Bear Stearns on The Huffington Post

Eric Kuhn: My Ode to 2008

2009-01-01T02:13:21Z

Oy, was the year 2008 a disaster,
For most of us it couldn't end any faster.
While companies dramatically cut their staff,
Tina Fey found new ways to make us laugh.

T'was not the year for Lehman, AIG or Bear,
Paulson thought his bailout would dampen the scare.
Many banks issued too much subprime,
And Madoff's scheme was an absurdly huge crime.

2008 offered quite the election,
With both parties fighting to set our nation's direction.
It took forever for Hillary Clinton's concession,
And Reverend Wright was not a good connection.

Things looked bleak for McCain 'til end of summer,
When he picked Palin and introduced Joe the Plumber.
She came in armed with a long hockey stick,
Assisting McCain, now a self-proclaimed Maverick.

And what is politics without the affair?
The Enquirer chased Edwards as he did swear.
Spitzer's alias was "Client Number Nine"
Forcing him to very quickly resign.

Goodbye to the buddy of the Sundance Kid,
And George Carlin who always outdid.
Tim Russert, too, who questioned with class and rigor
And Tony Snow, who fired back with the same vigor.

Miley Cyrus showed us a bit too much skin
O.J. was found guilty, much to his chagrin.
Michael Phelps swam like a fish in the sea,
And sweet Caroline hopes to head to D.C.

As we look towards 2009
Conflict still rages in Palestine,
The American people have a right to whine,
Still fighting two wars with an economy in decline.

Perfect conditions for me to graduate from college,
Clearly, still, without much poetic knowledge.
Nevertheless, I am asking for a job,
I am always on time and never a slob.

Please e-mail me with offers or even a suggestion,
For unemployment, according to my parents, is out of the question.

**Special thanks to David Riordan for helping make some sentences rhyme. He is also looking for a job!

Leo W. Gerard: Toyota Republicans Should Cut Their Own Pay

2008-12-22T16:36:38Z

President Bush took to the TV Friday to announce that he wouldn't walk past the financial crash of America's Big Three automakers and do nothing to save their lives.

Refusing resuscitation, Bush said, would be irresponsible during the worst economic crisis since the Great Depression.

A week earlier, 31 GOP Senators, mostly from Southern states, voted to avert their eyes and allow American auto companies to die. They opposed $14 billion in federal loans for GM and Chrysler, revealing that their loyalty lies not with America, not even with their own states, but with South Korea and Germany and Japan.

They are Toyota Republicans.

Toyota has non-union manufacturing plants in Alabama, Kentucky, Mississippi and Texas - states whose senators led the GOP quest to slay the Big Three American auto manufacturers - Richard Shelby, R-Ala.; Mitch McConnell, R-Ky, and John Cornyn, R-Tx. Here's the Republican from Mississippi, Sen. Thad Cochran, explaining why he'd vote against the loans, "Things have changed. It's not just the Big Three anymore," he said, pointing out that Nissan and Toyota employ more Mississippians than General Motors, Ford and Chrysler. But, he said, the foreign companies would not share "in the benefits of that automobile bailout program."

No. But Mississippi did give Nissan and Toyota more than $650 million to entice them to locate in the state. GM, Ford and Chrysler didn't share in those benefits, Sen. Cochran.
The Toyota Republicans are all for helping the rich with tax breaks and shelters, and they're all for aiding foreign auto manufacturers with billions worth of tax forgiveness and government-paid infrastructure improvements.

But their disdain for the working class couldn't be clearer as they organized defeat of loans to the Big Three under this command: "Republicans should stand firm and take their first shot against organized labor."

They haven't gotten the message sent out by the electorate in November. Voters rejected politicians prolonging the same old policy of protecting themselves and the rich. The nation's voters want selfless leaders who will perform in the best interests of the entire country. They want change.

Clearly the allegiance of the 31 Republicans who opposed the loan to save GM and Chrysler is not with the United States of America, which would lose 900,000 jobs if just GM closed, and more than 2.1 million if the Big Three did. Those job losses would occur during the worst economic downturn since the Great Depression. In November, the 11th consecutive month of job losses, another 533,000 people were thrown out of work, swelling the pool of unemployed to 10.3 million. The Toyota Republicans were willing to increase that.

They voted against the interests of their own states as well. Consider what would happen in a few of those Southern States whose senators led the charge against preserving the Big Three. If just GM collapsed, Kentucky would lose 20,000 jobs; Alabama, 21,000; Georgia, 23,000, and Tennessee, 29,400, according to calculations by the Economic Policy Institute.

Sen. Cochran just didn't think it was right for the U.S. government to aid its auto industry. But apparently he's fine with foreign governments providing subsidies to the transplant automakers in his state. And, apparently, he's okay with spending state and federal money to help foreign automakers locate manufacturing plants in the U.S.

Korean and Japanese automakers -- including Nissan and Toyota with plants in Cochran's Mississippi -- benefit from manipulation of currencies by their governments, a factor that, according to EPI estimates, reduces their costs by between 10 and 20 percent. In addition, nationalized health care in countries such as Japan and Germany serves as a subsidy.

Also, the Toyota Republican opposed federal money for American companies but supported state and federal money for foreign auto makers estimated at $3.6 billion.

Shelby, for example, got $3 million in federal funds to improve roads near the Hyundai plant in Alabama after the state gave $250 million to the Korean automaker. Shelby opposed loaning one federal cent to the U.S. automakers, though, telling "Face the Nation" that they should die: "Companies fail every day and others take their place... There's not a bank in this country that would loan a dollar to these companies."

But for foreign auto companies, his home state of Alabama couldn't provide enough taxpayer cash -- more than three quarters of a billion. In addition to the quarter billion it gave the Korean automaker, it handed another quarter billion to German Daimler for a Mercedes-Benz plant, nearly a quarter billion to Japanese Honda and $29 million to Japanese Toyota.

Similarly, Jim DeMint, another senator who led the Toyota Repubicans' rebellion against the loans to GM and Chrysler, told the "National Review" recently, "Government should not be in the auto industry." Yet, his state, South Carolina, got into the auto industry with nearly a quarter billion -- $230 million - in gifts to a German auto company - BMW.

The same is true in Kentucky, home of Sen. Mitch McConnell, who said of loans for the Big Three, "Government help is not the only option. It's not even the best option." But government help was fine when Kentucky was providing grants for Toyota, which got $371 million from taxpayers since 1986.

It's clear that the real problem was not a philosophical one.

All of these lawmakers were willing to flick free market capitalism out the car window like a cigarette butt if their states could use taxpayer dollars to buy a foreign auto plant. No, what really gags them about the Big Three is that they pay good, middle class wages and benefits as a result of contracts with the United Autoworkers.

Repeatedly, the Toyota Republicans insisted that UAW members bear the brunt of the cost of the bailout. The senators insisted that UAW wages be lowered to match those of non-union auto workers at foreign-owned manufacturers. Toyota Republican Sen. Bob Corker of Tennessee, wrote an amendment to the bailout bill that would have required UAW members to accept pay cuts by a specific date in 2009. When Republicans defeated the bailout, DeMint blamed that on the union, saying, "It sounds like the UAW blew up the deal."

The Toyota Republicans then conferred the American auto industry to bankruptcy. They said they favored bankruptcy because it would enable the Big Three to break pledges made in labor contracts and promises for health care and pensions made to retirees.

The Toyota Republicans want the wages of American workers pulled down. To them, UAW members making an average of $28 an hour, accounting for less than 10 percent of the cost of a car, are earning just too much money.

The Toyota Republicans did not, however, make that claim about the white collar workers on Wall Street who got this country into the financial fiasco that led to the dire circumstances for automakers. And not just for American ones. Domestic car sales declined by 40 percent last month, but Asian producers' sales dropped too - by 35 percent.

