United States of America

Globalization stops short at the corporate suite

28 Feb 2012

The global war for talent is a popular justification for exorbitant CEO pay. But with few exceptions, expat chiefs are still a tiny minority. It’s bad news for shareholders in high-pay hubs like the United States and Britain who could find better-value stewards overseas.

Investors ill-served by crude accounting standards

27 Feb 2012

Oil, that is. Divining how much explorers have discovered matters greatly to shareholders. Yet they must choose between two equally unreliable figures. Estimates based on SEC rules gyrate wildly with energy prices, while company data are too opaque. Shareholders deserve better.

Yahoo activist hasn’t yet earned four board seats

27 Feb 2012

Dan Loeb’s Third Point hedge fund correctly diagnosed the board as the problem. But investors should demand he provide a sound prescription to cure ailing Yahoo before voting for his full slate of directors. Until then, Loeb merits just one spot - to keep the pressure on.

Apollo’s $7 bln bet won’t get gas from leverage

27 Feb 2012

The buyout firm and its partners are writing a chunky 40 pct equity check for El Paso’s E&P business. With energy prices volatile, lenders are rightly cautious. But without the usual debt juice, the best hope of a punchy investment return is a big upturn in gas prices.

Buffett’s "trust me" succession plan doesn’t fly

27 Feb 2012

The Oracle says he has at last identified someone to replace him as boss of Berkshire Hathaway when he’s gone – but isn’t saying who. Given that one prime candidate left amid controversy and the company has underperformed of late, Buffett should name the person he has in mind.

Flashy insider trading suits pale before gray one

24 Feb 2012

Prosecuting the likes of Raj Rajaratnam and, now, analyst John Kinnucan grabs headlines, but an obscure Chicago case could finally draw the line between ill-gotten data and savvy research. That would be a landmark for investors understandably wondering what is and isn’t allowed.

AIG’s $20 bln quarter can’t hide slow recovery

24 Feb 2012

Strip out the huge tax gain and annual return on equity for the core business was a meager 2.3 pct. The one-off may have nudged Treasury’s 77 pct stake into the black. But that’s like robbing Peter to pay, well, Peter. A hurting insurance sector means an AIG upturn is a ways off.

Drilling alone won’t fulfil cheap U.S. oil dreams

24 Feb 2012

By expanding offshore drilling, GOP presidential contenders claim they can bring gasoline prices back to earth. With the US pumping only 9 pct of global oil, its leverage on supply is modest. But the biggest consumer can affect demand. That requires frank talk about conservation.

Crisis fiction doesn’t measure up to strange truth

24 Feb 2012

“The Darlings,” by a former Goldman analyst and corporate lawyer, is one of the first novels set amid the upheaval of 2008. The glossy thriller delves beyond the greed engulfing a rich Wall Street family in scandal. But it fails to top the era’s many real tales of sorrow.

Too-coy India prompts Citi’s HDFC retreat

24 Feb 2012

New Delhi has long worried about hot money and fair-weather friends. But the protectionism deployed actually increases the dangers. Give foreign banks more skin in the game and they are less likely to retreat. Citi’s exit from India’s top housing lender tells that tale.

A Goldman governance fix could serve Blankfein

23 Feb 2012

The bank has resisted separating the chairman and CEO roles for years, but there may now be a convenient reason to do so. Becoming chairman only would allow Lloyd Blankfein to gracefully move on and put the onus on his presumptive successor, Gary Cohn, to carve his own path.

Twitter revolt could march next on proxy season

23 Feb 2012

Social media enabled uprisings in the Middle East, Occupy protests and even blowback against banking fees. A logical next step would be to give a stronger voice to shareholders. And lighting a fire under complacent institutional investors would be a real coup.

Feel-good laws should put practicality before hope

23 Feb 2012

California has struck the right balance making firms like Apple police labor practices at foreign suppliers. But expecting companies to starve African thugs of mining profits is a stretch. Such edicts may have good intentions but are impractical and often counterproductive.

New US finance sheriff carves out shadowy domain

23 Feb 2012

The Consumer Financial Protection Bureau under Richard Cordray is throwing a regulatory lasso around a motley crew of cash checkers, credit bureaus, money wirers and debt collectors. As our new ’Cordray Index’ shows, they’ve had a wonderful financial crisis. That may change.

Politicians’ pleading on Volcker rule looks foolish

23 Feb 2012

The finance ministers of Japan and the UK are making a big deal about new U.S. rules against proprietary trading. They want to keep American banks trading foreign sovereign debt. But if there is a problem, it’s a minor one. Politicians must have better things to worry about.

UPS could be bidding against itself for TNT

22 Feb 2012

The huge available synergies mean the $73 bln U.S. parcel giant could sweeten its takeover offer for its Dutch rival. TNT shareholders are for now expecting at least 9 pct more. But with rivals FedEx and DHL inhibited in varying ways, they may not get the bidding war they’d like.

GM’s former finance arm better suited for IPO

22 Feb 2012

The business now known as Ally is now considering a sale - and it would fit well with some banks or even its previous owner. But the ResCap unit remains troubled. And at $25 bln, it’s no easy deal in this environment. Waiting for an opening in public markets is a better option.

Troubled princeling poses test for new China

22 Feb 2012

Bo Xilai, one of China’s most colourful politicians, has fallen under a cloud, sparking an unconfirmed report he may have resigned. Outsiders should care, because what happens to Bo may give an insight into how much - or how little - Chinese politics have changed.

Christie imperils reformist mojo and state coffers

22 Feb 2012

The governor’s budget paints a rosy picture of the Garden State, but overlooks thorny issues like underfunded pensions. A politician planning ahead for an election is no surprise, yet leaves Chris Christie putting New Jersey’s future - and a tough-talking reputation - at risk.

Obama’s corporate tax plan is a good start

22 Feb 2012

The president’s proposal to reduce the rate paid by companies to 28 pct and eliminate many loopholes gets the debate moving in the right direction. But there’s plenty of room to improve the plan, too. For one thing, it would make global competition tougher for domestic firms.