Former RBS chief executive, Sir Fred Goodwin, boosted his pension despite the bank posting the largest corporate loss in UK history under his watch. It means he is already drawing a pension for life of £703,000 a year from age 50. Sir Fred’s payment, which almost doubles to £16m the £8.4m his pension had earned by 2007 after 10 years on the board, was agreed by the previous management. An RBS spokesman said: “The company is taking further legal advice in respect of certain aspects of Sir Fred Goodwin’s contractual arrangements". Source
The share price, when he became CEO of RBS, in January 2001, was 442p. On the day his departure was announced it was 65.70p.
Sir Fred Goodwin, knighted by the Queen for 'services to banking.'
Letter from Sir Fred Goodwin to Lord Myners, refusing to give the money back.
RBS accounts prove the bank was not obliged to pay Sir Fred a £703,000 pension with immediate effect. The rules of its pension fund are that it was allowed to do so but it didn't have to. (Robert Peston, BBC News, 26/2/09)
Goodwin's pension would pay the annual state pension for some 150 UK pensioners
Fraud of the Day (1)
Paul Greenwood and Stephen Walsh, arrested in New York this week, are accused of defrauding investors of at least $553 million through a long-running scheme in which their firms, including Westridge Capital Management, claimed steady, safe returns. The SEC complaint said spending included multimillion-dollar homes, cars and collectibles, all part of a scheme to use client money "as their personal piggy-bank to furnish lavish and luxurious lifestyles." They spent as much as $80,000 on mohair Steiff teddy bears.
On Thursday, some residents of North Salem, N.Y., a town of 5,000 in an affluent, rural stretch of Westchester County, were reeling over the arrest of Mr. Greenwood. He serves as the town's supervisor, the equivalent of mayor.
Wall Street Journal, 27/2/09
Fraud of the Day (2)
James Nicholson, a New Jersey fund manager, was accused of cheating investors out of as much as $900 million since 2004. Prosecutors described it as “an egregious fraud of immense proportions”. Investigators in New York said the fraud was discovered after several investors tried to redeem money from Mr Nicholson’s Westgate Capital Fund after hearing of the alleged $50 billion fraud by Bernard Madoff.
Daily Telegraph, 26/2/09
former chief executive
of HBOS. "I don't think I am particularly personally culpable."
(Treasury Select Committee, 10/2/09)
Andy Hornby, former chief executive of HBOS. "I don't think I am particularly personally culpable." (Treasury Select Committee, 10/2/09)
Eric Daniels, Lloyds Banking Group chief executive. Claimed his £1 million wage was a "modest salary". (Treasury Select Committee, 10/2/09)
Sir James Crosby, former chief executive of HBOS. former advisor to Gordon Brown, former deputy chairman of the Financial Services Authority, sacked a whistleblower (Paul Moore) who warned he was leading HBOS “to the precipice”. Sir James was knighted in 2006 for "services to the finance industry".
"But what a feeder club the City has been, with Labour having given 23 bankers honours since 1997. Four of them scored life peerages, and seven were knighted. Three were made government ministers, two appointed to senior posts within Downing Street, 10 have been placed on eminent councils, seven on agencies and quangos, while just the 37 have been drafted in to head up taskforces, or sit on commissions and advisory bodies." (Marina Hyde, Guardian, 14/2/09)
Peter Cummings was HBOS's highest paid director in 2008, earning a salary of £666,000 and a £1.3m bonus. He was ousted last month, taking "early retirement" with a pension pot of £6million and a pay-off of another £666,000. It's believed Cummings could be in Spain, where he is understood to own a £4m mansion near Marbella. In December, Cummings reportedly told a bankers' dinner: "I make no apology for driving social infrastructure bank-speak for housing developments in a way that would also drive shareholder value." (Sunday Mirror, 15/2/09)
"So," said Alice to the Mad Banker, "let me get this right. The Royal Bank of Scotland (RBS), which lost £28bn and is kept from bankruptcy by taxpayers' money, will pay staff £1bn in bonuses; people at the organisation that looks after government cash in bailed-out banks will get bonuses; so will staff at the Financial Services Authority (FSA), the very people charged with reining in bonus culture; and Merrill Lynch, which lost $27bn (£19bn) last year, will pay $3.6bn in bonuses and make instant millionaires of no fewer than 700 staff?" The Mad Banker puffed out his chest. "Correct," he said. "More tea?" (Independent on Sunday, 15/2/09)
Paul Moore, HBOS head of group risk between 2002 and 2005, said he and his team “experienced threatening behavior by executives” when they warned that the bank was putting stability at risk. Crosby, then HBOS chief executive officer, fired him Moore said (Bloomberg, 11/2/09)
