Morgan Stanley to pay $2.6 bn to settle mortgage bond probe

Yahoo - AFP, 26 February 2015

Morgan Stanley said Wednesday it had reached a preliminary agreement with
 the Justice Department to pay $2.6 billion to settle a probe into its marketing
of mortgage-backed securities (AFP Photo/Emmanuel Dunand)

New York (AFP) - Morgan Stanley said Wednesday it had reached a preliminary agreement with the Justice Department to pay $2.6 billion to settle a probe into its marketing of mortgage-backed securities.

The settlement resolves claims the civil division of the Justice Department "indicated it intended to bring against the company," Morgan Stanley said in a securities filing.

The investment bank previously described regulatory probes as focusing on the bank's packaging of securities linked to subprime and non-subprime residential mortgages ahead of the housing bust and financial crisis.

The probes focused on issues including "the Company's due diligence on loans that it purchased for securitization, the Company's communications with ratings agencies, the Company's disclosures to investors, and the Company's handling of servicing and foreclosure related issues," the bank said in a November 2014 filing.

On Wednesday, Morgan Stanley trimmed its 2014 earnings from continuing operations by $1.35 per share from the $2.96 per share previously reported in light of the settlement.

Morgan Stanley to pay $1.25-billion settlement for bad mortgages

Deutsche Welle, 5 February 2014

US banking giant Morgan Stanley has agreed in principle to pay a $1.25-billion settlement for its involvement in the housing market bust. The bank allegedly misled investors about mortgage-backed securities.

Although still subject to final approval, Tuesday's settlement would resolve a 2011 lawsuit filed by the US Federal Housing Finance Agency (FHFA) against Morgan Stanley.

The FHFA accuses the Wall Street firm of making false statements and omitting information in the sale of around $11 billion (8 billion euros) in mortgage-backed securities to Fannie Mae and Freddy Mac. The later two companies, which are state sponsored, provide funding to the US housing market.

US banks have faced a host of lawsuits since the 2008 financial crisis. In November, JP Morgan Chase agreed to pay $13 billion, the largest settlement ever paid by a corporation in a government settlement.

slk/jm (AFP, Reuters, dpa)

The four business gangs that run the US

The Sydney Morning Herald, Ross Gittins, December 31, 2012 

Illustration: Michael Mucci.

IF YOU'VE ever suspected politics is increasingly being run in the interests of big business, I have news: Jeffrey Sachs, a highly respected economist from Columbia University, agrees with you - at least in respect of the United States.

In his book, The Price of Civilisation, he says the US economy is caught in a feedback loop. ''Corporate wealth translates into political power through campaign financing, corporate lobbying and the revolving door of jobs between government and industry; and political power translates into further wealth through tax cuts, deregulation and sweetheart contracts between government and industry. Wealth begets power, and power begets wealth,'' he says.

Sachs says four key sectors of US business exemplify this feedback loop and the takeover of political power in America by the ''corporatocracy''.

First is the well-known military-industrial complex. ''As [President] Eisenhower famously warned in his farewell address in January 1961, the linkage of the military and private industry created a political power so pervasive that America has been condemned to militarisation, useless wars and fiscal waste on a scale of many tens of trillions of dollars since then,'' he says.

Second is the Wall Street-Washington complex, which has steered the financial system towards control by a few politically powerful Wall Street firms, notably Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley and a handful of other financial firms.

These days, almost every US Treasury secretary - Republican or Democrat - comes from Wall Street and goes back there when his term ends. The close ties between Wall Street and Washington ''paved the way for the 2008 financial crisis and the mega-bailouts that followed, through reckless deregulation followed by an almost complete lack of oversight by government''.

Third is the Big Oil-transport-military complex, which has put the US on the trajectory of heavy oil-imports dependence and a deepening military trap in the Middle East, he says.

''Since the days of John D. Rockefeller and the Standard Oil Trust a century ago, Big Oil has loomed large in American politics and foreign policy. Big Oil teamed up with the automobile industry to steer America away from mass transit and towards gas-guzzling vehicles driving on a nationally financed highway system.''

Big Oil has consistently and successfully fought the intrusion of competition from non-oil energy sources, including nuclear, wind and solar power.