The average salary of white collar, Wall Street employees -- workers in "securities, commodity contracts and investments" -- is four times that of those laboring in the rest of the economy. Remember, these are the guys who are so smart that they took down Bear Stearns, Fannie Mae, Freddie Mac, Washington Mutual, AIG and Lehman Brothers - in less than a year - and ultimately required $700 billion from taxpayers to bail them out.

The top executives of Wall Street banks receive billions of dollars in year-end bonuses. The New York Times detailed those at Merrill Lynch in a story Dec. 17 entitled "On Wall Street, Bonuses, Not Profits Were Real." In 2006, the firm gave its top executives between $5 billion and $6 billion in bonuses, which means, for example, a trader earning $180,000 a year got a $5 million bonus.

Merrill's $7.6 billion earnings that year turned out to be bogus. The company's losses now have exceeded all of the profits it earned over the previous 20 years. To prevent collapse, it sold itself to Bank of America in September. But then, Bank of America took $15 billion of that $700 billion in bailout money. Despite the gift of taxpayer dollars, the CEO of Bank of American has not publicly announced that he will decline a bonus, and Bank of America plans to tell Merrill Lynch workers the amounts of their bonuses beginning Friday, the New York Times reported Dec. 18.

When those Toyota Republicans voted in favor of providing $700 billion for Wall Street -- including both of Tennessee's senators, Bob Corker and Lamar Alexander; Kentucky's Mitch McConnell; Georgia's Saxby Chambliss and Johnny Isakson; South Carolina's Lindsey Graham, and Texas' Kay Bailey Hutchinson and John Cornyn - none asked for high-paid white collar workers to take pay cuts or give up their million dollar bonuses. There was a feeble attempt to limit the pay of chief executives, but that applied only to firms that received federal money under one particular method, and the treasury decided not to hand out the $700 billion that way.

And no lawmaker asked white collar workers or executives who got billions in bonuses based on false profits to return them.

But those Toyota Republicans want middle class, blue collar workers who don't get year end bonuses, who don't celebrate with five-figure dinners, to take wage cuts. They want autoworker pensioners to lose the monthly benefits they earned with a lifetime of labor.

And at no time did those Toyota Republicans suggest that they should cut their own salary or top-notch, government-paid health benefits or pensions. Like the reckless speculators on Wall Street, Congress bears responsibility for the crisis condition of the American economy because it deregulated financial markets.

In 2002, during a downturn in Japan, the House of Councillors reduced the pay of Diet lawmakers by 10 percent, and ended the transportation allowance, portrait-painting and pension given senior lawmakers.

If the Toyota Republicans believe the Japanese way of pay is so great for autoworkers, they should first impose it on themselves.

Margaret Heffernan: What Do Business Schools Teach Now?

2008-12-17T13:15:39Z

The business landscape looks like nuclear winter: Merrill Lynch, Lehmann Brothers, Bear Stearns gone. Fannie Mae, AIG, GM, Chrysler teetering. In the UK, the City has lost 40,000 jobs and Woolworth's has just cleared out its merchandise and its employees. Any prospective business student would be forgiven for a crisis of faith; indeed, not having one would signal psychopathy.

After the collapse of Enron, WorldCom and Tyco, some tried to argue that these were failures caused by a few bad apples. No such pathetic fantasy will work this time. Regulators have failed, executives have failed, banks have failed, markets have failed. The only reason CEOs aren't being strung up from the nearest lampposts is because even investors appreciate that -- bad as many of these undoubtedly are -- the meltdown can't be attributed only to individuals.

But where did these people come from? Well the vast majority came out of business schools. Many of those institutions deliberately styled themselves Bootcamps for Quants: come here before making your millions on Wall Street; it'll be a good investment of the $100K+ the two years it will cost you. Historically, business schools grew out of engineering schools, derived from the Taylorian idea that a business was essentially a machine whose controls you could design and manage to generate maximum returns.

For decades, b-schools prided themselves on demanding total commitment: excellence demanded the exclusion of other interests, people, values. Total dedication was crucial to the training, designed to make initiates dependent on one another, loyal to a single, exclusive set of beliefs. And, for the most part, it worked, generating legions of bright young things eager to sacrifice anything to serve the masters of Wall Street.

(This intentional withdrawal from the world was one reason business schools found it so hard to increase their number of women students. Whereas law, medical and dentist schools reached 50%, business schools stayed stuck at around 30% female intake. The bootcamp culture didn't appeal and women have never warmed to a violent bifurcation of work and life.)

But the intentional exclusion of the rest of the world was what made it possible to work insane hours, to generate mania for deals regardless of cost, and to structure finance in ways that bore no relation to reality. Because reality had always been deliberately excluded. It was the exclusion of reality that let bankers imagine securitized mortgages had nothing to do with homes. It was the exclusion of reality that allowed GM to think it could make expensive, unattractive cars forever. It was the exclusion of reality that lay behind John Thain's delusion that, having sold his shareholders and employees short, he was entitled to a bonus.

After Enron, many business schools did a lot of soul-searching. They all questioned what they were teaching and to whom. They were shocked to discover how many of their students cheated -- and always had. Many, like Yale, added ethics courses and endeavored to integrate moral concepts into their core curriculum. Some, like Presidio, set out to teach a new business model in which profit was but one benchmark of success. But overall, not much changed.

If business schools don't change -- fast -- they'll become like military academies after the first world war: discredited and obsolete. It's time to ditch the engineering legacy: companies aren't machines, they are people. And business is not a discipline to be practiced like some religious cult, cut off from the society of lesser-minded mortals. If our economy is to survive, it needs to reposition business inside the world, inside human beings, connected to people, to consequences, to social ethics, values and responsibilities. This doesn't mean we need just to nurture so-called 'social entrepreneurs'. It means that all businesses must see themselves as social businesses, operating in society, for society and because of society.

It was Ayn Rand who, in 1961, announced that there was no such thing as society "since society is only a number of individual men[sic]." Well she was wrong. And nothing demonstrates that more vividly than the meltdown we're witnessing now. The inter-connectedness of people through business is so dense that no business -- and no business school -- can afford to ignore it. Redefining the role of business in the world is a huge opportunity for business schools if they have the wit to notice and the courage to change.

Margaret Heffernan teaches entrepreneurship at Simmons School of Management and is Executive in Residence at Babson College, both in Massachusetts.

Bob Franken: Torches and Pitchforks

2008-12-11T13:06:14Z

When President-elect Obama says, he will turn the economy back around, let's offer this gentle observation.

He'd better.

What he will really need to do is rescue it from the greedy gang-that-can't-shoot-straight which is holding it... and us... hostage.

He'd better.

Quite frankly, growing numbers of people in the United States are plain and simply disgusted.

Their lives are being damaged by a greedy incompetent few, who hoard unbelievable riches, while forcing more and more into economic uncertainty.

Repairing this is not optional: We are beginning to see the first glimmers of ordinary people/victims act on their disgust.

Witness the "occupation" of the Republic Windows and Door factory. The 250 workers there felt nothing less than betrayed, by company ownership and creditors who suddenly flew the coop They gave three days warning they'd be shutting down. We are now making a big deal of the fact that the illegal takeover worked. The shafted protesters were able to force the owners and creditors who betrayed them to throw a few crumbs when they got called out for their bold-faced thievery.

There is a glimmer of hope: The fact that these perps caved under public pressure demonstrates that they are not ENTIRELY shameless.

By the way, don't ignore that group in Florida either, the one that is helping homeless people take over foreclosed residences that are sitting as empty monuments to spreading desperation.

