Time to call a play, readers:
"Bankers get around overhaul law by hedging stocks; Such moves key in debate over compensation" by Eric Dash, New York Times / February 6, 2011
NEW YORK — Intent on fixing a banking system that contributed heavily to the recent financial crisis, lawmakers and regulators pushed Wall Street to overhaul its pay practices. Big banks responded by shifting more compensation into stock, a move intended to align employees’ interests more closely with those of investors and discourage excessive risk-taking.
But it turns out that executives have a way to get around those best-laid plans.
REVERSE, REVERSE!!!
(I played some football in my day, readers)
Using complex investment transactions, they can limit the downside on their holdings, or even profit, as other shareholders are suffering.
The most vile vermin on the face of the planet.
More than a quarter of Goldman Sachs’ partners, a group of around 475 top executives, used these hedging strategies from July 2007 through November 2010, according to a New York Times analysis of regulatory filings. The arrangements were intended to protect their personal portfolios when the firm’s stock was highly volatile.
The SUPER BOWL CHAMPION STEALERS!!
One prominent Goldman investment banker avoided more than $7 million in losses over a four-month period.
While YOU were taking it on the CHIN, dear readers.
Where's the FLAG, huh?
Such transactions are at the center of a debate over whether Wall Street executives should be allowed to hedge their stock holdings. The concern with hedging is that executives can break the ties between compensation and company performance.
Think of it as betting both sides of the football game, readers -- and winning both sides.
Related: BANKERS GONE WILD
WALL STREET'S MORTGAGE-BACKED SECURITY FRAUD DESTROYED BOTH THE US AND EU ECONOMIES!
But hey, at least they SPONSOR the GAME!
Employees who hedge their holdings are less concerned about a falling share price. That’s why the government barred top executives at banks that received multiple bailouts from using the strategies until they paid back the funds.
“Many of these hedging activities can create situations when the executives’ interests run counter to the company,’’ said Patrick McGurn, a governance adviser at RiskMetrics.
More broadly, critics say, the practice represents another end run around financial reform....
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Trick plays rarely work twice:
"Panel says US, Wall Street ignored warnings; Findings marred by political rift" by Marcy Gordon and Daniel Wagner, Associated Press / January 28, 2011
WASHINGTON — The government-appointed panel investigating the roots of the financial crisis says the meltdown occurred because government officials and Wall Street executives ignored warning signs and failed to manage risks.
Then they are ALL CRIMINALS!
The crisis could have been avoided, the Financial Crisis Inquiry Commission determined in a final report released yesterday that was only supported by Democrats on the panel. Instead the country fell into the deepest recession since the 1930s and millions of people lost their jobs, the congressionally appointed panel concluded.
The Bush and Clinton administrations, the current and previous Federal Reserve chairmen, and Treasury Secretary Timothy Geithner all bear some responsibility for allowing the crisis to happen, the panel said.
Then they should be in prison cells, not expensive offices.
Somebody put a pass rush on and sack these sickening slobs.
It also criticized bankers who got rich by creating trillions of dollars in risky investments. The deals grew so complex that bank executives and regulators did not understand them, the report found, and banks discouraged aggressive oversight of their activities, saying the government’s interference would stifle financial innovation....
The conclusions contradicted a parade of witnesses in the panel’s hearings who said the crisis couldn’t have been avoided or prevented. Federal Reserve chairman Ben Bernanke and Goldman Sachs Group chief executive Lloyd Blankfein were among those asserting that defense.
That didn't work at Nuremberg....
“The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done,’’ the report said....
The report detailed numerous warning signs that were ignored, among them: an explosion in risky subprime mortgage lending, an unsustainable rise in housing prices, widespread reports of unscrupulous lending practices, steep increases in homeowners’ mortgage debt and a spike in Wall Street firms’ trading activities, especially in high-risk financial products.
“A combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis,’’ the report said.
The commission criticized the view held by some regulators that markets are “self-correcting’’ and banks can police themselves. Former Fed chairman Alan Greenspan pushed this hands-off approach for decades, at the urging of the financial industry, the report said. As investments grew more complex, regulators allowed large parts of markets to develop with little oversight....
Related: Sex in the SEC
Yeah, I guess they were busy.
I think I'd rather watch football.
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Related: Nasdaq corporate service hacked
Also see: Slow Saturday Special: Massachusetts Court Rejects Foreclosure Fraud
Just keeping the pressure on....
