Allison Kilkenny: Unreported

Workplace Massacre in Alabama: Did Endless Downsizing and Slashed Benefits Cause the Rampage?

Posted in Capitalism, corporations by allisonkilkenny on March 13, 2009

Mark Ames (h/t Alternet)

workplace-violenceThe killing spree in Alabama fits a well-worn pattern of workplace-driven massacres that we’ve seen since the “going postal” phenomenon exploded in the middle of the Reagan revolution.

In spite of the fact that these killings have gone on unabated for over 20 years, most of the country doesn’t want to know why they’re happening — least of all the people in power.

If we study the motive for Michael McLendon’s shooting rampage Tuesday, which left 11 bodies across three towns in southern Alabama, and we look at the bizarre way that the causes of the shooting are being hushed up, you begin to understand why this uniquely-Reaganomics-inspired crime started in the United States, and continues to plague us.

But of all the inexplicable circumstances surrounding the murder spree, one of the oddest has to be the way Alabama authorities went from focusing hard on solving the shooter’s motive to suddenly dropping the issue like a hot potato and running away from the scene of the crime, as if they didn’t like what their investigation produced.

On Wednesday night, investigators announced that they had discovered the motive, and they would reveal it to the world on Thursday morning. 

Investigators close in on motive of Alabama gunman
by Donna Francavilla
SAMSON, Ala. (AFP) — Alabama investigators said they were closing in on a motive for the U.S. state’s deadliest-ever shooting, in which a man killed his mother, grandmother and eight others before taking his own life. The Alabama Bureau of Investigations said there had been “very recent developments that we believe may direct us to a motive” for the grisly rampage, but ABI was quick to dismiss earlier reports that a hit list had been found in the house of the gunman, identified as Michael McLendon.

But then something funny happened on Thursday. Alabama investigators completely reversed themselves: They were now claiming there was no way to find out the motive for the killings, and in fact, no motive ever existed in the first place.

“There’s probably never going to be a motive,” Trooper Kevin Cook, a spokesman for the Alabama Department of Public Safety, said Thursday.

Even the list that provided so many obvious clues as to what sparked the shooting is now no longer the “hit list” or list of people who had “done him wrong,” but rather, “the kind of list you’d put on a magnet on the refrigerator door,” according to Cook.

Which is odd, because just the day before, Cook told reporters, “As to motive, what we do know is that his mother had a lawsuit pending against Pilgrim’s Pride.”

Why the bizarre about-face? We may never know, because Alabama investigators abruptly closed the investigation at noon on Thursday, sending home almost the entire team. Nothing to see here folks, keep moving along.

This raises a new question: What was it about McLendon’s motive that officials wanted hushed? Or better yet: What did Pilgrim’s Pride do that could have incited a man described by all as nice, quiet and respectful to unleash a bloody killing spree?

On the surface, the horrific details seem to suggest a straightforward case of a lone psychopath unleashed: Michael McLendon, 28, shot and killed execution-style his own mother and four dogs, then set their bodies on fire before driving to other relatives’ houses and killing them; he killed a deputy’s wife and baby, along with bystanders; and like so many rampage massacres over the past 20 years, he ended his life inside of his former workplace: Reliance Metal Products, in the small town of Geneva, Ala.

Authorities say they discovered a list — presumably a hit list — of people and companies whom McLendon felt had done him wrong. Popular culture tells us that the hit list and his grievances are themselves signs that he suffered from a persecution complex, like so many Charles Mansons. No need to actually look into who was on that hit list and why — the mere discovery of such a list should be enough to indict him, case closed.

But nothing’s solved, nothing’s closed; and if we’re serious about understanding the “why” of this massacre, as everyone claims to be, then that list is the best place to start.

As with so many of these rage massacres from the past 20 years, the more you look at Tuesdays’ killing spree, the more you see that the system we’ve been living under since Reaganomics conquered everything has created all kinds of monsters and maniacs, from the plutocrats who’ve plundered this country for three decades straight, down to the lone broken worker — McLendon — who took up arms in a desperate suicide mission against the beast that crushed him.

So far we’ve learned that McLendon’s hit list names the three companies he had worked for since 2003 — Reliance Metals, which makes construction materials; Pilgrim’s Pride, the nation’s number one poultry producer, where his mother also worked, until she was suspended from her job last week; and Kelley Foods, a smaller family-owned meat-processing company from which McLendon apparently quit just last week.

Even more striking to someone who has studied these workplace massacres, it appears that McLendon was bullied and abused at work. One clue as to why he’d end his spree at Reliance, where he hadn’t worked since 2003, could be that he was trying to kill the source of the pain: workers at Reliance used to taunt him incessantly, giving him the nickname “Doughboy.” Which basically means “fatso” and “faggot” combined: McLendon was 5 feet, 8 inches tall, but he weighed roughly 210 pounds.

Maybe it’s just a coincidence, but “Doughboy” is the exact same nickname that workers at Standard Gravure, a printing plant in Louisville, Ky., gave to a guy named Joe Wesbecker back in the 1980s.

Like McLendon’s case against Pilgrim’s Pride, Wesbecker also was locked in an ongoing labor dispute with his company, whose top shareholders had gone on an eight-year plundering spree, leaving little for the workers; the government backed Wesbecker’s case against Standard Gravure, and he “won” his dispute, but it was irrelevant.

By 1989, the culture had changed, all power went to the CEOs and major shareholders. Standard Gravure’s senior executives ignored the arbitration rulings and continued to treat Wesbecker however they felt, slashing his pay under a different pretense, which would require a whole new round of arbitrations.

Joe “Doughboy” Wesbecker finally cracked: on Sept. 14, 1989, he unleashed America’s first private workplace massacre, pitting aggrieved worker against vampiric company, borrowing from the numerous post office shootings that had erupted a few years earlier. The result: seven killed, 20 wounded, and the death of the company that drove him to the brink. And an unending string of workplace massacres by “disgruntled employees” ever since.

