The Next Round of Looting
Here are three data points that will make you cranky.
First, the New Bottom Line has taken the bonus pool data the big banks have released from the first three quarters of this year to estimate what they’ll be for the year. They are:
Next, here’s Bank of America’s stock ticker for the day:
It just closed under $5 for the day.
To put that into perspective, BAC’s stock ticker for the year:
And here’s a list of the top holders of BAC stock. It shows that JPMorgan Chase and Citi are the 6th and 7th largest owners of BAC stock, and between those two big bonus recipients and Goldman Sachs, they own over 4% of BAC’s stock. {Update: Though almost all of that was in index funds they hold for their clients.]
You see, you might look at the impending demise of BAC and wonder why its banksters merit any bonus this year. You might argue that awarding any bonuses amounted to looting what was left of the company the banksters had already almost finished looting.
But then you’d see that over 30% of the owners of BAC are similarly suited MOTUs. That goes a long way to explaining why they’ll get away with it. (Yes, I also need to look at PAC donations, which probably explains the rest of it.)
Down roughly 6 percent today alone – not good.
But, I have to wonder what was the precipitating event (or recognition) that led to it going from a steady decline to falling off the table back in August.
Let’s see if I understand this. Last year BOC lost $3B dollars. Compensation increased by $2.5B.
Next year, if everyone roll’s up their sleeves and looses $6B then they can push up that compensation even higher. Go BOC!
@scribe: August was pretty demonstrably the failure of its attempt to push through the $8.5 settlement on mortgages quietly. That, and the delay of Obama’s “settlement.”
In other words, they were claiming they could unload their mortgage shitpile (the 2011 one, as opposed to the 2008 one) cheaply and be done with it.
ISTM a big factor in all of this is is that the current “Market” is programmed for short-term gains over long-term gains (anyone remember what the meaning of “investment” is?) So the MOTU play a shell game with the company’s money that makes this year’s bottom line look good, so they get showered with praise and bonuses, and the long-term prospects are muddied up (on purpose?) enough to make investors wary of trying to figure out the long term prospects.
BTW, as a BOA customer (yeah, I gotta move my accounts somewhere else), I received a plea to complete a survey for them. Of course, the questions only concerned customer care, and some of that in our case has actually been nice. But they didn’t ask me to evaluate their policies regarding mortgages, or any little ol’ thing like that.
Bob in AZ
Doesn’t bankruptcy allow clawback of payments made within the past 90 days, including bonuses?
@RhymesWithCluckingBell:
Hell I would have done the job for 10% of that;) I guess it a good job if you have it already. The senior staff walks away with $$$$$$$$$$$$$.$$ and the worker with nothing. Yep just more of the hopey changey thing for Main Street.
GOOOOOO 9ers
It is past time to address the homes they say they own! I’ll say it again, the American tax payers have paid the banks for those mortgages. They are patting themselves on the back. BOA shows on the charts of TARP payback that the bank itself has paid back, but if you follow to the next page where their mortgage division is you will see they haven’t! We the People either own the bank or the mortgages. Take your pick. I would rather allow people to stay in their homes this winter.
The phone rang a little while ago and it was my TBTF recently-ex bank with some kind of offer for their homeowners (of which I was never one). I hung up on them: anything they’re offering now, short of handing me a certified check for the interest they should have been paying on savings in the last five years, isn’t going to benefit me.
I’m not sure that chart from NBL is worth much, based on the fine print that explains how they calculated their estimated earnings for the year.
A lot has happened in the last quarter, and by simply taking the first 3 quarters, averaging them, and adding that in as an estimated Q4 number, these numbers could easily be wildly off the mark.
For example, GS stock price on January 18 was $175.34/share, and their 52 week low was $84.27 on October 4. Right now, they’re trading in the $87/share neighborhood. IOW, the GS stock price sank like a rock from Jan-Oct 4, and since then has been fairly flat.
If you looked only at the path of Q1-Q3 and extrapolated a continued fall, your prediction would be for a lower compensation pool because of the lower expected price. Presumably, the better actual Q4 stock price indicates some kind of better returns in Q4, and so you’d expect higher compensation bonuses.
Some companies might see better Q4 earning than Q1-Q3, while others may have seen the opposite. Either way, by simply extrapolating based solely on Q1-3, the projected compensation numbers they end up with are more of a WAG than anything approaching a solid estimate.
My two cents. (So to speak)
Where’s GMAC stand in this list? They are the only one of these big banks that shows up…then disappears.
@PeasantParty: I failed to leave links. Here is at least one and it should be enough to back up what I say above.
http://projects.propublica.org/bailout/list/index
@Bob Schacht: As of yesterday, I informed BoA that it was either going to have to find a way to begin working with me to restructure some debt so that I have some room to breathe, or I am going to leave it with both the debt and my underwater house. The woman I spoke with was a little aghast, but I explained I really don’t care about homeownership any longer.
I keep getting requests from BoA to do their customer surveys and refuse to do so. The people I usually talk to at BoA are generally friendly and helpful, and sometimes sympathetic, but something tells me these surveys are used to proclaim itself as the most consumer-friendly bank, or something similar.
It is time for BoA to go away…
@Sojourner:
I’ve heard similar stories from other customers. Customer surveys don’t fix the underlying (structural) problems. They just put paint and wallpaper over them. Which, come to think of it, is about how banks handle foreclosed property.