It has been at the side of the Pentagon in making sure that America defends the sea-lanes to the Persian Gulf, in effect ensuring a $US100 billion-plus annual subsidy for a fuel that is otherwise dangerous for national security, Sachs says.

''And Big Oil has played a notorious role in the fight to keep climate change off the US agenda. Exxon-Mobil, Koch Industries and others in the sector have underwritten a generation of anti-scientific propaganda to confuse the American people.''

Fourth is the healthcare industry, America's largest industry, absorbing no less than 17 per cent of US gross domestic product.

''The key to understanding this sector is to note that the government partners with industry to reimburse costs with little systematic oversight and control,'' Sachs says. ''Pharmaceutical firms set sky-high prices protected by patent rights; Medicare [for the aged] and Medicaid [for the poor] and private insurers reimburse doctors and hospitals on a cost-plus basis; and the American Medical Association restricts the supply of new doctors through the control of placements at medical schools.

''The result of this pseudo-market system is sky-high costs, large profits for the private healthcare sector, and no political will to reform.''

Now do you see why the industry put so much effort into persuading America's punters that Obamacare was rank socialism? They didn't succeed in blocking it, but the compromised program doesn't do enough to stop the US being the last rich country in the world without universal healthcare.

It's worth noting that, despite its front-running cost, America's healthcare system doesn't leave Americans with particularly good health - not as good as ours, for instance. This conundrum is easily explained: America has the highest-paid doctors.

Sachs says the main thing to remember about the corporatocracy is that it looks after its own. ''There is absolutely no economic crisis in corporate America.

''Consider the pulse of the corporate sector as opposed to the pulse of the employees working in it: corporate profits in 2010 were at an all-time high, chief executive salaries in 2010 rebounded strongly from the financial crisis, Wall Street compensation in 2010 was at an all-time high, several Wall Street firms paid civil penalties for financial abuses, but no senior banker faced any criminal charges, and there were no adverse regulatory measures that would lead to a loss of profits in finance, health care, military supplies and energy,'' he says.

The 30-year achievement of the corporatocracy has been the creation of America's rich and super-rich classes, he says. And we can now see their tools of trade.

''It began with globalisation, which pushed up capital income while pushing down wages. These changes were magnified by the tax cuts at the top, which left more take-home pay and the ability to accumulate greater wealth through higher net-of-tax returns to saving.''

Chief executives then helped themselves to their own slice of the corporate sector ownership through outlandish awards of stock options by friendly and often handpicked compensation committees, while the Securities and Exchange Commission looked the other way. It's not all that hard to do when both political parties are standing in line to do your bidding, Sachs concludes.

Fortunately, things aren't nearly so bad in Australia. But it will require vigilance to stop them sliding further in that direction.

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"Recalibration of Free Choice"–  Mar 3, 2012 (Kryon Channelling by Lee Caroll) 

(Subjects: (Old) Souls, Midpoint on 21-12-2012, Shift of Human Consciousness, Black & White vs. Color, 1 - Spirituality (Religions) shifting, Loose a Pope “soon”, 2 - Humans will change react to drama, 3 - Civilizations/Population on Earth,  4 - Alternate energy sources (Geothermal, Tidal (Paddle wheels), Wind), 5 – Financials Institutes/concepts will change (Integrity – Ethical) , 6 - News/Media/TV to change, 7 – Big Pharmaceutical company will collapse “soon”, (Keep people sick), (Integrity – Ethical)  8 – Wars will be over on Earth, Global Unity, … etc.) - (Text version)

"THE BRIDGE OF SWORDS"– Sep  29, 2012 (Kryon Channelling by Lee Caroll) - (Text version)

Bankers still overpaid, says Morgan Stanley boss

US investment bank's chief executive James Gorman says remuneration and jobs will have to be sacrificed to boost shareholder returns

guardian.co.uk, Josephine Moulds, Friday 5 October 2012

The Morgan Stanley boss James Gorman says bankers need to expect
lower pay. Photograph: Mark Lennihan/AP

The chief executive of the US investment bank Morgan Stanley has said Wall Street pay is still "way too high" and remuneration and jobs will have to be sacrificed to boost shareholder returns.

The comments by James Gorman, who took over the running of the bank in 2010, set him apart from longer standing peers who have always defended high pay as necessary for retaining key staff.

But Gorman told the Financial Times: "Compensation is way too high. As a shareholder I'm sort of sympathetic to the shareholder view that the industry is still overpaid."

