Bank of America faces more bonus embarrassment

NEW YORK (Reuters) - Bank of America Corp will likely face more embarrassing disclosures about bonuses paid at Merrill Lynch & Co after a federal judge refused to rubber-stamp a settlement over the $3.6 billion of payouts.

Judge Jed Rakoff's criticism of the $33 million settlement with the U.S. Securities and Exchange Commission prolongs the drama over bonuses that have prompted outrage in Congress and a probe by New York Attorney General Andrew Cuomo.

It also means Kenneth Lewis, Bank of America's embattled chief executive, may face more scrutiny over perhaps the most controversial aspect of the shotgun merger.

"What the judge is trying to get at is, was there actual fraud here?" said Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University. "The risks are they go back to their corners, and the SEC really does attempt to prove wrongdoing."

At a hearing in Manhattan, Rakoff said the fine appeared "strangely askew," representing only a "tiny, tiny fraction" of the bonuses, and might be unreasonable if the SEC were correct that the bank "essentially lied" about the bonuses.

Despite losing $27.61 billion in 2008, Merrill paid out 696 bonuses of $1 million or more, Cuomo said in a report in July.

GIVING UP THE GHOST

Rakoff questioned whether taxpayers footed the bill for the bonuses with some of Bank of America's $45 billion of bailout money, and whether it was fair for Merrill to pay bonuses, other than those required by contract, averaging $91,000 per person.

He also appeared dismayed by arguments that lawyers for Bank of America and Merrill somehow kept upper management out of the loop on many details of the bonuses.

"Was this some sort of ghost who performed these actions, or were they human beings?" Rakoff asked SEC lawyer David Rosenfeld at the hearing. Rosenfeld said the regulator chose in agreeing to settle not to allege wrongdoing by individuals.

Greater disclosure of who knew what could add ammunition to lawsuits against Bank of America as well as critics of Lewis.

Shares of Bank of America have fallen by roughly half since the announcement of the Merrill purchase after less than 48 hours of talks last September 15, at the height of the financial crisis.

Much of the anger concerns when Bank of America knew Merrill's fourth-quarter losses were soaring, why it did not disclose them sooner, and why it did not back out of the merger. Lewis has said regulators pressed him to complete the merger.

More disclosure might also shed light on the SEC's actions, at a time the Obama administration is mulling historic changes to federal oversight of financial companies.

JUDGE HAS LIMITED POWERS

"BofA is already being forced to make radical changes in how it operates, but I see less of a risk to BofA than I do potentially to government officials," said Jill Fisch, a professor at the University of Pennsylvania Law School and co-director of its Institute for Law and Economics.

"One of the things the settlement covers up is the government role, including that of the Federal Reserve," she added. "More disclosure of what went on could provide a check on overreaching by any one regulator."

Fisch said Rakoff cannot force the SEC to impose a higher penalty, but has the authority to insist on greater disclosure because of the public interest.

Richard Bove, an analyst at Rochdale Securities who views the merger as a positive for Bank of America, said prolonging the legal battle actually hurts shareholders.

"It is the stockholders who pay the fines," he wrote.

Rakoff ordered Bank of America and the SEC to submit new papers by August 24, and said he might hold another hearing.

"The judge seems to have the feeling the SEC pulled a punch, and that's why he wants to get down to the facts of who knew what, and when," Hurley said. "This comes as the SEC tries to recover some of its damaged reputation in the enforcement area. They're not getting a gold star for this one."

The case is SEC v. Bank of America Corp, U.S. District Court, Southern District of New York (Manhattan), No. 09-6829.

Copyright 2009 Reuters. click for restrictions

Elon Musk calls Biden a 'damp sock puppet,' says the president treats Americans 'like fools'

Photo by FREDERIC J. BROWN/AFP via Getty Images

Elon Musk, co-founder and CEO of Tesla, took to Twitter on Thursday to remind President Joe Biden that he left a certain key player out of a discussion about the future of building electric vehicles in the United States.

After meeting with General Motors Chair and CEO Mary Barra and Ford Motor Co. CEO Jim Farley, among others — but not including Musk — at the White House, Biden tweeted, "I meant it when I said the future was going to be made right here in America. Companies like GM and Ford are building more electric vehicles here at home than ever before."

Musk first responded by tweeting, "Starts with a T, Ends with an A, ESL in the middle."

Later in the thread, Musk seemed to agree with Twitter user Kim Paquette by tweeting: "Biden is treating the American public like fools."

Finally, Musk tweeted his pièce de résistance (at least for the day): "Biden is a damp [sock] puppet in human form."

