Financial Roundup: Bank Mergers, Fat Wall Street Bonuses, Paulson Backlash
Big regional banks look like merger bait -- Non-megabanks such as National City, Fifth Third Bancorp and Keycorp all posted big losses in the third quarter, and that weak performance -- combined in some cases with low stock prices -- make them look a lot more like merger candidates. For more, see Peter Galuszka's post on the merger sweepstakes among big regional banks.
The big, fat Wall Street bonus is alive and well -- Despite the recent market meltdown and taxpayer-backed economic bailout, major banking and investment houses are set to pay their annual discretionary bonuses to dealmakers, rainmakers and everyday support staff. Six firms -- including Goldman Sachs and Citigroup -- are expected to dole out nearly $70 billion in bonuses, according to a recent story in the U.K. Guardian.
The publication notes that the payout will be made despite the declining financial health of the financial services industry and dismal 2008 stock performances.
For example, shares in Citigroup and Goldman Sachs have declined by more than 45 percent since the start of the year. Merrill Lynch and Morgan Stanley have fallen by more than 60 percent. JP MorganChase fell 6.4 percent and Lehman Brothers has collapsed.
The Guardian adds: "Many critics of investment banks have questioned why firms continue to siphon off billions of dollars of bank earnings into bonus pools rather than using the funds to shore up the capital position of the crisis-stricken institutions."
That's a good question. Maybe Treasury Secretary Henry Paulson can get back to us on that one.
Paulson's approval plummets -- Most Americans are not very happy with the way U.S. Treasury Secretary is handling his job. A CNN/Opinion Research Corp. survey of 1,058 people found that 64 percent said they disapproved of Paulson's performance and 28 percent said they approved. The poll was conducted on Oct. 17-19 and the margin of error was plus or minus 3 percentage points.
Still, Paulson shouldn't be too upset at this negative feedback. At least he's faring better than his boss, President George Bush. In an earlier poll, the president had a whopping 72 percent disapproval rating, CNN said.
But Americans are in a grouchy mood anyway. The new CNN/Opinion Research survey found that 56 percent oppose the federal economic recovery plan while 52 percent are against the government's effort to recapitalize the nation's banks.