One is a name that you’d expect: Massachusetts Senator Elizabeth Warren, who has used her pulpit and influence on the Senate Banking Committee to push Congress to at least consider new and previously scrapped legislation that would shrink and further regulate Wall Street. The other is someone you may not expect: Democratic presidential hopeful Hillary Clinton, who within 48 hours of announcing her candidacy went after hedge funds and private equity firms.
Warren’s tone isn’t necessarily new but her voice in Washington is getting louder. She also took more of a personal line this time around, pleading with Congress to change the tax code for bank executives to align it with the long-term health of the banks themselves. Regulators have pushed banks to change their pay structures to mitigate against short-term risk but modifications to existing tax law would be something different. Warren wants to tax bonuses more aggressively to de-incentivize risk, though details are a bit scarce.
The Massachusetts senator also wants bigger personal financial penalties for those posing risk to the system and a firm cap on the size of big banks, which would undoubtedly lead to more layoffs and smaller paychecks for front office staffers.
Elsewhere, Hillary Clinton spent her first stop on the presidential campaign in Iowa, where she broached the subject of income inequality. She too talked tax changes but, unlike Warren, concentrated specifically on the buy-side. "There is something wrong when hedge fund managers pay lower tax rates than nurses or the truckers that I saw on I-80 as I was driving here over the last two days," Clinton said.
What she was likely referring to is the fact that buy-side staffers earn much of their compensation through investment income, which is considered capital gains and is only taxed at a top rate of 20%. Traditional income at the highest bracket – where most hedge fund and private equity employees would sit – is taxed at a top rate of 39.6%.
It’s an interesting first move for Clinton as she is seen in some parts as a friend to the finance community, though, who knows, it may just be talk.
Why You’ll Love and Hate Life at the Big Four (eFinancialCareers)
While the rankings are the same, here are some entirely new testimonials from people working for Deloitte, Ernst & Young, PricewaterhouseCoopers and KPMG.
Top Tech Skills Bank-By-Bank (eFinancialCareers)
We analyzed data from the software development and hardware/embedded software categories within our database for every large investment bank to gain an idea of the top technology skills in each organization.
BofA Books a Mixed Quarter (Forbes)
Bank of America missed analyst expectations but did swing to a profit after minimizing legal expenses. However, the bank’s FX traders had a banner quarter. That unit appears to be hiring.
Swing and a Miss By the SEC (WSJ)
In a clear example of the difficulty of determining individual responsibility when it comes to the financial crisis, the SEC has settled with former Freddie Mac executives who they were trying for years to penalize for the volume of risky mortgages the company purchased. The settlement is a slap on the wrist, if that. The three top executives will pay $310,000 that will be covered by Freddie Mac insurance. So they’re paying nothing.
Talk About Going the Extra Mile as a Boss (WSJ)
Former Citigroup banker John Riordan was told by the firm’s chairman to evacuate Saigon in 1975 as the North Vietnamese Army approached. Rather than leaving the 106 Vietnamese employees behind, as ordered, Riordan smuggled them and their families to Hong Kong, claiming on consequent flights that they were his family. Riordan is coming out with a book that documents the ordeal.
Don’t Follow the Herd (Business Insider)
Credit Suisse CEO Brady Dougan has some advice for the younger generation trying to make it in banking. Get into an area that is small and just at its beginnings. Growing new businesses or fixing broken ones is how to make a name for yourself, he said.
Yes, That Is Frowned Upon Here (Dealbreaker)
A senior executive at the Dutch Central Bank was fired after the regulator was made aware of her secret double life as a Nazi-themed dominatrix prostitute. Prostitution is actually legal in Holland but Conchita van der Waal’s activities tripped the central bank’s “indecent behavior” policy. One would certainly hope so.
Buzz Around the Office
Why Don’t You Just Tell Us Your Birthday, Cheryl (CNN)
This story is the new gold dress. The Internet is going crazy over a weird math problem asked of Singaporean high school students. It may make your brain hurt.
Quote of the Day: "The first thing I heard when I got in the business....was bulls make money, bears make money, and pigs get slaughtered. I'm here to tell you I was a pig. And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig. Put all your eggs in one basket and watch the basket very carefully." – hedge fund legend Stan Druckenmiller