NEW YORK (AP) -- Goldman Sachs Group Inc. CEO Lloyd Blankfein and six other top executives at the bank will not be receiving cash or stock bonuses for 2008, a spokesman said Sunday.
The decision was made by the seven executives themselves, said spokesman Lucas Van Praag, and approved Sunday by the Wall Street firm's compensation committee. The executives made the decision "because they think it's the right thing to do," Van Praag said.
The seven executives include Blankfein; Presidents and Co-Chief Operating Officers Jon Winkelried and Gary Cohn; Vice Chairmen John Weinberg, J. Michael Evans and Michael Sherwood; and Chief Financial Officer David Viniar.
They will receive no cash bonuses, no stock, and no options for 2008 - just their salaries, the spokesman said. Companies typically release compensation figures for top executives in the spring as part of their annual proxy statements.
Last year, Blankfein received total compensation of $54.0 million, according to calculations by The Associated Press - making him the 6th highest paid CEO at a Standard & Poor's 500 company in 2007. His salary that year was $600,000.
Goldman Sachs (GS, Fortune 500), like other financial institutions, has been struggling this year with the soaring mortgage defaults and the seize-up of the credit markets. Goldman and Morgan Stanley were the only major U.S. investment banks left standing after the buyout of Bear Stearns Cos. by JPMorgan Chase & Co. (JPM, Fortune 500), the bankruptcy of Lehman Brothers Holdings Inc. and Merrill Lynch & Co.'s sale to Bank of America Corp. (BAC, Fortune 500)
Shortly after Lehman's collapse, Goldman and Morgan Stanley (MS, Fortune 500) became bank holding companies - a move that subjects them to more oversight from the Federal Reserve, but that also gives them permanent and wider access to the central bank's lending programs.
Goldman's shares closed Friday at $66.73, down $3.26, and are down 69% since the start of the year. The firm is in the midst of cutting about 3,200 employees, or about 10%, of its staff worldwide.
Prime Minister Taro Aso told global leaders the U.S. dollar needs to remain the world's reserve currency, in contrast to suggestions by French President Nicolas Sarkozy that there are alternatives.
News photo
Last go-around: U.S. President George W. Bush sits together with Prime Minister Taro Aso during a news conference after the financial summit in Washington on Saturday. KYODO PHOTO
"We said we need to support the dollar-centered currency system," Aso said at a news conference in Washington after the Group of 20 meeting.
Sarkozy, who argues that the international financial turmoil calls for restructuring global systems, told reporters Saturday that "you can't talk world governance without talking currencies. The euro doesn't exist? The yuan doesn't exist?" He spoke after leaders agreed to work together to stabilize financial markets and boost global growth.
Aso also said Japan pledged to provide as much as $100 billion from its foreign-exchange reserves to the International Monetary Fund for emergency loans to developing countries. Similar donations from other countries with large currency reserves such as China and those in the Middle East would be welcome, he said.
"Just because no one else pledged any money at this meeting doesn't mean they won't go home and talk about it," Aso said. Japan on Friday pledged $2 billion to a World Bank fund intended to help recapitalize struggling banks in developing countries.
Japan's $955 billion in foreign-exchange reserves are second only to the $1.9 trillion held by China.
This... is complex. I don't fully understand it myself, so I don't really have an opinion one way or the other. All I know is that the concept of world currencies is debated by economists; some think there can be only one, some think that the world economy can have multiple (next up would be the Euro, then after that either the yen or pound).
I know there's a conspiracy theory called "petrodollar warfare", and it says that the US government has some secret agenda to maintain strong dollar values for the sake of keeping oil and energy resources cheap. This is supposedly one of the main reasons behind the Iraq war. Whether other governments, like France, believes that I don't know. Maybe it's possible, our government sucks sometimes.
I really don't understand the difference. The value of any single currency, even gold, is relative to the value of all other currencies, isn't it? The only issue is if they make an effort to maintain the relative high value of the USD because so many international corporations and banks use it. I don't even know which is the most popular. I imagine you'd want to maintain the integrity of the most popular currency, not even the current strongest, right?