Morgan Stanley is cutting 4,000 jobs, 7% of its workforce, by the end of this year and the bank said it would consider more redundancies next year and pay cuts for the remaining staff.

Gorman said that in the past bankers' pay had always increased with revenues, but never came down when revenues came down, as banks were so afraid of losing staff. "That's a classic Wall Street case of 'heads I win; tails you lose'. The current Wall Street management is a little tougher-minded about that and shareholders are certainly tougher-minded."

His comments follow announcements from a string of European banks ceding to pressure from shareholders over pay. Deutsche Bank last month said it was cutting bonuses and would spend less of its revenue on pay. UBS said it was considering capping bonuses and linking them to the bank's profitability. The Barclays chief executive, Antony Jenkins, said bonuses would be linked to the way staff did business, not just the revenues they generated.

These moves are being seen as a gradual shift to a new business model, as banks adapt to a climate of tougher regulation forcing them to reduce leverage, lower trading volumes, growing competition from the likes of hedge funds and private equity firms, and increased public scrutiny.

His comments echo those made by Deutsche Bank's co-chief executive Anshu Jain, who recently said the proportion of revenues spent on pay at the bank would have to decrease. "The payout ratio, it's got to go down," he said. "Employees must make their contribution." As part of a major overhaul of strategy, Deutsche also became the first global bank to say it would pay its top 150 managers the deferred part of its bonus only after five years.

Related Article:

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A Former Rising Star At Morgan Stanley Is Going To Prison For Bribing A Chinese Official

Business Insider, Reuters, by Jessica Dye, Aug 17, 2012

NEW YORK (Reuters) - A former Morgan Stanley real estate dealmaker was sentenced to nine months in prison on Thursday for skirting the bank's internal controls in an effort to enrich himself and a Chinese government official.

Garth Peterson, Screenshot CNBC 

Garth Peterson, 43, had pleaded guilty in April to conspiring to evade internal accounting controls that Morgan Stanley was required to maintain under the U.S. Foreign Corrupt Practices Act, an anti-bribery law.

Peterson, a managing director in Morgan Stanley's real estate investment and fund advisory business in Shanghai, was fired in 2008 amid a probe into a suspect real estate deal, court records showed.

While federal investigators have increased efforts in recent years to enforce the FCPA, which is intended to thwart illicit payments to foreign officials, Peterson's case is among the first related to the financial services industry.

The sentence, imposed by U.S. District Judge Jack Weinstein in Brooklyn, New York, was much shorter than the 51- to 60-month term sought by prosecutors.

A spokesman for U.S. Attorney Loretta Lynch in Brooklyn declined to comment.

During Thursday's sentencing hearing, Peterson apologized to his family and his former employer, saying he went down "the wrong track" when he entered a suspect real estate deal with an unnamed official from Yongye, a state-owned real estate investment corporation in Shanghai.

Prosecutors accused Peterson of helping the official and a Canadian lawyer they did not identify secretly buy a stake, at a discounted price, in a valuable Shanghai property owned by a Morgan Stanley fund.

In exchange, the official would help find investment opportunities for Morgan Stanley in China's real estate market, prosecutors said.

The discounted property stake was eventually worth nearly $5.4 million more than Peterson and his accomplices paid, prosecutors said.

Peterson was described by some colleagues as a rising star at Morgan Stanley before his termination, according to his pre-sentencing memorandum.

In court filings, Peterson said that he brought the official into the deal as an expression of "guanxi" - a Chinese custom referring to the exchange of favors in professional relationships.

But prosecutors said that Peterson used the deal to curry favor and turn a personal profit.

In April, Peterson settled a related U.S. Securities and Exchange Commission civil case. He agreed to never again work in the securities industry and to relinquish his share in the real estate deal, which was valued by the SEC in April at $3.4 million.

Morgan Stanley was not charged and said it cooperated with authorities. "Mr. Peterson's intentional circumvention of Morgan Stanley's internal controls was a deliberate and egregious violation of our values and policies," Morgan Stanley spokesman Matt Burkhard said.

Judges often impose prison terms of less than one year in FCPA cases, and the Peterson case underscores the inability of prosecutors to win greater punishments, said Mike Koehler, an assistant professor of business law at Southern Illinois University School of Law.

