Wall Street Folly

….Behind-the-scenes disputes over huge sums are common in banking, but the standoff between A.I.G. and Goldman would become one of the most momentous in Wall Street history. Well before the federal government bailed out A.I.G. in September 2008, Goldman’s demands for billions of dollars from the insurer helped put it in a precarious financial position by bleeding much-needed cash. That ultimately provoked the government to step in.

With taxpayer assistance to A.I.G. currently totaling $180 billion, regulatory and Congressional scrutiny of Goldman’s role in the insurer’s downfall is increasing. The Securities and Exchange Commission is examining the payment demands that a number of firms — most prominently Goldman — made during 2007 and 2008 as the mortgage market imploded.

The S.E.C. wants to know whether any of the demands improperly distressed the mortgage market, according to people briefed on the matter who requested anonymity because the inquiry was intended to be confidential…..

Treasury Secretary Timothy F. Geithner said the U.S. is in no danger of losing its Aaa debt rating even though the Obama administration has predicted a $1.6 trillion budget deficit in 2010.

“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast yesterday whether a downgrade is a concern. “That will never happen to this country.”……

Goldman Sachs Group Inc., trying to show it is responsive to public pressure over its pay, said Chairman and Chief Executive Lloyd Blankfein would get a $9 million bonus for 2009, a fraction of the $68.5 million payout he got in 2007.

Friday’s announcement was one of the most highly anticipated pay figures in Wall Street history. As Goldman rebounded in 2009 to its most profitable year ever, the 55-year-old Mr. Blankfein became the focus of anger about sky-high bonuses on Wall Street. That criticism continued even after Goldman said last month that it would make the smallest employee payouts relative to revenue since the firm went public in 1999.

Goldman didn’t comment Friday on the payouts to Mr. Blankfein and four lieutenants, who also were awarded $9 million each. The bonuses consist entirely of stock, with no cash, reflecting a recent shift by Goldman and other financial firms to tie compensation more closely to company performance. The $9 million bonus plus his $600,000 base salary are likely to account for nearly all of Mr. Blankfein’s compensation for 2009. The total will include other benefits and perks…..

Former Merrill Lynch & Co. chief John Thain is joining embattled lender CIT Group Inc., bringing together two prominent casualties of the credit crisis.

Mr. Thain, who left Bank of America Corp. 13 months ago amid controversy over its takeover of Merrill, will be CIT’s chairman and chief executive. CIT, a major lender to small businesses, nearly collapsed in 2009, several years after it expanded into subprime mortgages and student lending……

Barack Obama, US president, took the opposition Republicans at their word on Sunday and announced that he would hold a televised White House summit with senior legislators from both parties to try to free the logjam to enact a US healthcare reform bill.

Mr Obama’s comments, made in a live interview on CBS just before the Super Bowl American football final, came three weeks after his Democrats were deprived of their 60-seat Senate “supermajority” when they lost the Massachusetts election.

“I want to come back [after the Presidents Day congressional recess on February 15] and have a large meeting — Republicans and Democrats — to go through, systematically, all the best ideas that are out there and move it forward,” said Mr Obama…..

Argentina expects to carry out an exchange of $20 billion in defaulted debt in March, Economy Minister Amado Boudou said in an interview with Buenos Aires- based newspaper Pagina/12.

The government is working with regulators in the U.S., Luxembourg and Italy to complete the restructuring as soon as possible, Boudou told Pagina/12…..

Toyota’s imminent global recall of the Prius over problems with the brakes could be expanded to cover a flagship model from the high-end Lexus range, say sources.

Toyota is believed to be on the brink of a worldwide recall of its latest model of Prius that could affect as many as 300,000 vehicles.

But sources close to the company told The Times that Toyota was also gearing up to warn owners of the Lexus HS250h and Sai hybrid sedan that their cars may require similar repairs…..

Google’s aversion to advertising its search engine on TV ended with a bang on Sunday night as the company paid an estimated $5m to run a commercial during the Super Bowl.

The minute-long spot marks the biggest venture into mainstream advertising for a company that has become notorious growing almost exclusively through word of mouth and online exposure.

Indeed, the move is such a remarkable turnaround for the internet giant that it even moved chief executive Eric Schmidt to publish a rare message on Twitter, in which he claimed “someone said ‘Hell has indeed frozen over’”……

A deal to create a new powerhouse in the food and drink industry collapsed today after Japan’s Kirin Holdings and Suntory Holdings abandoned their plan to merge.

Kirin had hoped to become the world’s fifth largest foodmaker, bigger than Coca-Cola, by taking over smaller rival Suntory. But after months of negotiations the two sides were unable to agree on the terms of the deal, or on how the combined company would operate….

Tags: AIG, Argentina, Autos, Bonuses, CIT, Compensation, Debt ratings; AAA, Goldman Sachs, Google, John Thain, Lloyd Blankfein, Merrill Lynch, recalls, Tim Geithner, Toyota, U.S.. Treasury