Wall Street Folly

Banking chiefs will head to Davos this week where they are expected to use the Swiss ski resort’s annual economics jamboree to quietly lobby against Barack Obama’s proposed clampdown on risk-taking and mergers.

The top management of several of the world’s biggest investment banks will attend the World Economic Forum’s meeting, which kicks off on Wednesday and coincides with the banking sector’s bonus season. It comes just days after the US president unveiled plans for the most stringent rules on financial institutions for decades as he seeks to prevent a repeat of the financial crisis that prompted costly government bailouts of banks….

Alistair Darling has publicly voiced his opposition to Barack Obama’s plans to break up the banks, which the US President revealed to a startled financial world last Thursday.

As finance ministers of the G7 group of nations gathered in London to discuss the White House’s latest proposals, with Britain represented by the City minister, Lord Myners, the Chancellor made explicit his scepticism about the Obama administration’s plan. Mr Darling said: “If everyone does their own thing it will achieve absolutely nothing. The banks are global. They are quite capable of organising themselves in such a way that if the regime is difficult in one country they will go to another one, and that doesn’t do anyone any good.”….

Goldman Sachs Group Inc., the most profitable securities firm in Wall Street history, will cap the salary and bonuses of its London partners at 1 million pounds ($1.6 million) amid anger about the size of investment bankers’ pay, said a person familiar with the situation.

The decision will affect about 100 employees in London, said the person, who declined to be identified because the plan is private. Some traders may make more than 1 million pounds, the person said. Goldman Sachs staff will be told of their bonuses from today, the person said.

Barclays will demonstrate its commitment to pay restraint by paying bonuses for its top 11 executives entirely in shares and deferring them over three years.

The next 2,000 staff will have around 70pc of their bonus deferred as the bank attempts to take the initiative on the controversial issue. The policy goes further than the Financial Service Authority’s requirement that staff on £1m-plus have 60pc of their bonus deferred and 40pc for those on £500,000 or more……

Internal documents provided to Congress shed further light on how the Federal Reserve Bank of New York approached its unsuccessful and now controversial negotiations with large U.S. and European banks for concessions in the bailout of American International Group Inc.

An analysis put together by a unit of BlackRock Inc., and given to the New York Fed in November 2008, indicated various banks had significant bargaining power with AIG on insurance contracts tied to souring mortgage securities. Without receiving par, or 100 cents on the dollar, for those securities, the parties had little incentive to cancel the contracts, it noted…..

Retail giant Wal-Mart has said that it is cutting 11,200 jobs at its Sam’s Club warehouse chain in the US.

The majority of the cuts will hit staff running in-store promotions at the chain, after Wal-Mart decided to outsource these functions…..

Tishman Venture Gives Up Stuyvesant Project - Wall Street Journal

A group led by Tishman Speyer Properties has decided to give up the sprawling Peter Cooper Village and Stuyvesant Town apartment complex in Manhattan to its creditors in the collapse of one of the most high-profile deals of the real-estate boom.

The decision comes after the venture between Tishman and BlackRock Inc. defaulted on the $4.4 billion debt used to help finance the deal. The venture acquired the 56-building, 11,000-unit property for $5.4 billion in 2006—the most ever paid for a single residential property in the U.S. The venture had been struggling for months to restructure the debt but capitulated facing a massive debt load and a weak New York City economy that has undercut rents and demand for high-priced apartments…..

Cameron’s ‘Avatar’ Becomes 2nd-Highest Grossing Movie – Bloomberg

“Avatar” was the top movie for the sixth straight weekend with $36 million in sales, becoming the second-highest grossing film of all time in the U.S and Canada.

“Legion,” from Sony Corp., opened at No. 2 with sales of $18.2 million, researcher Hollywood.com Box-Office said today in an e-mailed statement.

“Avatar,” the 3-D adventure directed by James Cameron, has taken in $552.8 million in the U.S. since its Dec. 18 release, surpassing 2008’s “The Dark Knight” in sales. Cameron’s Titanic, released in 1997, is No. 1 in total sales in the U.S. with $600.8 million, according to Box Office Mojo, a researcher based in Sherman Oaks, California…..

Tags: AIG, Barack Obama, Barclays, Ben Bernanke, Bonuses, Compensation, Davos, Economy, Fed, Goldman Sachs, job cuts, Movies, Politics, Real Estate, UK