Analytical Wealth

Former AIG CEO Hank Greenberg suing his former company for "misleading investors" as a result of a $2 billion loss from AIG stock, has to be the most ridiculous thing I've come across in some time. How in the world can a sane person think that they have standing to sue someone for a problem that they created themselves? It's the functional equivalent of someone setting a fire bomb in a building on a 4-yr timer, and then coming back after the building has burned to the ground and blaming the fire inspector for not discovering it.

I wonder how Hank was even able to file the lawsuit with a straight face.

Hank may have left the company four years ago, but by the time of his departure in March of 2005 the die had already been cast with respect to the company's future. The division most responsible for destroying the company had already been in existence for eighteen years, and had been selling "free money CDS contracts" for seven. Furthermore 2005 marks the near peak of activity for the other division responsible for destroying AIG, the "AIG investments unit" that bought billions of dollars worth of subprime mortgage bonds for its securities lending business.

Now perhaps Hank has an argument in terms of the company's disclosures to investors, but when you're responsible for creating the problem you don't have any standing to call yourself a victim when things don't go right. Not to mention the fact that the situation makes Hank seem rather delusional because he's more or less claiming that there was nothing wrong with the way AIG did business, and that his successor merely mismanaged things.

No matter how you look at the whole thing is beyond ridiculous.

You can read more on the lawsuit here.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.

Posted by M at 04:04 PM | Permalink | Comments (0) | TrackBacks (0)

After reading about the cash that AIG is forking over in "retention pay" it occurs to me that I'm working with the wrong people, because when faced with a similar situation in the past (within a very profitable business unit no less), the response from management was: "Buy them Pizza".

Back Story:

I started a job at a good sized consulting firm and was soon put in charge of their largest IT services business, which had operations/client engagements all over the world. The primary reason for putting me in charge of that business is because I have a reputation as a fixer, someone who can go into a struggling business, and identify both problem areas and viable solutions.

About six weeks in I had a meeting with the CEO and COO to discuss (amongst other things) retention problems within one of the service delivery engagements in the U.S., things had gotten to a point where the higher-level managers were spending (at least) 1/3 of their time either mitigating problems caused by turnover or recruiting, interviewing, etc. Based on my research the source of the problem is that we were paying below market pay with arguably the worse benefits package around, high-level managers could go work for a competitor in an entry level role and out-earn their boss if not their boss' boss.

When faced with the prospect of a $20-$30k raise even the happiest employee will probably take the better offer even if it means a temporary demotion, because once they return to their prior level position wise they're going to be getting paid even more.

Anyway, I had my spiel and detailed calculations around the cost of finding new employees, the impact on morale, our credibility with the client, quality of service, etc, etc, how it would actually be more profitable in the long-run if we invested in our people more, etc, etc.

The CEO and the COO didn't dispute any of my findings (for the most part) and offered the following solution(s):

"You should buy them Pizza"

"You need to impress upon them that this is a great company this is to work for"

The best way to say is that I was effectively being told that I needed to convince my people to work against their own self-interest (salary, benefits, career path), so they could that of myself and the executives above me (our bonuses were based on the margins of our business units, our subsidiary overall, etc). Or better yet sell them on the Filet Mignon sizzle of working for the company, but give them Hamburgers from McDonalds

Being someone who likes to invest for the long-term it goes without saying that I wound up not seeing eye to eye with the CEO and COO, and while I didn't especially respect them or their management style I have to admit that it appears they wouldn't be spending $450 million on retention pay if they were running AIG.

On the other hand that company is turning into an archetypal case study in what happens when companies ignore the medium to long-term in favor of short-term gains, as things have gotten markedly worse since my tenure and the company in question is sticking to its original playbook.

Come to think of it: it was that same type of thinking lead to AIG's downfall as well.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.

Posted by M at 11:39 PM | Permalink | Comments (0) | TrackBacks (0)

Here are some additional items related to John Thain's veritable execution:

First , some humor:

Second, a quick John Thain mix tape:

Some analysis on John Thain's tenure and firing from the FT

Similar analysis as the above from the WSJ.

John Thain's farewell memo to his employees, where he claims that BOA knew everything(WSJ).

John Thain defends his tenure at Merrill Lynch (WSJ).

An interactive graphic from the WSJ looking at the stock performance of BOA and MER starting from July of '07.

