Wall Street Tycoons Could See More Bonus Cuts

Wall Street Bonus Cuts Will Reduce Risk U.S. Regulators

U.S regulators are all set to address the growing concerns about top financial institutions paying huge bonuses without considering long term financial stability of the organization. A new proposal is being mooted, that will require that top ranking executives put off receiving half their bonus for a minimum period of 3 years.

This news comes from sources who are in the know about the proposal that is being unveiled at the FDIC board meeting. Among those institutions that will be affected by this new proposal are Bank of America Corp, Morgan Stanley and Goldman Sachs.

The proposal is based on the Dodd-Frank law that aims at reducing the risk that investors and stakeholders face if the company pays out a significant proportion of its short term profits to top level employees. The reform law came into being to ensure that no adverse long term implications arise out of such short sighted bonus policies. By deferring bonuses of some high ranking employees, the profits of the company can be deployed towards cementing its financial stability.

According to the proposal mooted by the U.S. regulators, the deferred bonus that the employee could draw at a later date, post the three year period, depends on his contribution to the company’s overall profitability. The eligible bonus may be paid in installments not exceeding one-third of the total amount in each year post deferral period.
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Senate Begins Debate on Finance Bill About Wall Street Overhaul

The much-awaited debate on the finance bill, which proposes a sweeping regulatory overhaul of Wall Street, has begun after being voted down by the Republican Party, which strongly opposed certain provisions of the bill.

The two parties reached a compromise after Republican leader in the Senate, Mitch McConnell, agreed to begin the debate. Republicans will, however, continue to ratchet up pressure on Democrats and try their best to incorporate as many GOP amendments in the bill as they can. The Democrats have agreed to rewrite certain parts of the bill but they will proceed cautiously as Republicans have the power to filibuster amendments as well as the final vote on the bill. [Read more…]

Dubious Deals Come Back to Haunt Wall Street

The news that Goldman Sachs acted against the interests of its own customers have shaken up the financial world. The Securities and Exchange Commission suit against the company could have an irreversible impact on the industry, but the changes would be positive for everyone else except the banks. [Read more…]

Lehman Brothers Investigation Causes a Stir

The report on an investigation into wrongdoing at Lehman Brothers before the company collapsed has caused quite a stir among regulators and the financial industry.

The comprehensive report, which was authored by Anton R. Valukas, an examiner appointed by court to investigate the company’s bankruptcy has blamed Lehman’s top management and auditor Ernst and Young of using accounting gimmicks to hide troubled assets. The most controversial was the use of an accounting trick known as Repo 105 that allowed the company to shift a massive $50 billion of toxic assets. [Read more…]

Report on Lehman Brothers Collapse Blames Executives

The report on the collapse of Lehman Brothers has come out and it has blamed the company’s executives, its auditors and its rivals of wrong doing. The 158 year old Wall Street bank went bankrupt in 2008, triggering a huge financial crisis.

Anton R. Valukas, who was appointed by the court as an examiner to understand what went wrong in the last few days of the company authored a 2,200 page report detailing his findings. He claims that the senior management of the company indulged in balance sheet manipulation to hide its insolvency. [Read more…]