.

59 individuals received bonuses of $4 million or more.

11

10 1 individuals received bonuses of $3 million or more.
189 individuals received bonuses of $2 million or more.
Overall, the top 101 bonus recipients received a combined $577 million.
8. State Street Corp.
TARP: $2 billion
2008 Earnings: $1.811 billion, or $4.35 per diluted share
Total Bonuses: $469.97 million ($376.70 million in cash)
44 employees: at least $1 million
Total Workforce: 28,475
Bonus Breakdown
The top four recipients received a combined $17.88 million.

The next four bonus recipients received a combined $8.52 million.

The next six bonus recipients received a combined $10.30 million.

oindividuals received bonuses of $1 0 million or more.

oindividuals received bonuses of $8 million or more.

1 individual received bonuses of $5 million or more.

2 individuals received bonuses of $4 million or more.

3 individuals received bonuses of $3 million or more.

8 individuals received bonuses of $2 million or more.

Overall, the top 3 bonus recipients received a combined $15.15 million.
12

9. Wells Fargo & Co.
TARP: $25 billion
2008 Net Losses: $42.933 billion (includes losses from Wachovia)
Total Bonuses: $977.5 million
62 employees: at least $1 million
Total Workforce: 281,000
Bonus Breakdown
The Senior Executive Officers of Wells Fargo did not receive any bonuses

The top four recipients received a combined $17.29 million.

The next four bonus recipients received a combined $12.63 million.

The next six bonus recipients received a combined $16.14 million.

1 individual received a bonus of $5 million or more..

7 individuals received bonuses of $3 million or more.

22 individuals received bonuses of $2 million or more.

Overall, the top 7 bonus recipients received a combined $27.12 million.

Overall, the top 209 bonus recipients received a combined $197.75 million

13

APPENDIXC

TARP RECIPIENTS' HISTORICAL COMPENSATION & BENEFITS

AS A PERCENTAGE OF NET REVENUE & NET INCOME

Below are charts for the original nine TARP recipients from 2003 to the second quarter
2009 highlighting each bank's historical net revenue, compensation and benefits, compensation
as a percentage of revenue, net income, and compensation as a percentage of net income.
BANK OF AMERICA COMPENSATION & BENEFITS STATISTICS
Compensation as % orNet Revenue & Net Income
(mil.) Net
Revenue
Compo &
Benefits
Compo %
of Revenue
Net Income Compo % of
Net Income
2003 $37,886.00 $10,446.00 27.57% $10,762.00 97.06%
2004 $49682.00 $13435.00 27.04% $13947.00 96.33%
2005 $56,923.00 $15,054.00 26.45% $16,465.00 91.43%
2006 $73 804.00 $18211.00 24.67% $21 133.00 86.17%
2007 $68,068.00 $18,753.00 27.55% $14,982.00 125.17%
2008 $73976.00 $18371.00 24.83% $4008.00 458.36%
200910 $35758.00 $8768.00 24.52% $4247.00 206.45%
200920* $32774.00 $7790.00 23.77% $3224.00 241.63%
* As reported by BAC. 10-Q not yet filed with SEC.
14

BANK OF NEW YORK COMPENSATION & BENEFITS STATISTICS
Compensation as % orNet Revenue & Net Income
(mil.) Net
Revenue
Compo &
Benefits
Compo %of
Revenue
Net Income Compo %of
Net Income
2003 $4,880.00 $2,002.00 41% $1,157.00 173.03%
2004 $5 551.00 $2324.00 42% $1 440.00 161.39%
2005 $6,055.00 $2,310 or $2,549 38% or 42% $1,571.00 147.04% or
162.52%
2006 $6.838.00 $2640.00 39% $2.847.00 92.73%
2007 $11,331.00 $4,120.00 36% $2,039.00 202.06%
2008 $13 365.00 $5 115.00 38% . $1.386.00 369.05%
200910 $32060.00 $1 169.00 36% $370.00 315.95%
200920* $32 130.00 $1 153.00 36% $410.00 281.22%
Effective July 1,2007, The Bank of New York Company, Inc. and Mellon Financial Corporation
merged into The Bank of New York Mellon Corporation. Data for prior periods reflects only the
Bank of New York.
* As reported by BNY. 10-Q not yet filed with SEC.
2 2007 10-K versus 2005 10-K
15