Needless to say B-schools have their newest case study on ill-conceived mergers as this is shaping up to be the worse merger of all time by a rather significant margin, and somewhere Time-Warner, HP and Daimler Chrysler executives are all thinking: "thank god, maybe people will stop talking about us when they bring up the worst mergers of all time".

The sad part is that the Countrywide buyout could turn out to be another big mistake on the part of Ken Lewis and company, because when all is said and done they may very well have paid billions for money losing CFC's branch offices and not much else, once you factor in the debt, bad loans, etc.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.

Posted by M at 09:06 AM | Permalink | Comments (0) | TrackBacks (0)

Courtesy of the WSJ's deal Journal, here is a quick look at some of the key events, quotes and actions from John Thain's tenure as CEO of Merrill Lynch:

(From the WSJ): "

Organizational Behavior

February 2008: Bloomberg reported Thain saying , “‘I want to refocus on the company as a whole rather than on individual businesses,’ Thain said, sitting in a conference room on the 33rd floor of Merrill’s World Financial Center headquarters in lower Manhattan. ‘There was too much of a siloed structure here.’”

June 10, 2008: Thain played favorites, saying , “Merrill has a very good culture that is the strongest inside the wealth management organization.”

February 2008: “I grew up in a relatively small town in the Midwest, and I am a very straightforward kind of person,” the Illinois native told Bloomberg . “I would like to hear what you think we should be doing.”

January 20, 2009: The Journal’s Susanne Craig and Dan Fitzpatrick wrote , “On Monday a person familiar with how Bank of America obtained its information about the deal said senior executives there didn’t learn of the losses from Mr. Thain, but rather from the Merrill transition team…Some former Merrill board members and executives now are questioning why Mr. Thain didn’t inform them in December that the losses had become so outsize and that the deal might be in jeopardy…A person familiar with the matter says that Mr. Thain, 53 years old, kept whatever information he had close to the vest because he was worried that developments might leak to the media and blow up the deal, struck in mid-September.”

February 2008: “I don’t think it’s an accident that the firms that seem to have avoided these problems the best have CEOs who get very actively involved in the business,” Thain told Bloomberg. “You look at Goldman and you look at Lehman.”

January 20, 2009: “Senior executives at Bank of America sensed that Mr. Thain didn’t appear to be fully engaged in issues surrounding the deal just when the scope of Merrill’s losses was becoming apparent. In mid-December, Mr. Thain left on a vacation to Vail, Colo., and was pretty much out of touch after that, says this person,” the Journal wrote .

Capital Raising

January 17, 2008: Thain: “We were very comfortable with our liquidity position, both at the end of the year and going forward.” — Fourth quarter 2007 earnings call interview with France’s Le Figaro newspaper

March 16, 2008: Thain said, “We have more capital than we need, so we can say to the market that we don’t need more injections. We can confirm that we have tackled the problem.” –to Spain’s El Pais newspaper

April 17, 2008: Thain archly told analysts, “For those of you who like to blog, we do not have any plans to raise any additional common equity and [chief financial officer Nelson Chai] actually agrees with that .”

July 17, 2008 : “Right now we believe that we are in a very comfortable spot in terms of our capital,” Thain said on the firm’s second quarter earnings call.

July 29, 2008: “Merrill Lynch will be selling $8.5 billion worth of stock to raise fresh capital. Temasek Holdings, a Singapore sovereign wealth fund that is already Merrill Lynch’s largest shareholder, will purchase $3.4 billion of common stock in the offering,” this article said .

January 15, 2009: “The first round of TARP didn’t give (Bank of America) the ability to build tangible equity, as well as fund Merrill Lynch, as well as handle loan losses and get rid of the problems on their balance sheets,” said Christopher Marinac, an analyst at FIG Partners in Atlanta, Ga . “The reality is that they need more common equity — TARP may not be enough.”

January 16, 2009: Lewis said , “As we saw the anticipated fourth-quarter losses accelerating, we did evaluate our rights under the merger agreement and during that time we spoke to and were in close coordination with officials from both the Treasury and the Federal Reserve.”

History Lessons

January 18, 2008: Thain opined that the main difference between Merrill Lynch and his old firm, Goldman Sachs, is “says Thain, 52, adopting a low, gruff Bronx accent to mimic his 68-year-old predecessor . He pauses for the laughter and applause to die down. ‘Well, I’m not a Goldman guy anymore,’ he says.’”

July 17, 2008: Thain bristles in response to an analyst comment on Merrill Lynch’s second-quarter earnings call after the firm’s startling $9 billion write-down . The analyst asked a question about the collateralized debt obligations “you guys,” at Merrill Lynch, created. “First of all, I take exception to the ‘you guys’ comment. I did not create these CDOs,” Thain retorted with annoyance .

