Rag Hand

Banks refuse to change their bonus system because the people who make the rules governing bonuses also participate in them.

NYT:
Even as the industry’s compensation has been put in the spotlight for being so high at a time when many banks have received taxpayer help, six of the biggest banks set aside over $36 billion in the first quarter to pay their employees, according to a review of financial statements.

If that pace continues all year, the money set aside for compensation suggests that workers at many banks will see their pay — much of it in bonuses — recover from the lows of last year.

This is the same system that allowed personal greed to rule investment strategy.

“I just haven’t seen huge changes in the way people are talking about compensation,” said Sandy Gross, managing partner of Pinetum Partners, a financial recruiting firm. “Wall Street is being realistic. You have to retain your human capital.”

Brad Hintz, an analyst at Sanford C. Bernstein, was more critical. “Like everything on Wall Street, they’re starting to sin again,” he said. “As you see a recovery, you’ll see everybody’s compensation beginning to rise.”

Executive recruiters in the sector say prospective recruits are still being offered pay packages on par with those of earlier recruits. Some banks that received taxpayer help are even offering guarantees to recruit workers.

Part of the way banks are supporting high pay for their workers is by shrinking their work forces. Citigroup, for example, has dismissed 65,000 people since the start of 2007. That has left Citigroup paying the same amount on average to its remaining workers, though the quarterly cost to Citigroup is down by 25 percent, to $6.4 billion.

That’s the old Wall Street spirit. –Fire 25% of your people so you can give the people closer to the top the same or more money than last year.

As I’ve said every time I’ve gotten up on my soapbox: Nothing changes!

The combination of the Old_Boy_Network and political contributions continues to insure that no bank will be forced to change in any real manner.

Those banks that are paying back their government loans early are turning around and borrowing the money from others that still receive bailout money.

This combined with the end run by Obama and company guarantee the continuation of business as usual.

Washington Post:
The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.

From ZdNet:

The Pirate Bay may have grounds for a retrial. It turns out that the judge in the case, Tomas Norstrom, might have a slight conflict of interest. He’s a member of the Swedish Copyright Association and sits on the board of Swedish Association for the Protection of Industrial Property.

Peter Althin, the lawyer for TPB cofounder Peter Sunde, said he’s asking the Swedish appeals court to consider ordering a retrial based on the judge’s possible bias, the BBC reports.

BBC also offers perspective on Swedish law from former senior attorney Sven-Erik Alhem, who says it’s unlikely this will result in – a former senior attorney in Sweden – said the judge had made an error of judgement, but a retrial was unlikely.

“Of course you’ll get a fair trial.”
“Now, having cleared that up…… Would you prefer to be hung with a new rope or one that’s well broken in?”

Time Warner backed down from their pay per byte program but did not abandon it.

The program is alive and well in Beaumont Tx.

Time Warner Cable Chief Executive Officer Glenn Britt said, “It is clear from the public response over the last two weeks that there is a great deal of misunderstanding about our plans to roll out additional tests on consumption based billing. As a result, we will not proceed with implementation of additional tests until further consultation with our customers and other interested parties, ensuring that community needs are being met. While we continue to believe that consumption based billing may be the best pricing plan for consumers, we want to do everything we can to inform our customers of our plans and have the benefit of their views as part of our testing process.”

Translation: We made wheelbarrows of money with flat rate and now we intend to make truck loads of money by metering and overcharging for providing even less service.

We’ll roll this plan out again just as soon as we finish conning the customers with phony consumer groups and our PR department finds the right color of paint to make our old idea seem all shiny and new.

AT&T is running the same trials for this scam in Reno, NV and Beaumont, Tx.

DSL Reports:
Beaumont was chosen because it’s already the site of a similar trial by Time Warner Cable, who we were the first to report is implementing trial caps between 5-40GB with overages between $1-$1.50 per gig. In both trials, the companies are not only testing the network and billing systems necessary to make such systems work — but the marketing message. Convincing customers that already very profitable companies need to charge them more money for the same (or less) usage is, well, tricky.