CITIGROUP COMPENSATION & BENEFITS STATISTICS
Compensation as % orNet Revenue & Net Income
Net
Revenue
(mil.)
Compo &
Benefits (mil.)
Compo %
of Revenue
Net Income Compo %of
Net Income
2003 $71,594.00 $20,719.00 28.94%* $17,853.00 116.05%
2004 $79635.00 $22934.00 28.80%* $17046.00 134.54%
2005 $83,642.00 $25,772.00 30.81% $24,589.00 104.81 %
2006 $89615.00 $30277.00 33.79% $21 538.00 140.57%
2007 $81,698.00 I $34,435.00 42.15% $3,617.00 952.03%
2008 $53,692.00 $32,440.00 60.42% $(27,684.00) N/A
20091Q $24,521.00 $6,419.00** 26.18% $1,593.00 403.95%
20092Q*** $29,969.00 $6,359.00 21.22% $4,279.00 149.61%
* Before adjustment to align with other numbers of income statements the percentages were
26.15%,26.75%, and 26.61%, respectively.
** $6,419 reported in 10-Q. $6,235 reported in Second Quarter financial release.
***As reported by Citi. 10-Q not yet filed with SEC.
.'
16

GOLDMAN SACHS COMPENSATION & BENEFITS STATISTICS
Compensation as % orNet Revenue & Net Income
Net
Revenue
(mil.)
Camp. &
Benefits (mil.)
Camp. %
of Revenue
Net Income Camp. %of
Net Income
2002 $13,986.00 $7,037.00 50.31% $2,114.00 332.88%
2003 $16,012.00 $7,515.00 46.93% $3,005.00 250.08%
2004 $20550.00 $9652.00 I 46.97% $4553.00 211.99%
2005 $25,238.00 $11,758.00 46.59% $5,626.00 208.99%
2006 $37,665.00 $16,457.00 43.69% I $9,537.00 172.56%
2007 $45,987.00 $20,190.00 43.90% $11,599.00 174.07%
2008 $22222.00 $10934.00 49.00% $2322.00 470.89%
20091Q $9,425.00 $4,712.00 49.99% $1,814.00 259.76%
20092Q* $13,760.00 $6,650.00 48.32% $3,440.00 193.31%
* As reported by OS. 10-Q not yet filed with SEC.
17

JP MORGAN COMPENSATION & BENEFITS STATISTICS
Compensation as % o(Net Revenue & Net Income
Net
Revenue
(mil.)
Compo &
Benefits (mil.)
Compo %
of Revenue
Net Income Compo % of
Net Income
2002 $29,614.00 $10,693.00 36.11 % $2,114.00 505.82%
2003 $33,191.00 $11,387.00 34.31% $6,719.00* 169.47%
2004 $42736.00 $14506.00 33.94%. $4466.00 324.81%
2005 $54,248.00 $18,065.00 33.30% $8,483.00 212.96%
2006 $61,999.00 $21,191.00 34.18% $14,444.00 146.71%
2007 $71,372.00 $22,689.00 31.79% $15,365.00 147.67% .
2008 $67,252 22,746.00 33.82% $5,605.00 405.81%
20091Q $25,025.00 $7,588.00 30.32% $2,141.00 354.41%
20092Q** $25,623.00 $6,917.00 27.00% $2,721.00 254.21%
* Heritage JP Morgan Chase Only

