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To: Mr Stander,
Originally posted by stander
You are an expert on computer trading, so I hope you can help. You know that I'm not a greedy guy, but the morning was really slow, so I pushed CTRL + ALT + PAUSE and things started to move
but in a wrong direction. Do you know what keys to press to put it back?
A lot of valid points in this article, but, shouldn't this logically occur to be the correct avenue for congressional "Witch Hunt" Committees' to explore...?
Commentary: Boards are real culprits in AIG mess
(CNN) -- The stories about the outrageous $160 million bonus payments at AIG have all omitted the most important names.
They are the members of AIG's Board of Directors Compensation Committee.
These people should have been on the hot seat before the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, alongside CEO Ed Liddy. Although there is a lot of blame to go around, ultimately the buck stops -- or, I should say, the bucks should have stopped -- with them.
Why haven't we learned that it is the boards who are responsible for the massive failures of strategy and risk management at these companies? Regulators, journalists, securities analysts and investors routinely ignore the most obvious indicators of investment risk that are presented by bad boards of directors.
This is particularly obvious in the case of AIG, which has been a serial offender in corporate governance, especially in executive compensation.
Those of us who remember former CEO Hank Greenberg's departure from AIG in 2005, after a corporate governance meltdown that included excessive compensation, appreciate the irony of his comment to ABC News that the retention bonuses were "mind-boggling." Mr. Kettle, Pot is on line 1.
Compensation committees are not responsible for individual pay packages below the CEO, but they are responsible for determining their overall structure -- and for making sure that the CEO's job includes effective management on compensation issues.
Retention of employees may be a legitimate goal of a compensation program, but it can be accomplished in a way that is both effective and credible by being tied to performance goals and by delaying vesting until after the bailout funds are returned to taxpayers.
The Corporate Library released a report in February about the boards of the bailout companies, many of which were outliers in their governance and compensation practices. Some of these were clear indicators of investment and liability risk. In several cases, we found individuals who not only sat on more than four corporate boards but also sat on more than one of these particularly troubled boards during this period.
Former White House Chief of Staff Erskine Bowles, for example, served on the boards of Morgan Stanley, General Motors and Wachovia -- and at various times was also a director at Merck, VF Corp., Krispy Kreme and Cousins Properties.
Several other directors from these troubled boards also sat on either five or six boards altogether. We call the phenomenon of directors who serve on four or more corporate boards "overboarding."
Overboarding can limit the time and attention a director has for each board. It can also be an indicator of -- or a contributor to -- so many relationships and connections that it makes it more difficult to provide the respectful skepticism necessary for independent oversight.
In all, 11 of the 27 companies we identified as "troubled" had at least one overboarded director. Six had more than one; at Merrill Lynch, there were five. By comparison, fewer than 30 percent of S&P 500 companies have even a single overboarded director, and fewer than 5 percent have more than one.
Another key finding from our analysis: Shareholders at these companies were well aware of the relative weakness of these boards and had expressed their dissatisfaction by withholding votes from many of these individuals the year before these companies collapsed.
At least 13 individual directors, all of whom sat on at least three corporate boards during this period, had received a 13 percent or higher negative vote.
The highest of these was a 38.58 percent negative vote received by Sir Winfried F.W. Bischoff at McGraw-Hill, where he sat on the compensation committee. Bischoff also served on the boards at Citigroup (as chairman and interim CEO), Eli Lilly and Prudential.
Although the businesses of these companies do not overlap enough to impair Bischoff's designation as an "independent" director or to create legal conflict of interest concerns, it is relevant that McGraw-Hill owns ratings agency Standard & Poor's, which not only rates the other companies for which he was a director but also issues ratings on which the other companies rely in their assessment of risk.
Because of the extensive involvement that financial services companies have in many different aspects of the business of large public corporations, directors of those companies in particular should be especially cautious about overlaps and conflicts.
Badly designed compensation is an indicator of poor corporate governance, and poor corporate governance is an indicator of investment risk. Instead of trying to tax the bonuses at AIG, the government and the shareholders should insist on new directors.
The company's Web site says the compensation committee has five members. The two longest serving ones are James F. Orr III, who joined the committee on May 17, 2006 and Virginia M. Rometty, who joined it on January 17, 2007, according to the company's 2007 proxy statement.
The committee's charter says its responsibility include making recommendations to the full board regarding AIG's compensation programs and reviewing and approving any hiring, severance or termination payments.
People say that the definition of insanity is doing the same thing over again and expecting a different result. In this case, insanity is allowing the same people to continue to serve on the board after massive failure and expecting them to produce a different result.
LONDON -- U.K. hedge fund manager Weavering Capital put its $639 million Weavering Macro Fixed Income fund into administration late Thursday after the discovery that the fund's main assets was a $637 million derivatives trade with an offshore company controlled by the fund's founder and chief executive, according to a report in the Financial Times
More at Links...
UPDATE 2-Mexico says Citi unit to help in crisis
ACAPULCO, Mexico, March 20 (Reuters) - Finance Minister Agustin Carstens said on Friday that Citigroup's Banamex unit is key to getting Mexico through the global financial crisis and sees only a brief U.S. government involvement at the bank.
Putting an end to speculation Citigroup (C.N) might be forced to sell its prized Banamex asset, the finance ministry said on Thursday that a law banning foreign governments from owning stakes in Mexican banks could be overlooked in exceptional times like the financial crisis.