Hmm.... I really don't know, I've only seen information about this in passing before. I'm really curious, so I'll have to look it up. I'll get back to you later.
(CNN) -- Some lawmakers lashed out at the CEOs of the Big Three auto companies Wednesday for flying private jets to Washington to request taxpayer bailout money.
"There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses," Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee.
"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."
He added, "couldn't you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it."
Rep. Brad Sherman, D-California, asked the three CEOs to "raise their hand if they flew here commercial. Let the record show, no hands went up. Second, I'm going to ask you to raise your hand if you are planning to sell your jet in place now and fly back commercial. Let the record show, no hands went up."
The executives -- Alan Mulally of Ford, Robert Nardelli of Chrysler and Richard Wagoner of GM -- did not specifically respond to those remarks. In their testimony, they said they are streamlining business operations in general.
When contacted by CNN, the three auto companies defended the CEOs' travel as standard procedure.
Like many other major corporations, all three have policies requiring their CEOs to travel in private jets for safety reasons.
"Making a big to-do about this when issues vital to the jobs of millions of Americans are being discussed in Washington is diverting attention away from a critical debate that will determine the future health of the auto industry and the American economy," GM spokesman Tom Wilkinson said in a statement.
Chrysler spokeswoman Lori McTavish said in a statement, "while always being mindful of company costs, all business travel requires the highest standard of safety for all employees."
Ford spokeswoman Kelli Felker pointed to the company's travel policy and did not provide a statement elaborating.
But those statements did little to mollify the critics.
"If it is simply the company's money at stake, then only the shareholders can be upset or feel as it it might be excessive," said Thomas Schatz, president of the watchdog group Citizens Against Government Waste.
But in this case, he said, "it's outrageous."
"They're coming to Washington to beg the taxpayers to help them. It's unseemly to be running around on a $20,000 flight versus a $500 round trip," Schatz added.
The companies did not disclose how much the flights cost.
Analysts contacted by CNN noted that the prices vary with the size of the plane and the crew, and whether the aircraft is leased or owned by the company.
Analyst Richard Aboulafia of the Teal Group said that $20,000 is a legitimate ballpark figure for a round trip corporate jet flight between Detroit, Michigan, and Washington.
When asked whether they plan to change their travel policies as part of the restructuring needed to shore up their finances, none of the companies answered directly. But they said they have cut back on travel in general as revenues have fallen.
NEW YORK (Fortune) -- The latest round of government help for Citi buys the troubled bank some time. But the financial sector will need much stronger medicine before a recovery can get under way.
The feds agreed Sunday night to guarantee $306 billion worth of troubled assets for the troubled New York bank. The Treasury also poured $20 billion into Citi via a purchase of preferred stock, adding to the $25 billion stake the government took in October via the Troubled Asset Recovery Program.
The capital infusion and asset guarantees reduce the threat of a sudden collapse at Citi (C, Fortune 500), the biggest U.S. bank by assets with more than $2 trillion on its balance sheet. The moves also help the rest of the banks by showing that the government won't permit another disorderly failure along the lines of September's collapse of broker-dealer Lehman Brothers, which set off a flight from risky assets that continues to this day.
Still, the fact that Citi needed a new lifebuoy from the government less than a month after getting an infusion via the TARP capital purchase program shows how the entire financial system is laboring under an unmanageable debt load. The problem, analysts say, calls out for much larger infusions of taxpayer funds, in the name of stabilizing the financial system - as well as restructurings that give officials time to completely fix problems at troubled institutions.
"'Over-levered' is the purest description of the U.S. financial system today," Friedman Billings Ramsey analyst Paul Miller wrote in a report last week. "At eight of the largest financial institutions, tangible equity equals 3.4% of assets, which implies 29x leverage. If this wasn't bad enough, we expect that current tangible common equity will be essentially wiped out by losses from existing loan and security books."
Indeed, with house prices falling after a decade-long run-up and unemployment last month hitting a 14-year high, U.S. banks face increasing loan losses on mortgages, commercial real estate and credit cards. FBR's Miller writes that the eight biggest U.S. firms - Citi, Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500), Wells Fargo (WFC, Fortune 500), AIG (AIG, Fortune 500) and General Electric's (GE, Fortune 500) financial services arm - need at least $1 trillion in new capital to weather the coming recession without the prospect of an institutional failure.