Next time any asshole calls a kid or a co-worker “Doughboy,” put the bully and the bullied on the top of your next Ghoul Pool list. Bullying in the workplace, like bullying in the schoolyard, is only now being recognized as a serious problem, with devastating psychological consequences — and the occasional rampage massacre.

Conventional wisdom used to say that victims of bullying should “deal with it” since it was “just the way things are”; nowadays, after all the workplace and school shootings, anti-bullying laws and codes are becoming increasingly common.

Keep reading…

(more…)

The Ecstasy and the Agony

Posted in Barack Obama, corporations, Economy, politics by allisonkilkenny on March 1, 2009

Frank Rich, NYT

BARACK OBAMA must savor the moment while he can. It may never get better than this.#mce_temp_url#

As he stood before Congress on Tuesday night, the new president was armed with new job approval percentages in the 60s. After his speech, the numbers hit the stratosphere: CBS News found that support for his economic plans spiked from 63 percent to 80. Had more viewers hung on for the Republican response from Bobby Jindal, the unintentionally farcical governor of Louisiana, Obama might have aced a near-perfect score.

(Illustration by Barry Blitt)

(Illustration by Barry Blitt)

His address was riveting because it delivered on the vision he had promised a battered populace during the campaign: Government must step in boldly when free markets run amok and when national crises fester unaddressed for decades. For all the echoes of F.D.R.’s first fireside chat, he also evoked his own memorably adult speech on race. Once again he walked us through a lucid step-by-step mini-lecture on “how we arrived” at an impasse that’s threatening America’s ability to move forward.

Obama’s race speech may have saved his campaign. His first Congressional address won’t rescue the economy. But it brings him to a significant early crossroads in his presidency — one full of perils as well as great opportunities. To get the full political picture, look beyond Obama’s popularity in last week’s polls to the two groups of Americans whose approval numbers are in the toilet. There is good news for Obama in these findings, but there’s also a stark indication of the unchecked populist rage that could still overrun his ambitious plans.

The first group in national disfavor is the G.O.P. In the latest New York Times/CBS News survey, 63 percent said that Congressional Republicans opposed the stimulus package mostly for political reasons; only 17 percent felt that the Republicans should stick with their own policies rather than cooperate with Obama and the Democrats. The second group of national villains is corporate recipients of taxpayer money: only 39 percent approve of a further bailout for banks, and only 22 percent want more money going to Detroit’s Big Three.

The good news for Obama is that he needn’t worry about the Republicans. They’re committing suicide. The morning-after conservative rationalization of Jindal’s flop was that his adenoidal delivery, not his words, did him in, and that media coaching could banish his resemblance to Kenneth the Page of “30 Rock.” That’s denial. For Jindal no less than Obama, form followed content.

The Louisiana governor, alternately smug and jejune, articulated precisely the ideology — those G.O.P. “policies” in the Times/CBS poll — that Americans reject: the conviction that government is useless and has no role in an emergency. Given that the most mismanaged federal operation in modern memory was inflicted by a Republican White House on Jindal’s own state, you’d think he’d change the subject altogether.

But like all zealots, Jindal is oblivious to how nonzealots see him. Pleading “principle,” he has actually turned down some $100 million in stimulus money for Louisiana. And, as he proudly explained on “Meet the Press” last weekend, he can’t wait to be judged on “the results” of his heroic frugality.

Good luck with that. He’s rejecting aid for a state that ranks fourth in children living below the poverty line and 46th in high school graduation rates, while struggling with a projected budget shortfall of more than $1.7 billion.

If you’re baffled why the G.O.P. would thrust Jindal into prime time, the answer is desperation. Eager to update its image without changing its antediluvian (or antebellum) substance, the party is trying to lock down its white country-club blowhards. The only other nonwhite face on tap, alas, is the unguided missile Michael Steele, its new national chairman. Steele has of late been busy promising to revive his party with an “off-the-hook” hip-hop P.R. campaign, presumably with the perennially tan House leader John Boehner leading the posse.

At least the G.O.P.’s newfound racial sensitivity saved it from choosing the white Southern governor often bracketed with Jindal as a rising “star,” Mark Sanford of South Carolina. That would have been an even bigger fiasco, for Sanford is from the same state as Ty’Sheoma Bethea, the junior high school student who sat in Michelle Obama’s box on Tuesday night and whose impassioned letter to Congresswas quoted by the president.

In her plea, the teenager begged for aid to her substandard rural school. Without basic tools, she poignantly wrote, she and her peers cannot “prove to the world” that they too might succeed at becoming “lawyers, doctors, congressmen like yourself and one day president.”

Her school is in Dillon, where the Federal Reserve chairman, Ben Bernanke, grew up. The school’s auditorium, now condemned, was the site of Bernanke’s high school graduation. Dillon is now so destitute that Bernanke’s middle-class childhood home was just auctioned off in a foreclosure sale. Unemployment is at 14.2 percent.

Governor Sanford’s response to such hardship — his state over all has the nation’s third-highest unemployment rate — was not merely a threat to turn down federal funds but a trip to Washington to actively lobby against the stimulus bill. He accused the three Republican senators who voted for it of sabotaging “the future of our civilization.” In his mind the future of civilization has little to do with the future of students like Ty’Sheoma Bethea.

What such G.O.P. “stars” as Sanford and Jindal have in common, besides their callous neo-Hoover ideology, are their phony efforts to portray themselves as populist heroes. Their role model is W., that brush-clearing “rancher” by way of Andover, Yale and Harvard. Listening to Jindal talk Tuesday night about his immigrant father’s inability to pay for an obstetrician, you’d never guess that at the time his father was an engineer and his mother an L.S.U. doctoral candidate in nuclear physics. Sanford’s first political ad in 2002 told of how growing up on his “family’s farm” taught him “about hard work and responsibility.” That “farm,” the Charlotte Observer reported, was a historic plantation appraised at $1.5 million in the early 1980s. From that hardscrabble background, he struggled on to an internship at Goldman Sachs.