Otherwise law abiding citizens are starting to be fed up with a system that seems to be always stacked against them. What a shame it would be if the anger over a raw deal grows into more and more civil disobedience. Or worse.

This is not some call to "action". Quite the contrary. Unlawful defiance, no matter how justified, can quickly turn into mob rule...chaos.

That, of course would be a national tragedy. Ours is a country that has achieved historic stability based on a "Government of the people, by the people and for the people".

To cause those people to lose faith and start to take matters in their own hands could unravel our sense that we're all in this together.

It is imperative that those who have benefited by gaming our system, as well as those who will now govern us, do whatever it takes to correct the inequities with no more playing around. This is no longer some game.

For starters, we must address the knee jerk layoff reflex. At the first sign of a slowdown, companies fire their workers, choosing highest profits over the lowly employees.

It's not that all of these fat cats are amoral. Barry Diller, of the telecommunications Barry Dillers, just made a speech where he blasted so many of his fellow plutocrats, saying that letting people go in the pursuit of a better quarterly report is "... throwing people out to a larger, what is inevitably a larger unemployment heap for frankly no good reason." "Companies", he went on, "have obligations beyond that...".

Indeed they do. They speak a different language using words like "efficiencies" and "productivity gains" to justify their exorbitant salaries, translate to job losses for thousands, make that millions, of others. Also lost are livelihoods, homes, self-respect. In the process, these corporations breach their implied contracts to their employees, communities and yes the product that allowed them to thrive in the first place,

And before someone butts to point out a responsibility to stockholders, the investors also lose out when the deteriorating company inevitably drops in value.

So eventually everybody is angry, Forget "eventually". Everybody is angry NOW. They are starting to feel disenfranchised, and that franchise is the United States of America

So as our leaders in government and finance have their theoretical debates on the best ways to fix this problem, they must realize that if they don't clean up this mess, they're going to soon look out their windows and see huge crowds of the aggrieved marching with torches and pitchforks in hand, or the modern day equivalent.

The new President Obama will enter office with the very same advantage and disadvantage: He brings with him a hope for change. But that's also an expectation that his administration will be a force for meaningful, discernible change...not the work of the Keystone Cops we've been watching squander hundreds of billions. If he succeeds, he will have the thanks of his nation. If not, here's a stock tip: Invest in companies that make torches and pitchforks.

William H. Miller: Famed Stock Picker Did Great Until Picking AIG, Wachovia, Bear Stearns, Freddie Mac

2008-12-10T08:22:31Z

William H. Miller spent nearly two decades building his reputation as the era's greatest mutual-fund manager. Then, over the past year, he destroyed it.

Fueled by winning bets on stocks other investors feared, Mr. Miller's Legg Mason Value Trust outperformed the broad market every year from 1991 to 2005. It's a streak no other fund manager has come close to matching.

Mr. Miller was in his element a year ago when troubles in the housing market began infecting financial markets. Working from his well-worn playbook, he snapped up American International Group Inc., Wachovia Corp., Bear Stearns Cos. and Freddie Mac. As the shares continued to fall, he argued that investors were overreacting. He kept buying.

Alan Schram: Paulson Policy Failures

2008-11-24T14:04:42Z

Treasury Secretary Henry Paulson made some disastrous decisions that had major unintended consequences.

One of those was the decision to nationalize Fannie Mae and Freddie Mac. Once the government took over Fannie Mae and Freddie Mac, supposedly preemptively, shareholders of every other financial company that perhaps needed capital were left with no choice but to sell aggressively, fearing the government might decide to preemptively wipe them out also. This made it impossible for any company to raise the capital it needed or wanted.

About a week later Lehman Brothers filed for bankruptcy, Merrill Lynch was forced to sell to Bank of America, and AIG was extended a huge government loan, all completely or nearly wiping out shareholders.

Then Paulson forced nine major banks to receive capital infusions from treasury, effectively partly nationalizing them, and creating a huge American Sovereign Wealth fund.

The above referenced nationalizations created a bizarre situation where the government contended that financial institutions needed more capital, and that it should be private capital that will solve the problem. But the government also indicated that it stands ready to provide additional assistance in the future, thus destroying the equity stakes of those prospective capital providers. Why would private capital invest, if it believes it is the policy of the government to later intervene and dilute it?

Enter the pernicious crash of October-November 2008.

The smartest CEO, John Thain of Merrill, understood the new landscape before anyone else and quickly sold at the then still available price, albeit a fraction of his company's value at its peak. In doing that he saved Merrill from the ignominious fate it was inevitably headed towards, the same fate that awaited Lehman Brothers.

And by letting Lehman Fail, the counterparty risk was unleashed on the economy of the world, as Lehman was involved in thousands of trades all over the globe and was much bigger than Bear Stearns. That brought to the forefront the systemic risk that is now looming above us like a dark cloud. All of a sudden even money market funds were losing principal. Secured bond holders are losing money (unlike the creditors of Bear Stearns, Fannie and Freddie, who emerged whole). Nobody knew who could be trusted, and short term credit markets ceased to function, severely impairing the economy further.

I believe Secretary Paulson's policies aggravated the crisis. At the moment, Citigroup and JP Morgan are struggling; locked out of the market for private capital and their shares are in free fall. Despite major capital infusions, most financial stocks are down sharply. The nine institutions that received the first cash infusion from Washington have seen their shares fall more than 40% since then. Goldman Sachs last week was trading at a value less than just the amount of money it raised recently. So many financial institutions are failing, making the federal government their built-in savior and enervating the Fed's resources with their insatiable demand for fresh cash.

All this is making it palpably clear that the Treasury's policy did nothing to build confidence or stabilize the markets. The sickening, precipitous drop of the equity markets in October and November are the market's judgment on the merit of Treasury's policies.

Alan Schram is the Managing Partner of Wellcap Partners, a Los Angeles based investment firm.

Arlene M. Roberts: Fat Cat CEOs, Bailout on Wall Street and 'Say on Pay'

2008-11-17T05:54:52Z

There seems to be no end in sight to the bailouts on Wall Street as major financial institutions falter, then turn to the federal government for rescue packages. Chief Executive Officers jump ship, golden parachutes intact, while employees lower down the totem pole walk away having lost retirement accounts, nest eggs and health care coverage. As the Treasury Secretary deliberates over the $700 billion rescue plan, discussion ought to focus on restructuring executive compensation such that shareholders have a 'say on pay'.

Recently, the federal government's rescue plan has been at the center of attention. Congress has authorized the Treasury to spend $700 billion -- $350 billion immediately; $350 billion to be fast-tracked by Congress in the future. Under the terms of the plan, better known as the Troubled Asset Relief Program, the Treasury has committed about $290 billion. According to reports in the New York Times, the Treasury has allocated $125 billion to the nine biggest banks and investment banks; another $125 billion for publicly traded regional banks; and $40 billion to expand the ongoing bailout of the insurance conglomerate American International Group. Treasury Secretary Henry Paulson has made known his intention not to use bailout money to refinance the mortgages of homeowners who are at risk of losing their homes due to foreclosure.

The scope of the federal bailout must be viewed in relation to the salaries and bonuses paid to CEOs of some of the very institutions being rescued. From 2003 to 2007, Merrill Lynch & Co. paid its chief executive the most, with Stanley O'Neal taking in $172 million and John Thain getting $86 million. James Cayne of Bear Stearns made $161 million before the company collapsed and was sold to JP Morgan Chase & Co. in June. U.S. Treasury Secretary Henry Paulson, former CEO of Goldman Sachs Group Inc., received approximately $111 million between 2003 and 2006. Lloyd Blankfein, CEO of Goldman Sachs, made $57.6 million in 2007; co-presidents Gary Cohn and Jon Winkelreid each got $56 million. The $3.1 billion paid to the top five executives from 2003 to 2007 was about three times what JP Morgan spent to buy Bear Stearns.

