Bailout Videos CNBC: Jack Welch Can Still Get The Job Done. Former General Electric CEO Jack Welch Talks To Larry Kudlow. Broadcast March 16th
Former GE Chairman Jack Welch gave an outstanding interview last night on the Kudlow Report. He was more impassioned than I have seen him in years, and he made some great points about AIG's failing corporate governance, H-1B work visas, Fed Chairman Ben Bernanke, small business, economic recovery and the future of American manufacturing.
Welch correctly states that as 79% owners of AIG, Geithner and Treasury and the Fed neeed to get serious about being successful with our $170 billion AIG investment. Welch is ultimately a management guy and so he naturally feels distressed at the public in-fighting between AIG's CEO Ed Liddy and Treasury's Summers and Geithner.
Regarding the economy, Welch had some slightly optimistic anecdotes about business bottoming out and remaining flat (albeit at very low levels) for the past 10 weeks.
Today's links are in the comment section.
Mar 17, 2009 at 1:57 PM
Reader Comments (17)
March 17 (Bloomberg) -- President Barack Obama’s economic team finally found its voice -- and it belongs to Federal Reserve Chairman Ben S. Bernanke.
Bernanke’s March 15 appearance on CBS Corp.’s “60 Minutes” -- the first televised interview by a Fed chief since 1987 -- gained praise from experts who drew a contrast between his defense of government efforts to fix the financial system and the sometimes-floundering efforts of Obama’s top economic aides to explain to the public what they were doing, and why.
Goldman, which accepted billions of taxpayer dollars last fall and, as learned Sunday, was also a big beneficiary of the rescue of the American International Group, is offering to lend money to more than 1,000 employees who have been squeezed by the financial crisis. The loans, offered via e-mail last week, could range from a few thousand dollars to hundreds of thousands.
An interesting Read:
Sam Waksal Was Right All Along*
*Just ask him
The biotech entrepreneur, friend of Martha Stewart, and “Page Six” regular spent five years in jail on insider-trading charges. Just three months after his release, ImClone, the company Waksal founded, was sold for $6.5 billion, on the strength of the breakthrough cancer drug he developed. Did prison change him? Not really. Does he feel vindicated? Absolutely.
Meredith Whitney: Banking Woes Likely to Get Worse in 2009
"I don't think this year is going to look any better than last year," Whitney said in an interview Tuesday on CNBC. "In fact it will look worse because there's so much credit coming out of the system."
Nucor Warns of Loss, Sends Shares Tumbling
"The economy has fallen off a cliff—and there is no visibility as to the timing of the recovery," Nucor Chairman, Chief Executive and President Dan DiMicco said in a statement.
Geithner is in some trouble over exactly what I said yesterday. He knew about the bonuses all last week but he didn't tell the press. It makes him look complicit in this scandal. And this is why I stated he had no real interest in preventing these bonuses. All he needed to do was leak it and they never would have been paid.
He leaks everything else, why not leak this? There is only one answer- he didn't really want to stop the bonus payments.
From the article:
"The burgeoning controversy raged Tuesday as Sen. Richard Shelby, ranking Republican on the Banking Committee, charged that Geithner had known about the AIG bonus payments before they were made and failed to stop them.
"I don't know what President Obama knew about it," Shelby said. "I'd say he probably didn't know about it."
Shelby said that Geithner "either knew or should have known what was going on. We need to know, what are the details of this? When were the bonuses signed up? Who's getting it?"
The Alabama senator stopped short of calling for Geithner's resignation, saying "he's under fire from all sides now."
"I don't know if he should resign over this," Shelby said. "He works for the president of the United States. But I can tell you, this is just another example of where he seems to be out of the loop. Treasury should have let the American people know about this."
http://www.cnbc.com/id/29716355
Anticipating restrictions on bonuses, officials at Citigroup and Morgan Stanley [MS 22.08 -0.96 (-4.17%) ] are exploring ways to sidestep tough new federal caps on compensation, the Wall Street Journal said. Executives at these banks and other financial institutions that received government aid are discussing increasing base salaries for some executives and other top-producing employees, the paper said, citing people familiar with the situation.
The discussions are at an early stage, partly because the government has not yet issued specific rules on the bonus payments that will be allowed at companies that received aid under the government's Troubled Asset Relief Program, the paper said.
Holders Of Bank Debt Still Worried About Collapse
Interesting phenomenon: While bank stocks have rallied mightily over the past week -- Citigroup (C) is at $2.45 this morning! -- bank bonds have gone on a significant slump.
