Receiving Wide Coverage ...
Don't Worry, Be Wealthy: On Wall Street, profits are down and the number of workers is shrinking. But for survivors, bonuses continue to swell. Bonus payouts to New York's Wall Street employees rose 15% on average last year to $164,530, according to figures compiled by state comptroller Thomas DiNapoli and reported in the New York Times. (Average Wall Street pay, including salary and bonuses, was $360,700 in 2012, the most recent period for which figures are available.) The jump came despite the fact that profits overall fell 30% to $16.7 billion, according to the comptroller's report. The average bonus figure was the most since the 2008 financial crisis and the third-highest total on record, according to Bloomberg. "That bonuses rose during a challenging environment for the banks reflects a cardinal rule of Wall Street: Firms are willing to pay big for top talent," according to the Times. For others, the trends were less friendly; the number of finance jobs declined 1.2% to 165,200 as of last December. New York Times, Bloomberg
Citi's Lump of Coal: One group unlikely to share in the industry's spoils is the Citibankers responsible for its $400 million loan-fraud scandal at Mexican unit Banamex. The banking giant is considering clawing back compensation or shrinking 2014 pay for employees linked to the dustup, Bloomberg reports. Chief Executive Michael Corbat has called the incident a "despicable crime" and vowed to punish anyone responsible. So far, Citi (NYSE:C) has shrunk by 14% the pay of Manuel Medina-Mora, a co-president who oversees the Mexico unit. Medina-Mora is the third highest paid banker at Citi after Corbat and Jamie Forese, another co-president who oversees the investment bank. The brushback will force Medina-Mora to make ends meet on $9.5 million for 2013, versus the $11 million he took home the previous year; it may also add fuel to Wall Street scolds' claims that mega-bankers still regard true accountability as something to foist on other people. Even so, the decision to dock the pay of a senior executive is highly unusual, according to the Financial Times, which notes that Medina-Mora came to Citi via its 2001 acquisition of Banamex. "Although strong remediation measures are under way, the incentive award reflects consideration of leadership accountability for disclosed control issues that were identified in 2013, including in Banamex USA," the bank said in reference to Medina-Mora's performance. Bloomberg, Financial Times
Don't Get Caught!: Former Credit Suisse (CS) banker Andreas Bachmann pleaded guilty Wednesday to helping U.S. clients evade taxes, implicating his superiors as the bank faces a deepening tax-evasion probe. The plea comes a few weeks after Credit Suisse agreed to pay $196 million to settle Securities and Exchange Commission charges that it advised American clients without the required registration, writes the Washington Post. Bachmann and several other Credit Suisse bankers were indicted in 2011 on a charge that they helped U.S. clients hide $4 billion, Bloomberg reports. The Swiss citizen, who is cooperating with prosecutors, said superiors at his unit condoned violations of U.S. law and of a 2001 agreement that Credit Suisse reached with the Internal Revenue Service to withhold and pay taxes on U.S. client accounts. Bachmann said he once complained to an unidentified chief executive officer of his subsidiary about the accord's restrictions on activities in the U.S. and was told, "Mr. Bachmann: You know what we expect of you don't get caught," according to a 13-page statement of facts that he admitted with his plea that was cited by Bloomberg. Credit Suisse chief executive Officer Brady Dougan apologized for his bankers' misdeeds at a Senate Permanent Subcommittee on Investigations hearing on Feb. 26. Dougan blamed a small group of Swiss-based employees who appear to have broken U.S. law and fooled top managers. In his statement that delivered a distinctly different message, Bachmann said Credit Suisse compliance workers "did nothing to assure compliance" and that "no one was ultimately disciplined for continuing to discuss U.S. securities investments with U.S. customers." Credit Suisse is the largest of 14 Swiss banks under U.S. criminal investigation in a crackdown on offshore tax evasion. A report by the Senate subcommittee states that Credit Suisse helped 22,000 Americans hide as much as $10 billion from the IRS. Bachmann faces as long as 46 months in prison under the plea agreement. Bloomberg, Washington Post
Not So Fabulous: In yet another indication that Wall Street's ethical challenges persist, a federal judge has ordered former Goldman Sachs (GS) trader Fabrice Tourre to pay $650,000 in civil fines, and give up an additional $175,463 bonus plus interest, according to Reuters. The $825,000 in total penalties and other costs was just short of the roughly $1 million payout that the Securities and Exchange Commission had requested, the Times adds. Tourre, who once referred to himself as "Fabulous Fab," was at the center of a star-crossed crisis-era Abacus mortgage deal. The judicial ruling against him represents a capstone to one of the SEC's most prominent Wall Street cases and its first significant courtroom victory stemming from the financial crisis, the Times reports. Goldman reached a related $550 million settlement with the SEC in July 2010. The banking giant did not admit wrongdoing but acknowledged and expressed regret that its marketing materials were incomplete. New York Times, Reuters
New York Times
Right on cue with the morning's news, the Times' Peter Eavis writes that government authorities are publicly questioning whether the steady litany of Wall Street misdeeds reflects a fundamental problem with the fabric of the banking industry rather than bad behavior of a few isolated bad actors, as industry leaders claim. "Is there something rotten in bank culture? It is a concern recently voiced by William C. Dudley, president of the Federal Reserve Bank of New York," Eavis writes. Dudley talked in a speech last year of "deep-seated cultural and ethical failures at many large financial institutions." Now he tells Eavis "'Too big to fail' isn't the only problem. I don't want senior bank management to feel, 'Oh gee, if we solve too big to fail, we're done.'" Comptroller of the Currency Thomas Curry has also recently devoted several speeches to cleaning up the culture of banks.
The Senate has confirmed Federal Reserve Governor Sarah Bloom Raskin as deputy secretary at the Treasury Department, making her the highest-ranking woman in the agency's history. Raskin joined the Fed in 2010 and was known for her focus on consumer protection. In her speeches, she has called attention to problems in the mortgage industry, wealth inequality and the plight of low-income consumers. Raskin's confirmation creates another vacancy on the Fed's seven-member board of governors. The White House has yet to name a replacement. The Senate Banking Committee on Thursday will hear testimony from three nominees for open seats: former Bank of Israel governor Stanley Fischer, former Treasury official Lael Brainard and Fed board member Jay Powell, whose term is up for renewal.
Bloomberg: JPMorgan Chase (JPM) and HSBC Holdings (HSBA) face a European Union complaint as soon as next month as the bloc's antitrust chief races to fine a quartet of financial companies that snubbed rate-rigging settlements. Joaquin Almunia, whose term ends on Oct. 31, is determined to punish the two banks, as well as Credit Agricole (ACA) and interdealer broker ICAP, before he leaves office, said three people familiar with the probe who asked not to be named because the process is private.