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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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February 20, 2009 9:31 AM ET
(Business Insurance)—Former American International Group chairman Maurice R. "Hank" Greenberg criticized the Obama administration’s steps to restrict executive compensation for firms that receive federal aid, saying the move will result in an exodus of talent. “What kind of people are you going to get for $500,000? Anyone with real talent will just go elsewhere,” Mr. Greenberg told an audience in New York Thursday. He spoke as part of a panel discussion, sponsored by New York-based Source Communications, on the current financial crisis. Mr. Greenberg said any move to cap executive pay on Wall Street, will backfire. “The best managers will move to private companies that are not receiving government funds, and therefore do not face pay caps,” he said. The $787 billion stimulus package signed by President Obama Tuesday includes a provision to limit bonuses for senior executives at banks that receive more than $500 million from the Treasury Department’s Troubled Asset Relief Program. The law does not include salary caps, but last month President Obama proposed capping the pay of executives of bailed-out banks at $500,000. Mr. Greenberg, who is chairman and chief executive officer of C.V. Starr & Co. Inc., also noted that the current market dislocation may also give rise to a wave of startups, and those companies “will outperform the companies that are owned by the government.” During the discussion, Mr. Greenberg railed against a presidential administration that he views as “anti-corporate” and predicted further government ownership of failed institutions. “That scares me quite a bit. Free enterprise is what built this country,” he said. Mr. Greenberg said he is worried that under government control, bailed-out banks and firms that, like AIG, are part-owned by the government face dim prospects. He also expressed skepticism that the government would recoup all the funds that it had lent such companies. AIG is in the process of selling various noncore assets to repay funds it has borrowed from the government. Mr. Greenberg—who resigned as chairman and CEO of AIG in 2005 amid investigations of its accounting practices—has been highly critical of the government’s $150 billion AIG rescue package and its related nearly 80% stake in the company, calling it the “wrong approach.” Thursday morning, Mr. Greenberg reiterated his criticism of AIG’s effort to sell off assets as part of its re-organization, mentioning AIG’s announcement last week that it was looking for a potential buyer of its Tokyo headquarters. “If you sell that building, the loss of face to every Japanese employee would be profound,” he said. Mr. Greenberg also contends that any sale of assets by AIG in the current market will only yield a fraction of their real value. “That will not generate enough to repay the terms of the loan,” he said. Mr. Greenberg was joined by two other big financial names—Peter Peterson, co-founder and former co-chairman of private equity firm Blackstone Group, and J.C. Flowers, chairman and CEO of J.C. Flowers & Co.
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