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The Biz Roundup January 29

Welcome to the “agency problem,” Mr. President. It’s why boards and bailouts are supposed to have teeth.

“I saw an article today that indicated Wall Street bankers had given themselves $20 billion worth of bonuses ($18.4 billion, actually, according to New York comptroller),” Obama said. “That is the height of irresponsibility. It is shameful.” Obama said the bonus figure was the same Wall Street bankers gave themselves in 2004, when times were going well.

“Part of what we’re going to need is for the folks on Wall Street who are asking for help to show some restraint, some discipline and some sense of responsibility,” Obama said. “The American people understand we’ve got a big hole we’ve got to dig ourselves out of. They don’t like people digging a bigger hole even as they’re being asked to fill it up,” he said, working both ends of the metaphor.

(“Obama: Big Wall Street Bonuses ‘Shameful,’” The Washington Post, January 28) See, Mr. President, it’s not about holes and digging and dirt. It’s about greed. These guys, who drove their companies into a cliff and pushed their shareholders off a cliff, are simply trying to grab as much money as they can before the well dries up. The reason the Democrats originally wanted to legislatively stop bonuses for bailed-out executives and put government representatives on corporate boards was so the bank bailout didn’t turn into the rich-guys-in-the-Hamptons bailout.

The hedges get trimmed

. . . the administration is preparing to propose tighter regulation of credit rating agencies, federal oversight of mortgage brokers and greater oversight of credit-default swaps, the unregulated financial instruments that experts say contributed to the economic crisis. . . .

The Levin-Grassley legislation would correct that problem by giving the commission the authority to regulate hedge funds.

“If the events of the last year have taught us anything, it’s that we need to regulate firms that are big enough to destabilize our economy if they fail,” Mr. Levin said. “It’s time to subject financial heavyweights like hedge funds to federal regulation and oversight to protect our investors, markets and financial system.”

(“Senators Offer Measure to Regulate Hedge Funds,” The New York Times, January 29) Ummm, it’s about time? One note about hedge funds, though. You don’t see them running to Pennsylvania Avenue for bailout money.

It’s recession all over the place.

Economic activity contracted in every one of the 50 states in December, according to indexes tracked by the Federal Reserve Bank of Philadelphia.

That’s the first time all states have shown simultaneous declines in the Fed’s 30-year history of tracking the data.

For the fourth quarter overall, economic activity contracted in all but four states: Louisiana, Wyoming and North Dakota, which grew modestly; and Alaska, which was unchanged.

(“Recession hits all 50 states, a first in at least 30 years,” Los Angeles Times, January 29) Just in case we all needed to be told what we already knew. Those numbers, by the way, officially put George W. Bush in the infamous and incompetent company of Herbert Hoover and Jimmy Carter as the greatest failures in economic policy-making in modern American history.

That’s 5.9 billion in losses . . . which starts with “b,” which rhymes with “p,” which stands for “poor.” (“As Red Ink Spills, Ford Drains Credit Lines,” Wall Street Journal, January 29)

That’s roughly twice as much as $2.8 billion . . . which also starts with “b,” etc. (“Wells Fargo lost $2.83 billion in 4th quarter,” San Francisco Chronicle, January 29)

ABC hits the layoff button. (“Disney’s ABC Television Group to cut 5% of workforce,” Los Angeles Times, January 29)

So that’s what consumers are doing! They’re all buying books! (“Amazon sales and profits rise, bucking all the trends,” Andrea on Amazon, Seattle Post-Intelligencer, January 29)

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