Tag Archives: Wall Street Greed

Deaf, dumb, blind and stupid

Wall Street readies 7 and 8 figure bonuses. Average Goldman employee to get $595,000. They take taxpayer money to stay in business after their own recklessness exposed them to ruin, they get 100% back on their bad bets, including AIG bets, then rake in billions using taxpayer-provided free money and congratulate themselves on their genius and throw themselves a party at our expense. I m not a populist and I am a supporter of the free market and capitalism but I’m pissed as hell – imagine the reaction of those who don’t share my enthusiasm for the present system. Eighteen months ago I thought we should let these bastards crumble and see whether something better took their place. I am convinced now that I was right.

Even some industry veterans warn that such paydays could further tarnish the financial industry’s sullied reputation. John S. Reed, a founder of Citigroup, said Wall Street would not fully regain the public’s trust until banks scaled back bonuses for good — something that, to many, seems a distant prospect.

“There is nothing I’ve seen that gives me the slightest feeling that these people have learned anything from the crisis,” Mr. Reed said. “They just don’t get it. They are off in a different world.”

What really infuriates me is that these greedy, grasping morons are inviting a populist backlash that will wreck our economy and they’re just too arrogant to understand that or care.

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Maybe now Coldwell Banker Greenwich will get my point

Just about a year ago I was fired from the Greenwich Post after the manager of their biggest advertiser, Coldwell Banker Greenwich, threatened to pull their advertising if I wasn’t yanked. My publisher took about a nano-second to weigh whether he was in the journalism or advertising business and that was the end of my print run.

Which is water over the dam. This blog is far more successful, and far more fun, than the column, so no hard feelings. But I was fired for discussing the overwhelming debt loaded onto Coldwell Banker and its sisters, Century 21 and Sotheby’s, by the private equity firm of Appollo management. Apollo bought the parent company of the brokerage firms, Realogy, and smothered it in debt to pay its own investors. The point of my column was not to attack Coldwell Banker but rather to express dismay at how the new Wall Street was ruining good companies through its greed.

Today, a year later, the Wall Street Journal says the same thing. And the chickens are coming home to roost, to quote Obama’s preacher.

Wall Street might remember the private-equity boom for the billions in fees it collected along the way.

The rest of the country might remember it for a different kind of cleanup: job losses created, in part, by unsustainable debt loads hoisted on thousands of companies across the economy.

So far, the private-equity industry hasn’t come to terms with this inevitable bloodletting. That is largely because it has been spending the last two decades trying to reform its image from the 1980s, when buyout artists were branded unrepentant “flippers and strippers.”

The makeover can’t hide the basic facts: Otherwise-decent companies are being subsumed by debts that simply can’t be paid in this brutal recession. There is a certain irony that the Web site of the industry’s trade group, the Private Equity Council, highlights three investments — MGM Studios, Univision and Hilton Hotels — that are already struggling mightily.

There are more than reputations at stake. There are big portions of the economy, too. Private-equity research firm Pitchbook Data estimates 7.8 million people are employed by companies owned by private-equity firms.

“Things are bad, and because of the capital structure, it’s even more challenging,” says Pitchbook’s John Gabbert. Private-equity owners are “going to do everything they can to make these companies lean to service that debt.”

Buyout bosses have for years said they had properly “stress-tested” their numbers, leaving room for a downturn. But they couldn’t anticipate a near depression.

Just look at Moody’s latest Bottom Rung list, which features the companies it views as most likely to default on debts. The buyout gang’s all there: Univision, Harrah’s Entertainment, Realogy Corp. and Jacuzzi Brands Corp. among others.

Gee, I sure hope Coldwell Banker doesn’t threaten to pull its advertising from the Wall Street Journal!

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Why so few tears are shed for redundant Wall Streeters

Take $10 billion from taxpayers like us, pay yourself $15 billion in bonuses for bankrupting Merrill Lynch. When your house sells for pennies on the dollar, you bonus baby you, remind me of your pain.

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No honor among thieves but some get TARP $

Citicorp and Morgan Stanley fed their clients into UBP, then FGG and hence into Madoff’s maw. Why? I can’t guess, but this guy has a point.

Bloomberg reports that Citigroup and Morgan Stanley had $1.8 billion of client cash invested in Union Bancaire Privee, which in turn invested with Fairfield Greenwich, which of course was all Madoff.

With the billions these two firms manage, we’re not surprised that some of it ended up with Madoff, but even if there were no Ponzi, there’s still a scandal here: Investors are paying three levels of management fees. Citi, UBP, and Fairfield, and if Madoff had been a real manager, he would’ve charged real fees too, so that’s four levels.

Again, even if the end investor is totally legitimate, the clients of Citi and Morgan Stanley are getting royally hosed when their money is filtered through so many levels.

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