Everyone knows that senior execs at Bear Stearns and Lehman Brothers were paid largely in stock, and that they lost most of their wealth when the companies collapsed, right?

Turns out, not so much:

“Three professors at Harvard are disputing that logic in a new study, saying it is an urban myth that executives at Bear and Lehman were wiped out along with their companies.

Though the chiefs at both investment banks lost more than $900 million in their stock holdings, the professors argue that it is important to also consider all the riches the bankers took off the table in the years preceding the crisis.

At Lehman, the top five executives received cash bonuses and proceeds from stock sales totaling $1 billion between 2000 and 2008, and at Bear, the top five received more than $1.4 billion, according to the study, which was released on Sunday night on the Web site of the Program on Corporate Governance at Harvard Law School.

The payouts came in the form of cash bonuses as well as thousands of shares of stock that the executives sold as the share prices of their companies soared. Most of the executives sold far more shares during that period than the number they held when their companies hit bottom.”

Another myth of the Bailout era dies . . .

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Exec wealth

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Source:
Executives Kept Wealth as Firms Failed, Study Says
LOUISE STORY
NYT, November 22, 2009

http://www.nytimes.com/2009/11/23/business/23pay.html

Category: Bailouts, Corporate Management

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

19 Responses to “Bear Stearns, Lehman Execs Kept Billions . . .”

  1. flipspiceland says:

    Well, at least some others now know what the rest of us have known.

    He might also like to now tell us about the early investors of Bernie Madoff who got triple digit returns over 15 years but who now claim they are wiped out.

    The truth will out. But it sure fights like hell to reveal itself.

  2. Mannwich says:

    How is this at all surprising? These folks are merely catching up to what was widely known here and at other blogs in the blogosphere. It’s called legalized “stealing”.

  3. Pat G. says:

    That’s good to know. I will rest much better tonight knowing that these banksters are not sleeping on the street. Instead, hundreds of average Americans have been voluteered to take their place. That’s justice here in the good ‘ole USA.

  4. Z says:

    Wow, this may be the most bogus chart I’ve seen recently. How can you make a point about what these people lost, when it shows the current value of Jimmy Cayne’s share without any indication of what it was previously worth?

    At its peak in January 2007, Jimmy Cayne’s 7.03M shares in Bear Stearns were worth $1.2 billion (see p. 315 of Cohan’s excellent book). If he sold$289M, by my count he lost three times more than he sold. Cohan makes clear that many of Bear’s senior execs were in a similar situation, as they (stupidly, as it turns out) kept large chunks of their net worth in Bear stock. I don’t know about Lehman.

    ~~~

    BR: It references how much they sold and cashed out.

    If you are looking for empathy cause Cayne “only” cashed out ~$300 million as he destroyed the company, I doubt you are going to get any around here . . .

    When you get out of school, you will understand what $300 million means in the real world …

  5. madman130 says:

    Just as I thought.

    Also wasn’t there a report out today saying that GS’ pledge to invest $500 mil in small businesses is nothing but a sham? The report said that GS gets something like 70% tax break on that $500 mil, so it’s not even 250 mil. Sorry, I can’t find the link.

    I guess you have to have a heart to do a charity……

  6. The banks have been unbelievable during this downturn. They have basically pinned the world down without any way to get out. I wrote a little article about the “scary banks” in Why don’t more people get upset about this all is beyond me.

  7. Simon says:

    This vampire capitalism gig is a real gag. But where will it lead. I mean we kind of know where it has led the question is can it run any further? Surely the pool of greater fools with money to invest in companies run by emfanged ones is running out. Or perhaps it doesn’t matter because the government has taken up where the fools left off.

  8. bsneath says:

    I’ll bet you the Investment Banks are behind getting Jamie Dimon to take Geithner’s place. They are worried that Geithner is too weak and they need a heavy weight to protect their interests. I cannot see any other reason for Dimon to even let his name be considered.

    So if this happens it will be to prevent the breakup of TBTF banks.

  9. alfred e says:

    It’s nice to see the truth we should have all known become more apparent to more people.

    Now, the question becomes “Now what?”.

    How much of this has to be thrown in our leaders’ faces before they act on BananAmerica’s mood?

    And in a real way. Not in a phony turd-polishing way.

  10. bsneath says:

    Geithner Is Stalking Horse for Rage at Wall Street: Albert Hunt

    “Marie Antoinette would be embarrassed by these guys,”

    http://www.bloomberg.com/apps/news?pid=20601070&sid=anqEJS65F3Wg

  11. I’ve said it before and I’ll say it again,
    disgorgement.

  12. DL says:

    It’s bad enough that this happened once. What is much worse is that, even with the benefit of hindsight, Obama will probably not support a bill that includes a “clawback” provision for executives of bailed-out companies. If we’re going to have a President who’s a socialist, at least he could do something useful.

