Thursday’s Headlines: Is the 1% losing ground?
In an article entitled “Bonuses Dive, Stocks Tank: Goodbye Income Gap?” Bloomberg News explores the notion that shrinking comps, layoffs and faltering stock prices are in fact disproportionately hitting the wealthiest 1 percent’s affluence. The story cites research which found that this group’s share of income shrank from 23 percent in 2007 to 17 in 2009.
Ultimately, the writers dismiss this notion, saying that research is based on dated data. Further, the recent trend of financial services firms shifting bonuses from cash to company stock – which is now at depressed prices – will ultimately keep Masters of the Universe far wealthier than the rest of the universe.
Quoting from Bloomberg: “This year is the perfect situation where they can say it is a modest bonus season, but in the end, it could end up making many of them zillionaires,” said Jonathan R. Macey, a professor of corporate law and finance at Yale. “Not all banks may do well in the long run, but most will.”
Other News:
BofA will cut Merrill Lynch executives’ bonuses by as much as 40 percent. [Fox Business Network]
Credit Suisse will combine the support operations for its investment and private banking divisions. [NY Times]
Banks increase focus on wealthy female execs. [Bloomberg]
Old Mutual of Britain will sell its Nordic banking business Skandia Insurance to Swedish insurer Skandia Liv for $3.2 billion. [DealBook]
Regulators propose a new ratings system that could replace ratings agencies. [NY Times]
Deposits at foreign-owned banks in the U.S. fell 25 percent over the past six months. [Financial Times]
Carlyle is in talks to buy a unit of Highland Capital which manages $3 billion in European collateralized loan obligation. [Bloomberg]
London-based hedge fund James Caird Asset is liquidating its main hedge fund. [Businessweek]
Charles Schwab opens its first franchise branch in Nashua, N.H. [Investment News]