According to data compiled from company filings, executive compensation at the five firms (Goldman, Morgan Stanley, Merrill, Lehman Brothers Holdings Inc., and Bear Stearns) increased each year, doubling each year to $253 million in 2007. Executive compensation figures include salary, bonuses, stock and stock options, and some reward for past performance.

On September 15, Lehman Brothers filed for the biggest bankruptcy in history, more than $613 billion in debt. The same day, Merrill Lynch was sold to Bank of America for $29 a share. Goldman and Morgan Stanley, the two biggest independent U.S. investment banks, were forced to convert to bank holding companies. The fate of Bear Stearns is the stuff of financial lore. As John Waggoner writes in his book titled Bailout, "In March of 2008, the world markets woke up with one of the ugliest hangovers in history. Bear Stearns, the fifth-largest U.S. investment bank, found itself in the financial equivalent of the drunk tank: Sequestered with federal regulators and pitiless bidders for the remnants of its assets." Waggoner continues by saying, "The bubble that took down Bear Stearns had three ingredients: houses, mortgages, and mortgaged-backed securities. All three, separately, aren't usually considered a bubble cocktail. Stir them together? Ummmm. Bubbly."

So where do we go from here? Current trends towards bailouts, with the federal government buying equity in banks, has been dubbed 'socialism' by some; others find it harks back to European-styled nationalization. Amid renewed calls for congressional intervention and regulation of executive compensation, some companies are moving on their own initiative toward allowing shareholders a 'say on pay', a movement well underway in Great Britain.

Several days ago, Blockbuster Inc.'s CEO James Keyes addressed the issue of 'say on pay' at a breakfast policy seminar, outlining the company's efforts to provide greater accountability to shareholders. In 2007, a majority of Blockbuster shareholders first made the call for 'say on pay'. In March 2008, Blockbuster's Board of Directors voted to grant shareholders an annual non-binding vote on executive compensation. Beginning in 2009, shareholders will directly advise the board on whether they approve of the pay levels of the company's top executives.

According to Keyes, "We are in a period of self-regulation. Companies are looking at cost sheets, analyzing and addressing what to keep and what to get rid of. In some companies the pain is shared, in others the executive is impervious." Notwithstanding speculation about whether there are sufficient teeth in the concept of 'say on pay', Keyes held firm to the belief that the move is geared towards employees who are in it for the long haul.

Fellow panelist Vonda Brunsting, Eastern Region Director of the SEIU Capital Stewardship Program, also favors a 'say on pay'. Ms. Brunsting said, "Hopefully the era of the golden coffin, or golden parachute, is dead."

The issue of executive compensation was part of the discussion and debate in the presidential election. Only time will reveal the position to be adopted by the new administration.

Getting A Job After Bear Stearns, An MBA, Or A Kid

2008-11-10T10:07:07Z

1. The Bear Stearns Casualty
PIYUSH BHARGAVA
AGE: 33
RESIDES: Jersey City, New Jersey

Resume Highlights:
Moved here from India in 1993, then finished a four-year engineering degree in three years. Worked as a techie with Reuters, got a masters in computational finance from Carnegie Mellon, and spent three years as a risk consultant at Deloitte and Touche. At Bear Stearns, monitored trades for two hedge funds until they went bankrupt. Moved over to the firm's credit-trading desk and got laid off in August.

What He's Looking For:
A risk-management role at an investment bank, private-equity firm, or hedge fund. Bhargava isn't bitter about Bear's downfall and has kept busy giving tennis lessons in Jersey City. Still, he sees ex-colleagues landing jobs "pretty easily," while his own interviews have so far led nowhere.

Desired Salary: $115,000

Senior Risk Officer For Collapsed Bear Stearns Now Senior Fed Official Overseeing Banks

2008-11-05T18:54:41Z

The former chief risk officer at investment bank Bear Stearns , which nearly collapsed in March, is now a senior official of the Federal Reserve division that supervises U.S. banks.

Michael Alix, who worked at Bear Stearns for 12 years and was its senior risk manager since 2006, was named a senior vice president in the bank supervision group of the Federal Reserve Bank of New York, according to an announcement by the Fed.

Martin Nolan: The Republican Collapse: 100 Years In The Making

2008-10-30T20:26:46Z

THE REPUBLICAN COLLAPSE: 100 YEARS IN THE MAKING
Even amid the stressful heat of the campaign, the candidate could not escape the obvious. "The Republican party needs the discipline of defeat," William Howard Taft told a friend in 1912, near the end of his one term as president.
Taft had been challenged by his predecessor and political godfather, Theodore Roosevelt. Their quarrel focused on the definition of Original Sin of the Republican Party: whether and how much government should regulate business.
The argument is at least 100 years old, beginning when T.R. left the White House. Many Republicans were glad to see him go because he was, like John McCain, a maverick. Then, 100 Septembers later, Capitalism As We Know It collapsed. The most prominent political victim was not McCain. A maverick is by definition unbranded, so the heaviest damage was inflicted on the Republican brand.
McCain was never the favorite son of conservative consultants and commentators not because of his economic views, but because of his maverick status. Reacting to the Wall Street collapse, he used a word his hero, Teddy Roosevelt, might have used, a word beginning in G and ending in REED. An ominous silence ensued; greed is not a word used in polite Republican society.
In 1908, T.R.'s final year as president, Republicans had gained a reputation for keeping the promise he made in 1901: "We demand that big business give people a square deal." Roosevelt denounced "malefactors of great wealth." He attacked "the men of wealth who today are trying to prevent the regulation and control of their business." Roosevelt predicted that they "will not succeed," but added, "if they did succeed, they would find that they had sown the wind and would surely reap the whirlwind." Does that not describe the ruins of deregulation in today's economy?
Often interwoven with cultural issues, deregulation has roiled the GOP for a century. In the 1940s and 1950s, it divided the disciples of Taft's son, Sen. Robert Taft, from the apostles of Thomas Dewey and Dwight Eisenhower. The feud between Barry Goldwater and Nelson Rockefeller dominated the 1960s.
In 1980, Ronald Reagan united the party when he declared "Government is the problem." Today, as graven images of the Great God Marketplace litter Wall Street, Republicans may miss Teddy Roosevelt, McCain's hero, but not his role model. The senator's frequent praise of deregulation makes him a Taft Republican.
Since mid-September, the Karl Rove junior varsity, McCain's handlers, have discouraged talk of greed. Instead, they have dug into their tactic-of-the-day satchel for substitutes, each less credible than the next. Socialism? That won't fly because of the looming presence of the tallest, busiest socialist on the planet, Henry Paulson, commissar and chief teller for the Socialist Banking Group of North America. (Secretary of the Treasury is his honorific title.)
The GOP propaganda machine, humming efficiently for decades, is now beginning to gasp and sputter. It took a bumpy detour when its leading radio-television troubadours insisted that illegal immigrants were wrecking the economy. But no prominent Mexicans were discovered in the vaults of Bear Stearns, Lehman Brothers and AIG. The juggernaut blew a gasket trying to convert Sarah Palin into a combination of Margaret Thatcher and Madame Curie. Now it is in reverse gear, trying to blame Democrats for the Wall Street collapse. The road is rough.
Since 1854, the Republican Party's leaders, some great and some not, have pulled it out of the ditch. William Howard Taft could not do so in 1912. He carried just two states, Roosevelt won five and Woodrow Wilson won the presidency. Taft, who later became chief justice, had a large stomach, which had little room for politics. He told his wife in 1906, "Politics, when I am in it, makes me sick." Some Republicans today might echo that remark, as well as Taft's wise prescription for "the discipline of defeat."
###

David Epstein: Hitting the Trifecta

2008-10-28T17:39:37Z

Upon assuming office, President Bush promised to maintain the budget surplus that he had inherited, except in the event of recession, war or national emergency. ''Lucky me,'' he joked to his budget director Mitch Daniels shortly after 9/11, ''I hit the trifecta.''