G.O.P. pseudopopulism ran riot last week as right-wing troops rallied around their latest Joe the Plumber: Rick Santelli, the ranting CNBC foe of Obama’s mortgage rescue program. Ann Coulter proposed a Santelli run for president, and Twitterers organized national “tea parties” to fuel his taxpayers’ revolt. Even with a boost from NBC, whose networks seized a promotional opening by incessantly recycling the Santelli “controversy,” the bonfire fizzled. It did so because — as last week’s polls also revealed — the mortgage bailout, with a 60-plus percent approval rating, is nearly as popular as Obama.

The Santelli revolution’s flameout was just another confirmation that hard-core Republican radicals are now the G.O.P.’s problem, not the president’s. Rahm Emanuel has it right when he says the administration must try bipartisanship, but it doesn’t have to succeed. Voters give Obama credit for trying, and he can even claim success with many Republican governors, from Schwarzenegger to Crist. Now he can move on and let his childish adversaries fight among themselves, with Rush Limbaugh as the arbitrating babysitter. (Last week he gave Jindal a thumb’s up.)

But that good news for Obama is countered by the bad. The genuine populist rage in the country — aimed at greedy C.E.O.’s, not at the busted homeowners mocked as “losers” by Santelli — cannot be ignored or finessed. Though Obama was crystal clear on Tuesday that there can be “no real recovery unless we clean up the credit crisis,” it was telling that he got fuzzy when he came to what he might do about it. He waited two days to drop that shoe in his budget: a potential $750 billion in banking “asset purchases” on top of the previous $700 billion bailout.

Therein lies the Catch-22 that could bring the recovery down. As Obama said, we can’t move forward without a functioning financial system. But voters of both parties will demand that their congressmen reject another costly rescue of it. Americans still don’t understand why many Wall Street malefactors remain in place or why the administration’s dithering banking policy lacks the boldness and clarity of Obama’s rhetoric.

Nor can a further bailout be easily sold by a Treasury secretary, Timothy Geithner, whose lax oversight of the guilty banks while at the New York Fed remains a subject of journalistic inquiry. In a damning 5,600-word article from Bloomberg last week, he is portrayed as a second banana, a timid protégé of the old boys who got us into this disaster. Everyone testifies to Geithner’s brilliance, but Jindal, a Rhodes scholar, was similarly hyped. Like the Louisiana governor, the Treasury secretary is a weak public speaker not because he lacks brains or vocal training but because his message doesn’t fly.

Among the highlights of Obama’s triumphant speech was his own populist jeremiad about the “fancy drapes” and private jets of Wall Street. But talk is not action. Two days later, as ABC News reported, the president of taxpayer- supported Bank of America took a private jet to New York to stonewall Andrew Cuomo’s inquest into $3.6 billion of suspect bonuses.

Handing more public money to the reckless banks that invented this culture and stuck us with the wreckage is the new third rail of American politics. If Obama doesn’t forge a better plan, neither his immense popularity nor even political foes as laughable as Jindal can insulate him from getting burned.

Viacom to Employees: Happy Holidays and Go Screw Yourselves

Posted in business, corporations, media by allisonkilkenny on December 20, 2008

viacom-logo-cloud-lgLate paychecks are always a drag, but they’re especially inconvenient during the holidays. A delayed payment of a week may mess up one’s checkbook, but try not getting paid for three months. That’s the position MTV’s Street Team found itself in this year.

MTV and its parent company, Viacom, are on a roll lately with mistreating its employees. First, Viacom announces the firing of hundreds of employees right before the holidays, and now MTV employees will have payment delays and hiring freezes for their stocking stuffers.

Sure, times are tough, but Viacom and MTV have an obligation to pay its employees, including MTV’s Street Team, which consisted of students and single parents.

This week, I received an email from a source, who has been working for MTV’s Choose or Lose campaign since January. My source signed a confidentiality agreement with MTV, and explained that they wanted to remain anonymous out of respect for their supervisors and the many hard-working MTV employees, who defended the Choose or Lose employees throughout this ordeal.

Choose or Lose employed 51 “Street Team” members, and intended to be a journalistic collaboration between the Knight Foundation and MTV. In the spirit of the participatory internet, Choose or Lose tapped every day folks to participate in their election-time stories. Street Team members were hired as freelance employees for MTV, and were not invited to become full-time, or part-time employees of either MTV or Viacom.

Choose or Lose employees initially received timely and regular payments, but this summer, the checks suddenly stopped coming, and didn’t reappear for another two and a half months.

Over the summer, employees were told that MTV was conducting a quarterly financial review, and that’s why their checks were being held, and in fact, all freelancer checks were being held. MTV supervisor checks were also being held during this time.

Finally, after two and a half months, they received compensation for back payment. The project ended in November, but the employees have still not received their $800 final paycheck. Internal e-mails alerted the employees that there is no definitive deadline for when they will receive payment.

This poor treatment of the Street Team is especially appalling considering the MTV Choose or Lose Street Team was part of the 2008 Emmy-Award-winning ThinkMTV campaign. An award-winning team shouldn’t expect a wealth of perks for industry recognition, but they should at least receive timely paychecks.

Like some more salt in your wounds? MTV is throwing an inauguration ball for Obama next month, and didn’t even invite the Street Team (that’s the Emmy-award-winning Street Team, mind you.) Geez, I guess corporate loyalty really is dead.