"The DOJ speaks with very lofty rhetoric when it comes to FCPA enforcement, but judges don't seem to view the issue the same way," he said.

The case is U.S. v. Peterson, U.S. District Court, Eastern District of New York, No. 12-cr-00224.

(Reporting By Jessica Dye; Editing by Steve Orlofsky, Bernard Orr)

Libor Fraud Was Happening In 1991, Trader Says, 17 Years Before Timothy Geithner Claims He Knew

The Huffington Post, Mark Gongloff, Chief financial writer, Jul 27, 2012 

Tim Geithner claims he learned of Libor manipulation when the rest of us commoners did, in 2008. New evidence keeps coming out suggesting he should have known much, much earlier.

The latest example -- which puts the earliest time-stamp on Libor manipulation we've seen yet -- is a Financial Times op-ed by former Morgan Stanley trader Douglas Keenan. He claims that Libor, a key short-term bank lending rate that affects mortgages and other interest rates throughout the economy, was being jerked around for fun and profit as long ago as 1991.

Let that sink in for just a minute: Libor was being manipulated 17 years before the financial crisis and Geithner's babe-in-the-woods discovery of it, according to Keenan. Geithner wasn't in charge of the New York Fed at the time, but if this was widespread knowledge years before his arrival, it makes you wonder how he could not have heard about it for so long.

Now here's another Keenan allegation that will blow your mind. He notes that the guy running Morgan Stanley's rate-trading desk back then was none other than Bob Diamond. Yes, the same Bob Diamond that ended up becoming Barclays CEO, only to step down because his bank manipulated Libor like most people change socks.

Keenan doesn't say he has any evidence that Diamond was some sort of Libor-manipulatin' Ninja back in 1991. But Keenan does say that it was widespread knowledge even then that banks lied habitually about Libor.

He found this out when, in his early days on the trading desk, he noticed that Libor fixings -- set by a panel of banks, who declare, on a hilarious honor system, what their borrowing costs are -- were noticeably different from what financial markets predicted they should be:

Futures contracts on three-month Libor were -- and are -- traded on the London International Financial Futures Exchange (Liffe, now part of NYSE Euronext). There was a standard contract for the month of September. That contract had its rate settled on the third Wednesday of the month, at 11 o'clock.

In 1991, I had live trading screens that showed the Libor rates. In September of that year, on the third Wednesday, at 11 o'clock, I watched those screens to see where the futures contract should settle. Shortly afterwards, Liffe announced the contract settlement rate. Its rate was different from what had been shown on my screens, by a few hundredths of a per cent.

That few hundredths of a percentage point doesn't sound like a very big deal, but it adds up, day after day after day, on hundreds of trillions of dollars' worth of loans and derivatives contracts. Keenan says it was costing him money on his trades, and he complained to Liffe about it, getting nowhere.

Then he complained about it to his new buddies on the trading desk, who all laughed and laughed at him (emphasis mine):

I talked with some of my more experienced colleagues about this. They told me banks misreported the Libor rates in a way that would generally bring them profits. I had been unaware of that, as I was relatively new to financial trading. My naivety seemed to be humorous to my colleagues.

Imagine how hilarious Tim Geithner's naivete must seem to them! He had, after all, been in charge of the New York Federal Reserve since 2003. That organization runs point in the financial markets for the Fed and thus has intimate knowledge of and involvement in interest rates, including Libor. New York Fed officials talk all the time to people in the market. Somewhere along the way you might think they'd have heard about Libor manipulation.

In fact, they definitely heard about it at least once, in 1998, from Fed analyst Jeremy Berkowitz, who wrote a paper raising alarms about the accuracy of Libor and the ease with which it could be manipulated. Anecdotes in his paper dated back to 1996.

As Business Insider's Simone Foxman wrote, the report "suggests that the Fed was already ... concerned about the effects of inaccurate reporting by banks about their lending practices ten years before the financial crisis. Further, acknowledgments that a very small contingent of banks potentially could manipulate rates suggests that the Fed may very well have seen this coming."

And yet somehow Geithner only found out about Libor manipulation in 2008, a decade later.