February 2008: “When you’re the smartest guy in the room, which [Thain] typically is, you come at things from a different altitude,” CFO Nelson Chai told Bloomberg .

January 22, 2009: The Journal wrote , “When Mr. Lewis asked Mr. Thain what happened, the Bank of America CEO didn’t get a ‘good explanation for what was happening and why,’ this person said. Not only did Mr. Thain not appear concerned about the losses, but he ‘didn’t really have a good grasp of what was going on,’ this person added.

Risk Management

January 17, 2008: Thain said, “None of the trading businesses should be taking risks, either single positions or single trades that wipe out the entire year’s earnings of their own business, and of course certainly shouldn’t take a risk to wipe out earnings of the entire firm.” –Quoted in WSJ

February 2008: “The people who were here [at Merrill] — and who are not here anymore — did not do a very good job of managing risk,” Thain told Bloomberg .

June 10, 2008: “You can manage risk and manage it prudently. You can make good risk/reward tradeoffs,” Thain said at the Wall Street Journal’s Deals & Deal Makers Conference .

January 16, 2009: Bank of America CFO Joe Price told analysts, “[Of the $118 billion government backstop] 75% [will cover] Merrill Lynch legacy assets and about 25% of similar types of assets off the Bank of America platform.”

January 16, 2009: BofA CEO Ken Lewis attributed Merrill Lynch’s $15 billion loss in three months to “CDO-related exposure, auction-rate securities and legacy trading books, write-downs in leveraged finance, CMBS and private equity, additional support of the Columbia cash funds and a challenging trading environment that impacted our trading results.” Goldman Sachs analysts noted wryly, “To put [the] $15 bn after-tax [loss] in perspective, 60% of the common equity base of the company was lost in one quarter"

At the end of the day it appears that John Thain's tenure at Merrill Lynch was responsible for producing one thing: a lifetime's worth of damning quotes and actions that will undoubtedly follow Mr. Thain around for quite some time. The Lehman quote is probably the most damning of them all.

Still while Mr. Thain is the scapegoat for the BOA/Merrill Lynch debacle, let's not forget that Ken Lewis' behavior around the MER buyout falls into the same category as Mr. Thain's: being disconnected from the business and not having all of the necessary information in front of them to make effective decisions. 

While it's easy to toss out Mr. Thain like so much trash and blame him for the buyout's problems (as he's earned more than his fair share of blame), it still doesn't change the fact that BOA wouldn't be in this mess if they had performed the proper amount of due diligence, nor will it rid BOA of the problems they're going to have with Merrill Lynch on a go-forward basis.

I.e. if Ken Lewis and company had crossed their I's and dotted their Ts, they could've avoided this mess all together.

However I wonder if the real issue is that John Thain and other recently disgraced CEOs (not to mention CEOs that are still in place like Ken Lewis), are really suffering from the fact that they're operating within the context of/evaluating things based on various models and assumptions that have all been proven wrong over the last 2-3 years. It's hard to expect the quality of management to improve when management is using a lot of the same ideas that created the crisis in the first place.

You can read the original article in full here.   

Sources:

The WSJ: "John Thain, Then and Now" -- Heidi N. Moore, January 22, 2009.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.

Posted by M at 08:50 AM | Permalink | Comments (0) | TrackBacks (0)

It's rather disgusting/disturbing that the government is taking money from individuals who are struggling with their own debt problems, and using that money to back-stop the debts of two companies that were into the ground by CEOs who were given severance packages that exceed the annual income and/or net worth of 99% of the population.

As the nine people who read this blog are aware I'm rarely fond of populist arguments related to business and economics (because I often find them to be more knee-jerk than logical), however in this case certain recent events are too egregious to  chalk-up to mere knee-jerk populist sentiments.

Posted by M at 01:33 PM | Permalink | Comments (0) | TrackBacks (0)

Normally I find most arguments against a particular CEO's compensation to be knee-jerk  and populist as it seems to be more about a visceral reaction to the amount then the value delivered to shareholders, after all it's rare that someone expresses the compensation as a % of value delivered. This is not to say that some pay packages aren't ridiculous just noting where I think certain arguments come from; regardless it's up to the shareholders to police it not the government.

However in this case………...

