Feinberg Says He Spoke With Goldman Sachs CEO About Compensation Plans
It is good we are seeing more compensation that is based on performance of the stock of a firm and not large cash payments that could encourage one-time bumps in earnings for bonuses even if they are putting the firm into more risk. Over time this will also help shareholders because everyones goals will be much more aligned and investors can have more confidence investing in these firms for the long-term, opposed to speculating.
Bloomberg - Kenneth Feinberg, the U.S. special master on executive compensation, said Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein consulted with him on the firm’s pay plans and adopted his “prescriptions.”
Popularity: 1%
Jobless rate falls to 9.7 percent in January - its due to discouraged workers not true gains
This news does sound good on the outside but when you read into the report you find that we still shed 86,000 jobs after you add in the gains. Also and this is the biggie, the drop to 9.7% is because people simply gave up looking for work and fell off the unemployed rolls and are just not being counted. If you look at the U6 number in the report, you will see the “discouraged” works and unemployed together and that gives a much more accurate picture. The U6 number is well over 15% and that is a pretty big number. The stock market slid under 10,000 and we could be in for a major correction going forward. I’ll keep you posted.
Reuters, New York - KEY POINTS:
* The Labor Department said the economy shed 150,000 jobs in December, compared to 85,000 previously reported, but November was revised to a gain of 64,000, up from 4,000. Annual benchmark revisions to payrolls data showed the economy has purged 8.4 million jobs since the start of the recession in December 2007.
* Analysts polled by Reuters had forecast payrolls gaining 5,000 and the unemployment rate to edge up to 10.1 percent. Median estimates from the top 20 forecasters expected payrolls to be unchanged last month.
* A sharp increase in the number of people giving up looking for work helped to depress the jobless rate. The number of ‘discouraged job seekers’ rose to 1.1 million in January from 734,000 a year ago.
Popularity: 1%
Former Bank of America CEO Ken Lewis Sued by NY AG for Fraud
Good to see proper investigations are to taking place after this massive financial fraud that was bought to bear on people across the globe. In this case they are looking into the $16 billion dollars in losses that Merrill allegedly knew about when it was being acquired by BofA after the failure of Lehman Brothers. Being that the losses were that large and the amount of bonuses (in the billions) that were paid as part of the deal, rightfully there are serious questions that need to asked and accounted for. There are more skeletons buried on this so we need to keep looking until the daylight shines on them all.
Bloomberg - Former Bank of America Corp. Chief Executive Officer Kenneth Lewis was sued by New York Attorney General Andrew Cuomo for defrauding investors and the government when buying Merrill Lynch & Co. The bank agreed to pay $150 million to settle a related lawsuit by U.S. regulators.
Popularity: 1%
Fannie Mae Gives 3.5% Discount on REO Home Purchases
This is pretty big news. That is a pretty decent discount on a purchase on real estate listed on HomePath.com. That kind of discount should get some inventory moving from Fannie Mae. I was browsing through the inventory and if you are looking at the areas with the most exposure to subprime loans you are going to find some steep discounts on top of the 3.5% that Fannie is offering.
Housing Wire - Fannie Mae will provide a 3.5% discount to those purchasing a real-estate owned (REO) property listed as part of its HomePath division, according to a company notice. The discount can be used for closing cost assistance or the buyer’s choice of appliances. The offer applies to any owner-occupant who closes on a property listed on HomePath.com before May 1, 2010.
Popularity: 1%
Ex-Fed Chairman Paul Volcker to urge curbing risky trading by commercial banks
I fully support Mr. Volcker’s stance on this issue. Even though it is extremely profitable for commercial deposit taking banks to do trading on their own books, they should either convert into a investment bank or stick to lending which is still very profitable if done properly. As I have stated before on here, our commercial banks should be our most risk adverse institutions and that is why prudent regulations are needed and should be in place to limit this.
Investment banks are on the other hand, not regulated very much so they are allowed to make very risky trades and profit greatly. Conversely, if they make bad choices they should be allowed to fail without the same assistance that our vital commercial banks get if we have a classic “run” on the bank.
Washington D.C., Reuters - White House economics adviser Paul Volcker will urge Congress on Tuesday to rein in risky investing by big banks to help prevent them becoming “too big to fail,” according to testimony obtained by Reuters.
Popularity: 1%
U.S. GDP & economy grows at 5.7% but can it keep up?
It sounds like a robust number but when you look what it is compromised of, 3.4% of it is from inventory restocking from the holidays, not growth in spending. According to the article, the major impact of inventory rebuilding is a red flag for numbers going forward. The market has priced some real recovery in 2010 and it might not happen so we could see another leg down in the economy. We will be watching the next 2 quarters closely and if it doesn’t not support the recovery, we will have a choppy September and October.
Forbes - The U.S. economy crushed expectations by growing at a 5.7% clip in the fourth quarter of 2009, but even as Wall Street rallied on the news there are plenty of warning signs of a slower pace ahead.
Popularity: 1%
Fed keeps key interest rates steady despite board member’s disapproval
Interesting they are still keeping interest rates low for an “extended period” even though we are in a recovery. They must know something we don’t. They called the recovery moderate for sometime and that tells me that the earnings will not keep up with where the market is priced so we should see a correction.
LA Times - Washington D.C. - Reporting from Washington - Amid the political rancor over Federal Reserve Chairman Ben S. Bernanke’s bid for a second term, central bank officials encountered some dissension in their first policy-setting meeting of the year, even as they affirmed their pledge to keep interest rates at near zero for “an extended period.”
Popularity: 1%