This is an extraordinary missed opportunity, if it's true. Although it's hard to imagine what Geithner would have done about Libor manipulation had he learned earlier, considering his "actions" after his late discovery of it. He apparently didn't tell British regulators that the New York Fed had direct evidence that Barclays had admitted to not submitting an "honest" Libor. He didn't raise alarm bells in the market about the possibility that Libor was not accurate. He didn't tell U.S. banks to cool it with the Libor fraud.

What's more, he allowed Libor to be used in loans to banks under the Term Asset-Backed Securities Loan Facility and to American International Group, rubber-stamping Libor's legitimacy and potentially costing taxpayers millions, if not billions, of dollars.

Geithner's response raises questions about just how cozy he and other regulators have been with the banks they're supposed to be regulating -- and makes it even harder to believe his claim of utter cluelessness about Libor manipulation before 2008.

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Moody's downgrades 15 major banks

BBC News, 22 June 2012

Big Banking 

• Minority vote no to HSBC boss pay
• Barclays hit by revolt over pay
• Barclays to sell Blackrock stake
• HSBC profits fall on debt value

RBS said it "disagrees" with Moody's
move

The credit ratings agency Moody's has downgraded 15 global banks and financial institutions.

The UK banks downgraded were Royal Bank of Scotland, Barclays and HSBC. Lloyds also had its rating cut by Moody's in a separate announcement.

In the US, Bank of America and Citigroup were among those marked down.

BBC business editor Robert Peston said that banks were concerned as the downgrades may make it harder for them to borrow money commercially.

Moody's global banking managing director Greg Bauer said in the agency's statement: "All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities."

The other institutions that have been downgraded are Goldman Sachs, Morgan Stanley, JP Morgan Chase, Credit Suisse, UBS, BNP Paribas, Credit Agricole, Societe Generale, Deutsche Bank and Royal Bank of Canada.

'Disagrees'

Moody's said it recognised "the clear intent of governments around the world to reduce support for creditors", but added that they had not yet put the frameworks in place that would allow them to let banks fail.

Some of the banks were put on negative outlook, which is a warning that they could be downgraded again later, on the basis that governments may eventually manage to withdraw their support.

In a statement, Royal Bank of Scotland (RBS) responded to its downgrade saying: "The group disagrees with Moody's ratings change, which the group feels is backward-looking and does not give adequate credit for the substantial improvements the group has made to its balance sheet, funding and risk profile."

RBS estimated that the downgrade could mean it needing to find an extra £9bn in collateral for its debts.

Lloyds said it believed that the change would have "limited impact on our funding costs and market capacity".

Of the banks downgraded, four were cut by one notch on Moody's ranking scale, including HSBC, Royal Bank of Scotland, and also Lloyds.

A further 10 banks had their rating reduced by two notches, including Barclays. Credit Suisse was lowered by three notches.

"The biggest surprise is the three-notch downgrade of Credit Suisse, which no one was looking for," said Mark Grant, managing director of Southwest Securities.

Peter Hahn, a former executive at Citigroup and now a lecturer at Cass Business School in London, said the downgrades could limit the banks' activities.

He added: "Banks are going to have to put up collateral in their transactions with other banks.

"As they get downgraded, other banks and system players don't want exposure.

"It's a constraint on capital, it's a constraint on business, so it's obviously not welcome for us, trying to get more money into the economy."

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Facebook IPO: banks investigated for allegedly keeping negative news secret

Morgan Stanley, JP Morgan and Goldman Sachs are said to have shared with big investors while keeping public in the dark

guardian.co.uk, Tom McCarthy in New York, Tuesday 22 May 2012

Facebook stock charted a lackluster performance in its first day of trading
 before falling steeply at the start of this week. Photograph: Brendan
Mcdermid/Reuters

Financial regulators are to investigate whether the banks in charge of Facebook's initial stock offering broke the rules by selectively releasing negative news about the company before shares went on sale.

The financial industry regulatory authority (Finra) is looking into allegations that Morgan Stanley and other banks released reduced revenue forecasts for Facebook to big investors – but not the general public – before Friday's IPO. Such activity could constitute a violation of securities law.

Mary Schapiro, chairwoman of the securities and exchange commission, said it also had concerns. Speaking to reporters outside a Senate banking committee hearing into JP Morgan's financial reporting, she said: "I think there is a lot of reason to have confidence in our markets and in the integrity of how they operate, but there are issues that we need to look at specifically with respect to Facebook."

