Bookmark this post with:
Tuesday, February 24, 2009
The Merrill Bubble
It is pretty fascinating that Merrill which ranks horribly in both increasing writedowns and change in leverage over the past 5 years has the highest compensation as % of operating profit (when this was positive). Merrill is the only firm that paid out over 100% of its operating profit to its employees over the '03-'08 period (185% to be exact). Even mighty Goldman barely registers on the chart when compared to Merrill on these parameters. Hat tip to Mike Cembalest.
Sphere: Related Content
Print this post
Subscribe to:
Post Comments (Atom)
16 comments:
This is misleading - you can't compare comp for a money center such as Citi of BofA or JPM with hundreds of thousands of hourly employees (tellers) to comp for a broker dealer (GS or MS) to comp for a retail broker (Merrill).
Just as misleading is looking at average bonus/employee (same reasons as above).
Hello,
That is a lovely 3-D chart. Tufte would be proud of the author, presuming the circles representing compensation are sized by area and not by diameter or radius, as was done by other chartists lately.
Anonymous's point about comparing Citi et al with Merrill, BS, LB, MS, and GS is well-made.
One other worry though, is that the x-axis is unclear (to me, granted). What is definition used for Change in Leverage? Reason I ask is that JPM reported 5.91% "leverage ratio" in June 2007, and the book Banking on Basel by Daniel Tarullo, page 147, reported 5.57% for Dec 2003.
If, and this may be source of my confusion, one takes the inverse of these numbers one gets:
Jun 2007 1/.0591 = 16.9
Dec 2003 1/.0557 = 18.0
That suggests leverage at JPM declined about 6% over that interval, not ~30% as indicated in the chart.
Anyway, great looking chart, any help understanding where i went wrong would be much appreciated.
* Leverage. Firms that increased leverage tended to be broker-dealers ramping up risk after the abdication of the broker-dealer net capital rule(EOTM, September 26, 2008), or banks like Citi and UBS loading up on exposure to AAA paper that was guaranteed by insurance counterparties who
were themselves leveraged 100 to 1. Leverage excludes off-balance sheet entities such as SIVs (later consolidated by banks such as Citi), and growth in unfunded loan commitments.
* Writedowns. UBS and CSFB writedowns for Q4 2008 have not been reported; these data points will likely get worse, articularly UBS. Bear Stearns writedowns are understated (last reporting uarter Q1 2008). Most amazing writedown of all: $5 billion of structured credit insurance that MBIA simply walked away from entirely, leaving its broker-dealer counterparties
uninsured (as reported in August 2008 MBIA press release). Unlike AMBAC and MBIA, AIG's structured credit customers were bailed out, at a cost now exceeding $120 billion. Beneficiaries of this decision include Goldman Sachs, which according to AIG chief executive Robert Willumstad's
Congressional testimony, had $20 billion in credit derivative exposure to AIG's Financial Products division.
* Compensation. Merrill is the only firm that paid out over 100% of operating profits to its employees (185%, to be specific) over the 5 year period. Merrill is Godzilla on this chart in many ways, none of them favorable. The question for regulators is to what extent should Merrill, which paid $4 billion in 2008 bonuses after having lost twice its book value, be the casus belli for restructuring the financial system, the bank rescue plan or the TARP.
@anon "you can't compare comp for a money center such as Citi of BofA or JPM with hundreds of thousands of hourly employees (tellers) to comp for a broker dealer (GS or MS) to comp for a retail broker (Merrill)"
Yes you can, and that's the point. They are all banks now.
But you can compare ML, GS, MS and BS...fascinating Captain...
Hi
http://www.drpoonsak.com/ - generic lexapro
One of the newer anti-depressants known as Lexapro has shown promising results in users.
[url=http://www.drpoonsak.com/]lexapro antidepressant[/url]
Through the use of modern medicine one can alter their depressive symptoms and get back on track living their life again.
lexapro anxiety
One of the newer anti-depressants known as Lexapro has shown promising results in users.
Hello
http://www.rhythmmethodlive.com/ - lexapro cost
The credit for the invention of this Lexapro drug goes to the Lundbeck and Forest Laboratories.