It's been noted that at current bond price levels, the market assumes that equity will go back to being worthless and that bondholders will take a significant haircut (the end of civilization!).
March 17 (Bloomberg) -- Susan Woodward isn’t renewing the lease on her music boutique and internet cafe in Jackson Hole, Wyoming, after nine years. The reason: doubling interest rates on her credit cards.
“My business is seasonal, so we count on credit to stock the store at the end of the slow season and prepare for the busy season,” said Woodward, who canceled her Citibank and Capital One credit cards in February after learning that rates would climb to 19 percent from 10 percent. She said she always made timely payments and kept low balances.
Almost three-quarters of U.S. companies with fewer than 500 employees are experiencing a deterioration in credit or credit- card terms at a time when half of them depend on credit cards as a primary source of financing, according to a December survey of 250 firms by the National Small Business Association, a trade group with more than 150,000 members.
Trader Talk With Bob Pisani
The AIG Fallout
I was out to dinner with some hedge fund guys last night, one of them mentioned that he was at a meeting with other hedgies who were considering participating in the TALF yesterday, and several guys said they weren't sure they wanted to participate because they were worried that if they took loans or money from the government they might dictate what their pay and profits might be.
Even if they are saying they will not do that now, there was a feeling that it could be changed at any time.
Includes Video:
Treasurys Are 'Disaster Waiting to Happen': Dr. Doom Mark Faber
"Well I think other central banks have done it already around the world but basically what it amounts to is money printing and in fact I don't think that it will help the bond market at all in the long run," Faber told CNBC's Martin Soong.
"Yields have already backed up pretty substantially and I tell you, I think the US government bond market is a disaster waiting to happen for the simple reason that the requirements of the government to cover its fiscal deficit will be very, very high," Faber said.
"The Federal Reserve will have to buy Treasurys, otherwise yields will go up substantially," he said, adding that as their reserves were dwindling, foreign investors were likely to scale down their purchases.
March 17 (Bloomberg) -- Chairman Ben S. Bernanke and Federal Reserve policy makers may have to ramp up their purchases of mortgage securities and other assets after the economy and job market deteriorated further since they last met.
March 17 (Bloomberg) -- American International Group Inc., the insurer under fire for handing out bonuses after its $173 billion government bailout, budgeted $57 million in “retention” pay for employees who will be dismissed.
AIG disclosed the payments, part of a larger $1 billion program meant to retain staff, in a March 2 filing. The insurer was chastised yesterday by President Barack Obama for awarding $165 million to staff of the derivatives unit blamed for the firm’s near collapse, and New York Attorney General Andrew Cuomo said he’ll subpoena AIG to get details on those payments.
“Spending a billion dollars on retention payments while the company is on its deathbed is ludicrous, particularly when some of those payments are going to employees the company plans to terminate,” said Representative Elijah Cummings, a Maryland Democrat on the House Oversight and Government Reform Committee.
March 17 (Bloomberg) -- Investors allegedly defrauded by Bernard Madoff and R. Allen Stanford will be allowed to claim theft losses as deductions on their tax returns, Internal Revenue Service Commissioner Douglas Shulman said.
Shulman told the Senate Finance Committee the agency will explain today how losses can be claimed and is creating procedures for investors who may need to amend their tax returns.
“The IRS is today issuing guidance articulating the tax rules that apply and providing ‘safe harbor’ procedures for taxpayers who sustained losses in certain investment arrangements discovered to be criminally fraudulent,” Shulman said.
The guidance classifies the losses as theft losses rather than capital losses, giving most victims a bigger deduction. In addition, a special limitation that sometimes reduces deductions by 10 percent won’t apply, according to the new guidance.
March 17 (Bloomberg) -- U.S. Representative Barney Frank said lawmakers working to overhaul financial regulation amid the worst economic crisis since the Great Depression must “figure out how we avoid ever again being in this situation.”
“We have as important a task as we’ve had in this general area, I believe, since the ‘30s,” Frank, the chairman of the House Financial Services Committee, said today at a Washington hearing on his proposal to create a regulatory body to monitor risks to the financial system.
Frank, a Massachusetts Democrat, has said setting up a systemic-risk regulator will be his first priority in the regulatory overhaul and that the Federal Reserve should be given the responsibility. He said today his panel will begin drafting new rules for financial companies in May.
I generally call Welch a media driven hype machine.
I'm well aware of how he fucked up GE.
This is the first time I have been impressed by a Welch interview in a while.