You don't usually see the names Sheila Bair and Anna Wintour mentioned in the same sentence. Bair, of course, is the supremely powerful chairwoman of the Federal Deposit Insurance Corporation. Wintour is the supremely powerful editor-in-chief of Vogue. But now the two have collided. And, oh, yes. It is on.
New York's bad-ass attorney general, Andrew Cuomo, has been looking into compensation on Wall Street for, like, nine months now. And now the fruits of his labor have been unveiled for all to see! Cuomo released a report today called "No Rhyme or Reason: The 'Heads I Win, Tails You Lose' Bank Bonus Culture," in which he says—surprise!—big banks don't usually tie annual compensation to performance, and still pay out massive bonuses even in years when they don't record a profit. How surprising! (It's a good thing we don't tie the state tax rate to the performance of elected officials, too.) Unfortunately, Cuomo's 22-page report doesn't include the names of these Wall Streeters who are raking it in, but he does share a few facts you may find interesting.
It's been a rough few weeks for Goldman Sachs as critics have assailed the firm over its massive profits, the role it may have played in creating the current economic mess and, last but not least, the firm's decision to stand by silently as the Bronx's cookie industry is decimated. How could it possibly get any worse? Having child molesters on the payroll, for one thing:
You know who is really suffering these days? The investment bankers and corporate lawyers who had been accustomed to getting their action at the office during the boom years, but who have been forced to endure a dramatic downturn in workplace sex now that going to work every day is, well, more work-like:
In this week's issue of New York, Joe Hagan pens a long piece about Goldman Sachs, "America's most successful, cynical, envied, despised, and (in its view, anyway) misunderstood engine of capitalism." But if you were thinking that the last year of turmoil—or the unprecedented blow to Goldman's reputation in recent months—has changed things at the storied firm, well, you needn't worry:
Last September, shortly after Lehman had gone bust, Bank of America had just announced plans to acquire Merrill Lynch, and back when the management of Goldman Sachs wasn't feeling nearly as confident as they do these days, Goldman reached out to Warren Buffett for a financial lifeline. The deal Goldman CEO Lloyd Blankfein struck with Buffett gave the firm a big shot in the arm and signaled to investors that Goldman would endure the crisis intact. And it looks like it's working out pretty well for Buffett, too. As of today, Buffett's bet has earned him a paper profit of more than $2 billion. [Bloomberg]
Stocks have been on the rise for the past 10 days or so. Today the Dow jumped 200 points, lifting it above 9,000 for the first time since January. Was it because of better-than-expected quarterly earnings? More encouraging unemployment and housing data? The result of increased confidence the recession is over and we're well on our way to economic recovery? Free free to take your pick. [WSJ, CNN]
Billionaire financier Carl Icahn started blogging to great fanfare in February 2008. But while he got off to a very solid start, posting regularly about "shareholder empowerment" and corporate governance, the last few months have been a big disappointment for loyal readers of The Icahn Report. Icahn—who, as far as we can tell, holds the title of America's wealthiest blogger—hasn't put up anything new since April 16, and it wasn't even an original post, since it had been copied and pasted from the Huffington Post. What's with deal? Has Icahn given up?
A protest took place outside the offices of Goldman Sachs today! The crowd gathered in front of 85 Broad Street must have been outraged about the role Goldman played in the subprime mortgage crisis, right? Or how the bank managed to generate massive profits from the economic downturn while also convince Washington to bail out the banking industry? Or the way in which the bank has systematically used its ties to top officials in Washington to its advantage? Not so much! The signs, according to Dealbreaker, read "Stop the injustice at Stella D'Oro." It seems the people gathered outside think Goldman can prevent the cookie factory in the Bronx from closing down because it owns a piece of the company that owns Stella D'Oro. Oh, well. Guess you'll have to protest all the other stuff another day! [Dealbreaker]
Things may be all hunky-dory at Goldman Sachs and JPMorgan Chase now that both firms announced hugely profitable second quarter profits. The same can't be said for Morgan Stanley, though. The bank posted a $1.26 billion loss for the second quarter today, but as is the case with so many things on Wall Street, you should not expect any of the execs at Morgan Stanley to feel the sting: The firm set aside 72 percent of the $5.9 billion it collected in during the second quarter for compensation and benefits. "It was a very good quarter to be a Morgan Stanley employee," said one analyst. "I'm not so sure it was so good to be a Morgan Stanley shareholder." [Bloomberg]
As the public focuses on the lucky bankers at Goldman Sachs who are on track to make more money than ever this year, let's not forget about hedge fund managers. They're doing pretty well, too, you know! According to a new report by Hedge Fund Research, the average fund was up more than nine percent during the quarter, the best quarterly return since the fourth quarter of 1999. So if you see a cocky finance type out and about and he's buying bottles of champagne like the last year never happened—or waving a wad of cash—he could work at Goldman. But he could just as well be employed by a hedge fund. It still remains highly unlikely, however, that he works at Citigroup. [Dealbook]
Lehman Brothers has had an official Ebay store open since the beginning of July with proceeds from the auctions going to the failed bank's creditors. (Of course, items have been unofficially listed on the site since the bank's collapse last fall.) But now Lehman is taking it one step further: It plans to open a retail store next week at its 1271 Sixth Avenue office. "We are really excited to be able to offer this to the public because there is a demand," says a spokeswoman for the company. Better act quickly! Supplies are limited! [Bloomberg via Dealbreaker]
The unemployment situation in NYC isn't improving. The city's jobless rate jumped to 9.5 percent last month, which is almost double what it was a year ago and the highest it's been since July 1997. But there is some good news for unemployed Wall Streeters: It looks like banks are beginning to hire again. Of course, the very best news is reserved for people who happen to be employed by Goldman Sachs, who are on track to make $1 million this year, on average. If you fall into that last category, rest assured that everyone else in NYC is totally thrilled about your good fortune, isn't the slightest bit jealous, and only wishes you the very best. Promise! [Reuters]