Like many ISPs, AT&T and Time Warner Cable are preparing for a future where competition from Internet video threatens their TV revenues. Through caps and more specifically metered billing, carriers understand that down the road — they’ll be able to monetize and/or deter the use of video content that isn’t theirs, giving them a huge leg up in the Internet video battles yet to come. Luckily for both AT&T and Time Warner Cable, limited competition in Beaumont means most customers won’t be able to vote against this idea with their wallet.

I’m glad I don’t have to use the internet in Beaumont because it looks like there’s nowhere to run and nowhere to hide.

Gauging by the number of email articles I receive every week about using social media to promote sales, nearly everyone in the advertising world thinks it’s the greatest thing since sliced bread.

Now the FTC wants to limit this sort of advertising and hold those people doing it responsible for any falsehoods.

Advertising Age -13 April 2009: As part of its review of its advertising guidelines, the FTC is proposing that word-of-mouth marketers and bloggers, as well as people on social-media sites such as Facebook, be held liable for any false statements they make about a product they’re promoting, along with the product’s marketer. This could present a significant issue for marketers, including the likes of Microsoft, Ford and Pepsi, who spend billions on word-of-mouth and social media. PQ Media projects that marketers will spend $3.7 billion on word-of-mouth marketing in 2011.

The FTC said that this rule would apply only to those who are compensated for promoting or reviewing a product. (The question then becomes; what constitutes compensation? Does a case of water count as compensation? How about a hotel room at a trade convention?)

The problem is this: If an advertiser gets a famous blogger to promote their latest snake-oil without telling you that the guy is being paid, you will tend to believe that whatever they say is their honest opinion based on personal experience. Making it far more likely that you will buy whatever product or service they’re hawking, no matter how far fetched the claims.

The FTC simply wants to hold these paid spokesmen responsible for what they say, just like they would be in traditional modes of advertising.

It only seems fair that if somebody is being paid to give a review of a product we should be aware of it and they should also be responsible for what they say.

Here is the final paragraph in the article with a rational view of the subject.

But not everyone thinks the revised guidelines will hurt marketers. Jim Nail, chief marketing officer of TNS Media Intelligence and a WOMMA board member, said the revisions will bring more credibility to word-of-mouth and social-media marketing. “The thing that makes word-of-mouth marketing powerful is people believing they are getting truthful and honest opinions from real users,” Mr. Nail said. “If people start disbelieving word-of-mouth marketing as much as they disbelieve advertising, we are in deep trouble.”

In order to save Chrysler, the government has asked a number of banks to forgive and forget about $7 billion in borrowed money.

Washington Post:
Rescued Banks Balk at Chrysler Deal:
At a meeting with executives from four of the nation’s largest banks earlier this month, the chief of the government’s auto task force, Steven Rattner, delivered a message that shocked some in the room.

To save Chrysler, he told them, the four banks and several other financial firms would have to surrender their claims to most of the $7 billion the automaker owed them. And what would the banks get in return for this sacrifice? Nothing.

“People’s jaws just dropped,” said a person familiar with the discussions.

These banks are admittedly taking billions in bailout money so the government should be allowed some input as to how it’s used, but this move is over the top.

The rest of the details you can get from the WP.

The reason I even brought this up is that it brings back memories of the Chrysler tank fiasco.

The tank failed the original tests…. So they rewrote the tests.

When 60 minutes interviewed a Pentagon spokesman all he would say about the incident is “they passed the tests.”

When the subject of Chrysler’s failing the original test and the tests modifications required for the Chrysler tank to pass was brought up again and the spokesman was again asked to reply to some of the specifics, all he would say is “they passed the tests.” Over and over and over……

Obviously this was a blatant bailout of Chrysler with no regard for the real world functionality of the vehicle or for that matter the safety of the vehicle’s crew.

Now everybody’s favorite big brother seems to be doing it again. The administration and their anointed spokesmen are determined to save Chrysler while apparently leaving GM hanging.

While I don’t know the details or the thinking behind this latest move –nobody who’s on the outside looking in will never know what sort of backroom deals are being made. It could just be a way to pressure these banks to turn loose of some of their latest ill gotten gains. (You remember the billions of dollars in
bailout money that so many banks refuse to share.)

But it appears to me that it is more a matter of Chrysler still having powerful friends in positions of power, starting with the Whitehouse.