Citibank sued by shareholders over excessive pay

Earlier this week shareholders rejected the bloated Citibank pay, but the vote was only a suggestion. Citigroup management chose to ignore the vote so now shareholders are taking their case to court. Reuters:

The complaint filed Thursday in Manhattan federal court accuses directors of breaching their fiduciary duties by awarding more than $54 million of compensation in 2011 to the executives, including $15 million to Pandit, though the bank's performance did not necessarily justify it. At Citigroup's annual meeting on Tuesday, about 55 percent of shareholders participating in an advisory vote rejected Pandit's pay package. That marked the first time that investors had rejected a compensation plan at a major U.S. bank. That vote "has cast doubt on the board's decision-making process, as well as the accuracy and truthfulness of its public statements," the complaint said. "Absent this (lawsuit), the majority will of the company's stockholders shall be rendered meaningless."

Was there really any doubt that the Citi management decision-making was already a disaster?

YourBofA.com website looking for feedback

The Huffington Post has an article about the new joke website, but the message beneath the humor is completely serious. Bank of America really is your Bank of America, so click through and speak your mind about what you want your bank to be.

EU eyes banker bonus caps

This will surely be met with cries of "socialism" by the bankers, but that would be ignoring the free loans and easy money handed out to the bankers in recent years. If the bankers want to avoid caps, they should worry more about risking their own money and not public money.

Most people would prefer not having to bail out banks or give them free money to play with but until that ends, the bankers should accept that they're the ones to blame for any financial issues. The bankers keep missing this point as they continue to receive mounds of money, much greater than anyone in any other industry could expect to see each year. Nobody likes having flashy tax dollars rubbed in their faces, whether it's the GSA spending wildly or bankers spending wildly on themselves after bonus season.

Don't take the government money or expect more of this. It's that easy.

In a sign that Brussels is hardening its stance on banker pay, European Union parliamentarians are drawing up new caps on bonuses to be included in the bloc’s latest bank capital rules.

The move comes as research from the pan-EU banking regulator reveals huge disparities in bonus sizes across the region and big differences in enforcing existing EU pay rules, which limit the upfront cash portion of a bonus to 25 percent of the total.

The European Banking Authority survey found that the median average ratio of bonus to salary across the block was 122 percent for executives and 139 percent for other risk-takers, such as traders. But one country reported an average ratio of 313 percent for traders and one institution had a ratio of 429 percent for executives and 940 percent for other staff.

Is it fair for activists to protest outside bank exec’s house?

While it can't be pleasant for the executives or their families, it's no more pleasant for everyone who has been run over by the corporate giants. In another age, it does seem like it would be going too far but when money is so overpowering and controlling in politics, there aren't many great options for regular people to be heard. The playing field has not be this unbalanced in decades and something needs to change.

Neighbors are upset calling this unethical, but that has hardly been a one way street. Ruining the lives of millions of families was also a considerably unethical. Fair or too far?

Locally, the group targeted the far-less-known Wells Fargo board member Enrique Hernandez.

"The only way we can normally get up here is to do domestic work for them," said Peggy Mears, an ACCE community organizer, as she stood outside Hernandez's gated driveway Tuesday on a stately street in Pasadena. "Now we're going to name you and shame you."

About two dozen demonstrators wearing bright yellow ACCE T-shirts gathered outside Hernandez's home, barely visible behind a tall brick wall and high shrubbery. The group gave speeches and chanted: "Hey, Wells Fargo, you can't hide. We see your greedy side."

Banks in Portugal borrowing heavily from ECB

If this is a sign of things to come for Portugal, the near term future is not looking good. Banks in Portugal had been unable to borrow from other European banks as they were considered too risky, so going to the ECB has been the only option. That the number being borrowed is hitting new highs should also be a warning sign. The Guardian:

The reliance of eurozone banks on the European Central Bank was demonstrated on Monday when Portugal revealed that its domestic banks were tapping the central bank for record amounts of funding.

The Bank of Portugal said the use by domestic banks for the various facilities available from the ECB rose to €56.3bn in March – up from €47.5bn in February and greater than the previous record level of €49.1bn in August 2010.

Bailed out by the EU and International Monetary Fund in April 2011 for €78bn, Portugal has €12bn earmarked for bolstering its banks' capital positions if necessary in the months ahead.

American banks aren't good enough for Romney

HuffPo:

A conference call organized by President Barack Obama's presidential campaign on Monday to push for higher tax rates for millionaires quickly descended into an attack on Republican frontrunner Mitt Romney for his secretive Swiss bank account, with Sen. Dick Durbin (D-Ill.) declaring that no presidential aspirant has ever had such an exotic financial portfolio.