After that first initial contact with my anonymous source, my inbox exploded with angry letters from other MTV Street Team freelancers. The employees had to sign confidentiality agreements to work for MTV, so most of them requested to remain anonymous, but two brave souls stepped forward.

Nathan Leigh was the Street Team’s Iowa correspondent. He is going to the DC inauguration ball anyway, and he’s going to meet up with other Street Teamers, and he will be wearing a “WTF MTV” t-shirt proudly, and he says he we will be heard.

The late payments seriously messed with Leigh’s finances. “I had overdrafts and I’ve missed rent payments, but at one point our producers told us the money they were paying us was to be used for travel expenses and not our personal payments.”

Call me old-fashioned, but I always thought employees should expect timely paychecks from their employers, and they could use that money for whatever they want, including bread or electricity bills.

Christine Begay shares her former coworker’s outrage. The New Mexico representative on the team, Begay can’t believe how poorly the freelancers have been treated. “I am waiting on my last month’s paycheck, and also a travel reimbursement from when I traveled to Las Cruces, New Mexico to cover a story on immigration and the Mexico/NM border. I rented a car and paid for it upfront, which I agreed to, but I did not anticipate that it might be 2009 before I got my money back.”

Begay says the late payments have put a serious dent in her Christmas shopping budget, but they have also affected other areas of her life. “I think that a lot of Street Teamers have suffered, including myself, because we have not been able to pay rent, student loans, credit cards, utility bills, and car payments.”

Some kind of delayed, watered-down justice may be on its way for MTV freelancers. As stories about Viacom’s mistreatment popped up across the internet, Gary Kebbel, a Knight Foundation representative, contacted me to say that he had heard from MTV that the employee checks had been mailed off to the freelancers.

That would be great news for the freelancers, who ask for nothing more than their contractually promised payment. “It is just ridiculous the situation we are in. Throughout the entire project, we met our deadlines and had to abide by our contracts, or else we would not receive payment, but Viacom/MTV can do what they want and not meet their contractual obligations,” says Begay.

According to the latest news from Viacom, the money is in the mail. The Street Team will believe it when they see their checks.

Viacom representatives were contacted but did not respond to requests for an interview.

On Wall Street, Bonuses, Not Profits, Were Real

Posted in corporations, Economy by allisonkilkenny on December 18, 2008

New York Times

“As a result of the extraordinary growth at Merrill during my tenure as C.E.O., the board saw fit to increase my compensation each year.”  — E. Stanley O’Neal, the former chief executive of Merrill Lynch, March 2008 

For Dow Kim, 2006 was a very good year. While his salary at Merrill Lynch was $350,000, his total compensation was 100 times that — $35 million.The difference between the two amounts was his bonus, a rich reward for the robust earnings made by the traders he oversaw in Merrill’s mortgage business.   Mr. Kim’s colleagues, not only at his level, but far down the ranks, also pocketed large paychecks. In all, Merrill handed out $5 billion to $6 billion in bonuses that year. A 20-something analyst with a base salary of $130,000 collected a bonus of $250,000. And a 30-something trader with a $180,000 salary got $5 million.But Merrill’s record earnings in 2006 — $7.5 billion — turned out to be a mirage. The company has since lost three times that amount, largely because the mortgage investments that supposedly had powered some of those profits plunged in value.

Unlike the earnings, however, the bonuses have not been reversed.

As regulators and shareholders sift through the rubble of the financial crisis, questions are being asked about what role lavish bonuses played in the debacle. Scrutiny over pay is intensifying as banks like Merrill prepare to dole out bonuses even after they have had to be propped up with billions of dollars of taxpayers’ money. While bonuses are expected to be half of what they were a year ago, some bankers could still collect millions of dollars.

Critics say bonuses never should have been so big in the first place, because they were based on ephemeral earnings. These people contend that Wall Street’s pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino — and let them collect their winnings while the roulette wheel was still spinning.

“Compensation was flawed top to bottom,” said Lucian A. Bebchuk, a professor at Harvard Law School and an expert on compensation. “The whole organization was responding to distorted incentives.”

Even Wall Streeters concede they were dazzled by the money. To earn bigger bonuses, many traders ignored or played down the risks they took until their bonuses were paid. Their bosses often turned a blind eye because it was in their interest as well.

“That’s a call that senior management or risk management should question, but of course their pay was tied to it too,” said Brian Lin, a former mortgage trader at Merrill Lynch.

The highest-ranking executives at four firms have agreed under pressure to go without their bonuses, including John A. Thain, who initially wanted a bonus this year since he joined Merrill Lynch as chief executive after its ill-fated mortgage bets were made. And four former executives at one hard-hit bank, UBS of Switzerland, recently volunteered to return some of the bonuses they were paid before the financial crisis. But few think others on Wall Street will follow that lead.

For now, most banks are looking forward rather than backward. Morgan Stanley and UBS are attaching new strings to bonuses, allowing them to pull back part of workers’ payouts if they turn out to have been based on illusory profits. Those policies, had they been in place in recent years, might have clawed back hundreds of millions of dollars of compensation paid out in 2006 to employees at all levels, including senior executives who are still at those banks.

A Bonus Bonanza

For Wall Street, much of this decade represented a new Gilded Age. Salaries were merely play money — a pittance compared to bonuses. Bonus season became an annual celebration of the riches to be had in the markets. That was especially so in the New York area, where nearly $1 out of every $4 that companies paid employees last year went to someone in the financial industry. Bankers celebrated with five-figure dinners, vied to outspend each other at charity auctions and spent their newfound fortunes on new homes, cars and art.

The bonanza redefined success for an entire generation. Graduates of top universities sought their fortunes in banking, rather than in careers like medicine, engineering or teaching. Wall Street worked its rookies hard, but it held out the promise of rich rewards. In college dorms, tales of 30-year-olds pulling down $5 million a year were legion.