A guessing game swept the City: who is the Goldman Sachs banker who picked up the $100m bonus? The American investment bank is known to have paid one of its London partners the colossal sum - possibly the biggest bonus in City history, equivalent to £51m. (thisismoney.co.uk, 20 December 2006)
Sir Tom McKillop, former RBS Chairman, paid £750,000 in 2007. (Reuters, 10/2/09)
Lord Dennis Stevenson, former HBOS Chairman, paid £1.39 million last year (Reuters, 10/2/09). Henry Dennistoun "Dennis" Stevenson, Baron Stevenson, CBE, DL (born 19 July 1945) was created a life peer as Baron Stevenson of Coddenham, of Coddenham in the County of Suffolk in 1999 having previously been awarded a CBE (Commander of the Order of the British Empire) in 1981. He sits on the cross-benches in the House of Lords. He was educated at Trinity College, Glenalmond, and King's College, Cambridge. (Wikipedia)
Lloyds Banking Group plans to pay £120m in bonuses to staff. The bank has taken £17 billion from the taxpayer and admitted last week that it will clock up losses of more than £10 billion as a result of its takeover of HBOS. The government, which already owns 43% of the bank, may be forced to take a majority stake, or nationalise it entirely. (Sunday Times, 15/2/09)
Merrill Lynch's top four bonus recipients received a combined $121 million just before the firm was acquired by Bank of America, according to New York Attorney General Andrew Cuomo. Merrill reported Jan. 16 that it lost $15.31 billion in the fourth quarter of 2007 and $27 billion for the year. (Bloomberg, 11/2/09)
Stanley O'Neal, former Merrill Lynch CEO, left the company on November 1, 2007 with about $161 million worth of stock options and retirement benefits. (Wikipedia)
Robert Diamond, head of Barclay's investment banking arm. Salary: £250,000. Bonus £6.5m. (Observer, 15/2/09)
Lloyd Blankfein, Goldman Sachs CEO. Paid $68.5m in 2007. (Observer, 15/2/09)
Kenneth Lewis, Bank of America CEO. Paid $16.4 million in 2007. (Observer, 15/2/09)
Jonathan Adair Turner, Baron Turner of Ecchinswell, head of the Financial Services Authority, refused to give a direct apology for the FSA's failures (BBC1’s Andrew Marr Show, 15/2/09). Following his appointment, the FSA did not disclose Lord Turner’s salary. His pay is likely to be similar to the £433,000 earned in 2007 by his predecessor (Times Online, 31/1/09)
FSA Executives are in line for up to £33 million of bonuses this year. (Times Online, 13/2/09)
Hector Sants, FSA Chief Executive, paid £662,000, including a £114,000 bonus, in 2007-8.
Petition against RBS bonuses, signed by 31,000 people on 16/2/09. Link to petition
Blythe Masters, the Englishwoman who built financial 'weapons of mass destruction.' Masters, with an elite group at JP Morgan, developed many of the credit derivatives intended to remove risk from companies' balance sheets. The banks argued that by trading credit derivatives of the kind pioneered by Masters, they spread the risk elsewhere and therefore needed lower reserves to protect against loan defaults. (Guardian, 20 September 2008)
John Mack, Morgan Stanley chief executive, received $40.2 million in stock and options for his performance in 2006 plus $800,000 in salary and $336,000 in above-market returns on deferred compensation. He also received perks of nearly $400,000, primarily for personal use of the company jet. (CNNMoney.com, February 28 2008)
Vikram Pandit, Citygroup chief executive, received about $165.2 million in connection with the sale of Old Lane Partners, the investment firm that Citigroup bought in 2007 to lure him to the company. Pandit received an additional $2.7 million in annual pay in the roughly six months he led Citigroup's investment bank. In January 2008 Pandit was given a sign-on grant of stock and performance-based options worth more than $48 million, bringing the total to at least $216 million. (International Herald Tribune, 14/3/08)
Jamie Dimon, JP Morgan chief executive: 'Despite taking home some $44.4 million (£22.2 million) a year in salary, Dimon is known for eschewing the vulgarity of excessive wealth.' Source
Richard Fuld, disgraced chief executive of Lehman Brothers, transferred ownership of a $14 million Florida mansion to his wife for $100 (£70) on 10 November 2008, according to Marin County real estate records.
The 3 acre property is one of five homes owned by the Fulds. Henry Waxman, a Democrat Congressman, calculated that Mr Fuld collected $480 million in compensation in eight years at Lehman Brothers. (Times Online, 27/1/09)
The Lehman Brothers jet, a Bombardier BD-700 Global Express. Oprah has the same model.
Richard Pym, Bradford & Bingley Chairman. Annual salary: £750,000. Guaranteed bonus (paid regardless of performance): £326,000. Bradford & Bingley was nationalised in September 2008.
