Americas

Jamie Dimon should show some clawback cojones

14 May 2012

JPMorgan may have stomped on Dodd-Frank’s spirit, but it should comply with the letter of the law when it comes to compensation. To remain credible, Dimon should insist that Ina Drew and other CIO execs responsible for its trading losses hand back some of last year’s pay.

Dodd-Frank opponents return to the drawing board

14 May 2012

JPMorgan’s prop-like $2 bln trading flub gives ammo to proponents of more stringent bank oversight. Yet Mitt Romney and many in the GOP have promised to gut Dodd-Frank and Volcker. One tactic may be to embrace Dallas Fed President Richard Fisher’s call to make banks smaller.

ResCap bankruptcy brings Ally full circle

14 May 2012

Seven years ago, Ally Financial - then GMAC - was worried its GM links would bring down high-flying ResCap. It’s an irony of the financial cycle that cutting loose the U.S. mortgage unit may now give the car finance firm its best chance of repaying Uncle Sam’s $17 bln bailout.

JPMorgan hammers another nail in VaR coffin

14 May 2012

The U.S. bank’s $2 bln loss has again highlighted the flaws of using Value-at-Risk to gauge trading exposures. That will help regulators ditch the measure. The bigger challenge, however, will be making capital rules less dependent on figures produced by banks’ computer models.

Yahoo needs more than a revolution at the top

14 May 2012

The dysfunctional web firm is much like a failing country. It has been mismanaged and suffers from bureaucracy and an anachronistic business. Until recently it even had a dictator for life. Third Point’s shareholder revolt promises a fresh start, but fixing Yahoo won’t be simple.

Pricey Chesapeake medicine highlights its sickness

12 May 2012

The embattled energy firm is borrowing $3 bln at 8.5 percent to repay a loan whose terms might otherwise prevent asset sales. This buys time. But it makes even more obvious Chesapeake’s unsustainable reliance on selling choice assets to fund its persistent cash drain.

JPMorgan has more questions to answer

11 May 2012

Boss Jamie Dimon has eaten humble pie over the giant U.S. bank’s unexpected $2 bln of trading losses. But key questions remain about the firm’s risk management, the role of regulators and the lessons that may be applicable at JPMorgan and elsewhere.

Petrobras earnings delay excuse is cause for worry

11 May 2012

It’s bad enough the Brazilian oil giant was going to report crummy results on Friday. Delaying them until next week over a “scheduling problem” is unnerving. Investors know Petrobras is grappling with production issues. Adding shambolic governance to the mix is most unwelcome.

Contemporary art becomes the gold of the new rich

11 May 2012

This week’s big sales brought records for Rothko, Klein, Lichtenstein and others. Scarcity is part of the allure, as are taste and the spending power of the global plutocracy. One thing to please at least the financiers among them is that contemporary art has inked good returns, too.

Review: Devaluing the priceless

11 May 2012

What do you call someone who knows the price of everything and the value of nothing? A cynic, said Oscar Wilde. An economist, says Michael Sandel, whose book “What Money Can’t Buy” explores the corrosive effects of glibly unleashing market forces where they don’t belong.

Dimonfreude is irresistible, but may be dangerous

11 May 2012

The glee is understandable: JPMorgan, scourge of regulators and king of Wall Street which broke Bear, Lehman and MF Global, at last receives its comeuppance. But one of the few banks that sidestepped the crisis has been proven fallible. That will shake confidence in the system.

Jamie Dimon’s Ahab meets his Moby Dick

10 May 2012

JPMorgan’s $2 bln hedging loss is as much a blow to the CEO’s reputation as it is to the bottom line. The mess occurred in the core treasury unit and evokes similar mistakes predating Dimon’s arrival. Even a driven banking captain can be hobbled by a trading whale.

Europe gives America advice and time on austerity

10 May 2012

Hawkish politicians might take note that U.S. citizens won’t want their benefits slashed any more than angry Europeans do. In fact, polling suggests they may be willing to pay more tax to preserve them. Meanwhile, continuing EU trouble buys more time for a realistic U.S. deal.

Boardroom botches call for checklist fix

10 May 2012

Scandals at Yahoo, Green Mountain and Chesapeake suggest U.S. directors need simple reminders to prevent stupid mistakes. If humble checklists save lives in hospitals, as a surgeon’s bestseller shows, shareholders deserve similar protection. Breakingviews offers a starter set.

Coty’s freshened offer hard for Avon to resist

10 May 2012

The down-in-the-dumps U.S. makeup firm has until Monday to engage with Coty’s persistent advances. With the offer raised to $10.7 bln, the addition of Warren Buffett’s cash and blessing, and the possibility of a still higher price, Avon’s European suitor deserves a hearing.

Facebook not only IPO to spread underwriter wealth

9 May 2012

The social network’s 33 banks make up one of the biggest cabals of late. But it’s by no means a record. Over 15 years, that belongs to Goldman Sachs. A bigger change for Wall Street is the trend toward hiring more banks to jointly lead deals. That skews fees and bragging rights.

Pampered board shares blame for Chesapeake fiasco

9 May 2012

On paper the gas company appears to have a good mix of directors. But they didn’t just fail to stop CEO Aubrey McClendon’s excesses - they often approved. Time constraints and bumper pay and perks may have helped keep them subservient and led to them failing shareholders, too.

Judges can be tough without getting personal

9 May 2012

Few can chill U.S. business spines faster than Delaware’s Leo Strine. He honors a tradition of tart lectures from the state’s bench. But his scolding of Martin Marietta and its spin doctors, though on target, sounded catty. Too much of that and he could leave his audience cold.

GSK’s hostilities may follow Genentech playbook

9 May 2012

Britain’s biggest drugmaker is bypassing the Human Genome Sciences board with its $2.6 bln offer - and has implied the price is firm. The GSK-HGS links probably rule out a white knight. But echoes of Roche’s 2008 tilt at Genentech suggest there may yet be a sweetener.

Boardroom gamblers roasted by their own hubris

9 May 2012

Shareholders’ guardians ought to have some skin in the game. But the chairman and lead director of coffee maker Green Mountain threw caution to the wind by piling leverage on their holdings. Their downfall should be a lesson to others.