"I asked Warren Buffet in a meeting we had recently, 'Have you ever had a Swiss bank account?' He said, 'No, there are plenty of good banks in the United States,'" Durbin said.

"So I started asking people: 'Why do you have Swiss bank account?' One, you believe the Swiss Franc is a stronger currency than the United States dollar. And that is apparently the decision the Romney family made during the Bush presidency. And secondly, you want to conceal something. You want to hide something. Why would you have a Swiss bank account instead of one in the United States? I would like to ... ask the press to really press some of these questions, the obvious questions. When is the last time a presidential candidate for the United States had a Swiss bank account? I think the answer is never."

I'll bet Romney eats swiss cheese too.

Retiring Congressman Barney Frank will not agree to disclose negotiations for future jobs

This is just too easy, but it has to be said. In general, if a Congressperson is negotiating for a job prior to leaving office, it's the very definition of the "appearance of impropriety" — if not the fact itself.

It's the reason I've been calling Congress (almost all of it) the "House of Retainers" — as in paid retainers of the Top 0.01%. They take the cash and do the bidding.

Now comes Barney Frank, who's retiring shortly. Lee Fang has covered this kind of story before, as explained below, and had a request to make (my emphasis and some reparagraphing):

Selling out pays. We looked at just a dozen Members of Congress who became lobbyists and other advocates for special interests after they left office and found that they received an average of a 1,452 percent raise.

So we here at Republic Report sent a letter to all 36 retiring Members of Congress asking them to commit to disclosing any job negotiations they have with anyone during the rest of their time in office. That way, we at least know who they’re potentially selling out to, and we can watch out for signs that, while still in office, they are working to please a future employer. ...

The most powerful Wall Street lobbying group, the Financial Services Roundtable, which represents the big investment banks like Goldman Sachs, J.P. Morgan, and Bank of America, is now seeking a new chief lobbyist.

On Friday, Politico Influence, an insider’s publication, floated Rep. Barney Frank’s (D-MA) name as a top recruit after he leaves office this year.

This is real investigative reporting, folks. Note the activist approach, sending out letters that put people on the spot and on the record.

I myself find Congressman Frank's record filled with some "triangulation" of the public's interest, as well as evidence of banker-backed funding. Indicative but not dispositive, as some might say.

But let's go back to Mr. Fang, who spoke with the Congressman:

[Mr. Frank] told me that he does not need to sign our letter because he is not having job negotiations nor does he plan to have any negotiations while he is still in office.

When pressed to sign anyway, however, Frank demurred. I'll let you read why.

Is Frank currently negotiation with future employers? He says No, and there's no reason not to believe him. Will he pledge to disclose if he does? Again, he says No.

What's a person to think? Congress is a sea of iniquity, some might say. A pledge of clean living is not an inappropriate request.

But let's be generous and side with Mr. Fang, who requests only that Frank provide "leadership [that] could go a long way toward inspiring others to make this commitment to the American people" — by signing the pledge.

Fair enough. I add my small voice to the other Smalls, making the same request. Over to you, Mr Frank.

Sir?

GP

(To follow on Twitter or to send links: @Gaius_Publius)

Bankers SuperPac to launch "surgical" strikes at enemies in Congress

From the American Banker (my emphasis and some reparagraphing):

Frustrated by a lack of political power and fed up with blindly donating to politicians who consistently vote against the industry's interests, a handful of leaders are determined to shake things up.

They have formed the industry's first SuperPAC — dubbed Friends of Traditional Banking — that is designed to target the industry's enemies and support its friends in Congress.

"It comes back to the old philosophy of walking softly and carrying a big stick," says Howard Headlee, the president and chief executive officer of the Utah Bankers Association. "But we've got no big stick. And we should. We have the capacity to have one, we just aren't organized [sic]." ...

"Congress isn't afraid of bankers," adds Roger Beverage, the president and CEO of the Oklahoma Bankers Association. "They don't think we'll do anything to kick them out of office. We are trying to change that perception."

Unlike traditional banking PACs, which target hundreds of House and Senate races, the SuperPAC instead is focusing on making a big difference in just a handful of close elections.

They explain how this will work:

"BankPAC [the industry's non-super PAC] is much broader and covers lots of different candidates. This is much more surgical," Packard says.

"If someone says I am going to give your opponent $5,000 or $10,000, you might say, 'Yea, okay.' But if you say the bankers are going to put in $100,000 or $500,000 or $1 million into your opponent's campaign, that starts to draw some attention.

Needless to say, a million dollars will swamp most House races.

That "fed up with blindly donating" comment above likely means Dems. The goal will be to pick off the hard-core bank-reform outliers, and frighten the rest.

I'm not sure another comment is needed; the story is pretty self-explanatory.

