Investment Bank

“We're asking the American taxpayers to sacrifice and put $700 billion out there when other people have been lining their pockets,'' Illinois Representative Luis Gutierrez, a Democrat, said on 23^rd September on bailout plan by The Treasury Secretary Paulson and Fed Chairman Bernanke using taxpayer funds to be used to purchase assets that will in all likelihood be worth considerably less in the future. “I want to make sure it doesn't happen tomorrow.''

According to proxy statements outlining their salaries, bonuses and stock options: those  mandarins  from some of the major investment and commercial banks involved in the financial upheaval and bailout earned hefty paychecks last year.

§                Lehman Brothers Chairman and CEO Richard Fuld Jr. made $34 million in 2007. Lehman  filed for Chapter 11 bankruptcy protection earlier this month.

§                Goldman Sachs , which Sunday gained Federal Reserve Bank approval to become a bank holding company, paid its Chairman and CEO Lloyd Blankfein $70 million last year. Co-Chief Operating Officers Gary Cohn and Jon Winkereid were paid $72.5 million and $71 million, respectively.

§                Morgan Stanley Chairman John Mack earned $1.6 million. Chief Financial Officer Colin Kelleher got a $21 million paycheck in 2007. Morgan Stanley  also received approval to become a bank holding company, a shift that allows Morgan and Goldman to bring in bank deposit assets which offer more solid financial footing.

§                Merrill Lynch CEO John Thain was paid $17 million in salary, bonuses and stock options in 2007. Merrill is being acquired by Bank of America . BofA CEO Kenneth Lewis earned $25 million in 2007.

§                JP Morgan Chase & Co. Chairman and CEO James Dimon earned $28 million in 2007. Chase  acquired troubled investment house Bear Stearns earlier this year with the federal government promising to take on as much as $30 billion in Bear assets to help get the deal done.

§                Fannie Mae CEO Daniel Mudd received $11.6 million in 2007. His counterpart at Freddie Mac, Richard Syron, brought in $18 million. The federal government announced earlier this month it was taking over the mortgage backers with Herbert Allison to serve as Fannie CEO and David Moffett the new CEO at Freddie.

As stated above, the last two standing investment bank, Goldman Sachs and Morgan Stanley are abandoning their investment banking models. The Federal Reserve has approved the applications of the two investment banks to become Bank Holding Companies.I personally think that the whole reason the Investment Banks needed to partner up with established banks (who have deep retail deposits) was to get stable funding.

 With the current scenario that befall the investment bank industry in US, maybe down here we should rethink back the investment bank model especially those without a banking license in their group holdings. No doubt those executives running the local investment banks are not that creative as the American counterparts, but  they might acquire certain ideas from the Americans since all the highly confidential and secretive dealings of those American Investment banks become public due to the bailout.