  13. as others have noted, ~”How is this, even, News?”
    ~~
    on other facets “Just when you thought that the dust had settled from the scandals of Wall Street (at least temporarily), details come out of another Ponzi scheme by the titans of banking, this time with student loans. According to recently released court documents, Citigroup, JP Morgan and the education finance company Nelnet are being sued by the federal government for fraud of nearly $280 million from their participation in the Department of Education’s Federal Family Education Loan program (FFEL). FFEL provides billions in annual bank subsidies to private lenders for making student loans –the same subsidies that the student aid bill currently in Congress looks to abolish.

    According to court filings:

    “Nelnet, JP Morgan Chase and Citigroup caused false certifications, records or other statements to be made and used to get false claims paid and approved.”

    “Nelnet’s fraudulent course of conduct consisting of brazenly offering inducements to its employees and schools for loan applicants while keeping the DOEd in the dark by virtue of its implied and express certifications of compliance.”
    http://www.ourfuture.org/blog-entry/2009104319/big-bank-fraud-time-student-loans

    When Dick Thornburg was talking about ‘Crime in the Suites’ being a bigger problem than ‘Crime in the Streets’, maybe we should have paid attention..

  14. mock turtle says:

    a government of the people, by the people and for the people

    could rectify this travesty in short order

    with legislation and enforcement

    designed to capture taxes levied against “windfall profits”

    ie proceeds emanating from bailouts and flow thrus

  15. mathman says:

    @ mock turtle: That would only happen if we had a working democracy instead of the oligopoly we’re stuck with. We vote for change and get more of the same. What’s the use in paying taxes, when “our” government no longer responds to the needs of “we the people” and in fact spends “our” money propping up insolvent banks and extends wars we voted to end? Now the value of our homes, our pensions and even our currency is being debased so that for many of us there will be no “retirement” (except death), while the fraudsters and sharks continue living “the good life”. The American dream has become a nightmare.

  16. mathman,

    good point, but to keep it simple, at an earlier stage in our History, We called it, out, as: “No Taxation, without Representation.”

    maybe, these daze, to fit it on a bumper sticker, or T-Shirt, We should go w/ “Defund to Defend.”

    in the meantime, start practicing ‘building your Social Credit’..

    see if you like this Thesis..
    “…In a tapeworm economy a small group of insiders centralize political and economic power at the expense of people, living things and the environment, in a manner that destroys real wealth. A tapeworm economy is one in which it is considered acceptable to make money from our popsicle index going down. In investment terms, it is an economy with a negative return on investment. It is parasitic in nature.

    The way an actual tapeworm operates is to inject its host with a chemical that makes the host crave what is good for the tapeworm and bad for the host. So the Tapeworm Economy is adept at using media and education and numerous financial incentives to get us acting against our own strategic interests and instead supporting and depending on the Tapeworm.

    The symptoms of the Tapeworm are many – narcotics trafficking that targets our children, runaway exploitive and predatory corporate practices such as the patenting of life, terminator seed and the destruction of our topsoil and food supply, fraudulent inducement of debt to homeowners, students and consumers, suppression of knowledge and renewable energy technology, criminal mismanagement of government credit and resources, black budget operations and the manipulation of currency, financial and precious metal prices and markets. These practices introduce organized crime throughout all aspects of our lives… these transactions drain our families and neighborhoods on a daily basis – much like a tapeworm drains its host.

    As we understand the history of these drains in our lives – who is doing them and how we are complicit – we begin to understand the power of the opportunity to transform them in a manner that is safe and profitable for ourselves and those we love.

    As we begin to pull our resources out of the Tapeworm, and learn to invest our time and assets in building the world we want, by building real wealth and financial liquidity outside the Tapeworm, and by raising our popsicle index without putting others’ at risk, the Tapeworm stronghold will weaken and the excellence of local living economies and diversified enterprises will prosper worldwide – one neighborhood, one enterprise and one investment at a time…”
    http://solari.com/realdeal.htm

  17. PithyDog says:

    @ Mark,

    Excellent article.thanks.

    I will forever think of it every time I go to wash a dogs behind and see the occasional tapeworm excreteing from the butt- hole.

    BTW the article doesn’t mention tapeworms result from FLEAS, who cause much pain and suffering to the unhealthy host. Fleas also causing bubonic plague.
    FYI- I own a pet styling business.

  18. Its Me says:

    @mathman, good point

    At this time in November of George Bush’s first term he was directing the wealth of our nation towards a war. Security alerts, orange code and red codes we didn’t know what to believe. Were you a terrorist was I?

    But the banks rolled on

    Now with Obama its the same play book, the wealth of the nation is being directed towards health care. H1N1 alerts, crisis stories about no health care for the unemployed.

    But the banks roll on.

    There is little churning within the government class and there is only one play book. Direct the nations wealth towards the programs that best suit the constituents that re-elect your party.

  19. DeDude says:

    As they artificially pumped up the value of their companies stocks by extremely risky bets, they dumped most of their own holdings. Who would have thought that these people that where payed all that money for their “skills”, would be all skills and no morals. Does anybody know of a mutual fund that uses a screen of “less than average excecutive compensation”. I bet it could outdo the indexes by a fine margin.