GP

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Digby and David Dayen explain why Obama won't unravel the Mortgage Fraud Mess

David Dayen is as on top of the bank-fraud mortgage-fraud mess as anyone in the country. And this conversation between Dayen and Digby (an able interviewer) is as good an explanation of the rule of law aspect of this problem facing Obama and the legal system (both) as I've heard.

It's cogent and very listenable, despite the technical nature of the problem. Dayen is good on this subject, and I'm glad to present his walk-through. Thanks also to Jay Ackroyd and the good people at Virtually Speaking for bringing it to us.

Note that while this is a one-hour segment, the mortgage discussion lasts only till the midway point. The rest is about the War on Women, also good, but if you came for the mortgage discussion only, feel free to stop there.

(Hint: Holding down the right and left arrow keys performs an excellent fast-forward and fast-rewind. Use them for navigation.)

Listen to internet radio with Jay Ackroyd on Blog Talk Radio

For more on this topic, see here from Rachel Maddow, and this, our own primer on the fraudulent mess.

GP

(To follow on Twitter or to send links: @Gaius_Publius)
 

Maddow on Mortgage Fraud—NC County Recorder sues big banks for dozens of instances of "fraud"

"The banks could start losing these cases," says Maddow. Yes, there's hope — the real kind.

This is an excellent primer on the mortgage mess (it's actually a crime scene, as you'll see). Very watchable, easily grasped. Please take time, if you have it, to view. This is ground-zero for the greatest challenge to our legal system in modern times. As Jeff Thigpen says in the clip, this is a "rule of law" story — writ large, in my view.

(Our primer is here, if you want a fuller explanation.)

Note especially that, despite the apparent impossibility of going through the Bush II–Obama I bank-fraud indemnification firewall, you (and your county clerk) can do it. As Maddow says (at 4:22):

Going after the banks by going through their paperwork turns out to be not that hard to do; regular people can do it, with a little training. ... It's looking more and more like they may be onto something.

Change "may be" to "are" and you have it.

It helps to have a Jeff Thigpen (4:50 in the clip; that's his face below), but there are lots of counties in the country. It won't take many of them to bust this wide. Watch:



This is about property rights (yes, good old libertarian property rights) versus hiding and indemnifying the massive criminal banking fraud that led to the 2008 crisis — and making sure that prosecuting said fraud doesn't bring down the entire U.S. banking system.

That's a really tough place to be, isn't it — caught between systemic banking collapse and protection of property rights. What's a money-hungry political ad campaign to do?

I'll have more on this — David Dayen and Digby have aired this issue in a recent Virtually Speaking episode that's a textbook explanation of this Scylla–Carybdis dilemma.

GP

(To follow on Twitter or to send links: @Gaius_Publius)
 

SEC sues Wells Fargo for ignoring subpoenas

Things must be ugly if the bank has ignored multiple requests for information about mortgage backed securities that went bad. How is it that the banks can even get this far along without responding to the SEC? They certainly enjoy a privileged position within certain circles, seemingly above the law. While the SEC is now forcing the issue, it remains to be seen how this will proceed.

I wonder how easily it would be for a private individual to try this approach of ignoring, then becoming indignant when called out.

U.S. securities regulators accused Wells Fargo & Co on Friday of repeatedly ignoring its subpoenas for documents in connection with a probe into the bank's $60 billion sale of mortgage-backed securities.

The Securities and Exchange Commission's filing in a San Francisco federal court seeks to compel the fourth largest U.S. bank to hand over documents. The SEC said it has issued several subpoenas since September.

A Wells Fargo spokeswoman called the SEC's action "inappropriate" and pledged the bank would "vigorously defend itself in court" against the SEC action.

As a side note, someone at the SEC needs to know that this might not help their job opportunities when they flip back to private industry. This embarrassing moment won't be forgotten by Big Finance.

Joe Nocera: Jon Corzine may "get away with" committing the worst crime a broker-dealer can commit

Another county heard from. Joe Nocera, one of the best financial reporters in the country, echoes what we wrote just days ago — it looks like Jon Corzine, poster-boy for the Top 0.01%, may never see the inside of a courtroom, much less a jail.

And yet, he and his firm appear to have committed the "sin of sins" (or crime of crimes) for a firm of his type — he took segregated customer money to cover the firm's own losses.

Writing in the New York Times, Nocera says (my emphasis and some reparagraphing):

It’s sure starting to look as if Jon Corzine is going to get away with it.

By now, it has been well established that Corzine’s former firm, MF Global, committed the sin of sins for a broker-dealer. In late October, during the final, desperate days before it entered bankruptcy proceedings, its executives took money from segregated customer accounts — money that belonged not to MF Global but to the farmers and commodities traders that were its clients — and used it to prop up its rapidly collapsing business.

