What happens if you cut the pay of senior executives? The general response of large companies is that these employees will leave for a competitor. But is that true?
Kenneth Feinberg, the US government’s “pay czar” who sets senior executive compensation at the remaining companies receiving assistance under its Tarp programme, thinks not. Read more
The oddity of the competing releases this weekend of internal Goldman Sachs emails is that the prosecution case is less embarrassing for Goldman than the bank’s defence.
The initial release came from the Senate subcommittee on investigations, which on Tuesday is due to quiz Lloyd Blankfein, Goldman’s chief executive, and Fabrice Tourre, a structured credit salesman accused of fraud for his role in the Abacus 2007 deal. Read more
Was it Goldman’s fault that IKB, the German bank, lost $150m on the controversial Abacus deal, or should IKB take all the blame itself?
My column in today’s FT argues that Goldman had an ethical, even if not a legal, responsibility to warn IKB that it thought the subprime mortgage market was in trouble when it executed the CDO in early 2007. The SEC has accused Goldman of securities fraud. Read more
My FT column this week is on Wall Street:
There are various ways to describe the synthetic collateralised debt obligation that Goldman Sachs constructed for John Paulson, the hedge fund manager who bet on the collapse of the mortgage bubble. Read more
Should the US be offering more incentives to its own global companies to build manufacturing plants at home rather than abroad? Intel thinks so.
Stacy Smith, Intel’s chief financial officer, dropped into the FT office in New York on Tuesday and, among other things, argued that the US is not taking high tech job creation seriously enough. Read more
Before the Abacus synthetic CDO that led to Goldman Sachs being accused of securities fraud came the CDO deals associated with Magnetar, the Illinois-based hedge fund.
Now Magnetar has come out fighting against accusations from ProPublica, the online news group, that it helped to stoke the US housing bubble in order to short its CDOs with astronomy titles such as Libra and Norma. Read more
One side effect of the SEC fraud case against Goldman Sachs is that it draws attention to one of the most flawed initial public offerings of recent years.
ACA Capital, which was the “portfolio selection agent” for the controversial Abacus deal and invested in the deal, as well as insuring the most senior tranches, went public in November 2006 just as the US mortgage market was about to crater. Read more
I’ve written a news commentary for Monday’s FT on the Goldman case:
In taking on Goldman Sachs, the most successful and prestigious investment bank on Wall Street, and accusing it of securities fraud, the Securities and Exchange Commission has its work cut out. Read more