** As reported by JPM. 10-Q not yet filed with SEC.

18

MERRILL LYNCH COMPENSATION & BENEFITS STATISTICS
Compensation as % orNet Revenue & Net Income
Net Revenue
(mil.)
Compo &
Benefits
(mil.)
Compo % of
Revenue
Net Income Compo % of
Net Income
2003 . $19,548.00 $9,814.00 50.20% $3,836.00 255.84%
2004 $21 500.00 $10599.00 49.30% $4436.00 238.93%
2005 $25,277.00 $12,314.00 48.72% $5,116.00 240.70%
2006 $33,781.00 $16,867.00 49.93% $7,499.00 224.92%
2007 $11,250.00 $15,903.00 141.36% ($7,777.00) N/A
2008 ($12,593.00) $14,763.00 N/A ($27,612.00) N/A
MORGAN STANLEY COMPENSATION & BENEFITS STATISTICS
Compensation as % orNet Revenue & Net Income
Net
Revenue
(mil.)
Compo &
Benefits
(mil.)
Compo % of
Revenue
Net Income Compo % of
Net Income
2002 $19,127.00 $7,933.00 41.48% $2,988.00 265.50%
2003 $17,621.00 $7,892.00 44.79% $3,787.00 208.40%
2004 $20,319.00 $9,320.00 45.87% $4,486.00 207.76%
2005 $23,525.00 $10,749.00 45.69% $4,939.00 217.64%
2006 $29,839.00 $13,986.00 46.87% $7,472.00 187.18%
2007 $28,026.00 $16,552.00 59.06% $3,209.00 515.80%
2008 $24,739.00 $12,306.00 49.74% $1,707.00 720.91%
20091Q $3,042.00 $2,082.00 68.44% ($190.00) N/A
20092Q* $5,400.00 $3,900.00 72.22% $149.00 2,617.45%
* As reported by MS. 10-Q not yet filed with SEC.
19
STATE STREET COMPENSATION & BENEFITS STATISTICS
Compensation as % orNet Revenue & Net Income
(mil.) Net
Revenue
Compo &
Benefits
Compo % of
Revenue
Net Income Compo % of
Net Income
2003 $4,734.00 $1,731.00 36.57% $722.00 239.75%
2004 $4951.00 $1 957.00 39.53% $798.00 245.24%
2005 $5,473.00 $2,231.00 40.76% $838.00 266.23%
2006 $6311.00 $2652.00 42.02% $1 106.00 239.78%
2007 $8,336.00 $3,256.00 39.06% $1,261.00 258.21%
2008 $10693.0 $3 842.00 35.93% $1811.00 212.15%
200910 $2002.00 $731.00 36.5% $476.00 15-3.57%
200920* $2 122.00 $696.00 32.8% ($3 182.00)** N/A
* As reported by STT. 10-Q not yet filed with SEC.

** Extraordinary loss as a result of the previously reported consolidation of the ABCP conduits.

20

WELLS FARGO COMPENSATION & BENEFITS STATISTICS
Compensation as % orNet Revenue & Net Income
Net
Revenue
(mil.)
Compo &
Benefits
(mil.)
Compo %
of Revenue
Net Income Compo % of
Net Income
2003 $28,389.00 $8,924.00 31.43% $6,202.00 143.89%
2004 $30059.00 $8446.00 28.10% $7014.00 120.42%
2005 $32,949.00 $10,455.00 31.73% $7,671.00 136.29%
2006 $35,691.00 $12,027.00 33.70% $8,420.00 142.84%
2007 $39,390.00 $13,368.00 33.94% $8,057.00 165.92%
2008 $41,897.00 $12,940.00 30.88% $2,655.00* 487.38%
20091Q $21,000.00 $6,494.00** 30.92% $3,050.00 212.92%
20092Q*** $22,500.00 $6,725.00** 29.89% $3,170.00 212.15%
* Does not include 2008 losses from Wachovia.

** Includes "salaries, commission and incentive compensation, and employee benefits," as

reported by the company.

*** As reported by Wells Fargo. 10-Q not yet filed with SEC.

21

Uncategorized - 03/14/2011

Want a Job? Go to Prison

American workers find themselves in an increasingly uncomfortable squeeze.

On one hand, public officials demonize organized labor, as seen in Wisconsin and several other midwestern states.

On the other hand, the growing trend in outsourcing keeps jobs closer to home, but with equally disastrous results, paying prisoners an average of less than a dollar an hour for work once done by decently paid workers on the outside.

Prisoners aren’t just making license plates anymore. They do everything from manufacturing plastic cups and furniture to operating call centers.

In the most recent example of this disturbing trend, prisoners are apparently building electronic parts for Patriot missiles.

The story was laid out by Jason Rorhlich on Minyanville, where he displays all of the promotional material by the firm, which obtained the contract to have the prisoners do the work. The firm, called Unicor, is a giant, wholly-owned subsidiary of the federal government originally formed during the Depression. It operates more than 100 factories in federal prisons and employs about 17,000 inmates, or about 11 percent of the federal prison population.

Unicor even received nearly $1 million in stimulus money, earning the ire of some on the outside who said they could have used the work.

After Rohrlich’s piece appeared, and it was picked up by Wired, Lockheed’s PR machine spun into action, denying that prisoner labor was used in building the Patriot, acknowledging for Wired that prisoners only worked on Raytheon’s ignition system for the missile. Which left Rohrlich and readers scratching their heads, given how hard Unicor has been bragging about its work on the missiles themselves. Does Unicor, an arm of the federal government, not know what its employees/prisoners are up to? Or is Lockheed working on some pretty lame damage control? I hope the missiles work better than the public relations does.

