We learned a lot Tuesday, although Wednesday we might find that we learned completely different things. Here are the articles that prove the idiom, “When it rains it pours.”
A Citigroup spokesperson told DealBook that he could not confirm the reports that the bank was set to take control of a new jet, citing “security” concerns. “Executives are encouraged to fly commercial whenever possible to reduce expenses,” Citi said in a statement.
Seriously? Security concerns? Now, there are some rumblings that the jet was purchased two years ago. However, if there was ever a time to wage the P.R. war and risk getting sued to keep the big picture impression of your firm together, this was it. I can, without a doubt, say that if I were sitting in Vikram’s seat I would be refusing to pay for the jet or take delivery of it, and would be doing whatever I could to be sued. The headline, “Citi Sued for Failing to Honor Commitment to Purchase Corporate Jet” sounds like music compared to “Citigroup Likely to Face Criticism Over Jet” (the actual DealBook headline).
And in the end, they ceded the ground anyway.
2. Congratulations, you’ve hired some lobbyists! It turns out that a whole bunch of firms, including Citi, American Express (AXP), Capital One (COF), Goldman Sachs (GS), KeyCorp (KEY), Morgan Stanley (MS), PNC and Bank of New York Mellon (BK), all hired lobbyists. The whole notion of a company hiring a lobbyist, clearly, leads to obvious questions about companies representing their own interests and those of their shareholders instead of those of the people (who, now, are also their shareholders). I can’t possibly imagine what firms are thinking when they hire these lobbyists, except that they will “get away with it.” Absolutely ridiculous.
And, no sooner than I had noted this, newly confirmed Treasury Secretary Geithner cracks down on lobbying.
3. Apparently, Bank of America (BAC) approved everything they used against John Thain when it came time to push him out. From the Elusive January 23rd version of the WSJ article:
Thain also left for a vacation in Vail, Colo., after the losses came to light, accelerated bonus payments at Merrill so they could be collected before the end of the year and scheduled a trip this week to attend the World Economic Forum in Davos, Switzerland [...]
Vitriol between the Bank of America and Merrill camps also stemmed from the fact that Merrill had paid out bonuses much earlier than expected. A person familiar with Merrill’s bonus scheme said executives typically are told what their bonus will be by the second week of January and the payments are made in the second half of the month. Some people inside Bank of America believe Merrill accelerated the payouts to avoid having them cut amid a much-leaner plan at Bank of America.
And, from the FT:
Ken Lewis, BofA’s embattled chief executive, ousted Mr Thain on Thursday after news of the bonus payments appeared in the Financial Times. BofA told the FT last week that Mr Thain had made the decision to pay bonuses in December instead of January and it had been “informed” of the move. The bank said Merrill was an independent company until the deal closed on January 1.
BofA Monday confirmed there were conversations about the bonus payments prior to the pay-outs: “We never said we didn’t talk with them about it. But, in the end, it was their decision and they informed us of it.”
Jeeze. Ken Lewis needs to go… His P.R. war to keep his job despite fleecing taxpayers is pathetic.