By mismanaging their respective companies to the point of needing a taxpayer funded bailout Daniel Mudd and Richard Syron have effectively stolen from the American people, why these clowns weren't given anything more than a 20 day old moldy sandwich and a kick in the a** is beyond me. Instead of allowing their severance packages to be paid the government should be doing something to hold them accountable, not handing them (what is effectively tax payer money) as a reward for getting the sack.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice. The author doesn't advocate that incompetent CEOs be kicked in the a**, nor does he support the feeding of moldy food to individuals he deems unsavory and/or incompetent.

Posted by M at 03:18 PM | Permalink | Comments (0) | TrackBacks (0)

In something that is straight out of Dilbert...

I switched cable/Internet providers after my last move and was charged a fee when I took too long to return the DSL and Cable Modems, after returning the modems I patiently waited for my $300 refund ($150/each) to be credited to my credit card. After waiting a month I called and inquired as to what the problem was, they looked into it and said the refund had just been "held up" and would be processed immediately.

Weeks go by and no refund.

I kept meaning to call them and find out what the hold up was, but just due to my busy schedule (and being loathe to wait on hold for 30 minutes) I kept neglecting to take care of it.

Yesterday morning I finally get around to picking up the phone and calling my old cable company, once the agent pulled up my account he could see that I had a large credit balance that should've been refunded to my credit card. However he couldn't figure out why the refund hadn't been processed yet, so he had to do some digging.

The culprit?

I had a past due balance of $3.00 that needed to be cleared up before I could get my refund, and they needed my express permission to either bill my credit card or subtract it from the credit balance.

?

You have my credit card on file for automatic billing so why didn't you just bill my credit card for the $3.63?

Why were you able to bill my account for the hardware that wasn't returned, but not for the past due amount for cable and internet service? Why wasn't that amount charged to my account as part of the account closing process, especially when I had to get a sweet talk a supervisor into not charging me for an extra month because I didn't give them enough notice prior to canceling my service? Especially when you initially charged me for the next month after I canceled my service, and then refunded that amount after I called in and complained?

Finally why wasn't this explained to me when I returned the modems, or the other times I called about this issue?

Needless to say the agent didn't have much of an answer for my questions, other than to mumble something about company policies.

Like I said this was something straight out of Dilbert…..

Perhaps the most irritating thing of all is that I'm 100% positive that somewhere at this company there is a manager that will swear up and down that the business processes I'm mocking are perfectly logical.

Posted by M at 09:50 AM | Permalink | Comments (0) | TrackBacks (0)

As related in a FT Blog Post that I found to be quite humorous, management consultancy McKinsey and Co has recommended to Wall St. firms that a way for them to cut costs and avoid sacking people, would be to well, sack McKinsey:

(From the FT): As well as getting rid of staff, financial firms have put the squeeze on their travel and entertainment spending in response to deteriorating economic conditions.

Now McKinsey claims that some US investment banks could save up to $2bn a year by cutting costs in ways that are less likely to antagonize their remaining workers.

The consultant reckons that for some banks, spending on things like real estate, IT and office supplies grew too fast during the fat years and could now be pruned aggressively without sowing discord among the troops:

(From the McKinsey report): Initiatives to curb expenditures need not be extremely demoralizing to frontline employees… 80 percent of fixed costs have minimal or no impact on a bank’s employees or culture. Launching initiatives that target these areas, we estimate, could in many cases produce most of the non compensation savings that banks aim to achieve while reducing the possibility of targeting areas that could damage employee morale.

Hang on a minute. I’ve just noticed the fifth entry on McKinsey’s list of investment bank costs that could be cut with “minimal or no impact on employees/culture”. The entry says “consulting”.

Let me try to get my head around that. Is McKinsey - a consultant - seriously recommending that investment banks consider ways of cutting their spending on consultants?

It looks that way to me. A McKinsey spokeswoman declined to comment.

It's actually not as strange as it sounds because it's often said that a good consultant will always work him/herself out of a job, and I've made recommendations that led to my being let go early. Still I find it hilarious that McKinsey's report specifically states that removing consults would have no impact on an I-Bank's employees or culture, it sounds like something out of Dilbert where a management consultant states that they serve no real purpose.

Of course, we all know that this just isn't true - Corporate America would grind to a halt without consultants around to "drive high value paradigm shifts in the enterprise's strategic approach to enabling innovative thinking, growing market share and stimulating profit growth".

Mind you I say all of this in jest, because I always provide value in ways that doesn't  involve stringing together buzzword laden, semi obtuse sentences on the fly and creating pretty power point presentations.

