Wall Street making bad habit of weekend wimp-outs

June 1, 2010

No one likes revealing bad or unsavory news. But lately Wall Street has taken to sneaking out some of its less palatable developments right before the weekend. Such timing may keep to the letter of transparency rules, but hardly the spirit.

Morgan Stanley is the latest culprit. The investment bank chose the eve of this past holiday weekend to dribble out that it was more than doubling the annual base salary of Chairman John Mack to $2 million. The figure keeps with Morgan Stanley’s plan to construct a more balanced pay scheme that relies less on annual bonuses.

Fair enough, but then why put out the news when Americans and Britons alike were departing for the first long weekend of the season? Mack has only been in his new role for five months — surely not long enough to warrant such a bumper pay hike. But banker compensation remains a hot-button issue, just as it was when his new role was announced last September. That’s why the disclosure smacks of an attempt to sweep the salary bump under the carpet.

It’s not the first time this year Morgan Stanley has embraced a holiday weekend with zeal. After markets closed the day before Good Friday, the firm unveiled it was taking a writedown of nearly $1 billion on Revel, its casino investment in Atlantic City. Goldman Sachs has been thankful of Fridays too. In February, it waited until most had gone home for the weekend before informing markets that Chief Executive Lloyd Blankfein was getting a $9 million bonus for last year.

These aren’t the most egregious transgressions. Morgan Stanley had the good grace to report and explain a $10 billion CDO-related loss in 2007 mid-week. And the two firms hardly have an exclusive on the PR strategy: politicians are masters of the weekend wimp-out and companies regularly try to bury bad earnings news when fewer shareholders are watching. But the last thing Wall Street needs is another black mark from enraged and suffering taxpayers and investors.


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You probably know of this one anyway, but on 9/11 in the UK, one of New Labour’s spin doctors wrote to a ministerial colleague as the twin towers news broke, ‘This could be a good day to announce the unemployment figures’.

Don’t think there’ll ever be a good day for the Glazers to announce this one:
http://nbyslog.blogspot.com/2010/06/worl d-exclusive-man-united-glazer.html

Posted by nbywardslog | Report as abusive

That’s because the people suited to profit from these announcements are workging through the weekend. In any case – Wall Street in New York City has undermined its own position. It is just a matter of time before Americans and the world in general realizes that they are better able to provide most of their financial needs locally and don’t need a global hub for financial transactions. The time of regional exchanges has returned and we should slowly see a turning away from Wall Street and more towards Main Street to provide most financial instruments need to conduct business locally – except most of the fantasy items now being traded as legitimate stocks and issues – that will remain the territory of the Wall Street Wizards for some time.

Posted by cranston | Report as abusive

I am not sure if you are aware but this sounds like a populist and uninformed comment. John Mack has not been around for a few months and he declined any bonus in 2007, 2008 and 2009. Not sure if you it is wise to compare his meager salary increase to what a lot more junior people at his firm and across the industry were making. Lets please not make things more drastic than they are.

Posted by harrami | Report as abusive

The average citizenry is not opposed to bonuses based on performance. But their perspective is there must be a correlation between bonuses paid and the general benefit to the nation’s economy as a whole. We are told that in theory “free” markets and capitalism is in the best interest of everyone.

If successful investment strategy centered more on discovering and investing in companies that provided superior products and service, while managing efficiency and providing value, then it is easy to see that capital invested in such a manner would indeed serve to lift the general economy and society as a whole. Shorting the garbage investments they have sold America is about like a captain of a sinking ship, taking odds against the passengers surviving and betting that he will be first off the boat.

But making money by corrupting the political process, using labor arbitrage to offshore the nation’s jobs, bail outs and unlimited access to free money from the government, dodging of tax responsibilities, obfuscation and manipulation of publicly required financial information, cronyism, and a host of other standard practices ain’t going to cut it (for me, anyway).

I would be more interested in “shared” pain and rewards. Instead of “what’s good for Wall Street is good for America” we have What’s good for Wall Street is what’s good for Wall Street”.

Posted by garrisongold | Report as abusive