Morning Coffee Aug 09 2009

Credit Suisse's Toxic Compensation

By gayathri vaidyanathan

Credit Suisse is offering up to its bankers a plate of their own toxic goodies at bonus time; fortunately, the goodies are not as tainted as expected.

In 2008, the bank created a bonus fund from soured mortgages and bonds for nearly 2,000 of its top bankers. Last Wednesday, the bank told employees that the $5 billion fund had returned 17% since January, according to The Wall Street Journal. This was better than expected from both inside and outside the bank, though no where near the 75% increase of Credit Suisse's shares this year. (

According to Paul Calello, investment banking chief, creating the fund was "thoughtful and responsible." And it certainly was a tidy way of ensuring that the bankers who made reckless bets will reap their rewards with the performance of their assets.

Meanwhile, the insurer Ambac Financial Group Inc. sued Credit Suisse (together with Citi) on Monday. It alleges that the two banks misrepresented the risks involved with nearly $2 billion of mortgage-backed assets.

AIG Bonuses

Meanwhile, American International Group Inc. delivers another punch to taxpayers' guts. The giant insuerer will pay out the remaining $249 million of its $1.09 billion retention bonuses over the last quarters of 2009. (Bloomberg)

Where Have the Women Gone?

Wall Street is lacking in estrogen these days, with three out of every five female bankers from a 2007 list of bulge bracket firms out of a job or holding onto a precarious posting. The exception: Sallie Krawcheck of BofA. (WSJ)

Banker Migration

There is a growing migration of big time bankers to small regional banks. Signature Bank of New York has hired 10 teams of bankers from big players like Citigroup, JPMorgan, and others. Other banks have followed suit. (AmericanBanker)

Harvard Restocks

Harvard Management Co., the endowment fund of the ivy league school, hired two hedge-fund pros to help stop its blood-letting. Since June 2008, the fund has lost $10 billion and axed 50 investment staff. (

Disappearing Diversity

International applications to B-schools have fallen this year due to problems obtaining student visas and getting loans. Enrollments are down between 10 and 30% in surveyed schools. (BusinessWeek)

Notable Death

Andrew Lanyi, securities analyst, legendary stockbroker, and author of "Confessions of a Stockbroker" died last Tuesday, at 84. He regularly dispensed pithy wisdom that became part of his legend. One nugget: "The only people who sell at the highs and buy at the lows are liars." (WSJ)

Headhunters Vie for Spoils

One of the biggest stakeholders in the U.K. banking business is the government, and it hired the search firm Odgers Berndtson last week to find itself a CEO. (WSJ) For Uncle Sam, the go to for executive hires at bailed-out banks is Spencer Stuart. (FINS)

Stock Shock, the Movie

The financial crisis is ripe fodder for Hollywood, with the first movie exploring naked short selling with Sirius XM releasing on DVD in late July. Michael Moore is in the editing phase of his version of the meltdown as well. (


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