You can read the original post here, some of the comments left by readers are rather hilarious.

Sources:

The Financial Times:   "McKinsey offers to take a bullet for Wall Street" --  Adam Jones, August 21, 2008.

Posted by M at 11:19 AM | Permalink | Comments (0) | TrackBacks (0)

Scott Adams is spot on as usual; one of my favorite Tech Boom era strips involves Dogbert starting a company, going public and then promptly liquidating his shares: "I'm selling my shares in my worthless tech company and investing the money in real companies that are actually profitable".

But really I get it now, Financial Executives pronouncing a quick return to normalcy, market bottoms, claiming they don't need to raise capital, etc, aren't liars, they're just optimists. It all makes sense now.

Posted by M at 09:16 AM | Permalink | Comments (0) | TrackBacks (0)

A must read  piece on Barry's Ritholtz's blog on the Merrill Lynch situation,  based on his recent conversation on the train with a CDO manager from MER.

Here is an image from the Bespoke Investment group depicting the comments of CEO John Thain on MER's financial situation:

Graphic courtesy of the Bespoke Investment Group

Is it me or is this guy approaching Angelo Mozilo territory?

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article.

Posted by M at 08:24 AM | Permalink | Comments (0) | TrackBacks (0)

So as I'm sure many of you know, Merrill Lynch announced that they're going to write down another $5.7 billion dollars, sell off its CDO investments for $0.22 on the dollar and raise $8.5 billion on new capital.

(From the NY Times):   "Only 10 days after stunning Wall Street with a huge quarterly loss, Merrill Lynch unexpectedly disclosed another multibillion-dollar write-down on Monday and sought to bolster its finances once again by selling new stock to the public and to an investment company controlled by Singapore.

Moving to purge itself of the tricky mortgage-linked investments that have brought the once-proud firm to its knees, Merrill said that it had sold almost all of the troublesome investments, once valued at nearly $31 billion, at a fire-sale price of 22 cents on the dollar.

As a result, Merrill expects to record a write-down of $5.7 billion for the third quarter. Such an outcome could push Merrill into the red for a fifth consecutive quarter if revenue remains weak and would bring its charges since the credit crisis erupted last summer to more than $45 billion…

...To shore up its finances, Merrill said it would raise $8.5 billion in new capital from common shareholders, including $3.4 billion from the investment arm of the Singapore government, Temasek Holdings, which, with an 8.85 percent stake as of June 30, is already Merrill’s largest shareholder. Those shares and a conversion of preferred securities into common stock will dilute the value of stock held by current shareholders by about 40 percent."

Call me crazy but this is all information that should've been revealed when they reported quarterly earnings if not sooner, it doesn't take a "master of the financial universe" to know that the company has  known of the need to raise capital, dump the CDOs, et al, for weeks now. I'm not so much irritated with the nature of the announcement as I am with the timing of it, as it speaks to a lack of transparency and candor with investors. I wouldn't want to invest in a healthy company that behaves in this fashion, let alone a struggling one like Merrill Lynch.

I'm becoming increasing disgusted with banking executives who are fully aware of the sorry state of their companies yet continue to lie to investors, at best they're clueless fools who were hoping that a miracle would come along to save them and at worse they're liars hoping to minimize the impact on the stock price by withholding key information. I also find it ironic that many financial firms are blaming short-sellers for their stock prices, when they themselves are arguably engaging in market manipulation via the way they mislead investors.

Investors looking to call a bottom in financials and/or rush back into them hoping for a recovery need to take note of the Merrill Lynch situation, and realize that the lack of transparency makes investing in many financials right now tantamount to gambling. What else do you call it when a company announces a move that will dilute the value of investor's shares by 40% 10 days after their quarterly earnings report was issued?

You can read the NY Times coverage in full here.

Sources:

The NY Times: "Write-Down is Planned at Merrill" -- Louise Story, July 29, 2008.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article.

Posted by M at 08:12 AM | Permalink | Comments (0) | TrackBacks (0)

As if we didn't already have enough financial chicanery in the banking world, there comes this story from the Financial Times around how an accounting rule allows banks to record negative sentiment against them as a paper gain.

(From the Financial Times) "Banks are set to cushion the blow of more credit-related losses by using an accounting rule that enables them to record exceptional gains when their financial health deteriorates. The method, which has allowed US and European banks to add more than $8bn in paper profits, faces increasing opposition from investors, analysts and credit rating agencies.