While top executives received the biggest bonuses, what is striking is how many employees throughout the ranks took home large paychecks. On Wall Street, the first goal was to make “a buck” — a million dollars. More than 100 people in Merrill’s bond unit alone broke the million-dollar mark in 2006.Goldman Sachs paid more than $20 million apiece to more than 50 people that year, according to a person familiar with the matter. Goldman declined to comment.

Pay was tied to profit, and profit to the easy, borrowed money that could be invested in markets like mortgage securities. As the financial industry’s role in the economy grew, workers’ pay ballooned, leaping sixfold since 1975, nearly twice as much as the increase in pay for the average American worker.

“The financial services industry was in a bubble,” said Mark Zandi, chief economist at Moody’sEconomy.com. “The industry got a bigger share of the economic pie.”

A Money Machine

Dow Kim stepped into this milieu in the mid-1980s, fresh from the Wharton School at the University of Pennsylvania. Born in Seoul and raised there and in Singapore, Mr. Kim moved to the United States at 16 to attend Phillips Academy in Andover, Mass. A quiet workaholic in an industry of workaholics, he seemed to rise through the ranks by sheer will. After a stint trading bonds in Tokyo, he moved to New York to oversee Merrill’s fixed-income business in 2001. Two years later, he became co-president.

”]Dow Kim received $35 million in 2006 from Merrill Lynch. [Bloomberg News]Even as tremors began to reverberate through the housing market and his own company, Mr. Kim exuded optimism.

After several of his key deputies left the firm in the summer of 2006, he appointed a former colleague from Asia, Osman Semerci, as his deputy, and beneath Mr. Semerci he installed Dale M. Lattanzio and Douglas J. Mallach. Mr. Lattanzio promptly purchased a $5 million home, as well as oceanfront property in Mantoloking, a wealthy enclave in New Jersey, according to county records.

Merrill and the executives in this article declined to comment or say whether they would return past bonuses. Mr. Mallach did not return telephone calls.

Mr. Semerci, Mr. Lattanzio and Mr. Mallach joined Mr. Kim as Merrill entered a new phase in its mortgage buildup. That September, the bank spent $1.3 billion to buy the First Franklin Financial Corporation, a mortgage lender in California, in part so it could bundle its mortgages into lucrative bonds.

Yet Mr. Kim was growing restless. That same month, he told E. Stanley O’Neal, Merrill’s chief executive, that he was considering starting his own hedge fund. His traders were stunned. But Mr. O’Neal persuaded Mr. Kim to stay, assuring him that the future was bright for Merrill’s mortgage business, and, by extension, for Mr. Kim.

Mr. Kim stepped to the lectern on the bond trading floor and told his anxious traders that he was not going anywhere, and that business was looking up, according to four former employees who were there. The traders erupted in applause.

“No one wanted to stop this thing,” said former mortgage analyst at Merrill. “It was a machine, and we all knew it was going to be a very, very good year.”

Merrill Lynch celebrated its success even before the year was over. In November, the company hosted a three-day golf tournament at Pebble Beach, Calif.

Mr. Kim, an avid golfer, played alongside William H. Gross, a founder of Pimco, the big bond house; and Ralph R. Cioffi, who oversaw two Bear Stearns hedge funds whose subsequent collapse in 2007 would send shock waves through the financial world.

“There didn’t seem to be an end in sight,” said a person who attended the tournament.

Back in New York, Mr. Kim’s team was eagerly bundling risky home mortgages into bonds. One of the last deals they put together that year was called “Costa Bella,” or beautiful coast — a name that recalls Pebble Beach. The $500 million bundle of loans, a type of investment known as a collateralized debt obligation, was managed by Mr. Gross’s Pimco.

Merrill Lynch collected about $5 million in fees for concocting Costa Bella, which included mortgages originated by First Franklin.

But Costa Bella, like so many other C.D.O.’s, was filled with loans that borrowers could not repay. Initially part of it was rated AAA, but Costa Bella is now deeply troubled. The losses on the investment far exceed the money Merrill collected for putting the deal together.

So Much for So Few

By the time Costa Bella ran into trouble, the Merrill bankers who had devised it had collected their bonuses for 2006. Mr. Kim’s fixed-income unit generated more than half of Merrill’s revenue that year, according to people with direct knowledge of the matter. As a reward, Mr. O’Neal and Mr. Kim paid nearly a third of Merrill’s $5 billion to $6 billion bonus pool to the 2,000 professionals in the division.

Mr. O’Neal himself was paid $46 million, according to Equilar, an executive compensation research firm and data provider in California. Mr. Kim received $35 million. About 57 percent of their pay was in stock, which would lose much of its value over the next two years, but even the cash portions of their bonus were generous: $18.5 million for Mr. O’Neal, and $14.5 million for Mr. Kim, according to Equilar.

Mr. Kim and his deputies were given wide discretion about how to dole out their pot of money. Mr. Semerci was among the highest earners in 2006, at more than $20 million. Below him, Mr. Mallach and Mr. Lattanzio each earned more than $10 million. They were among just over 100 people who accounted for some $500 million of the pool, according to people with direct knowledge of the matter.

After that blowout, Merrill pushed even deeper into the mortgage business, despite growing signs that the housing bubble was starting to burst. That decision proved disastrous. As the problems in the subprime mortgage market exploded into a full-blown crisis, the value of Merrill’s investments plummeted. The firm has since written down its investments by more than $54 billion, selling some of them for pennies on the dollar.

Mr. Lin, the former Merrill trader, arrived late to the party. He was one of the last people hired onto Merrill’s mortgage desk, in the summer of 2007. Even then, Merrill guaranteed Mr. Lin a bonus if he joined the firm. Mr. Lin would not disclose his bonus, but such payouts were often in the seven figures.