Facebook stock charted a lackluster performance in its first day of trading before falling steeply at the start of this week. News of the Finra investigation drove the stock down more than 8% Tuesday.

It is the second regulatory investigation tied to the Facebook IPO. The SEC announced Friday that it was looking into reports of breakdowns in trading mechanisms at the Nasdaq exchange as the stock went on sale.

And the SEC investigation isn't the only headache for Nasdaq after the Facebook IPO. An investor is suing the exchange, accusing it of negligence in handling trades that resulted in losses for traders, Reuters reports.

All three banks that worked on the Facebook deal – Morgan Stanley, JP Morgan and Goldman Sachs – will be investigated for allegedly sharing the negative news with institutional investors but not the public at large, Finra chairman Richard Ketchum told Reuters.

"If true, the allegations are a matter of regulatory concern to Finra and the SEC," Ketchum said.

The Facebook underwriters already had come under criticism for rolling out the stock at a price the market could not sustain, although the aggressive pricing netted $16bn for Facebook owners.

Barry Ritholtz, the widely followed financial blogger and chief market strategist at Fusion IQ in New York, criticised all sides – Facebook, Morgan Stanley and Nasdaq.

"Thus, what we see are a series of bad decisions made by Facebook's executives going back many years," he wrote on his blog Tuesday. "The insiders got greedy, too clever by half, in how they used secondary markets. They picked a bad banker and an awful exchange," Ritholtz said.

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Anti-Wall Street protesters upstage Morgan Stanley meet

Reuters, by Lauren Tara LaCapra, Purchase, New York, Tue May 15, 2012

(Reuters) - Anti-Wall Street protesters upstaged Morgan Stanley's annual meeting on Tuesday, lobbing tough questions at Chairman and Chief Executive James Gorman and shouting negative comments over a bank official who was attempting to read a tally of shareholder votes.

The 53-year-old CEO kept his cool through the meeting, but took protesters to task after one accused him and the board of directors of "immoral" and "unethical" practices. Among protesters' complaints were the bank's high pay packages, job cuts and financial reform lobbying efforts.

"I take umbrage at the suggestion that our board did anything unethical and I can't just let that sit out there," said Gorman.

He went on to say that although some of Morgan Stanley's business practices, including mortgage servicing, had been poor in the past, "I don't regard those as immoral or unethical."

After engaging in debate with some members of the protester group, which identified itself as "The 99% Spring" and was similar in tone to the "Occupy Wall Street" movement, Gorman instructed Corporate Secretary Martin Cohen to announce the preliminary shareholder vote tally.

But protesters quickly drowned out Cohen by yelling negative comments about Morgan Stanley and Wall Street.

"We will not be quiet until we create a system that prevents the 1 percent from ripping off the 99 percent," they chanted in a call-and-response fashion.

Once the protesters had finished their chant, Cohen announced that 93.6 percent of shareholders voted for the election of directors, 94.8 percent of investors approved proposed compensation for top executives and 81.4 percent approved a plan to add clawback provisions to bonuses stemming back to 2007.

There followed a second, lengthier question-and-answer session between Gorman and shareholders - who were mostly protesters - that pushed the meeting to over an hour.

After the meeting, which was staffed with security guards and police, Gorman shook hands with a few more supportive shareholders and fielded more questions from reporters.

Gorman said that Morgan Stanley does not have positions similar to the derivatives trades that have caused at least $2 billion in losses for competitor JPMorgan Chase & Co. Morgan Stanley's corporate treasury desk, which manages the company's excess liquidity, is "conservative," he said.

Gorman also said he does not believe JPMorgan's trading losses, which caused negative reactions from rating agencies for that bank, will affect Moody's Corp's assessment of Morgan Stanley's rating.

"I don't think JPMorgan has anything to do with how Morgan Stanley is rated," said Gorman.

Moody's is in the process of assessing downgrades for several large banks, and has said it might lower Morgan Stanley's three notches, from "A2" to "Baa2," which is just two notches above junk. Moody's has an open dialogue with Morgan Stanley as it gears up for the release of its assessment in June, Gorman said.

Gorman, who opened the annual meeting by saying he hoped it would be "respectful and orderly," had been prepared for the protesters. All considered, he said, "I thought it was pretty smooth."