As Wired points out, the Patriot is just one in a long string of weapons work that Unicor has done, including work on F-15 and F-16 fighter jets and Cobra helicopters.
This week, Unicor scored a $20 million, no-bid contract to build bulletproof vests. All I can is say is they must have connections, since the last time they built body armor for the Army, it didn’t work so well. Last year the Army had to recall 44,000 Unicor-built helmets because they failed ballistics testing.

This is not about trashing prison training and rehabilitation efforts, which should be continued because the evidence shows that they work in reducing recidivism. But can’t our public officials find a way to do it without undermining the middle class, which they all claim to be so devoted to?

 

 

 

 

Martin Column - 03/11/2011

Culture of Greed 1, Crackdown 0

When President Obama appointed his new chief of the Securities and Exchange Commission, he promised she would “crack down on the culture of greed and scheming.”

But that culture seems to be getting the better of Mary Schapiro after the resignation of her agency’s top counsel, amid allegations of questionable ethics.

That former top counsel, David Becker, is among those whose family actually made money from the massive frauds of Bernard Madoff.

As SEC general counsel, Becker recently argued for a change in policy that would have allowed his family to keep more of the fortune they made from Madoff, rather than turning it over to pay those who lost money.

Becker might have been considered a curious choice for a new tougher SEC, considering that during an earlier stint as a top SEC lawyer earlier in the decade, Becker was among those who failed to crack down on Madoff, despite highly publicized warnings.

Now Becker has decamped back to the corporate firm from where he came, leaving Schaprio, his former boss, sputtering about what she can and can’t say about what she knew about Becker’s Madoff investments and when she knew it.

This is, of course, catnip to the Republicans looking for any opportunity to embarrass the Obama administration. Never mind that they oppose any kind of regulation of the financial industry at all.

What a great gift Schapiro and Becker have handed Republicans: proof that the Obama administration’s promises to protect us from the “culture of greed and scheming” were nothing more than a sham. Meanwhile, Becker slams the swinging door in our faces and goes back to his real job – representing the interests of big banks and financial interests.

 

 

 

 

Around the Web / Martin Column / Securities and Exchange Commission (SEC) - 03/09/2011

D.C. Disconnect: Geek Squad Edition

Deep within the of bowels of the Defense Department is the secretive agency that invented the Internet, known as the Defense Research Projects Agency, aka DARPA, aka the Mad Scientist agency.

With its $3.2 billion budget, the agency is supposed to come up with wild, innovative ideas. Some of their inventions, like military drones, “work,” while others, like psychic CIA agents, robot hummingbirds and mind-bending wormholes, have earned the agency the reputaion of something of a hare-brained money pit.

One of its recent projects, something called the halfnium bomb, apparently ran into problems getting past the basic laws of physics.

President Obama himself recently showered major love on DARPA, hailing it as a source of cutting-edge technology.

At least one aspect of DARPA retains an infuriatingly old-fashioned quality – the reek of conflict-of-interest and nepotism.

Before she became head of the agency in 2009, Regina Dugan started a high-tech explosive detection company called RedX Defense, with her father and her uncle, the Project on Government Oversight reports. She served as CEO and president. Six months after she took over the DARPA, RedX, where her father now serves as CEO, landed a $400,000 contract with the agency, which was recently extended.

Dugan of course, disqualified herself from any decisions regarding her former company when she took over DARPA. The agency’s media office insisted there were no ethical issues with the contract because Dugan didn’t participate in awarding it.

POGO was less generous, and suggested in its understated way, “it surely must have come as a pleasant surprise to learn that DARPA’s contract management office had chosen the company she founded to do work for DARPA.”

Maybe it was a pleasant surprise for Dugan; it was unfortunately no surprise to taxpayers, who have grown way too accustomed to these kinds of shenanigans.

D.C. Disconnect / Martin Column - 03/05/2011

From Prosecutions to Peanuts

It was only last December that the head of a 50-state attorney general investigation into foreclosure fraud boldly told homeowner advocates, “We will put people in jail.”

That was Tom Miller, Iowa attorney general, who added, “One of the main tools needs to be principal reductions, just like in the farm crisis in the 1980s…there should be some kind of compensation system for people who have been harmed…And the foreclosure process should stop while loan modifications begin.  To have a race between foreclosures and modifications to see which happens first is insane.”

That was then. Now Miller is backing off his tough talk, replacing it with a strategy of negotiating with the big banks and a bunch of federal agencies to come up with a settlement.