Nor was this petty cash: of the $6.9 billion in customer assets that MF Global held, a stunning $1.6 billion is missing. There is virtually no chance that the full amount will ever be recovered.

Let’s not mince words here. These executives committed a crime.

Virtually every knowing violation of the Commodities Exchange Act is a crime, but taking money from segregated customer accounts is at the top of the list. And for good reason. ... Indeed, customers need to be able to trust the fact that their money is segregated and protected at all times. Otherwise, the markets can’t function.

It's not just a crime; it's the mother of all broker-dealer crimes, and yet prosecutors are not going to prosecute unless they find a "smoking gun" — amazing. In how many courtrooms in this country is there no smoking gun, but plenty of evidence to convict?

I guess it's the old old story: "Circumstantial evidence for thee; smoking guns for me and my friends." Nocera again:

Excuse me while I roll my eyes. Of course there isn’t a smoking gun. As a general rule, financial professionals tend not to write e-mails that say, “Hey, we’re desperate. Let’s break into the customer accounts!” And, of course, they are always going to say it was unintentional. ... [I]s it really plausible that you can take $1.6 billion — nearly 25 percent of the customer assets under management — and not know you’ve used customer money? It is not.

Nocera then makes exactly the Rule of Law argument we've made in these pages again and again. If the connected rich can always skate, it's not just bad for financial markets (and it is really bad), "it isn’t good for democracy either."

I’ve heard it suggested, for instance, that the Justice Department won’t prosecute Corzine because it would hurt President Obama. (Corzine, the former governor of New Jersey, had been a big fund-raiser for the president.)

He doesn't believe that suggestion, but he understands why others might differ.

Indeed. This is me, begging to differ.

GP

(To follow on Twitter or to send links: @Gaius_Publius)
 

Taibbi: Bank of America is "too crooked to fail"

This really is a must-read, and it really speaks for itself. The subject is Bank of America, and it stands proxy for the entire U.S. banking system.

Kudos to Rolling Stone for actually turning a good researcher (Taibbi) loose on this stuff — and for publishing it during election season. A sitting president is a very persuasive man when his job is up for renewal (just ask MSNBC, Dylan Ratigan excepted).

The link is here. In the subtitle, Taibbi asks:

The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out?

That covers it, right?

A taste (my emphasis and reparagraphing):

At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time.

Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers?

Take your eyes off them for 10 seconds and guaranteed, they'll be into some sh*t again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.

That was my asterisk; no kittens or hookers were harmed in the pasting of this quote. (That was one paragraph of the source, by the way; I get two more.)

How about this:

It's been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in their conception, some so crude that they'd be beneath your average street thug.

Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of thousands of Americans to foreclosure court using bogus, "robo-signed" evidence – a type of mass perjury that it helped pioneer.

It hawked worthless mortgages to dozens of unions and state pension funds, draining them of hundreds of millions in value. And when it wasn't ripping off workers and pensioners, it was helping to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of millions insuring those same worthless mortgages.

And:

But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America's bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages.

By looking the other way and rewarding the bank's bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it's also far too corrupt to survive.

Hooked yet? I am. That's my three-paragraph allotment — can't wait to read the rest. This piece is loaded, and there's a ton of history of the bank. Taibbi really does his job.

But what about the political side, the Obama bottom line?

If I were to ask the author, "Why is this happening?" he might reply (in the words of the article) because "our current president, like the last one, apparently believes it's better to project a false image of financial soundness than to allow one of our oligarchic banks to collapse under the weight of its own corruption."

Mr. Taibbi labels Bank of America, in its current form, a "full-blown assault on the American dream."

I'll go him one better. It's a full-blown assault on the American political system, the American Constitution. After all, the Constitution isn't just what's on paper; it's amended by what's practiced, especially by bipartisan agreement.

Bush and Obama have amended our current Constitution. Rule of Law for the New Nobility (Our Betters) has been suspended. That's just a fact. Whatever other reasons you may harbor for voting Dem in the presidential ad campaign, this isn't one of them.

Restoring Rule of Law would be revolutionary — I mean that literally — and may take a form that looks like rebellion. If so, that's terrible news. It's sad to think that it took the Great Depression to allow FDR to sell his revolution to the Betters of his day, as an alternative to actual rebellion by the destitute and hopeless.

Do we really need a depression to get a different, better Obama (the one his voters Hoped for) to do likewise? If so, this is a really sh*tty corner we've painted ourselves into.

(Yep, second asterisk. Maybe if Matt quotes this, he will restore my original intention, and reverse my edit of his good swearing as well.)

GP

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