Wall Street firms apparently like arbitration when they are being sued by customers but prefer court when they want to sue their former employees. This disconnect speaks volumes.
Financial advisers are winning large arbitration awards against their former firms. During the past three months at least three arbitration panels have ordered financial services firms to pay millions of dollars to financial advisers formerly employed by the firms.
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It’s getting rough and rowdy as Occupy Wall Street protesters attempt to shut Wall Street down and police try to clear them out. Protesters marched from their former home in Zuccotti Park and blocked intersections near the New York Stock Exchange. Police hit and shoved some of them, and reporters saw one woman pinned to the ground by police, bleeding from her mouth. (“Protesters Disrupt Business Around Wall Street,” Wall Street Journal).
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Citigroup plans to cut 3,000 or more jobs, about 1 percent of employees, and BNP Paribas plans to cut about 1,400 jobs, or 7 percent of its employees, according to the New York Times (“Citi to Shed 1% of Its Workers; BNP Paribas Plans to Cut 7%”). The NY Times was told unofficially that one third of the cuts at Citigroup will come from its securities and banking unit, but the timing is uncertain.
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Nassim Taleb, author of “The Black Swan: The Impact of the Highly Improbable,” says the solution to the problem of bankers who take risks that threaten the general public is simple: Eliminate bonuses. (“End Bonuses for Bankers,” New York Times). He cites as the latest example of the excessive risk taking problem MF Global and its CEO Jon Corzine. MF Global filed for bankruptcy after Corzine made risky investments in European bonds. There has been no taxpayer funded bailout of MF Global, but Taleb warns it is only a matter of time before private risk-taking leads to another one.
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A USAToday poll shows that American blame both Wall Street and Washington politicians for the nation’s economic woes. 87% of those polled said Washington bears a great deal to a fair amount of the blame, and 78% said the same of Wall Street.
Continue reading "Support Grows for 'Occupy Wall Street' Movement" »
Occupy Wall Street has swept the globe and is generating enormous sympathy and interest in Asia as well as Europe. The spread of Occupy Wall Street to Asia – especially Japan – is further evidence that it is a mistake to dismiss a global groundswell of anger over the flow of money from banks to governments that concentrates wealth in the hands of the 1 percent.
In Japan, the protesters gathered at the swanky Roppongi Hills complex where Goldman Sachs maintains offices. Bloomberg News columnist William Pesek was there, reporting signs saying “No Greed,” “Taxiderm the Rich” and “Stop Vampire Squids,” a reference to Goldman Sachs, which Rolling Stone colorfully characterized as a “great vampire squid wrapped around the face of humanity” (See “The 1 percent meets 2 billion in search of answers,” Daily Report).
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America’s big brokerage firms just don’t get it. Rather than focusing on their clients’ best interests, which would enhance the firms’ long-term interests, they are focused on getting rid of so-called “less productive” financial advisers to save money, and flogging the rest to sell more high-fee products to generate more revenues for the firm. Morgan Stanley’s chief financial officer Ruth Porat confirmed this on a conference call with analysts this week by reportedly saying: “Greg Fleming [head of retail brokerage]…is focused on reducing the number of less productive FAs and that brings some cost savings.” Again, big brokerage firms keep track of what is produced for the firm, not what is produced for clients. CEO James Gorman seconded: “We are not focused myopically on our size but on the returns we generate for our shareholders.”
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There is doom and gloom on Wall Street, a feeling that there is no money to be made, and that it is not going to get better. Wall Street pay is expected to fall 30% this year, even more for executives. The economy is stagnant. New rules and regulations will stifle leveraged risk-taking at the big banks. Even if they did not, the big banks are now risk-averse. At JP Morgan third-quarter trading revenue is expected to drop 30% and investment banking fees by 50%. The financial bubble is still deflating.
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The securities industry in New York City has lost 22,000 jobs since January 2008, and will lose another 10,000 by the end of next year, according to a report by New York City’s Comptroller Thomas P. DiNapoli. If his predictions are correct, Wall Street will have lost 17% of its jobs. Wall Street has shed 4,100 jobs since April. Bonuses and other compensation are declining as well. (See “Wall Street Shrinkage,” by Andrew Grossman, Wall Street Journal).