This isn't the first time Musk has taken issue with the current administration. In December, he railed against Biden's "Build Back Better Act", saying he's deeply concerned about how the multitrillion-dollar bill would increase the national debt. In October, Musk slammed the administration's proposed tax on unrealized capital gains, warning Americans that "eventually, they run out of other people's money and then they come for you."

And who could forget Musk's spectacular Twitter spat with Sen. Elizabeth Warren (D-Mass)? In case you missed it, Warren called Musk a freeloader after Time magazine named him "Person of the Year." Musk shot back with, "If you opened your eyes for 2 seconds, you would realize I will pay more taxes than any American in history this year. Don’t spend it all at once … oh wait you did already."

On his radio program Thursday, BlazeTV's Glenn Beck spoke out in Musk's defense. He praised Musk's "American spirit," noting the South African-born American entrepreneur's humble beginnings.

"Do you know that when Elon Musk and his brother launched their first company, Zip2, Elon was living in his office and he was showering at the YMCA? Did you know that? But he was in America. He's got more American spirit in him than most people I see every day. He's gone from showering at the YMCA to now mapping out a trip to Mars and he'll do it. Why? Because he has that American spirit in him."

Watch the video below to hear more from Glenn Beck:

Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

When Biden was given the keys to the Oval Office in January 2021, gas was $2.50 a gallon and the inflation rate was 1.4%. Today gas is at $3.32 a gallon and the inflation rate is at 7% ... and STILL RISING. These are just 12 months of numbers, but we’re clearly in a worrying decline. While the economy has opened up more post-COVID, it’s not just getting worse — we’re going IN REVERSE.

On "Glenn TV" Wednesday, Glenn Beck heads to the chalkboard (and the very top of his studio ceiling) to explain what’s happening to inflation and why it’s so hard for your family to afford basic goods and groceries. It’s not “corporate greed,” as Democrats have been telling you. The Biden administration wants to continue to spend trillions of dollars to “reinvent capitalism,” but that’s in addition to the trillions that are being pumped out IN THE SHADOWS.

Glenn exposes what the Fed has been doing behind closed doors and shows us the tidal wave that’s about to hit. He’s looked at the numbers, and they're frightening. Carol Roth, former Wall Street investment banker and author of “The War on Small Business,” gives advice to Americans who want to protect their checking and savings accounts before it’s too late.

Watch the full episode below:

Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

The stock markets have taken a nosedive in the biggest downtrend since the start of the COVID-19 pandemic in 2020. But that's nothing compared to what's coming thanks to our government's embrace of modern monetary theory, warned BlazeTV's Glenn Beck on the radio program.

"It really is important that you understand what's happening to us," Glenn stated. "Modern monetary theory is truly the [fuel] ... for the great reset. It is the idea that we can print as much money and spend as much money as we want," he explained.

"Then the next step is to release the Federal Reserve digital currency and make payments by other currencies [including cryptocurrencies] illegal," he continued. "And you're seeing it happen now in real time. Why would they do this? Because you cannot print this kind of money without having absolute control over how it is spent."

Glenn broke down the steps powerful political organizations — like the Federal Reserve — will take to end currency competition and enact a Federal digital dollar, which will allow for the government to have complete control over how we spend our money.

"This is what's coming. This is coming quickly, and events will make it move faster. For instance, why is Joe Biden basically giving Ukraine to Russia? He's giving it to them. He he knows Russia's not afraid of him. Putin knows that [Biden] is not going to do anything ... neither is NATO. They're not going to do anything," Glenn said.

"It's because war resets everything. War is the best great resetter. Changes boundaries. It changes borders. It changes laws. It changes societies. It changes currencies. It changes everything. And in the end you just want the war to stop. And so you you accept whatever it is the terms are that you're going to have to live under now. We're in very, very dangerous times. The only way to survive this is to know why they are dangerous times."

Watch the video clip below to hear more from Glenn Beck:

Want more from Glenn Beck?

To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

Chances are, you've noticed that many large companies have decided to become woke activists, despite the fact that alienating half your customer base is a terrible business strategy.

This woke shift isn't being driven by the usual market forces. It's the Great Reset's ESG score system at work, Glenn Beck said on "GlennTV." Under the “environmental, social, and governance” score system, companies will no longer make decisions based on what you, the consumer, want. Now, it's all about what those in power deem society should want. And it's not just businesses that are affected, he explained.

Watch the video clip below or find the full episode of "GlennTV" here:


Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution, and live the American dream.