[url=http://www.rhythmmethodlive.com/]lexapro price[/url]
No prescription! 30 day money back guarantee!
Lexapro is yet another useful drug or medication useful for you all.
generic lexapro
Now just have a look at some of the facts related to the history of Lexapro.
Hello all
http://www.stillmyqueen.com/ - levitra price
Check with your doctor or ask the pharmacist if you are not sure if any of the drugs you are taking are nitrates
- are taking alpha-blockers.
[url=http://www.stillmyqueen.com/]levitra cost[/url]
Levitra works for men with ED FDA-Approved Medications
No Prescription is Needed
Free Shipping for Bulk Orders
15% Discount on Reorders Buy Levitra (Vardenafil) at one of the reputable online pharmacy.
levitra pharmacy
Check with your doctor or ask the pharmacist if you are not sure if any of the drugs you are taking are nitrates
- are taking alpha-blockers.
http://www.title-holder.com/ - lexapro sale
Generalized anxiety disorder is persistent excessive anxiety felt by the patient for at least 6 months.
[url=http://www.title-holder.com/]escitalopram generic[/url]
Generalized anxiety disorder is persistent excessive anxiety felt by the patient for at least 6 months.
discount lexapro
Dizziness, headache, nausea are symptoms that have been observed to occur upon abrupt cessation.
Hello,
Online Casino
It'd be better if you choose to prefer such an online casino website that uses the most honest and reliable software, such as Playtech, Cryptologic or Microgaming.
[url=http://nicheblogssquad.com/]Best Online Casinos[/url]
Check out the software the casino uses.
http://nicheblogssquad.com/ - Best Online Casinos
Online casinos are absolutely secure and you don't have to worry about your money as long as they are unauthorized and scammer casino websites wherein you're willing to try your fate on.
Hi,
Best Online Casinos
It'd be better if you choose to prefer such an online casino website that uses the most honest and reliable software, such as Playtech, Cryptologic or Microgaming.
[url=http://nicheblogssquad.com/]Online Casino[/url]
These websites are absolutely legitimate and authorized by government.
http://nicheblogssquad.com/ - Play Casino For Fun
However, it's possible for you to learn strategies on the ways to bluff as perfectly as possible as well as controlling your emotions.
Hi,
phentermine online
Although if the dryness continues for more than 2 weeks, it?s important to consult the doctor and dentist since there is a higher chance that dental diseases and fungal infection may occur.
[url=http://www.fourseasonsindiatour.com/]phentermine 37.5 mg[/url]
You can order Phentermine 37.
http://www.fourseasonsindiatour.com/ - generic phentermine
It cannot be used by patients with moderate to severe high blood pressure, overactive thyroid, glaucoma, heart of blood vessel disease or those with history of drug abuse.
buy [url=http://www.avi.vg]sex toys [/url] online, large selection of adult toys like [url=http://www.avi.vg/category.php?a=sex4sexx&cid=3]vibrators [/url] and [url=http://www.avi.vg/category.php?a=sex4sexx&cid=30]dildos [/url]at www.avi.vg ,
buy the way, another great site to buy [url=http://www.ewgpresents.com]viagra online[/url] is the all new http://www.ewgpresents.com !
Hello swantosad
http://www.devicedriversportal.com/ - propecia mg
Finasteride, the generic medicine is a FDA approved medicine.
[url=http://www.devicedriversportal.com/]buy cheap propecia[/url]
See the list of reliable online pharmacies selling low cost Propecia (Finasteride).
finasteride mg
On the other hand, Finasteride stimulates the hair follicles and new hairs grow more rapidly.
http://siqihogi.freesuperhost.com http://qiwaxo.freehost123.com http://tesadulo.freehostia.com
порно галереи девочки
http://curazo.freehostingz.com http://virb.com/gedasex http://riversex.vox.com/
порно галлерии
vrotmnenogi
Hello swantosad http://lifeforce-international.org/ - cheap tamoxifen This drug is very helpful, but should not be use without doctor concern. [url=http://lifeforce-international.org/]cheap tamoxifen[/url] Women should examine or take some test for the incidence of the breast cancer, before starting the Nolvadex dose. buy nolvadex Nolvadex is commonly known as SERM.
Post a Comment