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Ben Bernanke, chairman of the Federal Reserve, has declared our unemployment situation a national crisis according to an article in Bloomberg by Joshua Zumbrun and Vivien Lou Chen. The American unemployment rate is still hovering between 9% and 10% and has been for the last few years. Worst of all, 45% of those unemployed have been without work for more than 6 months.
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“Occupy Wall Street,” the once loosely-organized protest against Wall Street greed and corruption, has swelled in number, garnered union support and appears to be morphing into the Tea Party of the Left. Powerful unions like the AFL-CIO and the American Federation of Teachers unions are lending support.
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The Recession of 2008 slowed our economy to a crawl and also produced significant societal changes. High unemployment among young adults aged 16 to 29 produced the biggest impact on the American way of life, followed by increased immigration and the resulting increase in the poverty rate. The 2010 Census revealed some landmark changes since World War II and these changes were highlighted by Hope Yen in an article for the Associated Press and picked up by MSNBC.COM.
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Jobs at Wall Street banks are being eliminated at an increasingly rapid pace and this bodes ill for many employed in the financial services sector.
Bloomberg’s recent article “UBS Bankers Face Dwindling Options for Jobs” underscores this situation. Those pushed out at UBS will doubtless find few opportunities on Wall Street. The bigger story, however, is that what is happening at UBS is just a small part of the overall “brain drain” occurring all across Wall Street these days, as the larger global banks are cutting jobs at the fastest rate since 2008.
Continue reading "Job Cuts at UBS - A Microcosm of What's Happening on Wall Street" »
A Bank of America employee will collect $930,000 from his former employer, Bank of America, for being fired in violation of the whistleblower protections. The employee blew the whistle on fraud at Countrywide Financial Corp. and led internal investigations that found “pervasive wire, mail and bank fraud involving Countrywide employees,” according to the U.S. Department of Labor. He was terminated soon after the bank acquired Countrywide in 2008. In addition, Bank of America must reinstate the whistleblower. He claimed that others who tried to report fraud to Countrywide’s employee-relations department suffered persistent retaliation. The $930,000 includes back wages, interest, compensatory damages and attorney fees.
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Any kind of crisis is fair game on Capitol Hill. A favorite complaint right now is that “regulations kill jobs”. Both political parties repeat this talking point and industry lobbyists use it as a rallying cry. There aren’t a lot of polls or studies on whether or not this is true. So far the evidence points to a mere shift in the type of jobs within an industry unless there is an outright ban on a product.
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What in the world is going on with corporations today? How does one draw the line between capitalism and greed? Whatever happened to the theory that when employee hard work contributes in a positive way to the corporate bottom-line, everyone prospers? These are some issues addressed by Sally Kohn writing for The Guardian, a British national daily newspaper.
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Most of us who have been around since the Space Age began grew up in a middle class home with a Dad who worked, a Mom who stayed home to take care of the house and kids and at least one dog. There was that “corporate ladder” to climb with the promise of raises and promotions to those who worked hard. The economy thrived on the employment of trained and motivated people. Technological advances were in their infancy. This Middle Class Picture is the equivalent of the American Dream – work hard at your job and you too can have a home, a car, college for the kids and a comfortable retirement. Unfortunately, this “picture” is fading fast.
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UBS will slash bonuses and eliminate more positions as a result of the now estimated $2.3 billion trading loss it has called “unauthorized,” according to observers. Apparently, the positions that resulted in the $2.3 billion loss were normal in size and appeared to be hedged, but the hedges were “fictitious positions.” As a result, there may be no bonus pool at all as well as sharp employee cuts. See Bloomberg article, “UBS Bonuses at Risk After $2.3B Trading Loss” (Sep 18, 2011).
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Unemployment is due to remain at 9 to 10% and the nation’s poor continue to increase. Incomes across the board have declined over the last several years but the poor show a greater loss than the rich. As Hope Yen points out in an article for the Associated Press, the statistics behind this phenomenon are abundant and all point to the fact that one in six Americans, 46.2 million people are now living in poverty and those without health insurance are at a 20 year high of 49.9 million.
The figures just released by the Census Bureau show the numbers increasing faster than in the early 1980s when we had severe government cutbacks creating high inflation, unemployment, high interest rates and an energy crisis. Mississippi claims the largest share of poor people at 22.7 percent and New Hampshire the lowest at 6.6 percent.
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