He says the most likely scenario is that these eight giants will face losses of around $400 billion over the life of their existing loan portfolios - but cautions that those losses could reach almost $600 billion.
"If our models are too conservative with respect to losses," he writes, "more capital will be needed going forward."
Investors have become accustomed to banks' voracious need for capital at a time of global deleveraging. Firms around the globe have raised hundreds of billions of dollars in new capital over the past year. But the deepening problems at one of the biggest capital-raisers - Citi, which has brought in $50 billion from private investors in addition to the funds it has gotten from the government - suggest that merely raising more money isn't going to be enough to see many firms through the worst of the downturn.
"We estimate C's risky assets to be roughly $120 billion," Oppenheimer analyst Meredith Whitney writes Monday, "but the company has almost $600 billion in consumer and card loans. We are unclear exactly which assets were targeted in the $306 billion."
Even with more capital in hand, the banks' problems aren't just going to go away. Indeed, the KBW Bank stock index was down 37% this month heading into Monday, in a vicious selloff that started after Treasury Secretary Henry Paulson distributed the first round of TARP checks to the biggest banking companies.
One reason is that the piecemeal approach to government support - $25 billion here, $20 billion there - isn't going to persuade investors to pour new money into an institution such as Citi with a balance sheet measuring in the trillions, says Mark Sunshine, president of middle market lender First Capital. He says that for truly troubled institutions such as Citi, with risky assets running into the tens of billions of dollars in a souring economy, the only answer is full government nationalization.
Once the government takes a bank over and wipes out its shareholders, he says, officials can wrap bad assets into a so-called bad bank to be run off over a period of years, then repackage the good bank and sell it off to private investors. He rejects halfway measures such as loan guarantee programs and partial nationalizations such as the feds tried with AIG, Fannie Mae and Freddie Mac.
Until there's clarity as to which banks are truly solvent and which are subject to a government takeover, Sunshine says, Treasury Secretary Henry Paulson's hope of attracting private capital back into the finance sector will remain a pipe dream.
"The fastest way to attract capital is to seize the troubled banks," says Sunshine. "You've got to serially take over every one of them."
That said, Sunshine doesn't believe many of the biggest institutions would need to be nationalized. He says big banks other than Citi appear to be much less apt to be overwhelmed by souring loans, and believes the cost of dealing with the troubled banks could run much lower than the $1 trillion price tag projected by FBR's Miller.
The problems in the banking sector are made that much more pressing, Sunshine adds, by the fear of deflation now looming over the market in the wake of last week's rare decline in the consumer price index.
Sunshine says that unless the government stops the deflationary worries through aggressive monetary policy and heavy fiscal stimulus, the banking problems will only get worse. Government officials fear deflation because it increases the value of cash, which encourages hoarding that reduces economic activity, increasing the debt burden felt by firms and individuals.
"Having deflation is like pouring hydrochloric acid over your loan portfolio," he says.
WASHINGTON — The nation's budget deficit will soar to an unprecedented $1.2 trillion this year, congressional budget analysts said Wednesday, a startling tide of red ink that could dampen enthusiasm on Capitol Hill for some of President-elect Barack Obama's most ambitious priorities.
In the first official estimate of the damage done to the nation's finances by a weakening economy and various financial sector bailouts, the Congressional Budget Office reported that the gap between government spending and revenue will exceed 8 percent of the overall economy by the end of September, a yawning chasm not seen since the end of World War II.
'Jaw-dropping'
The news drew a grim reaction from Congress, where the chairman of the Senate Budget Committee, Sen. Kent Conrad, D-N.D., called the figure "jaw-dropping." While lawmakers said they expect to dig this year's hole even deeper by approving a massive stimulus package aimed at pulling the nation out of recession, Conrad and his House counterpart, Rep. John M. Spratt Jr., D-S.C., said they have warned Obama to limit the package to temporary measures that will not add to the deficit in future years.