Mr. Lin said he quickly noticed that traders across Wall Street were reluctant to admit what now seems so obvious: Their mortgage investments were worth far less than they had thought.

“It’s always human nature,” said Mr. Lin, who lost his job at Merrill last summer and now works at RRMS Advisors, a consulting firm that advises investors in troubled mortgage investments. “You want to pull for the market to do well because you’re vested.”

But critics question why Wall Street embraced the risky deals even as the housing and mortgage markets began to weaken.

“What happened to their investments was of no interest to them, because they would already be paid,” said Paul Hodgson, senior research associate at the Corporate Library, a shareholder activist group. Some Wall Street executives argue that paying a larger portion of bonuses in the form of stock, rather than in cash, might keep employees from making short-sighted decision. But Mr. Hodgson contended that would not go far enough, in part because the cash rewards alone were so high. Mr. Kim, for example, was paid a total of $116.6 million in cash and stock from 2001 to 2007. Of that, $55 million was in cash, according to Equilar.

Leaving the Scene

As the damage at Merrill became clear in 2007, Mr. Kim, his deputies and finally Mr. O’Neal left the firm. Mr. Kim opened a hedge fund, but it quickly closed. Mr. Semerci and Mr. Lattanzio landed at a hedge fund in London.

All three departed without collecting bonuses in 2007. Mr. O’Neal, however, got even richer by leaving Merrill Lynch. He was awarded an exit package worth $161 million.

Clawing back the 2006 bonuses at Merrill would not come close to making up for the company’s losses, which exceed all the profits that the firm earned over the previous 20 years. This fall, the once-proud firm was sold to Bank of America, ending its 94-year history as an independent firm.

Mr. Bebchuk of Harvard Law School said investment banks like Merrill were brought to their knees because their employees chased after the rich rewards that executives promised them.

“They were trying to get as much of this or that paper, they were doing it with excitement and vigor, and that was because they knew they would be making huge amounts of money by the end of the year,” he said.

 

Balls of Steel: Merrill Lynch CEO Asks For $10 Million Bonus

Posted in corporations by allisonkilkenny on December 8, 2008

TheStreet.com

"I'd like more money, please."

"I'd like more money, please."

Merrill Lynch CEO John Thain suggested to directors that he get a 2008 bonus of as much as $10 million, but the securities firm’s compensation committee is resisting his request, the Wall Street Journal reports, citing people familiar with the situation.

The committee and full board are scheduled to meet Monday to hear Thain’s formal bonus recommendations for himself and other senior executives of the New York company. The compensation committee is leaning toward denying the executives bonuses for this year, the Journal reports.

Shareholders of Merrill Lynch on Friday approved the securities firm’s acquisition by Bank of America to create the nation’s largest financial services company.

Thain argues he was instrumental in averting what could have been a larger crisis at the firm by contacting Bank of America about a tie-up, the same day Lehman Brothers filed for bankruptcy, the newspaper reports.

Members of Merrill’s compensation committee agree with Thain that the takeover was in shareholders’ best interest, but are weighing the fact that other Wall Street firms, such as Goldman Sachs, aren’t giving out bonuses to top executives, the Journal reports.

Once the merger of Bank of America and Merrill is completed, Thain will be in charge of the combined company’s global banking, securities and wealth management businesses. He won’t join the board of Bank of America.

Huffington Post

Reuters points out that several other Wall Street firms –including Goldman Sachs, which did better than Merrill this year– will not be giving out bonuses to top executives this year. Though Thain’s company was sold to Bank of America this year, Thain argued that it could have been worse.

Thain has said he deserves a bonus because he helped avert what could have been a much larger crisis at the firm, people familiar with his thinking told the WSJ.
Members of Merrill’s compensation committee agree with Thain that the takeover is in shareholders’ best interest, but believe it would be foolish to ignore strong public sentiment against large compensation packages, the paper said, citing people familiar with their thinking.

 
Thane will stay with the company following the merger, Bank of America has said. Thane, for his part, has predicted that “thousands” of other Merrill jobs will be lost in the wake of the merger.

Verizon and AT&T Gave Free Cell Towers to McCain

Posted in corporations by allisonkilkenny on October 15, 2008

Washington Post:

AT&T says Thanks John!

AT&T says: Thanks John!

Verizon delivered a portable tower know as a “cell site on wheels” — free of charge — to Cindy McCain’s property in June in response to an online request from Cindy McCain’s staff early last year. Such devices are usually reserved for restoring service when cell coverage is knocked out during emergencies, such as hurricanes.

In July, AT&T followed suit, wheeling in a portable tower for free to match Verizon’s offer. …

Ethics lawyers said Cindy McCain’s dealings with the wireless companies stand out because Sen. John McCain is a senior member of the Senate Commerce Committee, which oversees the Federal Communications Commission and the telecommunications industry. He has been a leading advocate for industry-backed legislation, fighting regulations and taxes on telecommunications services.

McCain and his campaign have close ties to Verizon and AT&T. Five campaign officials, including campaign manager Rick Davis, have worked as lobbyists for Verizon.

Mind you, AT&T is the same telecommunications giant that helped the government spy on American citizens, and subsequently received total immunity for the deed. AT&T also partially sponsored the first two presidential debates, which is why no questions about FISA or NSA’s wiretapping were raised by moderators.

So really, it’s business as usual that McCain is receiving goodies from the very people he was hired to oversee.

In Washington, the motto is: We Are Family.

Meet Your Debate Sponsors: Part 2

Posted in corporations by allisonkilkenny on October 7, 2008

In a thrilling follow-up to Meet Your Debate Sponsors: Part 1, let’s examine who our sponsors are for tonight’s Belmont University love-in!

AT&T makes a triumphant return in this second installment of the Presidential debates. While Wachovia is out of the mix tonight, the financial industry will be well-represented tonight by not one, nor two, but THREE banks.

