Who knows what they are saying? Can't trust anyone right now, but BAC could survive another capital raise with little or no dilution if they generated capital from retained earnings and the divestiture of assets like they did last year. That has been there message so far, no reason to change at the last minute due to bonus restrictions. WFC is doing pretty much the same thing, and doing so in a way that is shareholder friendly. BAC should make the same commitment.
The point is that no one should be in a hurry to get the damn thing over, just so mgmt can get back to fully restored comp. I don't think the government is going to let them off the hook anyways. Feinberg is getting ready for a pay restructure for the top 100 paywinners at C and BAC that will be due in December.
Hopefully, that will avoid any embarassing bonuses in 2009. BAC really isn't in a position to get rid of TARP just yet, since they haven't even gotten back to core operating profits yet. They are still collecting tax rebates.
Who knows, maybe all the pay cuts gets non operating expense low enough for the next couple quarters for BAC to generate positive operating results sooner rather than later. Nobody should be earning bonuses when the taxpayers are sending BAC tax refunds. And, they really shouldn't be making any bonuses until the shareholders get their dividends back.
BAC's execs need to get back towards the baseline of the new economic equilibrium. Sure, they can all whine and cry that they will go work for JPM, but they aren't hiring. I don't think GS needs any more new talent right now either. All the other people have already left and found new positions at UBS or whatever. There aren't that many positions left open. Everyone's still between a rock and a hard spot, better to squeeze them as much as possible. If they sit tight and do their job, they will make all the money they will ever need over the next 5 to 10 years.
Short term, they can't possibly expect big bonused financed by tax rebates. And, they shouldn't expect shareholders to fork over an extra $45 billion of common equity, just to make their lives easier for the next 6 months. They need to show a little backbone, given their industry high capital ratios. Better to earn back your respect from here. |
