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Merrill Approved Dividend Payment To Stockholders Last November
It turns out the billions in dollars in bonuses paid out by Merrill Lynch even as its new owner, Bank of America, was lobbying for more bailout money weren't the only questionable payments the firm made late last year.
BusinessWeek reports:
On Nov. 13, just three weeks before Merrill shareholders voted to approve the merger with BofA, Merrill's former board approved the payment of 35 cent-a-share dividend to all common stockholders. The payout drained another $565 million from Merrill's coffers at a time when the firm should have been building up cash, instead of spreading it around.Now sure, one could argue that if Merrill had slashed the dividend to the bone, the brokerage's stockholders may not have voted for the merger with BofA. But Merrill's dividend payout came just weeks after Bofa announced on Oct. 6 it was slashing its dividend in half to 32 cents-a-share--a move the bank said would save it some $1.4 billion in cash each quarter. (The bank has since cut the dividend to a penny-a-share).
The magazine also offers an important, if obvious-when-you-think-about-it corrective to the fast-emerging narrative that Bank of America knew nothing about Merrill's huge fourth quarter losses until mid December (and had no reason to know any sooner.)
Says Bizweek:
Anyone with inside knowledge of Merrill's investment portfolio could have seen that the brokerage's investments in corporate loans and commercial real estate-related securities would all take a hit in the fourth-quarter. And that includes Thain & Co., as well as Lewis' team at BofA, which was conducting its due diligence on Merrill at the time.
No one comes out of this looking good.
Josh
Zachary
"Clawback" (n.) : "1. Previously given monies or benefits that are taken back due to specially arising circumstances."
January 23, 2009 7:35 PM | Reply | Permalink
At least the IMPORTANT and WEALTHY people won't lose everything as the commoners become destitute one by one...
January 23, 2009 7:51 PM | Reply | Permalink
He's a hero! He made sure shareholders were rewarded for not working while those who do would go hungry. Let them eat cake!
January 24, 2009 2:16 AM | Reply | Permalink
I really don't understand how capitalists think.
I read their stuff - like "business is all about increasing shareholder value" (so why fault Merrill for doing just that?) and what seems to be some sort of capitalist dogma that "people will pursue their own self-interest and that will work out well for everybody" (but isn't that just exactly what's been going on so what's the gripe?)
And when the public takes it in the neck? Old Wil Vanderbilt's famous reply to keeping open a railroad line between NY and New Haven for the benefit of the public said, "The public be damned." That's the speak of a proper capitalist.
So what's with all the hand-wringing, gnashing of teeth, not to mention endless carping and fault-finding. This is your capitalistic system and your capitalists playing by your/their rules.
January 24, 2009 1:10 PM | Reply | Permalink
Please! No bailouts, period. Bankruptcy is the only place to go for large, bad banks and our auto companies. Our US Congress is not helping GM, Ford (F), Chysler, or our bad banks. Giving them dollars will not fix them. Drunken sailors make their way back to their ship sick and broke. Given time and hard work, they heal and become useful again.
CHYSLER
Investors paid Benz only $7 billion. Their request equals their purchase price. Don't let them play with our money; they already wasted their $7 dollar investment. Now they are wasting ours.
Chysler is a private company. We can not control them. We don't own them. Let their parent company use its cash.
FORD
Ford financed all their assets two years ago. They built a fine factory in Brazil. Let Brazil bail them out. Stop the farce. Ford family owns 3% of Ford stock; however, thkeir family have 40% of the shareholder votes. One hell of a democratic fix. We can not control them either.
GM
GM is financially the worst. Even $100 billion will not fix them. They are investing heavily in Asia and Russia. Let them ask China and Russia for a loan!
LARGE US BANKS
With Hank Paulson's $700 Billion TARP sandbox we could have bought all the large banks, and the three USA automakers. We could own 100%. What a waste. Citigroup (C) and Bank of America (BAC) Goodwill asset is larger than their market cap by far! J P Morgan also has a very high Goodwill asset. Collectively, their Goodwill is worthless in Bankruptcy court.
Citigroup is the poster child for why none of the big banks should not have gotten bigger.
AIG
AIG bailout paid Hank Paulson's friends at the big banks. That is, $150 B settled nothing but bad CDS bets. Bet made by JP Morgan, Goldman Sachs, etc.
US FEDERAL RESERVE
Our Fed paid off two trillion of bad bet on CDS, CDO, and other worthless, unregulated, and uncontrolled debt obligations. Good bank vs bad bank? You can without a calculator quickly answer: what is a bad bank full of worthless assets worth? Zero! Zero!
TOO BIG TO FAIL?
They already failed! The fix? Let them merge to get bigger? Ridiculous!
Please, please no more loans to those showing such poor judgment! Bad loans do not get paid!
January 24, 2009 5:48 PM | Reply | Permalink
netskinner: Kudos. I like the way you line them up and knock 'em down. Good stuff....
January 24, 2009 7:17 PM | Reply | Permalink