While this debate isn’t dominated by two major corporations, we are instead presented with a delicious spread of banks, law firms, and a movement to fight disease thrown into the pile just to keep the middle class from storming the Bastille.

Meet Your VP Debate Sponsors

Posted in corporations by allisonkilkenny on October 2, 2008




That’s right — from the people who wiretap your phones and are praying for a government bailout comes the TOTALLY fair and nonpartisan vice presidential debate!

Of course, this isn’t your League of Women Voters, tired, outdated debate! This baby is organized by the Commission on Presidential Debates, the group run by Paul Kirk (D), who has lobbied on behalf of the pharmaceutical industry, and Frank Fahrenkopf (R), the nation’s leading gambling lobbyist.

But since Kirk is a Democrat and Fahrenkopf is a Republican, the Commission HAS to be nonpartisan, right? Well, it is, unless of course you’re a candidate representing Independents, or the Green party, or you’re poor, or anti-corporation. Then you can’t get into the debates to save your life.

A lot of fuss has been raised over the impartiality of tonight’s moderator, Gwen Ifill. Yet, no one is examining the larger bias of tonight’s debates toward the interest of corporations. Ifill may have reflected certain biases toward the Obama camp in the past, but the ENTIRE debates are being run by an organization funded by corporations like Anheuser-Busch.

Where is the outrage over this bias toward corporations? Where is the outrage that the previously unbiased League of Women Voters was ousted in favor of the Commission on Presidential Debates that effectively hijacked the democratic process in favor of cronyism and corporate cash?

Joe and Sarah have agreed to answer questions with responses no longer than two minutes to prevent embarrassing gaffes. Many similar agreements are hashed out between the parties pre-debate, behind closed doors. No one really knows what the Democratic-Republican debate contract looks like because the contract is not available to the public.

While these arrangements surely benefit the parties, they harm the American people, who aren’t likely to receive much information during the short two-minute window. Two minutes is enough time to repeat a stump speech, or deliver a sample audience-tested zinger, but it’s hardly adequate time to explain economic or foreign relations platforms.

Since AT&T is one of the sponsors, what is the likelihood that topics like FISA and telecom immunity will be breached? Because Wachovia is other other sponsor, will Gwen ask about the failure of the Free Market and Deregulation? Surely, no moderator in their right mind will bring up the corporate sponsorship of our elections during a debate SPONSORED by the very corporations that are taking over America.

Sounds like some good, old-fashioned aggressive moderating to me!

Wal-Mart to Employees: Don’t Vote Democrat!

Posted in corporations by allisonkilkenny on August 1, 2008

Source: Wall Street Journal

Wal-Mart Stores Inc. is mobilizing its store managers and department supervisors around the country to warn that if Democrats win power in November, they’ll likely change federal law to make it easier for workers to unionize companies — including Wal-Mart.

In recent weeks, thousands of Wal-Mart store managers and department heads have been summoned to mandatory meetings at which the retailer stresses the downside for workers if stores were to be unionized.

According to about a dozen Wal-Mart employees who attended such meetings in seven states, Wal-Mart executives claim that employees at unionized stores would have to pay hefty union dues while getting nothing in return, and may have to go on strike without compensation. Also, unionization could mean fewer jobs as labor costs rise.

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The actions by Wal-Mart — the nation’s largest private employer — reflect a growing concern among big business that a reinvigorated labor movement could reverse years of declining union membership. That could lead to higher payroll and health costs for companies already being hurt by rising fuel and commodities costs and the tough economic climate.

The Wal-Mart human-resources managers who run the meetings don’t specifically tell attendees how to vote in November’s election, but make it clear that voting for Democratic presidential hopeful Sen. Barack Obama would be tantamount to inviting unions in, according to Wal-Mart employees who attended gatherings in Maryland, Missouri and other states.

“The meeting leader said, ‘I am not telling you how to vote, but if the Democrats win, this bill will pass and you won’t have a vote on whether you want a union,'” said a Wal-Mart customer-service supervisor from Missouri. “I am not a stupid person. They were telling me how to vote,” she said.

“If anyone representing Wal-Mart gave the impression we were telling associates how to vote, they were wrong and acting without approval,” said David Tovar, Wal-Mart spokesman. Mr. Tovar acknowledged that the meetings were taking place for store managers and supervisors nationwide.

Wal-Mart’s worries center on a piece of legislation known as the Employee Free Choice Act, which companies say would enable unions to quickly add millions of new members. “We believe EFCA is a bad bill and we have been on record as opposing it for some time,” Mr. Tovar said. “We feel educating our associates about the bill is the right thing to do.”

Other companies and groups are also making a case against the legislation to workers. Laundry company Cintas Corp., which has been fighting a multiyear organizing campaign by Unite Here, relaunched a Web site July 14 called CintasVotes. The site instructs visitors to take action by telling members of Congress to oppose the legislation.

“We feel it’s important that our employee partners fully understand the implications that the Employee Free Choice Act could have on their work environment and benefits,” said Heather Trainer, a Cintas spokeswoman.

Business-backed organizations are also running ads aimed at building opposition to the bill, including the Coalition for a Democratic Workplace, which counts several hundred industry associations as members. Another group, the Employee Freedom Action Committee, is run by former tobacco lobbyist Rick Berman. The groups, which aren’t affiliated with each other, say they have a total of $50 million in funding. Neither will disclose which companies or individuals have provided funding.

The U.S. Chamber of Commerce has made defeat of the legislation a top priority. In the past six months, it has flown state and local Chamber members to Washington to lobby members of Congress. On Thursday, the Chamber began airing a television ad in Minnesota and plans to run ads in other states as part of a broader campaign.

The bill was crafted by labor as a response to more aggressive opposition by companies to union-organizing activity. The AFL-CIO and individual unions such as the United Food and Commercial Workers have promised to make passage of the new labor law their No. 1 mission after the November election.