The Democrats have the opportunity to hit a trifecta of their own this year, and a more positive one at that. US politics is roughly divided into three areas: domestic policy, fiscal policy and foreign policy. Democrats have traditionally been stronger on domestic policy and Republicans have owned foreign policy, with fiscal policy changing back and forth. But now the Democrats have a strong argument that the public trusts them more in all three dimensions. If they can state their case strongly, and more importantly follow through on it once they gain power, they can remake the face of American politics for the foreseeable future.

In domestic policy, it's not even close any more. The current administration has proven the folly of trying to make government work when you don't really believe in government to start with, when you think it's the problem, not the solution. Bush stocked administrative agencies with incompetent cronies and was then surprised when things went wrong, like with FEMA. The Republicans' idea of passing social legislation was the Medicare drug benefit (Medicare Part D), which has proven to be nothing more than a disastrous giveaway to the drug companies. If you recall, the bill featured a "donut hole" in seniors' insurance: a gap between basic coverage, which the legislation allows, and catastrophic insurance, also in the bill. But it prohibits beneficiaries from insuring themselves for medication expenses in between, on the hardly believable theory that it would give sick seniors bad incentives.

The Republican mantra that the only good regulation is no regulation has also cost them dearly in the one area of social policy they used to dominate: financial markets. The collapse of the housing market and subsequent series of meltdowns and bailouts that have been orchestrated since Bear Stearns went under in March have made the public wary of Republicans' ability to keep the economy from sinking into quicksand. The administration is finally learning - too late - that sometimes regulation and markets are not diametrical opposites: you need a certain amount of regulatory underpinnings for markets to operate at all. It is a lesson that a Democratic administration is ready to put into practice.

In fiscal policy, Democrats used to be unable to push back when Republicans chided them for being "tax-and-spend liberals," unable to resist the calls of their special interest groups for spending programs. It was on the basis of this rhetoric that the GOP branded itself the party of fiscal discipline for a generation or more. The situation, though, has reversed itself: Democrats are now the more fiscally conservative of the two parties, although leading Democrats seem not to have noticed or are for some reason embarrassed by their own success in balancing the budget.

But the numbers don't lie: Reagan and then Bush I ran up historic deficits on the back of large amounts of military spending and trickle-down economic theory. Clinton bit the bullet and convinced Congress to enact the 1993 budget, which contained $250 billion each of tax increases and spending cuts over a decade. The bill passed by one vote in the House and a tie vote in the Senate, with the Republicans, those supposed guardians of fiscal propriety, casting not a single vote for the bill, arguing that it would ruin the economy. In fact, the 1990's saw an economic boom that was not wholly created by, but was certainly abetted by, the lowering of government deficits, and Clinton left office with the largest budget surplus in history. Bush II promptly gave it all away in his first budget, and if estimates are correct the US will run its largest deficit in history next fiscal year. Bush's trifecta of disasters certainly contributed, but budget experts estimate that the turnaround in the nation's finances was roughly 1/3 due to war spending, 1/3 due to Bush's tax cuts, and 1/3 due to lower revenue because the economy slowed down (which is itself a result of larger macroeconomic mismanagement by the current administration).

In a reverse of the former refrain, now it is the Republicans who cannot resist calls from their wealthy right wing constituents for tax cuts, and they are going to lose office in no small part due to the fact that their policies have created a large increase in income inequality. Trickle down economics is now dead as a working theory, even among serious conservative economists; the last eight years have demonstrated that, given a large increase in their income, the richest 1% of the population will find plenty of ways to spend it that do not magically create jobs for middle and working class Americans.

Finally, the public is coming to distrust the Republican line on foreign policy as well. After the collapse of the Soviet Union and the end of the Cold War, there were two strategies the US could adopt. The first was to say, "We're now the only super-power: to heck with you. We will do what we want when we want. This may sometimes convene with your interests, and sometimes not. But we will act at every moment in accord with our own preferences, using force if and when necessary to achieve our goals." This is more or less the attitude taken by the Bush administration, and it's left us in a hugely expensive and unpopular war in Iraq, with our international reputation in shreds and forced to do nation building in places where we have neither the expertise nor the inclination to do so.

The other option is to say, "We're now the only super-power, but just because we can do anything we want doesn't mean that we should. In the long run it is cheaper and more effective to lead coalitions of countries in pursuit of our objectives. We will never compromise on fundamental issues of national security, but this approach may at times mean compromising and accepting outcomes that are not our first best, in order to win on other issues that matter to us more."

This is the vision that the Democrats are, implicitly, laying in front of the public, and with considerable success. Americans want the US to mean something again, to live up to its ideals and regain its status as world leader, relying more on soft power than military force. And it goes without saying that you can't be a leader if no one follows.

These, then, are the stakes in the current election. The Democrats seem poised to take the White House and increase their margins in the House and the Senate, possibly with a filibuster-proof majority in the latter. They will face a number of challenges, not the least of which will be the recession bequeathed to them by an outgoing administration bumbling toward the finish line. But if they can keep policy consistent with their basic principles and dare to challenge the Republicans on their home turf, Democrats can once again become the party of ideas and dominate politics for some time to come.

Danny Schechter: Why The Government Can't "Fix" the Crisis

2008-10-25T12:14:20Z

New York OCT 27: Most Americans know the phrase, "if it ain't broke don't fix it." In the good times, when the economy boomed and Wall Street prospered, it looked like nothing was broke. The free market, we were told was working like magic insuring prosperity and progress.

But then it happened, out of sight and out of mind, an upward trajectory turned in the other direction. In what was for many an unbelievable chain of events, markets started melting down, banks began writing down portfolios clogged with asset-backed securities that had no assets behind them. Confidence shattered. Suddenly, believers in unregulated transactions realized something was very, very wrong.

Alan Greeenspan was "shocked" and said he was wrong to support deregulation of financial markets. As headlines conjured up breadlines and recession, with "something worse" threatening, the government was pressed to act.

Over a year later, after eight interest rate cuts and the injection of trillions into credit markets and banks worldwide, little has changed. Markets are volatile and trending down while banks are still not lending with frequent projections of massive unemployment and stagflation.

At the same time, we live in a country that believes that whenever there are problems, there must be solutions. And in the case of the financial crisis, there are no shortage of proposals especially because the whole system -- if not capitalism itself -- seems at risk. (Even the NY Times ran an editorial on "Rescuing Capitalism.") This is not a situation that inspires confidence in token reforms and minor adjustments. There seems to be a consensus that this crisis is systemic and structural even as the candidates reduce it all to tax policy.

That hasn't stopped the government from dipping into its tool bag and throwing everything it has at the problem -- including bailouts on an unprecedented scale, including, now, of insurance companies and auto lenders There have been rule changes even partial nationalizations of banks, mortgage companies, and insurance combines.

Together, the Treasury Department and the Federal Reserve Bank are fighting on every front. They seem to be giving money away. Is it working?

"Scarcely a day goes by with out some dramatic new initiative," writes the New Yorker's financial columnist James Suriwieki, "even as market chaos makes each new idea soon seem like ancient history."

Why is that? Surely the people in command are smart, savvy and know the system well. What are they missing? They now know its broke (and many of them are broke too) but they can't seem to fix it.

