Tagged: Finance

AIG breaks bonuses promises

December 23rd, 2009 in Banks, Finance, Financial crisis 0 comments

AIG logoInsurance giant AIG, bailed out by taxpayers to the tune of $180 billion, had promised to return $45 million of the $165 million in bonuses it paid despite the bailout.  But most of that remains unpaid, the Washington Post reports.  Former Federal Reserve Bank examiner Mark T. Williams, who teaches finance at BU’s School of Management and whose book “Uncontrolled Risk” about the fall of Lehman Brothers will soon be published, says AIG is just greedy.

If these executives do not want to honor their obligation to refund bonuses, then the government should impose an AIG bonus tax to have these funds returned.  At minimum, the government needs to remind AIG executives who they are now owned by.”

Contact Mark T. Williams, 617-358-2789, williams@bu.edu

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Citigroup repayment costs taxpayers

December 16th, 2009 in Economics 0 comments

CitiOn the one hand Citigroup is repaying Uncle Sam that TARP bailout money, which is good for taxpayers.  On the other hand, they’re getting a multi-billion dollar tax break in the process.  Economics Professor Laurence Kotlikoff, a former senior economist in the White House Council of Economic Advisors, doesn’t like the tax breaks built into the repayment program.

“This is Uncle Sam handing out money under the rug. This is expected of a third-world dictatorship, not our country.”

Contact Laurence Kotlikoff, 617-353-4002, or kotlikoff@bu.edu

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SEC widens BofA/Merrill probe

December 11th, 2009 in Banks 0 comments

SEC logoThe Securities and Exchange Commission is widening its probe of the Bank of American take-over Merrill Lynch to go beyond failing to disclose bonuses paid to Merrill employees to now include failure to disclose ML’s mounting losses.  Law Professor Elizabeth Nowicki, a former SEC and Wall Street attorney, says it’s about time.

The SEC’s expanding probe of Bank of America’s egregious disclosure failures regarding Merrill Lynch is shocking only in that it has taken the SEC so long to expand it. The BofA disclosure problems are so blatant that even an ill-informed law student could identify them.”

Contact Elizabeth Nowicki, 617-353-2807, enowicki@bu.edu

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France and U.K. curb bankers' pay

December 11th, 2009 in Banks, Economics 0 comments

money rollEngland has been joined by France in slapping a supertax on bank bonuses in an effort to push other countries, including the U.S., do so likewise.  Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and former counsel to the Fed Board of Governors, says it’s disgaceful the United States didn’t lead the way.

“In this country, we should be having a debate about recouping bonuses paid to executives and traders in the years leading up to the financial melt-down. Instead, we condone lavish rewards to the leaders of the very firms that owe their continued existence to taxpayer generosity.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

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Wall Street whining about pay

December 7th, 2009 in corporate governance 0 comments

U.S. moneyWith Washington’s “pay czar” setting limits for executives of bailed out Wall Street firms, five high-ranking execs at AIG reportedly are ready to quit if their compensation is cut significantly.  Law Professor Tamar Frankel, an authority on securities law and legal ethics, says maybe its time to both change the guard and change the mores that presume top pay equals top-quality management.

“We need those who care about the economy and their contribution to their corporations.  Most of all, we need to change our evaluation of management — pay alone should not signify value.”

Contact Tamar Frankel, 617-353-3773, tfrankel@bu.edu

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Fed guidelines for bank pay

October 23rd, 2009 in Banks 0 comments

In an effort to avoid unnecessary risk taking in the financial services monayyindustry, the Federal Reserve has issued guidelines regulating bankers’ pay.  Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and a former counsel to the Fed Board of Governors, says it’s a welcome step but not enough.

What is missing is a recognition that the empowerment of shareholders through ‘say on pay’ and other governance changes is the most powerful way for controlling out-of-control pay practices.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

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Banking compensation going back up

October 14th, 2009 in Banks 0 comments

wall stDespite the taxpayer bailouts and regulators pressuring Wall Street’s compensation culture, finance-industry pay is expected to push to a record high of $140 billion this year.  Former Federal Reserve Bank examiner Mark T. Williams, who teaches finance at the School of Management, says only emplyees that take low risks and make large profits should be rewarded.

“Compensation schemes in the past inappropriately incentivized employees to bet the farm using the firm’s money.  For the health of these companies and our economy, this practice must be stopped.”

Contact Mark T. Williams, 617-358-2789, williams@bu.edu

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