Under the rule, introduced in February 2007 after lobbying from banks, financial companies are allowed to use “mark to market” accounting on their own debt. As a result, if the price of their bonds and notes falls, banks can record a gain equal to the difference between the original value of the debt and its market price.

In past months, the rule has helped banks including Lehman Brothers , Citigroup , Goldman Sachs , Morgan Stanley and Merrill Lynch to boost profits.

Analysts forecast that Merrill and Citi, which report second-quarter results next week, will offset part of their expected multibillion-dollar writedowns with these gains. The impact of the accounting rule could be muted by a brief rally in debt markets in April.

Critics, such as David Einhorn, the hedge fund manager who has been shorting Lehman shares, say the rule lets banks record accounting gains when sentiment towards the companies worsens.

Mark LaMonte, a senior vice-president at Moody’s, said the credit rating agency had advised investors to strip out these gains from their analyses. “We are not big fans of the fair-value option when it is applied to a company’s own debt because the results are very counterproductive. It creates very poor quality earnings."

In other words: the poster children for more greater transparency so investors can make more informed decisions, are going to use an oft  hidden (if not spurious) accounting trick to offset the losses from their often byzantine mortgage investment activities. The problem is even worse when you consider that the banks are desperate for cash and are inflating the appearance of their financial health with paper gains;  I.e. record all the paper gains you want, it's still not going to solve your cash and capitalization problems , or improve your intrinsic financial health.  

I don't know about you but this doesn't exactly encourage me to put my money into financial stocks right now, sure there are definitely going to be some winners out there but it's hard to know what exactly you're investing in. Especially when it seems like certain companies are telling you everything is fine one day, and desperately raising cash the next.

You can read the entire Financial Times article in full here

Sources:

The Financial Times: "Banks find way to cushion losses" -- Francesco Guerrera and Ben White, July 8, 2008.

Posted by M at 02:42 PM | Permalink | Comments (0) | TrackBacks (0)

The Quagmire that is the SocGen trading scandal seems to get deeper every day, as it now appears that the bank didn’t notice a €1.4 billion gain rogue trader Jerome Kerviel had booked by the end of ’07. This scandal is getting more and more absurd every day, their risk management controls (which they claim worked just fine) didn’t notice a massive fraud AND management didn’t notice when the “rogue” generated a gain of €1.4 billion?! Is anyone watching the traders at this company? Are there are other frauds going on that they haven’t noticed, do the doors of their HQ even have locks?

Continue reading "SocGen's Traders are Managed by Souris Aveugles; SocGen doesn't notice 1.4 Billion Euro Gain" »

Posted by M at 03:12 AM | Permalink | Comments (0) | TrackBacks (0)

A recent article in the NY Times discusses how recently deposed Sr. Executives responsible for billions in losses at Citigroup and Merrill Lynch  are having no problems finding new jobs, raising money for Hedge Funds, etc. In fact, its part of a long-time pattern where Wall St. executives who have caused their employers to lose billions have no problems finding new positions, as their stature protects them from disgrace.

(From the NY Times) ““It is always an assumption on Wall Street that it is not the individuals that lose money; it’s the system,” said Charles R. Geisst, a Wall Street historian and a finance professor at Manhattan College. “You can fail big time, but you can also succeed big time. “It is always an assumption on Wall Street that it is not the individuals that lose money; it’s the system,” said Charles R. Geisst, a Wall Street historian and a finance professor at Manhattan College. “You can fail big time, but you can also succeed big time.”

Continue reading "Being a Sr. Executive Means it’s never Your Fault" »

Posted by M at 06:34 AM | Permalink | Comments (0) | TrackBacks (0)

Sadly this isn’t that far off from how many boards appear to operate, not to mention key executives as far as having their underlings do a lot of their work for them. In the past I’ve had consulting engagements where my duties involved creating power point decks, reports and even e-mails for my client to present/deliver to the executives above them. I’d create the “communication piece” and then coach him/her on how to deliver it to their superiors, prepare a cheap sheet with answers to questions, etc.

IF the whole thing sounds farcical in nature, than you would be 100% correct, especially if you knew how much some of those engagements pay!

Disclosure: Any similarities to any of my clients past or present is completely coincidental and is not intended to insult, disparage or bite the hand that feeds me. In fact, let’s just call this entire post a satirical work of fiction and/or label ourselves exceptions shall we?

Posted by M at 05:14 PM | Permalink | Comments (0) | TrackBacks (0)