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Category: Banking

  • Thomas Montag rakes it in, despite economic crisis

    What bad economy?

    Thomas K. Montag, the new head of global markets at Bank of America Corp., had a very good year in 2008 despite the worldwide downturn in the markets.

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    As reported in The New York Times, Montag was one of nearly 700 Merrill Lynch & Co. employees who collected bonuses of at least $1 million just before the company was sold to Bank of America.

    Merrill later reported a $27 billion loss for 2008.

    Quite likely, Montag was the leader in this privileged group of bonus recipients.

    He had been brought to Merrill by John A. Thain, the company’s then-CEO and his former colleague at Goldman Sachs Group Inc.

    According to the terms of his May 1, 2008, compensation agreement with Merrill, Montag earned a bonus of $39.4 million for joining the brokerage firm.

    But that may have been only half of the Merrill money that came Montag’s way in 2008, even though he worked for the company for just a few months, having started his job in Aug. 4 at an annual salary of $600,000. Upon the December sale of the firm, he went to Bank of America.

    In addition to his Merrill bonus, Montag also received stock options and shares from Merrill that have been estimated to be worth at least $40 million.

    These were granted to him as compensation for the Goldman equity he lost in joining Merrill.

    Montag, 52, had worked at Goldman for 22 years before retiring at the end of 2007.

    He spent seven years in Japan as the co-head of Goldman’s Asian efforts and was widely credited with turning that operation into a profit center, once tripling the company’s profits in a two-year period.

    “Tom is extremely personable, extremely quick, very smart and good analytically,” a former Goldman colleague of his told Bloomberg News.

    “Peers who were direct reports of his universally rave about him as a manager and a leader.”

    Montag returned to the U.S. in 2006 and was Goldman’s global co-head of securities overseeing the Americas before retiring.

    The New York Observer reported in February 2008 that Montag had purchased a six-story townhouse on New York’s Upper East Side.

    Designed by Stanford White in 1903, the house was listed for $38 million. A source told the Observer that Montag had paid “well below” the asking price.

    Making millions, Montag has given away millions, as well.

    Bloomberg News reported that he donated $2 million to Beaverton High School in Portland, OR. Montag played football, basketball and baseball while a student at the school.

    He also gave $1.4 million to Stanford for a stadium scoreboard and $2 million to Willamette University in Salem, OR, his parents’ alma mater.

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    • Top Google exec funds online news startup

      February 18, 2009 at 12:45pm

      Some are billing it as a back-door way for Google to enter the news business.

    • Goldman Sachs Alums Oversee Financial Institutions Around World

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    • A disaster for most is a gold mine for Gerald J. Ford

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    • Goldman Sachs’ network extends around the world

      After U.S. Treasury Secretary Henry Paulson named protege Neel Kashkari to head the $700-billion bailout, some grumbled that the entire U.S. financial system seemed to be under the stewardship of Goldman Sachs alumni.

      In fact, Goldman’s reach through a network of former officials extends worldwide – a fact that could help foster global cooperation as Paulson and other U.S. officials reach out to foreign powers to calm financial markets, but which could also promote conflicts of interest.

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      Former Goldman Sachs execs now in top positions in key world institutions include:

      • Mark J. Carney, former managing director in Goldman’s Toronto office, who is governor of the Bank of Canada after having served as a senior official in Canada’s Finance Ministry.
      • Michael Cohrs, former head of Goldman’s equity capital markets, now the head of global banking for Deutche Bank.
      • Former Managing Director Mario Draghi, governor of the Bank of Italy.
      • Former vice chairman Robert B. Zoellick, now the head of the World Bank.

      Executives at Goldman Sachs say it has so many alumni in government posts and central banks around the world because the firm tends to push partners out after they’ve made a lot of money but while they’re still young. The average tenure for a partner is only eight to 10 years, which means high-powered people are leaving while still in their 40s and looking for second careers.

      “Goldman Sachs cares passionately about the intersection of Wall Street and public policy,” a former Treasury Department official told Politico. “They place a huge premium on engagement in both domestic and international policy circles.”

      Others, however, are less sanguine about the implications of a globe-girdling Goldman network.