A shareholder who shook hands with Gorman said he was upset that the event was dominated by protesters' political statements rather than more traditional shareholder concerns. "I want the stock to go back to where it was - that's all I want," he said.

Morgan Stanley shares were up 0.3 percent at $14.35 in afternoon trading on Tuesday. Its shares closed at $14.30 on Monday, less than half the company's stated book value of $31.42 as of March 31.

(Reporting by Lauren Tara LaCapra; Editing by Gerald E. McCormick and Tim Dobbyn)

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Some Wall Streeters Facing Tough Times On Just $350,000 A Year

MSNBC News, by msnbc.com staff, Mar 1, 2012

Pity the poor investment bankers.

Facing a sharp decline in revenue from banking and trading, many Wall Street firms have trimmed 2011 discretionary pay, according to a Bloomberg News report, and that has translated into shrinking paychecks and widespread unease.

Wall Street types like Andrew Schiff, director of marketing for broker-dealer Euro Pacific Capital, are feeling the pain.

Schiff told Bloomberg that his reduced bonus means his $350,000 salary doesn’t cover his family’s private-school tuition, a Kent, Conn., summer rental and the upgrade they would like for his 1,200-square- foot Brooklyn duplex.

“I feel stuck,” Schiff told Bloomberg. “The New York that I wanted to have is still just beyond my reach.”

Cue the tiny violins.

Across Wall Street, smaller bonus checks are making upscale lifestyles harder to maintain, Bloomberg reports, based on interviews with bankers, accountants, therapists, advisers and headhunters.

At Goldman Sachs and Barclays Capital, the cuts were at least 25 percent, Bloomberg said, while Morgan Stanley has capped cash bonuses at $125,000.

However, Bloomberg also notes that median household income in 2010 was $49,445, according to the U.S. Census Bureau — lower than the previous year and less than 1 percent of Goldman Sachs CEO Lloyd Blankfein’s $7 million restricted-stock bonus for 2011.

Richard Scheiner, a 58 year-old real-estate investor and hedge-fund manager, told Bloomberg that he spends about $500 a month to park one of his two Audis in a garage and at least $7,500 a year each for memberships at the Trump National Golf Club and a gun club in upstate New York.

He also pays $17,000 a year on food, health care, boarding and a daily dog-walker (who charges $17 each per outing) to look after a labradoodle named Zelda and a rescued bichon fries named Duke.

But to make ends meet he has sold two motorcycles he doesn’t use and makes do with his Porsche 911 Carrera 4S Cabriolet, which he called “the Volkswagen of supercars,” Bloomberg said.

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NYC pension funds want tougher Wall Street clawbacks

Reuters, Wed Dec 21, 2011

(Reuters) - New York City's pension funds want three big Wall Street banks to impose tougher compensation-clawback rules for top executives.

NYC Pension Funds and City Comptroller John Liu called on the boards of Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co to strengthen language in top executives' compensation agreements. The funds held $483.3 million worth of stock in the three banks as of Monday.

In shareholder proposals, released on Wednesday, the pension funds proposed that the banks remove the word "material" from language in compensation contracts that require a "material" loss or reputational harm to have occurred before executives' pay can be reclaimed.

They also proposed that the banks be able to claw back supervisors' pay for the bad behavior of employees they manage, and that all clawback actions be disclosed to shareholders.

"No one should profit or be rewarded with bonuses when engaged in improper or unethical behavior," said Liu. "These tougher clawback provisions will not only recover money that shouldn't have been paid in the first place, but also set the tone for a stronger standard of conduct for company executives as well as their bosses."

A press release from Liu's office noted that JPMorgan, Goldman and Morgan Stanley have each paid more than $100 million over the past 18 months to settle state or federal charges in connection with mortgage securities. There have been no publicly disclosed clawback actions for any of the three banks.

A spokeswoman for Morgan Stanley declined to comment. Representatives for JPMorgan Chase and Goldman did not immediately return requests for comment on the proposal.

The New York City pension system held $108 billion under management as of September 30 for retirement funds of teachers, police, firefighters and other city employees.

The funds held 10.6 million shares of JPMorgan, valued at $324.3 million; 1.2 million shares of Goldman, valued at $107.1 million; and 3.7 million shares of Morgan Stanley, valued at $51.9 million.

