By Jacqueline Simmons and Josh Fineman
March 27 (Bloomberg) -- Bank of America Corp. plans to increase some investment bankers’ salaries by as much as 70 percent following the takeover of Merrill Lynch & Co., people familiar with the proposal said.
Bank of America, which has received $45 billion of taxpayers’ money, may raise the annual base pay for some managing directors to about $300,000 from $180,000, said the people, who declined to be identified because the final numbers are still under discussion. Salaries for less-senior directors would climb to about $250,000 from $150,000, and vice presidents would get $200,000, up from about $125,000, the people said.
“We regularly review our compensation programs,” Bank of America said in an e-mailed statement. “Such a review is particularly appropriate during such challenging times. While various alternatives are being considered, no decisions have been reached.”
DoctoRx here: The anonymous Email is an obvious lie. The only non-decision may be the exact salary numbers.
Adjusted for inflation/deflation, the stock crash of the last 17 months is worse than that of the Great Depression at the same time frame, and the same things are happening. Spain is in deflation, with an unemployment rate of 14%; its Prime Minister said the unemployed may as well just f--- because there's no work to be had. Mish at www.globaleconomicanalysis.blogspot.com has two recent posts, one about banks walking away from foreclosures because the properties aren't worth foreclosing on; and one on cities abandoning parts of their own municipalities and shrinking. The accounting standards board, FASB, is revealed to be a bunch of lap dogs. Last year, it refused to implement its rule requiring the Citis of the world to take on-balance sheet their SIVs, providing a pitiful non-reason for its reversal. Now we have:
Mark-to-Market Lobby Buoys Bank Profits 20% as FASB May Say Yes
Four days after U.S. lawmakers berated Financial Accounting Standards Board ChairmanRobert Herz and threatened to take rulemaking out of his hands, FASB proposed an overhaul of fair-value accounting that may improve profits at banks such as Citigroup Inc. by more than 20 percent.
The changes proposed on March 16 to fair-value, also known as mark-to-market accounting, would allow companies to use “significant judgment” in valuing assets and reduce the amount of writedowns they must take on so-called impaired investments, including mortgage-backed securities. A final vote on the resolutions, which would apply to first-quarter financial statements, is scheduled for April 2.
FASB’s acquiescence followed lobbying efforts by the U.S. Chamber of Commerce, the American Bankers Association and companies ranging from Bank of New York Mellon Corp., the world’s largest custodian of financial assets, to community lender Brentwood Bank in Pennsylvania. Former regulators and accounting analysts say the new rules would hurt investors who need more transparency, not less, in financial statements.
Officials at Norwalk, Connecticut-based FASB were under “tremendous pressure” and “more or less eviscerated mark-to- market accounting,” said Robert Willens, a former managing director at Lehman Brothers Holdings Inc. . .
Please review the first paragraph immediately above. Bloomberg says that this rule change would "improve profits" at Citigroup. WRONG. It would improve reported profits. Economic profits cannot be changed by an accounting change. Who will be fooled by FASB's supine behavior? Only the small investor, that's who.
The noose and the cops are closing in on the Establishment. Newsweek's pitiful attempt to smear Paul Krugman went nowhere. Felix Salmon at Portfolio.com reported:
Newsweek's Fearful Krugman Profile
Evan Thomas has a profile of Paul Krugman on the cover of Newsweek. The 2,825-word article has six on-the-record quotes about Krugman; none of them -- not even the one from his mother -- are particularly flattering. No one is quoted saying a single nice thing about Krugman's economics or his opinions. Salmon got it right with his title. Newsweek and the Establishment are afraid of the truth. While DoctoRx and Dr. Krugman have different political philosophies (big vs. small government), Dr. Krugman believes in "speaking truth to power", as his party liked to say when they were out of power. As this blog has noted on numerous occasions, Dr. Krugman has been critical of Barack Obama's economic policies before Mr. Obama became President Obama. One can pick one's preferred time of when things went seriously, structurally wrong. The Left goes back to Reagan. I would more simply go back to the Asian contagion, when the average U. S. stock peaked around 1997-98, but the bubble was then perpetrated. Ever since then, bubbles have been blown and burst. However, there are now no bubbles left in the stock market, as all stock groups are in well-defined downtrends, and forget about real estate. Only gold and Treasuries/government mortgage-backed securities are in defined up-trends. One suspects that that's where the big money has been flowing, as the public continues to disbelieve that these markets are toppy. Even the ad for gold in the Super Bowl was for the public to sell its gold, not to buy it, and thus did not signify a top. Some major unanswered questions include: 1. How will the financial fraud on the public, which is well on its way to being revealed for all to see and is thus coming to a climax, be resolved; 2. In the midst of the worst financial crisis since the 1930s, how did America get as President the single least experienced President in its modern history, whose political career most resembled that of Robert Morse in "How to Succeed in Business Without Really Trying"? (Remember the song, "Oh, I Believe in You . . .?); 3. How much wealth will be/is left after all that has been looted by the banksters and the insider/CEO has been revealed; and 4. Where have the looters been stashing their gains? For individual investors, their pecuniary interest is actually most importantly revealed by #4. This is where technical analysis, with trend-following rather than assuming reversion to the mean, may help. After all, if you're a looter, your wealth has to be somewhere. It's not logical for it to be sitting in T-bills just waiting for stocks to bottom "tomorrow" if you know that you and your ilk have appropriated for yourselves more than the public can imagine. If it's in T-bills, it's to protect capital against deflation; in deflationary bananas, stocks have no bottom. Back to Whalen: "As global deflation proceeds, those with cash shall be king . . ." This could be the financial equivalent of Watergate, and potentially more consequential. Copyright (C) Long Lake LLC 2009
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