Here are five views on what they are getting wrong.

l. The system needs to collapse

That's the view of a perennial bear investor Marc Fabor who "thinks the market was primed for a technical rally but is not keen on the long-term prospects for the US economy:

"The governments in this world have no other option but to print money. That will lead down the road to inflation,'' Faber said. ``You don't need to be an economist graduated from Harvard to know we're already in a recession. They will just put white paint on a crumbling building....

"To rebuild economic health in the United States, you need a serious recession that will last several years,'' he said. "The patient that got drunk on credit growth needs to go into rehabilitation. To give him more alcohol, the way the Fed and the Treasury propose to do, is the wrong medicine.''

2. Consumers are not spending

Bloomberg reports: "The big concern is that households, spooked by the turmoil in financial markets, will cut back rapidly and sharply, plunging companies into bankruptcy and deepening a recession that many economists say has already begun.

"If we did have a quick cut in spending, it could turn a pretty nasty recession into possibly the worst downturn we've seen in the postwar period,'' says Michael Feroli, a former Federal Reserve official now at JPMorgan Chase & Co.

3. Moral Hazard: They are bailing out the wrong people

There is something fundamentally wrong in rewarding the people who are responsible for the problem. Worries William Buitner, a financial historian at the London School of Economics, that this will lead to more collapses in the future: "by boosting the incentives for future reckless lending to elephantesquely large financial enterprises.

Unless not only the existing shareholders of the banks benefiting from these capital injections but also the holders of the banks' unsecured debt (junior and senior) and all other creditors of the bank (with the possible exception of retail depositors up to some appropriate limit) are made to pay a painful penalty for investing in excessively risky if not outright dodgy ventures, we are laying the foundations of the next systemic crisis, even as we are struggling to escape from the current one."

4. Financial scammers and criminals are going unpunished

The FBI announced that it lacks the staff to fully investigate the pattern of pervasive crimes on Wall Street.

5. Good people are leaving in disgust

Some of the best and the brightest are giving up, rejecting businesses based on flimflams and deceptive marketing. Two years ago, a very successful investor, Andrew Ladhe, started returning money to his investors. "Our entire banking system is a complete disaster," he wrote. "In my opinion, nearly every major bank would be insolvent if they marked their assets to market."

In October 2008 he closed his firm all together explaining:

"Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, 'What I have learned about the hedge fund business is that I hate it.' I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America."

These are just five reasons why "the quick fixers" are unlikely to succeed. Notes Harpers, we need more than tinkering. They call for a fundamental reconstruction at a time when we are also "menaced by dwindling energy supplies and accelerating climate change."

Also, time's up for the Captain Ahabs in charge. They should admit defeat and step down as was suggested by this comment on a financial website:

"Perhaps Bernanke and Greenspan should see if there is an opening for the captain of the Exxon Valdees, job requirements: asleep at the switch."

Still to be answered, can the system be saved from itself?

News Dissector Danny Schechter is author of Plunder: Investigating Our Economic Calamity (Cosimo Books) now available at online book stories.
Comments to Dissector@mediachannel.org

Financial Crisis Hurting Office Market

2008-10-20T18:30:49Z

(Crain's) -- J. P. Morgan Chase & Co. has terminated a 52,100-square-foot lease of a former Bear Stearns Cos. office in the Central Loop, as Wall Street's woes begin to rattle the downtown Chicago office market.

Five financial services firms that were sold or taken over as a result of the crisis, including Merrill Lynch & Co. and American International Group Inc., lease about 835,000 square feet downtown, according to a third-quarter report by tenant representation firm Studley Inc.

The companies, which also include Lehman Bros. Holdings Inc. and Wachovia Corp., account for just 1.4% of top-quality, so-called Class A space in the downtown office market. Yet that could be enough to "tip the balance" in tenants' favor, in light of the other challenges facing landlords, such as the wave of new buildings, Studley says.

Read the entire article here.

What Is A CDS, Or Credit Default Swap?

2008-10-10T17:00:43Z

If Hieronymus Bosch were alive today to paint a triptych called "The Garden of Mortgage Delights," we'd recognize most of the characters in the bacchanalia and its hellish aftermath. Looming largest, of course, would be the Luciferian figures of Greed and Excessive Debt. Scurrying throughout would be the Wall Street bankers who turned these burgeoning debts into exotic securities with tangled structures and soporific acronyms -- CDO, MBS, ABS -- that concealed the dangers within. Needless to say, we'd see the smooth-tongued emissaries of the credit-rating agencies assuring people that assets of lead could indeed be transformed into investments of gold. Finally, somewhere past the feckless Fannie Mae executives and the dozing politicians, one final figure would lurk in the shadows: a hulking and barely recognizable monster known as Credit Default Swaps.

Continue reading here

John Hood: Miami Debate-Watch Crowd in the Tank for Obama

2008-10-09T11:29:06Z

If the presidential election had been held during Tuesday night's debate watching party at Miami's stunning Cesar Pelli-designed Adrienne Arsht Center for the Performing Arts, McCain not only would've lost -- he'd have gotten trounced. Actually, trounced might be too soft a word for the hard fact that someone received no votes whatsoever.

Granted, it was an official Florida for Change event. But wouldn't even the most fervent Obama supporters have given McCain the benefit of some doubt?

Actually, they wouldn't. And they won't. Oh they doubt just about everything the so-called Gentleman from Arizona says, does or makes believe he stands for, but I'd hardly say it was to his benefit. No, the only thing last night's packed house gave McCain were groans -- and a nice hiss when he called derisively referred to Obama as "that one."

If the glazed looks that shrouded the crowd's eyes every time McCain spoke were any indication, you might say they also gave the man their yawns, but from the minute Ol' Mr. Mean Mouth told Senator Obama that it was "good to be with you at a town hall meeting" to the point where he said he knew "what it's like in dark times," the groans had it -- in a landslide.

They groaned when McCain mentioned suspending his campaign, when he asked if we heard the "size of the fine," when he spoke of Reagan (his "hero"), cited Teddy Roosevelt (his "hero"), and cried about follow-ups.

"If we're going to have follow-ups, then I will want follow-ups, as well," sobbed the senator, coming off like the oldest living baby on the planet.

But the most groans came when McCain injected a smarmy "my friend" into his responses. And I say most only because it happened so often. Over and over, the least cordial man in politics tried to insist that he was a friend; and again and again a roomful of genuinely friendly folks groaned otherwise.

Then finally someone asked the question everybody had been thinking all along:

"Does he even have any friends?"

Not in this crowd he didn't, unless friends are the kind of people who call each other "dumbass."

Obama, in contrast, elicited nothing but cheers and applause -- for "not having politicians point fingers," for his proposed "surpluses," when he smacked back with Rick Davis and S-CHIP, after he mentioned the Peace Corps and Darfur, and as he promised that "nobody will be excluded [from healthcare] for pre-existing conditions."

But by far the heartiest cheers and the most resounding applause came when Obama wrapped up the debate by insisting "we're going to have to have the courage and the sacrifice, the nerve to move in a new direction."

Everybody rose, and everybody roared, for what must have been a full five minutes, stopping only so they could say how "presidential" Obama appeared, and how fully he out-classed his opponent. After all, this was the reason everyone had come.

So no, McCain didn't pick up any votes last night in Miami, not in this place anyway; then again, he never was even in consideration.

New York Psychiatrist Uses Verbal Abuse On Wall Street Clients

2008-10-06T16:38:44Z

A New York psychiatrist says caustic verbal abuse is the best treatment for traumatized Wall Street jocks.

Last week the bottom dropped out of the financial market, and in a peculiar way, the brunt of the collapse fell on me. I counsel senior executives at Lehman Brothers, Goldman Sachs, Bear Stearns, Merrill Lynch, Citibank, Deutsche Bank, Moody's, and a number of hedge funds. I've even treated a few US cabinet members in my 30 years in practice.

