Daily Archives: October 16, 2012

Hidden cost: Corporations see lower tax bill when they settle with the government

When Bank of America agreed in Decemberto pay $335 million to resolve federal charges that its mortgage-lending arm discriminated against black and Hispanic borrowers, government officials hailed it as the largest fair-lending settlement in history.

But, in fact, the banking giant has the right to a massive discount on the payout. Thirty-five percent of the settlement is deductible. That means Bank of America could wind up saving $117 million on its tax bill.

Read on.

LPS settles with Delaware AG over DocX loan documentation allegations

Mortgage technology services provider Lender Processing Services   ($30.61 0.47%) settled a major investigation launched by the Delaware Attorney General against its DocX subsidiary.

The investigation, which centered around the firm’s loan document execution practices, ended with LPS agreeing to pay the state $150,000 in lieu of penalties and reimburse the Delaware AG’s office in the amount of $100,000 to cover fees and costs of the probe.

In addition, the agreement releases DocX and its parent company, LPS, from potential liability related to its document execution practices in Delaware.

Read on.

New Jersey moves to fast track vacant foreclosures

Moving vacant properties through the foreclosure process can be difficult in New Jersey, but advocates of a bill that would expedite the move of abandoned homes into foreclosure are more confident after the legislation’s recent passage in the state Senate.

New Jersey Senate Bill 2156, a proposed bill that would allow courts to grant summary foreclosure action when a property is deemed vacant, is now heading to the state Assembly.

New Jersey Senator Raymond Lesniak proposed the bill, which would deem certain properties “vacant and abandoned,” giving the court the right to grant a summary foreclosure action to move the property into the hands of a party that can care for the unit.

The bill would require that the parties in court present “clear and convincing evidence” that the real estate is vacant and abandoned.  Meeting two of several property conditions would help establish the real estate as vacant and permissible to foreclose on. Among those factors would be overgrown vegetation, the accumulation of newspapers, fliers and garbage, as well as broken doors and windows or safety and welfare threats.

Read on.

Can Employers Tell Their Workers How to Vote? No Federal Law on the Books: FEC


Legal experts say there is no law that expressly forbids company executives from giving their political views or even threatening lay-offs if a certain candidate is elected. (Read more: Calfornia Squeezed By a ‘Munger Sandwich’)

A spokesperson for Federal Elections Commission also said there are laws that restrict employers from inducing employees to give money or fundraise for a certain candidate

But there are no federal election laws relating to voting recommendations or even implied threats.

“There is no specific federal law for this kind of communication, as far as I know” said Stacey Mark, an employment lawyer at Ater Wynne in Oregon who mostly represents companies.

She said that some states have laws forbidding coercion or voting pressure. Oregon, for instance, has a law preventing employers from using “undue influence” to “vote in a particular manner.” It’s unclear whether Florida or Georgia have similar laws.

Mark said that there should be federal legislation that prevents employers from telling workers how to vote, whether for Democrat or Republican.

“I don’t think employers should have that kind of power over their employees,” she said. “People are required to do a lot of things in an appropriate work environment. Employers can restrict speech, people have biases they are restricted from bring to work, and that’s not unreasonable. But voting is personal and I don’t think employers should be able to effect that.”

Ex-Citi CEO Pandit bottom line: Earning tens of millions while investors lost 90% of their money


Here is the bottom line. From the day Pandit took control in December 2007 until today, C stock is down 90%…

..Even as Pandit has been paid a total of over $260 million during his CEO tenure, even including his famous $1 comp received in 2010. While CEO of Citigroup in 2007, Vikram Pandit earned an annualized compensation of $3,164,320, which included a base salary of $250,000, stocks granted of $2,914,320, and options granted of $0. In 2008, he earned a total compensation of $38,237,437, which included a base salary of $958,333, stocks granted of $28,830,000, and options granted of $8,432,911. In 2009 he received total compensation of $128,751, including base salary of $125,001; In 2010 he received total compensation of $1,00; In 2011 he received total compensation of $14,857,103 including base salary of $1,671,370. Oh, and this number includes the $165 million Pandit received for his low performing hedge fund which was purchased by Citi in 2007, and was closed by Citi a few months later for epic underperformance. (via Proxy Statement and Wiki).