      As far back as two years ago, Bloomberg News columnist Matthew Lynn argued the concentration of so much power in a group of people who shared similar backgrounds and training was unhealthy:

      A clan of former senior Goldman staffers is now in a position to help steer the dollar, the euro and the pound. There needn’t be anything sinister about that – though financial conspiracy theorists could have a field day with some of the connections. The issue is that they are likely to have a uniform set of preconceptions and prejudices. In any area of endeavor, it is healthy to have a wide diversity of views. Global monetary policy is no exception.

      All that clout does breed discomfort and jealousy – especially when Goldman is one of the only major Wall Street investment firms left standing in this country, besides Morgan Stanley.

      “Even before Mr. Kashkari’s appointment, there were a lot of Goldman people involved,” complained the editorial board of the New York Times:

      Mr. Paulson, after all, was urged to join the Bush administration by Joshua Bolten, President Bush’s chief of staff and a former Goldman executive director of legal and government affairs.

      In October of 2006, Mr. Paulson recruited Robert Steel, a former vice chairman at Goldman to be his right hand man as Under Secretary of the Treasury for domestic finance. Mr. Steel left the Treasury in July to become the boss at Wachovia, then one of the nation’s biggest banks.

      Earlier this year, Fortune magazine aired a complaint from an anonymous Wall Street money manager who complained that Goldman’s connections enabled it to weather the economic storm by getting information that others didn’t have.

      Other questions are bound to surface when so many of the banks who stand to benefit from infusions of government cash are headed by Goldman alumni, among them Citigroup, where former co-chairman Robert E. Rubin is a director; Bank of America, where former Goldman president John Thain will head global banking, securities, and wealth management after the acquisition of Merrill Lynch; and of course Goldman itself, headed by Paulson’s successor, Lloyd Blankfein.

      See Muckety’s earlier post on the Goldman Sachs network.

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      1 Comments

      • #1.   David Greenblat 05.11.2009

        Carol,

        WOW, incredible! Thank’s for the unbelievable amount of work you did to put this together. Everyone in this country should see this.

        DaveG.

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      • Nikki Finke becomes a Hollywood must-read

        July 20, 2009 at 10:16am

        Nikki Finke, former debutante turned reporter and editor, has become the blogger movie industry insiders have to read even when it hurts.

      • Small banks’ lobbyists win a big one with proposed increase in insured deposits

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      • Inspector General Kotz Gets Expert Help on His Sec Audit

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      • FDIC chair Sheila Bair likes a story with a happy ending Muckety.com

        Rock and Brock are twins. Brock is a saver. Rock is a spendthrift.

        When their grandfather hires them to do chores, promising to match every penny they save, Brock accumulates hundreds of dollars, while his brother goes on a buying spree.

        Brock eventually shares his fortune with his twin, who learns his lesson. The story ends with the brothers as adults, both millionaires and both understanding compound interest.

        The author of this children’s book, called Rock, Brock, And the Savings Shock, is Sheila Bair, who no doubt hopes that the current financial crisis will have a similar happy ending.

        Bair is chair of the FDIC, which seized Washington Mutual, the nation’s largest S&L, on Thursday. The agency is likely to have to bail out more banks in coming months, straining FDIC finances in a way that hasn’t occurred since its inception in 1934, in the midst of the Depression.

        The FDIC backs all all accounts up to $100,000 at member banks, and it has never failed to pay up.

        In the current climate, banks will billions of dollars in assets are at risk. Thirteen banks have failed thus far in 2008 and the agency maintains a list of more than 100 other endangered institutions.

        As of June 30, the FDIC’s insurance fund totalled $45.2 billion for claims – not enough to cover the collapse of several major banks. Even if the proposed bailout plan receives congressional approval, it won’t address FDIC’s need for cash.

        Bair has said the FDIC is preparing for a likely succession of bank failures, and plans to raise insurance premiums paid by the banks.

        More importantly, she says, there are plenty of buyers interested in buying up the distressed institutions. As she told CNBC:

        I have people calling us every day, interested in investing in banks. There is a lot of market interest out there and that’s good, because that is good to try to move these banks. You don’t want to close them, but if they have to be closed, move them back into the private sector as quickly as possible, with minimal cost to us. And if we have multiple bidders that helps us get the price we need.

        Bair was appointed to a 5-year term as FDIC chair in June 2006. Before joining the agency, she taught at the Isenberg School of Management at the University of Massachusetts-Amherst. She previously served as assistant treasury secretary, senior VP at the New York Stock Exchange, and counsel to Bob Dole.

        Her husband, Scott P. Cooper, is the lobbyist for the American National Standards Institute.