Sir Allen Stanford has run off. At the centre of £6.5bn criminal allegations, Sir Allen, the only Texan ever to be knighted, is nowhere to be found. He is reported to have tried to board a private jet at Houston yesterday (18/2/09) but his credit card bounced.
Update: Sir Allen has been found. The FBI tracked him down to Fredericksburg, Virginia, and served him with papers detailing charges of fraud totalling $9.2 billion. Meanwhile, callers to the numerous Stanford offices across the US were greeted with a recorded message: “This office is temporarily closed. Have a great day.”
The first public meeting with creditors was held in New York on 20 February in the Bernard Madoff alleged $50 billion Ponzi scheme. Reacting to angry investors demanding that the bankruptcy trustee also go after Madoff family members' personal assets, David Sheehan, a lawyer for the trustee, said his staff is "looking at every Madoff family member and every insider associated with the Madoff firm." (Boston Globe, 21/2/09)
Madoff creditors in New York on 20 February 2009
Bernard Madoff's Montauk oceanfront house
Goldman Sachs set aside $16.5 billion for salaries, bonuses and benefits for employees in 2006 -- an average of over $600,000 per employee. Some senior executives received $100 million. What to do with a $100 million bonus?
» Buy a Rolls Royce every day of the week and still have more than $97 million left over
» Provide immunizations for 40,000 impoverished children for a year ($37.5 million)
» Feed about 800,000 children for a year ($60 million)
» Recreate the Tom Cruise-Katie Holmes and Brad Pitt-Jennifer Aniston weddings four times over ($16 million)
» Buy one of Mel Gibson's private islands ($15 million), and still remain a millionaire nine times over
» Pay Harvard tuition for more than 1,500 students ($70.5 million)
» Provide health care to over 1,000 Americans for a year ($7 million), and still have enough to buy a different Brioni designer suit for every single day of the year ($6,000 suits for all 365 days would cost $22 million)
» Take everyone in the country of Grenada to a Broadway show, then buy the most expensive apartment in New York City (a triplex penthouse at the Pierre Hotel, $70 million), and still have an extra $15 million dollars in your pocket -- over 300 times the median income of the average American household
» Buy every person in Kansas City a pair of Manolo Blahnik shoes (147,000 pairs of $400 shoes comes out to about $60 million) and still have $40 million dollars left -- that's more than 500 times the average doctor's salary in the United States (about $80,000)
» Buy 1,000 gala tables at your favorite charity's ball ($10 million), provide winter blankets for 350,000 children in developing countries ($14 million), personally pay Derek Jeter's salary for a year ($21 million), and still buy your own private Boeing jet ($55 million)
» Fail to insure Jennifer Lopez's backside -- rumoured to be worth $1 billion.
(ABC News, 13/12/06)
Five companies which received a combined $120 billion in US government cash injections -- Citigroup, Wells Fargo, Bank of America, JP Morgan and Morgan Stanley -- still own private jets, according to regulatory filings and interviews. (China Daily, 22/12/98)
(Private Eye, 20/2/09)
"Words pop in and out of our language as social conditions change. The American gangster, which is still with us, has been around as a noun and a reality since 1896 according to my Shorter Oxford, but it seems to have dropped another Americanism from the 1930s and I think now is the time to revive it.
The word is bankster, derived by a marriage of banker and gangster.
It was coined, as far as I can deduce, by an American immigrant, a fiery Sicilian-born lawyer by the name of Ferdinand Pecora. He was the chief counsel to the US Senate Committee on Banking set up in the early 30s to probe the origins of the Crash of 1929.
He exposed quite a lot of the Wall Street practices that Harvard's Professor William Z Ripley had condemned in 1928. The believable Ripley called them - get ready for these Americanisms - "prestidigitation, double-shuffling, honey-fugling, hornswoggling and skullduggery".
The professor had vainly tried to warn President Calvin Coolidge that Wall Street was full of gas and was bound to blow up. To great discomfort all round, Pecora identified Coolidge himself, by then out of office, as one of those who'd been in on the honey-fugling.
The great banking house of JP Morgan had the president on a "preferred list" by which the bank's influential friends were given a chance to buy stock at half price. Shall we say, they made out like bandits?
Today the term bankster perfectly fits Bernard Madoff, whose crooked Ponzi scheme lost $50 billion of what the trade calls OPM - other people's money - invested with him."
BBC News Magazine, 30 January 2009
Sir Ken Macdonald lambasts bankers
The former Director of Public Prosecutions, Sir Ken Macdonald, said today: "If you mug someone in the street and you are caught, the chances are that you will go to prison. In recent years, mugging someone out of their savings or their pension would probably earn you a yacht.”
Sir Ken said more:
“No one in Britain has any confidence that fraud in the banks will be prosecuted.” He then questioned whether legislators understand financial wrongdoing and the “wreckage it brings”.
