BILL MOYERS: Usually it's the bandits robbing the banks. But now it's getting hard to tell the bankers from the bandits. Where have they stashed the loot — that 350 billion dollars of our money that the Bush Administration lavished on them to jump-start our failing economy?
For a story in last Sunday's "New York Times", largely overlooked in all the pre-inaugural hoopla, reporter Mike Mcintire reviewed investor presentations and conference calls to see how bankers talk when they think the rest of us aren't listening.
This from Boston Private Wealth Management, a healthy bank that was handed $154 million: "With that capital in hand [...] we'll be in a position to take advantage of opportunities that present themselves once this recession is sorted out."
Once this recession is sorted out? Those funds are supposed to generate loans for people and small businesses in trouble — not to help banks ride out the recession on a cushion of cash.
Then there's this bit of Simon Legree mustache-twirling from the chairman of Whitney National Bank in New Orleans. They've received 300 million dollars in bailout boodle: ""Make more loans?" he asked. "We're not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans."
I'm not making this up — Flushing Financial crowed that it was newly flush enough to use the bailout bucks to raise the ante and buy new companies:
"We can get $70 million in capital," their CEO said. "So, I would say the price of poker, so to speak, has gone up." And, so to speak, he's playing with our chips!
John Thain resigned under pressure from Bank of America on Thursday after reports he rushed out billions of dollars in bonuses to Merrill Lynch employees in his final days as CEO there, while the brokerage was suffering huge losses and just before Bank of America took it over. The bonuses were paid before Bank of America's acquisition of Merrill became final on Jan. 1, and while Bank of America was privately telling the government that Merrill was losing so much money that the deal might fall through unless it could get more federal bailout money.
Bank of America later received an additional $20 billion from the government, in part to offset the unexpected Merrill losses. The brokerage lost $15 billion in the fourth quarter and more than $27 billion for the year. The bonuses, typically paid in January, were instead given in December and totaled $3 billion to $4 billion, the Financial Times reported Thursday. Bank of America would not confirm the size of the bonuses.
Jan. 23 (Bloomberg) -- John Thain, the former Merrill Lynch & Co. chief executive officer ousted yesterday, spent $1.2 million redecorating his downtown Manhattan office last year as the company was firing employees, a person familiar with the project said. . . . Thain, 53, oversaw the sale of Merrill Lynch to Bank of America Corp. last month, and took over the bank’s wealth management and corporate and investment banking divisions. Merrill’s $15.4 billion fourth-quarter loss forced Bank of America to seek additional aid from the U.S. government, which last week agreed to provide $20 billion in capital and $118 billion in asset guarantees.
. . . Wall Street executives may no longer be able to spend lavishly on perks, said James Post, professor of corporate governance and business ethics at Boston University School of Management. “That’s symbolic of a pattern that has developed on Wall Street over this past decade of more and more extravagant, more and more lavish, more and more one-upmanship in all of these visible symbols,” said Post. “This may be the last vestige of a culture that we’re not going to see for many years to come.”
Succeeding in Business
As Joshua Green says in The Washington Monthly, in a must-read article written just before the administration suddenly became such an exponent of corporate ethics: ''The 'new tone' that George W. Bush brought to Washington isn't one of integrity, but of permissiveness. . . . In this administration, enriching oneself while one's business goes bust isn't necessarily frowned upon.''