Thursday, January 29, 2009

What Is Perella Weinberg's Compensation Structure?

As Dealbook reported previously, Perella Weinberg, the advisory/investing company headed by former Morgan Stanley Chairman of Investment Banking Joe Perella, has been retained by the FDIC to "advise on transactions and strategies to stabilize the banking system, and also on the proper way to dispose failed institutions and how to handle delinquent securities assumed from banks, as well as the creation of the aggregator bank." As these are essentially the core components of whatever the ultimate strategy to extricate us of the current (mini) depression, it seems that U.S. taxpayers need to be kept in the loop on this one a little more actively. Jason Cave, senior advisor to FDIC Chairwoman Sheila Bair said Perella would "bring a different perspective, to make sure our process is fully informed, that we've considered all possibilities."

We agree that the wealthiest Italian American has experience working with toxic assets, as he advised on the Bank of America takeover of MBNA and is likely quite familiar with the acquiring company, which as we all know, is currently in a world of toxic pain.

But back to the disclosure issue - as Perella Weinberg will be paid to essentially shut down banks and other institutions, and thereby lead to even more job losses, it only makes sense to fully disclose the firm's compensation structure to make sure that its interests are not 180 degrees misaligned with those of the people who are potentially about to be sacked by Mr. Perella. Furthermore, Mr. Perella is the proud owner of Xerion Capital, a distressed billion dollar hedge fund, which he acquired a little over a year ago. While we have no doubt there are some substantial Chinese walls in place at the company's HQ at 767 Fifth Avenue, it might make sense to disclose what all the holdings of this hedge fund are, to avoid "conflicts of interest."

Jason Cave has denied to disclose Perella's compensation structure. We suggest the FDIC follow in Tim Geithner's steps from last night, and start providing long overdue transparency to the process of "bailing out" the U.S.
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Anonymous said...

Interesting stuff. We've got a long ways to go for true transparency. Need to keep the pressure on Obama to hold up his pledge. Other stuff we need to know:

What is the treasury accepting as collateral for the trillions we're loaning banks?

How much are we paying Goldman, JP Morgan, and other advisors for their services during this debacle they may have helped to create?

Why did Goldman Sachs' tax rate go from 34% to 1% last year? They said it was due to, "geographical changes" among other things.

What the hell do these banks have off their balance sheets?

patently-absurd said...

TD - forgive me, it's been a long day. If you give us the lingo to use, I'm quite certain greater numbers will see fit to take 10 minutes to fill out the easy-peasy online FOIA form. Do tell, it shall be done.

STAY ON YOUR GOVT PEOPLE - they do NOT have our best interests at heart.