Top talker: Mark Williams weighs in on Jefferies CEO, Jack Lew, AIG, and other business stories

February 6th, 2013

williams11-150x150Several business stories made headlines during January – CEO compensation, Jack Lew’s nomination as the next U.S. Treasury Secretary, Deutsche Bank’s design of a new derivative, and a potential lawsuit against the U.S. government by American International Group (AIG) to name a few.

Mark Williams, Executive-in-Residence and Master Lecturer at Boston University’s School of Management, is an expert in risk management in the energy trading, banking industry, and derivative matters related to the capital markets. He is a former bank examiner for the Federal Reserve Bank and the author of Uncontrolled Risk: Lessons of Lehman Brothers and How Systemic Risk Can Still Bring Down the World Financial System. He was contacted several times during the month to offer his expertise on several topics:

Jefferies CEO is king of pay (Wall Street Journal)
“Unfortunately, Jefferies has demonstrated that precrisis bonus levels are not yet dead on Wall Street.”

Treasury nominee Lew’s history with Citigroup raises questions (Washington Post)
“His résumé isn’t sterling from this perspective. Citigroup was one of the bad firms on Wall Street.”

Deutsche Bank derivative helped Monte Paschi mask losses (Bloomberg)
“This transaction shows the complexity of banks’ balance sheets. It leaves one wondering what other skeletons are in the closet.”

Bankers get IOUs instead of bonus cash (Wall Street Journal)
“I don’t think there will be a lot of cheers on the trading floors of Morgan Stanley. Bonuses were used to buy houses and cars. They were savings vehicles.”

Banks say new agency’s oversight is slow, costly (Associated Press)
“For the examination process to be effective, there can’t be a nine-month time lag between the examination and the examination findings.”

Jack Lew had major role at Citigroup when it nearly imploded (Washington Post)
“He stepped into the hedge-fund buzz saw. His timing wasn’t the best.”

Bank made huge bet, and profit, on Libor (Wall Street Journal)
“The bets represented an extremely large risk.”

AIG considers joining lawsuit against U.S. over bailouts (Los Angeles Times)
“It’s just [being] handled so poorly, and I think it reinforces this view that they were a bad corporate citizen before the bailout and they’re a bad corporate citizen now. They haven’t reformed.”

Benmosche: AIG paid America back, but we still have to consider suing (Forbes)
“If A.I.G. enters this suit it would be the equivalent of a patient suing their doctor for saving their life. Government action gave A.I.G. a second life.”

Leon Black investing Dartmouth money stirs ethics debate (Bloomberg)
“Even the appearance of conflicts of interest can create reputational risk and harm the institution. The perception is almost as bad as the act of conflict. It does damage to that reputation, which has taken many universities centuries to create.”

The great Citigroup hedge fund giveaway (Business Week)
“Citi shareholders are paying a cost right now for a decision made a decade earlier to venture into risky hedge funds. The Old Laners should not be the ones that gain the lion’s share of the profit.”

Contact Williams at 617-358-2789;  williams@bu.edu

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