This week, Wall Street is bearish on compensation. Perhaps the most alarming (read hilarious) bit of news was a veritable death sentence for AIG executives issued Monday by Iowa Senator Charles “Chuck” Grassley, who told Cedar Rapids, Iowa, radio station WMT that AIG executives should follow "the Japanese example" by publicly apologizing to the American people and then doing “one of two things: resign or go commit suicide,” reports Dealbreaker. AIG has come under fire for doling out $165 million in bonuses to some employees after accepting huge government bailouts. Tuesday, Grassley told Bloomberg in an interview that he was just joking around about the whole “suicide” thing, “Of course I don’t want anyone to go commit suicide,” he said. “But I do want some contrition. I want showing of remorse. I have not heard a single apology from a single Wall Street CEO.”
Meanwhile President Obama is trying to prevent the bonuses from being paid—though the firm says that’s impossible without a big legal battle. AIG granted the bonuses to its financial products division, the group responsible for the insurance giant’s virtual collapse says today’s Journal. AIG has received $173 billion in federal aid—with $70 billion from the Troubled Asset Relief Program (TARP) money—and while the government controls a 80 percent equity stake in AIG, it does not have the legal authority to freeze the payments. Instead, the government says it will reign in AIG spending on the recently allocated $30 billion in TARP funds. Meanwhile, New York Attorney General Andrew Cuomo subpoenaed AIG in his latest round of investigations into Wall Street compensation. Cuomo is likely looking for some dirt on the roughly $55 million AIG previously paid out to the financial products unit, under its $450 million retention program.
Talking about pay cuts, Citi CEO Vikram Pandit is getting a roughly $10 million haircut on his salary, says the Post. While on paper Pandit was set to take home $10.8 million in 2008, he received $958,333 instead, thanks to the elimination of his cash bonus, plus the worthlessness of his options and stocks. Pandit has said he will take home a salary of no more than one dollar until Citi is profitable again, which, if the firm is lucky, could be this quarter. Last week, Citi said it was profitable during the first two months of the year. At least Citi is no longer trading for under $1. It closed at $2.33 Monday.
In other bank news, Wells Fargo Chairman Richard Kovacevich said Friday that the government’s stress test on banks is ‘assinine,’ the Post reports. Speaking at a Stanford University event, Kovacevich expressed some regret about the bank’s acceptance of $25 million in TARP money, and the retroactive restrictions that come with that bailout money, saying the bank would have been able to raise private capital. Kovacevich says Wells’ had to slash its dividend 85 percent to a nickel because of the bailout money it took. "Is this America - when you do what your government asks you to do and then retroactively you also have additional conditions?" Kovacevich griped. Riddle me this, what other country do you know bails out banks with taxpayer money and (gasp) sets restrictions on the use of said borrowed taxpayer money?
As for Madoff, prosecutors are going after the Ponz’s assets, regardless of whether they are held in the name of Ruth Madoff, his wife, says the Financial Times. The government plans to seize Madoff properties with a combined value of $22 million, including his upper east side Manhattan apartment, holiday homes in Montauk, New York, Palm Beach, Fla. and Cap d’Antibes, France. They also plan to pursue the $17 million in cash in Mrs. Ponz’s Wachovia bank account and $45 million in municipal bonds she is holding at Cohmad Securities. In total Madoff’s assets sit at around $826 million, including two Mercedes, a BMW and a Volkswagen Touareg, in addition to four boats, three officially registered to Mrs. Madoff. The boats include a $7 million 23m Leopard Sport Yacht named “Bull” docked in France, a 12m sport fishing boat named “Sitting Bull”, a 7.5m Pathfinder named “Little Bull,” as well as a 17m sport-fishing boat, the FT reports. How about an airboat named “The Ponz.”