The two Democratic budget leaders also cautioned Obama to find ways to pay for any other initiatives he pursues after taking office later this month, including expensive promises to expand access to health care for the uninsured, develop new sources of alternative energy and offer a bevy of new tax cuts to middle-class families.
"We should be very skeptical about any policy changes that add to the deficit and the debt that are permanent in nature," Conrad said told reporters.
Obama once again declined to say how he plans to eliminate the growing budget gap, which is projected to narrow somewhat as the economy improves but explode again as the retiring baby boom generation sends the cost of the entitlement programs — Social Security, Medicaid and Medicare — skyrocketing. Obama said he will offer "very specific outlines" for addressing short- and long-term deficits when he submits his first budget proposal to Congress next month.
"We expect that discussion around entitlements will be a part, a central part, of those plans," Obama said.
So far, however, Conrad said Obama's team has been cool to requests to establish a bipartisan task force that would re-examine the entitlement programs, as well as the nation's tax system.
Meanwhile, Spratt said Obama's team is pressing for a new tax cut for working families in the stimulus package that would be made permanent in Obama's first budget.
Spratt said he got "sticker shock" when he opened Wednesday's CBO report.
9% jobless rate predicted
The picture it paints is bleak: The CBO predicts that the recession that began in December 2007 will extend well into this year, driving unemployment to more than 9 percent by early 2010. (That rate is currently 6.7 percent.) Plummeting home prices, which touched off the panic in financial markets last year, are likely to fall another 14 percent by 2010 and foreclosure rates are likely to remain high. As a result, federal tax collections are expected to drop by $166 billion this year.
Government spending, meanwhile, is expected to skyrocket to nearly 25 percent of the economy. Two of the biggest expenses will be the estimated $240 billion to incorporate mortgage-finance giants Fannie Mae and Freddie Mac into the federal budget and the rescue of troubled financial institutions, expected to cost $700 billion.
The CBO estimates that most of the money will be recovered when those assets of the latter are sold and so is charging only $180 billion against the deficit.
No Congress denied it, and I'm pretty sure Bush didn't approve it either.
Toyota makes more cars in the US than GM anyway, so Toyota technically creates more American jobs. They're better for our economy on many levels. Shame on the American car companies, calling themselves the true American companies while outsourcing the majority of their labor to out of country locations. Additionally, they've got about 50,000 people in unions that don't work but are still payed their wages because of an agreement based on factory shutdowns. These people are suppossed to lookk for a new job but have no obligation because they earn full wage in their union.
:tmyk:
America wastes to much money like a few days ago president bush and laura bush bought a china dinnerplate set for 425 thousand dollars how stupid is that
I'm not boned up entirely on Presidential entitlements, but I think a purchase like that would most likely have to come out of their own pockets. Can anybody confirm/deny this?
I remember one time some environmentalist called out Arnold Schwarzenegger for owning like fifty SUVs, without stopping to realize that he can only actually be driving one at a time and therefore wasn't hurting the environment any more than anyone else.
Comments
or people with logic for that matter.
I just saw this and immediately thought about this thread. I think I agree with him completely.
Just like 80% of YouTube's video blogs...
No bonus for Goldman Sachs' CEO
I know there's a conspiracy theory called "petrodollar warfare", and it says that the US government has some secret agenda to maintain strong dollar values for the sake of keeping oil and energy resources cheap. This is supposedly one of the main reasons behind the Iraq war. Whether other governments, like France, believes that I don't know. Maybe it's possible, our government sucks sometimes.
Why the banks need stronger medicine
Congress gets 'sticker shock' at $1,200,000,000,000 deficit
Toyota makes more cars in the US than GM anyway, so Toyota technically creates more American jobs. They're better for our economy on many levels. Shame on the American car companies, calling themselves the true American companies while outsourcing the majority of their labor to out of country locations. Additionally, they've got about 50,000 people in unions that don't work but are still payed their wages because of an agreement based on factory shutdowns. These people are suppossed to lookk for a new job but have no obligation because they earn full wage in their union.
:tmyk:
Logan's Run?
And don't you dare suggest donating it to charity!