"I spoke to the U.S. treasury secretary (Timothy Geithner) and he told me very clearly he has no intention of becoming a banker again. On the contrary, he wants to clean up those institutions and get rid of them," Carstens told reporters during a bank convention in Acapulco.
Mexico's government says it will ask Congress to change banking laws to set out exceptions to limits on foreign government ownership of local banks.
After an economic crisis in the 1990s, Citigroup, Spain's BBVA (BBVA.MC) and other big foreign players bought up most of Mexico's main banks.
Citi bought Banamex in 2001 for $12.5 billion, which was the biggest-ever acquisition at the time in Mexico.
"We have to recognize that foreign banks brought capital and resources to our financial system when it was devastated, and now they're part of the solution to our problem," Carstens said.
Bankers at the Acapulco conference welcomed the government's decision.
"As foreign investors, we want a peaceful country where the rules are kept to," said a senior bank executive who declined to be named.
Some opposition lawmakers had lobbied President Felipe Calderon to return Banamex to Mexican hands, saying foreigners were now too dominant in the banking system.
Mexico govt says US stake in Citi good for Banamex
More at Link...
Goldman says did nothing wrong taking AIG payments
NEW YORK (Reuters) - Goldman Sachs Group Inc did nothing wrong when it accepted payments to close out trades with American International Group, the giant insurer rescued by the U.S. government, Goldman's chief financial officer said on Friday.
CFO David Viniar, in a conference call, answered questions about Goldman's trading relationship with AIG, which was given $180 billion of taxpayer funds in the last four months of 2008 to save it from collapse.
The bailout sparked public outrage amid revelations that $90 billion of those funds were funneled quickly to banks that traded with AIG. Goldman received $12.9 billion in payments and collateral, while most AIG investors were wiped out and the mounting cost of the bailout sparked outrage.
Viniar told reporters the trades with AIG were "commercial contracts" and the insurer was obligated to make good.
"We don't think we did anything wrong," he said. "We had commercial terms. It is our responsibility to our shareholders to make sure that we are protecting ourselves."
More at Link...
White House considers reforms for nonbank fin firms
WASHINGTON, March 21 (Reuters) - Establishing a formal process for the U.S. government to unwind failing non-bank financial firms, like AIG, has moved to the top of the Obama administration's financial regulation reform agenda, sources familiar with discussions said late on Friday.
While Treasury Secretary Timothy Geithner is expected to unveil the bare outlines of that agenda next week, sources told Reuters that President Barack Obama has put "unwind authority" on a fast track and wants urgent legislation from Congress.
For now, that priority will sideline other initiatives, such as setting up a "systemic risk" regulator, taking steps to protect consumers and investors, and restructuring the U.S. financial oversight bureaucracy, the sources said.
The government's handling of the problems at Bear Stearns and the Lehman Brothers collapse in 2008, as well as the AIG affair, were severely complicated by the lack of a clear administrative procedure for dealing with such situations.
The Federal Deposit Insurance Corp has a long-established process for bringing failing banks under government control, but there is no such procedure for non-bank institutions.
FDIC Chairman Sheila Bair told a Senate committee on Thursday that her agency's process for dealing with troubled banks could also be applied to non-bank financial firms.
Layoffs spreading across sectors, bankrupt supermarket looted in north
The sight of people carrying off refrigerators, air conditioners, shelves and food from the market was another sign of the deepening economic crisis. Dozens of people from the town and neighboring Tuba-Zangaria were seen leaving the store with their hands full. By afternoon, the store had been stripped bare, including the doors and the office supplies.
Conn. official says AIG understated bonus pool
Employees of the company's financial-products unit were paid $218 million in retention bonuses rather than the $165 million reported last week, according to Blumenthal's office.
Iceland takes over country's top two savings banks
REYKJAVIK, March 21 (Reuters) - The Icelandic government said on Saturday its financial watchdog had taken over the country's top two savings banks, the latest part of the nation's banking sector to buckle under a weight of debt.
The government said discussions with creditors of both Reykjavik Savings Bank (SPRON) and Sparisjodabanki, formerly Icebank, had been unsuccessful and that their liquidity positions had continued to deteriorate, warranting such a move by the Financial Supervisory Authority (FSA).
"The Government of Iceland underlines that deposits in domestic commercial and saving banks and their branches in Iceland will be fully covered," the Ministry of Business Affairs said in the statement.
Eleven other savings banks would also receive liquidity support, it said.
The financial system and currency of the North Atlantic island nation were shattered five months ago when Iceland's main commercial banks collapsed in a matter of days.
Earlier this month the FSA took over Straumur Burdaras STRB.IC, the last major Icelandic bank left standing from the crisis in October.
Gudjon Gudmundsson, general manager of the Association of Icelandic Savings Banks, told state radio this week the government would probably become half owner of the country's 14 savings banks.
That would mean the number of savings banks, mostly small and scattered across the country, would fall from 14 to six or eight, he said.
SPRON had total assets of 267 billion Icelandic crowns (about $880 million) at the end of September 2008, including 212 billion crowns of loans listed as assets. Sparisjodabankinn had assets worth 289 billion crowns, with 105 billion crowns in loans and advances listed as assets at the end of June last year.