A briefer summary comes from Bloomberg:   

If no changes are made to Pandit’s compensation package, Citigroup will have paid him about $261 million in the five years since he became CEO, including his personal compensation and about $165 million for buying his Old Lane Partners LP hedge fund in 2007 in a deal that led to his becoming CEO. The bank shut Old Lane soon after Pandit took the post, causing a $202 million writedown.

Citi CEO Vikram Pandit Gives His First Post-Resignation Interview: Live BBG TV Webcast

On a side note, Pandit wasn’t the only rat that jumped the Citi Titanic:



Curious to learn just why Vik Pandit was given his marching orders with what appears to have been a one day’s notice? Hear it from the horse’s mouth direct courtesy of his first interview since quitting effectively several hours ago, with BBG TV’s Erik Schatzker.

Click here to see video.

Citi CEO Vikram Pandit steps down. The big question is why now?

Citigroup ($36.97 0.31%) announced Vikram Pandit is stepping down as CEO and board member, effective immediately.

The board has elected Michael Corbat to serve as the next CEO and director of the board. Corbat previously served the company as CEO of Europe, the Middle East and Africa.

“We respect Vikram’s decision,” said Michael O’Neill, chairman of the Citigroup board. “Since his appointment at the start of the financial crisis until the present time, Vikram has restructured and recapitalized the company, strengthened our global franchise and re-focused the business. The board and I are grateful to Vikram for his leadership, integrity and resilience in guiding Citi through the crisis and positioning it well for the future. We wish him all the best with the next stage in his career.”

Read on.

NY Fed Sends Thousands of Libor Documents to Congress

The New York Federal Reserve said on Monday that it sent Congress a second trove of documents that show that the central bank took action to fix problems with the key interest rate Libor.

Up to 6,000 documents were delivered to the House Financial Services Committee, which has been investigating how the Fed responded when it first learned that Libor was being manipulated.

Read on.

Sen. Coburn’s ‘Waste Book’ details $19 billion in eye-opening government expenses

What do robotic squirrels, menus for Martian meals and a musical about climate change have in common?

They’ve all been made possible with taxpayer assistance, according to the latest survey of government waste put out by Sen. Tom Coburn, R-Okla.

Known simply as the Waste Book, the report is a watchlist of eye-opening expenditures, which Coburn blames on a “let them eat caviar” attitude in Washington — at a time when “23 million of our fellow Americans do not have good jobs,” Coburn notes.

Here are some highlights:

– Though skeptics say there’s no such thing as a free cellphone or service funded by the federal government, Coburn’s report shows otherwise. It estimates that taxpayers are subsidizing phone service at a cost of nearly $1.5 billion a year. Though the roots of the program can be traced back to an effort in the 1930s to make sure all Americans had access to telecommunications, it has morphed into program that provided free cell service to some 16,500,000 participants last year.

Read more: http://www.foxnews.com/politics/2012/10/15/coburn-waste-book-details-1-billion-in-eye-opening-government-expenses/#ixzz29Q1SPJNv

Starbucks ‘paid nothing in UK corporation tax’

The disparity in its turnover and what it pays in UK corporation tax has made Starbucks the latest US company to come under the spotlight for its negligible contribution to Her Majesty’s Revenues & Customs.

Its nearest UK rival, Costa, owned by Whitbread, had a similar amount of turnover, with £377m of sales in the year ending March 3 2011. But Costa’s tax bill came to £15m – 30.5pc of its profits.

Starbucks’ UK annual results for the year ending October 2, 2011, show the company made a £32.9m loss, which is why it is not liable for tax. However, there is very little detail in why its UK operations have spent almost a decade in the red.

According to the latest filing at Companies House, Starbucks “cost of sales” was £319m, including £124m of staff costs, an undisclosed amount of money paid in rent, and an £8.9m tax credit from 2010. Starbucks was left with a gross profit of £78.4m, against which £107.2m of “administrative expenses” were charged. The result was an operating loss of £28.8m and a loss before tax of £32.9m.

Read on.