“Do they really believe that an illiterate, mother-of-five drug mule from a village in Gambia should be serving five times the sentence of a millionaire City fraudster?”
Sir Ken calls for fewer laws on terrorism and attacking people's right to speak frankly and freely. There should be more laws to “confront the clever people who have done their best to steal our economy”. He adds: “If the Government really wants to protect people, beyond armoured-vest posturing, here is the opportunity.”
(Times Online, 23/2/09)
Northern Rock reports loss of £1.4bn - and plans to reward top executives
Northern Rock, nationalised after it made a £1.4 billion loss, said yesterday that 100 senior executives were eligible for the 2008 bonus scheme. "It is essential that the Company can recruit and retain good people," the bank said in a statement. "Senior individuals who are important to the Company's future will receive a deferred bonus award for 2008."
Bad Idea of 2008
Alexandre Mouradian, a 38-year-old trader with the Paris-based Tradition Securities and Futures, is suing his employers, claiming they shortchanged him over £92,571 of the £1.32m bonus he awarded himself from a bonus pool two years ago.
Mouradian, who earns £1.6m as head of the company's exchange-traded options desk, has brought his case to the court of appeal under the Employment Rights Act, which prohibits the unlawful deduction of an employee's wages.
In his first address to Congress (24/2/09) President Obama mentioned Leonard Abess, a bank president from Miami who, President Obama said, "cashed out his company, took a $60 million bonus, and gave it out to all 399 people who worked for him, plus another 72 who used to work for him. He didn't tell anyone, but when the local newspaper found out, he simply said, 'I knew some of these people since I was 7 years old. I didn't feel right getting the money myself.' " Leonard Abess started his career in the bank's print shop, which made forms and documents. Working his way up the ladder gave him an appreciation for the role employees play in the success of an enterprise.
''I saw that if the president doesn't come to work, it's not a big deal,'' he said. ``But if the tellers don't show up, it's a serious problem.''
Leonard Abess, honoured by President Obama
London ~ Reykjavík on Thames
Unemployment is rising twice as fast in Britain as the European average. Two million people have lost their jobs, a number that could rise to three million by the end of the year. According to the International Monetary Fund (IMF), the British economy will shrink by 2.8 percent in 2009, the greatest projected decline among the seven largest industrialized nations.
Someone in Great Britain loses their home once every seven minutes. The British welfare state, its reach narrowed by a succession of reforms, only offers about £60 ($85) a week in unemployment benefits to those who have been laid off.
The current widespread loathing of bankers has reached levels reminiscent of the year 1720. That was when the "South Sea Bubble," one of the first speculative bubbles in history, burst, and a parliamentary inquiry suggested sewing the guilty into sacks filled with poisonous snakes and tossing them into the Thames River.
British private households, having accumulated £1.5 trillion ($2.1 trillion) in debt, are at the leaders in Europe.
More than 20 years ago, then Prime Minister Margaret Thatcher broke apart or privatized ailing traditional industries like shipping, mining and automobile manufacturing. Thatcher made it clear that the future, in her eyes, lay in a deregulated financial industry that would emulate the United States, which she considered Britain's role model.
U.S. investment giants like Goldman Sachs, Merrill Lynch and Morgan Stanley set up shop in the British capital, and major continental European financial institutions like Deutsche Bank and Credit Suisse made London a center of their investment banking businesses.
When Tony Blair came into power in 1997, his Labor government did not reverse any of Thatcher's neoliberal reforms. On the contrary, Labor even loosened the reins on the financial caste a little further.
Its approach was one of "light-touch regulation," which removed onerous restrictions and reduced taxes on capital gains. London became the private equity and hedge fund capital of the world. Bonus payments jumped from £1.7 billion ($2.4 billion) to £8.5 billion ($12.1 billion) over 10 years of Labor government.
"What is happening now is like the fall of the Berlin Wall," says author Tony Parsons. "People look at this ideology and realize that it hasn't worked. We cannot have unregulated capitalism. We cannot tell these people to do as they wish, and hope that a lot of money comes out in the process."
"Thatcher had riots in the streets with three million unemployed. Gordon Brown, or David Cameron, will experience the same thing." And those who do have money, like Parsons himself, will soon be pleased about the security guards they have in front of their houses.
This view of Britain causes frayed nerves in British government circles. When the head of Starbucks, Howard Schultz, claimed recently that the British economy was in a spiral of decline, Lord Mandelson, the business secretary, responded: "Who the f*** is he? How the hell are they [Starbucks] doing?"
Former Merrill Lynch
CEO John Thain spent $1.22 million of company money redecorating his
office, just as the financial crisis was hitting the firm and other
employees were being fired. Items include:
1) $2,700 for six wall
There's confusion about what Mr Thain paid for a wastebasket. According to Wikipedia it was $1,400. But other sources claim only $1,300.
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