My schedule is always packed--I see about 80 people a week. But for the past few weeks, my phone has been ringing off the hook, as self-worth on Wall Street plummets faster than WaMu stock.

Dean Baker: Letting the Bank Robber Fix the Bank's Books

2008-10-03T05:52:11Z

If Congress passes the bailout it will be demonstrating an extraordinary belief in the power of redemption. In the past, I have noted the fact that Secretary Paulson's failure to recognize the housing bubble, and the economic and financial havoc that would be created by its inevitable collapse, contributed to the disaster we now face.

It turns out that Secretary Paulson played an even more direct role in bringing down our financial system. The New York Times has a superbly timed piece reporting on how a 2004 change in an SEC rule allowed Bear Stearns, Lehman, and the other major investment banks to leverage themselves to unprecedented levels. Among the highlights of the story is the fact that Treasury Secretary Henry Paulson was one of the main people pushing for this change in SEC rules.

It is remarkable that Congress would be willing to give Secretary Paulson such enormous power in running this bailout given his advocacy of rule changes that played such an important role in this financial disaster, and the extent to which he personally profited from these changes. This would be like giving the bank robber who cleaned out the vaults the opportunity to set the banks finances in order -- and letting him keep the loot. Let's hear it for second chances!

Thomas Frank: Wrecking, Wrecking, Wrecked

2008-09-29T09:49:17Z

The great fear that hung over the business community in the 1970s was death by regulation, and the great goal of the conservative movement, as it rose to triumph in the 1980s, was to remove that threat--to keep OSHA, the EPA, and the FTC from choking off entrepreneurship with their infernal meddling in the marketplace.

Defunding those agencies was one way to stop the killer bureaucrats; another was to stuff them full of business-friendly personnel who would go easy on regulated. The signature conservative regulatory idea became "voluntary enforcement", because everyone now knew that efficient markets regulated themselves. Bad practices or tainted products drove away consumers; therefore firms had an incentive to behave, an incentive far more powerful than some top-down scheme in which big brother told them what to do.

Whether people ever truly believed this nonsense or not, its application over the years makes up the basic story of conservative governance as I tell it in my book, The Wrecking Crew. This is the philosophy by which conservatives gutted the EPA and the Labor Department, turned over the Interior Department and the FDA to the industries they were supposed to regulate, let the CEO of Enron advise the vice president on energy policy, and generally came to regard business, not the public, as government's "customer" (a word that crops up with disturbing frequency in conservative regulatory history).

But it is only now, as we watch the financial system crumble around us, that we can really see the devastating consequences of this folly. It turns out the Securities and Exchange Commission (SEC), which was responsible for regulating investment banks, did a significant part of its job through a voluntary program which firms could participate in or not as they saw fit. As the New York Times told the story on Saturday, this system had--of course--been pushed for by the investment banks themselves, who wanted it in order to avoid the stricter rules from European governments that they would otherwise have had to obey.

And now, as a consequence, the SEC has almost no industry left to regulate. Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs, Morgan Stanley: All of them are gone or restructured. At business's urging, business was left up to its own devices; its own devices turned out to be precisely the things that our grandparents set up regulatory agencies to guard against: euphoria that leads to panic; perverse incentives that lead to fraud; boom that leads to bust.

As you watch the world crumble, try taking your Armageddon with this sprinkling of irony: Over the last three decades, business has got virtually everything it wanted, and its doomsday scenario from the 1970s has come true because of it. The regulators have indeed killed the regulated--not by intrusive meddling but by doing nothing, by taking a nap while the financial sector puffed up the bubble and blew itself to pieces.

Mark Green: 7 Days in America: Obama Passed the 'Commander in Chief' Test But McCain Didn't Pass the 'Economist in Chief' Test: with Huffington, Shrum, Galbraith & Green

2008-09-27T20:44:26Z

7 DAYS PANEL w/ ARIANNA HUFFINGTON, BOB SHRUM, JAMIE GALBRAITH & MARK GREEN, September 27, 2008

Listen to the whole show at AirAmerica.com

MARK GREEN: Bob, you speak often about Obama having to pass the JFK "commander in chief" test. What do you mean and did he do it Friday night?

BOB SHRUM: Nixon ran on the slogan "Experience Counts". People watched the debate and then said, well, Nixon has more experience, but Kennedy has enough, I can vote for him. Commander of Chief threshold questions are not binary questions when these pollsters go out and say who would be a better as Commander of Chief. McCain can have a lead. The real question is -- can Obama be a Commander of Chief? After last night, I do not think there is much doubt.

GREEN: How do you measure that? Or you just know it when you see it?

SHRUM: Look, the whole thesis on the McCain campaign on Commander in Chief basically has been that McCain is so much stronger, more knowledgeable and so much better prepared to do this job. But people who watched the debate saw that Obama was as least as knowledgeable. I think more knowledgeable. And he had a calmness and a presidential quality that I think enable him to pass that test and he was going to pass the test unless he made some big mistake. That is why questions like experience don't work as an argument in presidential debates. In fact the last three times we had a candidate accused of being inexperience compared to their opponent -- in 1960 with John Kennedy, 1976 with Jimmy Carter, 1980 with Ron Reagan -- the so-called inexperienced candidate has won.

GREEN: Most analysis have said that, isolating national security aspects, McCain won on points because he seemed relatively more comfortable then on the economic issues. Arianna, do you agree with that?

ARIANNA HUFFINGTON: Yes, I think McCain won primarily because he stopped the bleeding of that week. This has been a terrible week for him. He gambit trying to concentrate on the debate, flying to Washington, all that stuff did not work. It made his campaign seemed in free fall. The greatest gain for him was the debate. It put an end to that impression. The greatest problem with Obama he did not make the clear distinctions between the two of them. This is the moment to really draw a very clear distinction between two philosophies of government. In a sense it's what Jamie is writing in his book on the free market, on how Ron Reagan said that government is not the solution, it is the problem. That philosophy is completely bankrupt and Obama did not take the opportunity to point it out yesterday.

GREEN: Who thought McCain came off well because he was on offense on foreign policy issues? Like on the exchange on whether Obama would meet with hostile foreign leaders without preconditions -- did McCain succeed in making Obama seem weak, as Hillary tried to do on this point in the primaries?

SHRUM: It did not work in the primaries and did not work last night. Because the country is pretty sensible about this. There has been actual some polling about this. You can go off and negotiate with these people. This does not mean you are giving into these people. Actually I think this will not be the first time Arianna and I disagree. I think Obama sees this as a dynamic process. The first stop in the process was to pass this threshold in terms of being commander in chief. That was his principal aim.

GREEN: As for the first 40 minutes on the economy, it struck me that Obama really cleaned up. While he bluntly asserted in his first answer that the financial collapse this week was a 'final verdict" on the failure of Bush's and McCain's anti-regulatory economics, McCain answered with irrelevant platitudes about earmarks and "greed" -- and somehow never mentioned the middle class. Did he flunk his exam on the biggest issue of 2008?

SHRUM: Yes, I think people will be very doubtful that McCain even seemed to care that much about the economy; he talked about earmarks four times, and never talked about the middle class once!. I thought Obama, today, by the way, in his appearance in North Carolina after the debate, was really smart. He said '[McCain] railed against the study of bears in Montana, but had nothing to say about Americans who can't afford to go to college!' I mean, I think that sums up what the country saw when he talked about economics last night.