(Reporting By Lauren Tara LaCapra; Editing by Steve Orlofsky)

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Banks must cut executive pay, warns shareholders group

Bob Diamond, head of Barclays Bank, is one of five top

bankers  whose pay is targeted in a letter from the ABI. 

Photograph: Dylan Martinez/Reuters

Investors target JPMorgan over $95 billion of RMBS

Reuters, by David Henry, NEW YORK,  Fri Dec 16, 2011

Related News 

• Morgan Stanley settles with MBIA, sets $1.8 billion charge

(Reuters) - A law firm that led mortgage bondholders to extract a $8.5 billion settlement from Bank of America Corp (BAC.N) is turning its sights on JPMorgan Chase & Co (JPM.N).

Houston-based Gibbs & Burns LP said on Friday its clients have instructed trustees overseeing $95 billion of securities issued in the housing boom by JPMorgan's affiliates to investigate whether ineligible mortgages were included in collateral behind the bonds.

Gibbs & Burns said its clients represent holders of more than 25 percent of the voting rights on 243 residential mortgage backed securities.

JPMorgan spokeswoman Kristin Lemkau declined to comment.

The development marks an escalation of legal challenges from the housing bust for JPMorgan. The largest U.S. bank by assets, JPMorgan has been setting aside billions of dollars for claims that mortgage bonds sold by Chase bank, and by companies it bought, were backed by fraudulent loans or otherwise flawed.

Mortgage securities typically set a threshold of 25 percent of voting rights above which organized investors gain additional legal power over the pools, said Greg Taxin of Spotlight Advisors LLC, which advises pension funds on mortgage bond investments.

"This is what started the ball rolling that ultimately led to the $8.5 billion settlement with Bank of America," said Taxin. "The best defense for JPMorgan has been that the investors were not coordinated."

Paul Miller, an analyst at FBR Capital Markets, said, "It was only a matter of time before they went after JPMorgan."

The settlement with Bank of America is pending and being challenged in court as insufficient by other holders of its mortgage bonds.

Kathy Patrick of Gibbs & Bruns LLP said in a statement, "Our clients continue to seek a comprehensive solution to the problems of ineligible mortgages in RMBS pools and deficient servicing of those loans."

The investors represented by the firm own securities issued in 2005, 2006 and 2007. They include bonds from Bear Stearns and Washington Mutual, two firms which JPMorgan took over during the financial crisis.

JPMorgan is in a better position than Bank of America to deal with the legal claims, said Miller. It is not clear that the bank is responsible for mortgages made by Washington Mutual, which the government put into JPMorgan's hands after it failed, he said.

Bank of America, in contrast, had bought mortgage-maker Countrywide, the source of most of its problem securities, on its own before the crisis.

Also, JPMorgan has already booked litigation expenses when it added to reserves. "For something like this, they are well-reserved," Miller said.

JPMorgan shares closed up 14 cents to $31.90 on the New York Stock Exchange on Friday.

(Reporting by David Henry; editing by Carol Bishopric)

S&P downgrades top US banks' credit ratings

Associated Press, Nov 29, 2011

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NEW YORK (AP) -- Standard & Poors Ratings Services is adjusting the ratings on 37 of the world's largest financial institutions, including downgrading the biggest banks in the U.S.

Bank of America Corp. and its main subsidiaries were among those cut at least one notch on Tuesday, along with Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Wells Fargo & Co.

S&P says the changes reflect its new ratings criteria for banks, which incorporate shifts in the worldwide financial industry and macroeconomic trends, including the role of governments and central banks in industry funding.

Top U.K. downgrades include Barclays, HSBC Holdings, Lloyds Banking Group and The Royal Bank of Scotland.

Ratings for several big European banks, including Credit Suisse, Deutsche Bank, ING and Societe Generale are unchanged.

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Downgraded:

• Banco Bilbao Vizcaya Argentaria S.A.
• Bank of America Corp.
• Bank of New York Mellon Corp.
• Barclays Plc
• Citigroup Inc.
• Rabobank Nederland
• Goldman Sachs Group Inc.
• HSBC Holdings Plc
• JPMorgan Chase & Co.
• Loyds Banking Group Plc
• Morgan Stanley
• Royal Bank of Scotland Plc
• UBS AG
• Wells Fargo & Co.

Upgraded:

• Bank of China Ltd.
• China Construction Bank Corp.