The amount of the potential settlement is $20 billion, according to press reports.

Gone is any notion of prosecutions.

There’s been a lot of discussion about whether this amount is too high or too low. The banks contend that they might have been sloppy about their paperwork but they foreclosed on only a few people who hadn’t been making their mortgage payments. No harm, no foul.

But homeowner advocates and critics are outraged, arguing that the banks are guilty of more than slovenliness, they violated laws intended to protect consumers. You can’t pass laws that require banks to follow certain procedures and then allow the banks to flout them. That reinforces one of the most corrosive aspects of the bailout and its aftermath – that the system is rigged so that the banks don’t have to follow the law.

Not to mention that $20 billion is pocket change to the big banks and won’t go far in modifying the mortgages that they refused to touch so far.

In addition, any fund that is controlled by the banks rather than a responsible government agency is a recipe for continued inaction by the banks.  See the disastrous Obama Administration HAMP program, which is somewhere between an abject failure and an actual scam that rips off homeowners.

Miller’s retreat is not the only distressing signal coming from the foreclosure front. Here in California the new state attorney general, Kamala Harris, made the strong protection of homeowners in foreclosure a key plank of her campaign. Yet her office recently signed off on a feeble $6.8 million settlement of a lawsuit against Angelo Mozilo and another top official of Countrywide Financial who presided over that company’s orgy of subprime lending before the financial collapse.

$5.2 million of the money goes into a restitution fund for victims. Mozilo and his president, David Sambol, admitted no wrongdoing. They’re not on the hook for the money- Bank of America, which bought Countrywide will pay it for them.
As David Dayen points out on Firedoglake, the settlement was probably inherited from her predecessor, the present governor, Jerry Brown. But that doesn’t mean she has to tout such a pittance as some great victory for the state.

It’s just a very small drop in a bucket with a very big leak in it.

If you live in California, you can call Harris’ office and suggest she stop caving into predatory lenders and start living up to her campaign promises.

Wherever you live, please contact your attorney general and remind them they are, after all, not the bankers’ buddies, but the people’s prosecutors.

Here are numbers where you can reach your state attorney general.

 

Around the Web / Foreclosures / Martin Column / Outrage - 03/04/2011

Will Afghan Bailout Trump U.S. Homeowners?

At least you know where the Tea Party stands. If it’s a government program, they want to end it.

The Democrats are murkier. They propose tepid solutions to serious problems like the foreclosure crisis, then when their programs don’t work it, ends up reinforcing the Tea Party’s arguments that government doesn’t work.

So the Tea Party-driven Republicans come along and want to whack the Obama administration’s failed foreclosure prevention scheme known as the Home Affordable Modification program. They would probably want to whack it even if it was working, but that’s another subject.

The Tea Party doesn’t offer anything in its place. Homeowners are pretty much on their own at the mercy of the banks.

So much for the American Dream.

Many people have pointed out that the HAMP program is something between an abject failure and a scam that rips off already beleaguered homeowners.

The Obama administration doesn’t offer so much of an argument in its defense as a hapless shrug. In this video, Treasury Secretary Timothy Geithner acknowledges that the foreclosure prevention program amounts to a “tragic, terrible mess.”

But hey, the administration says, it’s better than nothing.

Meanwhile, the foreclosures continue while authorities investigate massive fraud by the banks in the foreclosure process.

This is not a debate calculated to offer much confidence that our public officials can deal effectively with the problems that afflict those of us who live in the reality-based community.

I was reflecting on this tawdry spectacle while reading about the latest developments in the latest “too big to fail” bank bailout to strike at U.S. taxpayers – this one in Kabul, Afghanistan. My colleague Harvey Rosenfield warned about this brewing fiasco several weeks ago.

Apparently the wildly corrupt officials and their cronies used the bank as their private piggy bank, and the bank’s imminent collapse is now a greater threat to Afghanistan’s security than the Taliban.

As recently as last September, officials were offering assurances that U.S. taxpayers would not have to pay for a bailout. Now apparently if we don’t cough up $1 billion the war and the country will be lost and all the previous billions we’ve squandered there will have been wasted.

So we can’t afford a dime to help homeowners in this country but we must spend $1 billion to bail out the Afghans.

I don’t expect the Democrats to put up much of a fight against such an outrage.

I hope the Tea Party stands strong on this one.

 

 

 

Around the Web / Foreclosures / Martin Column / Outrage / Too Big To Fail - 03/02/2011