First introduced in 2003, the bill came to a vote last year and sailed through the Democratic-controlled House of Representatives, but was blocked by a filibuster in the Senate and faced a veto threat by the White House. The bill was taken off the floor, and its backers pledged to reintroduce it when they could get more support.

The November election could bring that extra support in Congress, as well as the White House if Sen. Obama is elected and Democrats extend their control in the Senate. Sen. Obama co-sponsored the legislation, which also is known as “card check,” and has said several times he would sign it into law if elected president. Sen. John McCain, the likely Republican presidential nominee, opposes the Employee Free Choice Act and voted against it last year.

Wal-Mart’s labor-relations meetings are led by human-resources managers who received training from Wal-Mart on the implications of the Employee Free Choice Act.

Fine Legal Line

Wal-Mart may be walking a fine legal line by holding meetings with its store department heads that link politics with a strong antiunion message. Federal election rules permit companies to advocate for specific political candidates to its executives, stockholders and salaried managers, but not to hourly employees. While store managers are on salary, department supervisors are hourly workers.

However, employers have fairly broad leeway to disseminate information about candidates’ voting records and positions on issues, according to Jan Baran, a Washington attorney and expert on election law.

Both supporters and opponents of the Employee Free Choice Act believe it would simplify and speed labor’s ability to unionize companies. Currently, companies can demand a secret-ballot election to determine union representation. Those elections often are preceded by months of strident employer and union campaigns.

Under the proposed legislation, companies could no longer have the right to insist on one secret ballot. Instead, the Free Choice, or “card check,” legislation would let unions form if more than 50% of workers simply sign a card saying they want to join. It is far easier for unions to get workers to sign cards because the organizers can approach workers repeatedly, over a period of weeks or months, until the union garners enough support.

Employers argue that the card system could lead to workers being pressured to sign by pro-union colleagues and organizers. Unions counter that it shields workers from pressure from their employers.

On June 30 the National Labor Relations Board ruled that Wal-Mart illegally fired an employee in Kingman, Ariz., who supported the UFCW and illegally threatened to freeze merit-pay increases if employees voted for union representation. The decision came eight years after the organizing campaign failed, and four years after the case was originally heard.

“We’ve always maintained the termination was not related to the union and that there was nothing unlawful about an answer provided an associate about merit pay,” said Mr. Tovar, the Wal-Mart spokesman. “Following the decision, we were considering offering reinstatement, but that is on hold, since the [union] appealed the decision.”

Unions consider the Employee Free Choice Act as vital to the survival of the labor movement, which currently represents 7.5% of private-sector workers, half the percentage it did 25 years ago. The Service Employees International Union said the legislation would enable it to organize a million workers a year, up from its current pace of 100,000 workers a year.

The Underdogs

The business-backed lobbying groups are running ads in states where a win by a Democratic Senate candidate would boost support for the legislation in the Senate, saying the loss of secret ballots exposes workers to bullying labor bosses. In one, they use an actor from the “Sopranos” TV series about mob life to hammer home their point.

Business groups say they’re the underdogs since they will be outspent by unions by a wide margin. Labor has pledged to spend $300 million on the election and securing passage of the Employee Free Choice Act, compared with under $100 million by business groups, according to Steven Law, chief legal officer of the U.S. Chamber of Commerce. The Chamber’s strategy is to focus on the Senate, where labor needs eight more supporters of the legislation to reach the 60 votes needed to overcome a filibuster.

“This is a David-and-Goliath confrontation, but we believe we’ll have enough stones in the sling to knock this out,” said Mr. Law.

Wal-Mart is a powerful ally. Through almost all of its 48-year history, Wal-Mart has fought hard to keep unions out of its stores, flying in labor-relations rapid-response teams from its Bentonville, Ark., headquarters to any location where union activity was building. The United Food and Commercial Workers was successful in organizing only one group of Wal-Mart workers — a small number of butchers in East Texas in early 2000. Several weeks later, the company phased out butchers in all of its stores and began stocking prepackaged meat. When a store in Canada voted to unionize several years ago, the company closed the store, saying it had been unprofitable for years.

Labor has fought back with a campaign to portray Wal-Mart as treating its workers poorly. The UFCW helped employees file a series of complaints about the company’s overtime, health-care and other policies with the National Labor Relations Board. Dozens of class-action lawsuits were filed on behalf of workers, many of which are still winding their way through the courts.

Wal-Mart has been trying to burnish its reputation by improving its worker benefits and touting its commitment to the environment. On the political front, it’s hedging its bets, spreading its financial contributions on both sides of the political divide.

Twelve years ago, 98% of Wal-Mart’s political donations went to Republicans. Now, as the Democrats seem poised to gain control in Washington, 48% of its $2.2 million in political contributions go to Democrats and 52% to Republicans, according to the Center for Responsive Politics, a nonpartisan organization that tracks political giving.

Huffington Post UPDATE: Wal-Mart has issued a statement regarding the Wall Street Journal article outlining how it’s warning employees to beware of voting for Democrats. AP has the details. The Wall Street Journal article is excerpted below:

Wal-Mart Stores Inc., the world’s largest retailer, denied a report Friday that it had pressured employees to vote against Democrats in November because of worries that a bill the party supports would make it easier for workers to unionize.

The measure, called the Employee Free Choice Act, would allow labor organizations to unionize workplaces without secret ballot elections. It was co-sponsored by Barack Obama, the presumed Democratic presidential candidate, and opposed by John McCain, the presumed Republican nominee.

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They Don’t Give A Fuck About You

Posted in comedy, corporations, media, politics by allisonkilkenny on June 27, 2008


This particular material of George’s may have made me laugh less than some of his other work and yet I think I love it the most.

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