GALBRAITH: It's clear that John McCain doesn't have an economic program; what he has is a slogan, which is 'cut spending.' And cut spending on everything, except for Pentagon veterans, and maybe one other thing, like entitlements. Which would mean that there would be no effective response to the recession that we're in, there would be no program to bring us out of it. His administration would see a long period of economic stagnation and rising unemployment and wouldn't have the slightest clue about what to do about it. So it's very plain, in fact, that there's really no credible economic component to this campaign.... There's a good reason that Republicans have nothing to say [about the economic crisis]; it's the policies of the Bush administration that have landed us in the financial debacle that we are presently living through, I mean, there's just no question about that. To go to another recent media event, the President's speech a night or so ago was an extraordinary exercise in evasion of responsibility; an attempt to pretend that these things that have happened could not have been forseen, when in fact they were a direct outgrowth of very specific policy choices that this administration made early on.

GREEN: You had a significant Washington Post piece this week on Congressional action on the credit crisis. What's the current state of play?

GALBRAITH: The situation is really very serious, and action is absolutely required. The action I propose is to lift the FDIC insurance cap, but to make that work would require a huge re-regulation of the banking industry; those two things are two sides of the same coin. But I suspect that we will not be able to change the direction of the legislation presently moving through Congress. We started with a three-page Paulson bill; we now have a 102-page bill which is a vast improvement, with many more protections for the public interest than the original one did. To come back to the presidential campaign, John McCain is in a difficult spot that he is the least equipped to handle. You have to be able to condense and express very clearly the differences between these various proposals -- differences between blank checks and oversight, differences between proposals that have a reasonable chance of working and proposals that probably would not work at all, differences between proposals that would waste a lot of resources and those that would seriously try to limit waste.

GREEN: Can you synthesize what bill is mostly likely to be enacted and to be agreed to by both nominees?

GALBRAITH: I think we will get a bill that will have some safeguards in it, and that will get us through the campaign season, possibly as far as next year. We will not get a bill that resolves this issue in a definitive way because I think that there are such basic problems with the original Treasury idea that you're going to go out and basically buy up the bad assets in the open market. GREEN: So there will be a round 2 for the 44th president to look at after January 20? GALBRAITH: With luck you'd get that far, yes, with luck. GREEN: Without luck? GALBRAITH: Without luck you could be back in the soup before Christmas. It's extremely hard to tell at this point.

GREEN: Anyone disagree that Obama won the debate on the economy?

SHRUM: No.

GREEN: That's a good succinct answer, Bob.

GALBRAITH: Well I thought that the worst part of the debate was Jim Leherer's effort to impose an economic choice on the candidates at the very beginning, by demanding to know what Obama would give up from his positive agenda in order to pay for this bailout...The needs of the economy are going to be greater, and the requirements for action are going to be stronger, and the case for Obama's program gets stronger, and not weaker, as you go down this path of the dissolution of the previous financial system that supported our economy.

SHRUM: Look, this is the classic establishment Beltway view, it happens every four years. Republicans don't care about it; they just say 'oh, our tax cuts add up, and they'll add more revenue than they lose,' which is now demonstrably untrue. And it's a kind of one-way ratchet that pushes against programs like healthcare reform. I think Obama handled it exactly right last night.

GALBRAITH: I think Obama pushed back very hard, but I think it was really in many ways improper for Leherer to try and frame these issues in those terms, it was economically illiterate.

GREEN: Finally, some style questions. Remember Gore's sighing in debates in 2004. Who thinks that McCain's repetition of 'you don't understand' and Obama's repetition of 'John's right' combined to help McCain appear to be on the offensive?

HUFFINGTON: I think it helped him. I was watching the debate with two people, one who was looking at from the point of view of a director and what's working in stylistic and dramatic terms, and Cory Booker, the Mayor of Newark, was looking at it from the point of view from what the people he represents would want to hear. And they both thought there was something missing, in the fact that Obama did not give voice to the outrage that so many Americans, middle class and poor, are feeling. He basically was trying to be too much in the club, he was trying to be one of the boys, as opposed to being somebody who wanted to change the club's rules. And so the 'you are right' [riff] was the sort of senatorial politesse that seemed out of place with the crisis the country is going through.

GREEN: Or is his accommodating approach both authentic to him and an effective antidote for nervous white voters?

SHRUM: Well, he hasn't done badly by sticking to that style, which I think is authentically who he is. The constant repetition of 'you don't understand' from McCain, to someone who evidently understood, and was demonstrating over and over again that he understood, didn't do McCain any good at all. GREEN: Did it contribute to McCain coming across as condescending and grumpy? SHRUM: I think he came across as grumpy and graceless. But look, the fundamental point here, which we just can't lose sight of, is that the one thing I think Obama didn't want to do was come across as arrogant or angry. He didn't do that: he came across as presidential, he came across as in command of foreign policy, he came across as in command on the economy. He came across as someone who did have an economic plan, does have an economic vision. And maybe he does need to get grittier, maybe he will get grittier. But right now, he's beating McCain by miles on this issue.

GALBRAITH: Lincoln used to say that his courtroom strategy was to give away six points to the other side, and then turn the jury on the seventh. I got the impression that Barack Obama is a student of Abraham Lincoln on that, and it worked pretty well for him last night.

HUFFINGTON: But this is a point, Bob, that is being made by many people who are in touch, much more than we are, with people who are hurting on a daily basis. And they are hearing their voices, and they are longing for someone on the national stage to give voice to their own pain about what they are going through; that's something that is being felt by many people throughout the country.

SHRUM: My disagreement is that I believe Obama is giving voice to those folks, maybe not in exactly the way you would want him to do it, but I think he's doing it in a way that will get him elected President of the United States so that he can actually help them.

GREEN: How would you advise McCain to learn from this debate before the next one?

SHRUM: Well, he's not going to call Jamie, but he could at least call Steve Forbes, Larry Kudlow, any number of the conservative economists who have signed on with him, and say 'give me some coherent plan, some argument I could make, about what I'm going to do about the economy, how I'm going to respond to the problems of the middle class and the pressures that the people are feeling.' And remember, that debate will come after this rescue bill passes and when we're headed into a recession. This issue is going to get bigger, not smaller.

GREEN: So overall, who won this debate politically?

HUFFINGTON: I think it was a draw. I think that it basically did something good for Obama, which was clearing the threshold for Commander-in-Chief, and it did something good for McCain in that it staunched his bleeding of the week.

GALBRAITH: McCain needed a very strong victory in this debate, because it was on his strong subject, and he didn't get that. The issues are clearly moving toward the economic crisis, and McCain doesn't have the credentials in that area, he simply doesn't have the credibility on that. And even if he did call Steve Forbes and Larry Kudlow, I think he'd be hard-pressed to overcome that.

GREEN: There's a consensus that while Obama passed his 'commander-in-chief' test, McCain didn't pass his "economist in chief' test and didn't alter the arc of the campaign which Boama is now winning. So short of a gaffe or a surprise, do we know who the next president will be?

SHRUM: Short of a gaffe or some unexpected development, to paraphrase Tim Russert's line, we now have a pretty good idea, in fact we know who the next President will be. Because the fundamental forces within this election move toward a Democratic victory. And there were some tests that Obama had to pass, and he's passed those tests.

Top Wall Street Executives Made More Than $3 Billion Before Financial Crisis

2008-09-27T11:48:31Z

Wall Street's five biggest firms paid more than $3 billion in the last five years to their top executives, while they presided over the packaging and sale of loans that helped bring down the investment-banking system.

Merrill Lynch & Co. paid its chief executives the most, with Stanley O'Neal taking in $172 million from 2003 to 2007 and John Thain getting $86 million, including a signing bonus, after beginning work in December. The company agreed to be acquired by Bank of America Corp. for about $50 billion on Sept. 15. Bear Stearns Cos.'s James ``Jimmy'' Cayne made $161 million before the company collapsed and was sold to JPMorgan Chase & Co. in June.