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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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November 10, 2008 3:58 PM ET
The question of whether to participate in the Treasury Department’s bailout plan hangs over many banking executives’ heads. But limits on executive compensation won’t play a major part in that decision, according to several experts speaking at a Wall Street conference today. Many banks, including private and smaller banks, face a choice as the deadline to apply for bailout funds approaches: accept certain restrictions on executive pay or fend for themselves. For a lot of banks, however, curbing CEO pay is less worrisome than the possibility the Treasury will impose other restrictions. Financial services companies participating in the Treasury’s Troubled Asset Relief Program, or TARP, must restrict severance payouts for top executives to three times base salary, institute clawback provisions, avoid excessive risk-taking and limit tax deductibility on executive pay to $500,000. These provisions will be in place as long as the federal government has an equity stake in a company. Randal Quarles, former Treasury staffer and now a managing director at Carlyle Group, said that “of the various issues that people are concerned about as they contemplate TARP capital…the executive compensation issues have not driven it whatsoever.” “Compensation is great for headlines … but it is not the big issue,” said Gerard Cassidy, managing director of bank equity research at RBC Capital Markets. He said bankers may instead fear the Treasury imposing lending requirements or other conditions that affect their core business. “We’re advising all well-capitalized banks not to touch the TARP,” Mr. Cassidy told reporters after his remarks at the Securities Industry and Financial Markets Association conference. Of course, one company’s federal interference is another’s salvation. AIG announced today that it was availing itself of TARP to the tune of $150 billion, and automakers have been clamoring on Capitol Hill for additional bailout funds. And more companies could seek bailout cash if conditions worsen. “We’re going to see some enormous losses coming up in the fourth quarter,” Mr. Cassidy said, citing the Circuit City bankruptcy filing today as evidence of a coming tide of write-downs and problems. “Many of the bank management teams use the fourth quarter as that proverbial kitchen sink quarter. This is going to be a very big kitchen sink this quarter.” Other experts at the conference had similarly skeptical views of TARP, noting it won’t smooth the way for additional bank mergers and acquisitions. “Big picture, it’s not going to change a lot,” said Fernando Rivas, a managing director at J.P. Morgan Chase, although he noted that TARP cash could change the timing of some deals. “We haven’t had one conversation with a board or CEO where they’ve said, ‘Wow, TARP is fantastic, it’s significantly changed what I’m going to do from an acquisition point of view.’” Publicly traded banks must apply for TARP by this Friday; the Treasury is extending the deadline for private banks.
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Latest News
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March 5, 10:52 AM EST
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March 4, 4:16 PM EST
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March 4, 3:59 PM EST
CRAIN'S BENEFITS OUTLOOK 2009
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