Sri Lankan Tamil protesters smashed windows of the Indian High Commission and forced their way inside the building during a demonstration on Monday.
The High Commission has sought adequate protection from the British Government.
British police arrested five Sri Lankan Tamils after several demonstrators broke into the Indian High Commission in the middle of the protest outside the building in central London.
A spokesperson for the High Commission said the protest began when a crowd of about 100 to 150 protesters gathered outside India House at 0815 hrs (local time), their numbers swelling to over a thousand later.
The demonstration over the current civil war in Sri Lanka became violent when a few of the protesters forced their way into the building when its door was opened to allow a staff member in.
"The crowd outside have shattered some of the glass windows of the High Commission's premises with heavy objects. Police and security agencies are on duty outside the premises. No one in the High Commission has been injured," the spokesperson said.
She said the British Foreign Office had been informed about the incident, "along with the High Commission's concerns about the security situation and their need for adequate security measures."
Monday, April 27, 2009
Probe Narendra Modi's role in Gujarat riots: SC
The Supreme Court on Monday asked a special probe panel formed by it to look into the allegations that Gujarat Chief Minister Narendra Modi along with over 50 other politicians and government officials had aided and abetted statewide communal riots in 2002.
A bench of Justices Arijit Pasayat and Asok Kumar Ganguly directed the panel headed by former Central Bureau of Investigation (CBI) director R K Raghavan to particularly look into the allegations that Modi was involved in the killing of an MP in Ahmedabad's Gulbarga Society arson case.
The panel was asked to file its report within three months.
A bench of Justices Arijit Pasayat and Asok Kumar Ganguly directed the panel headed by former Central Bureau of Investigation (CBI) director R K Raghavan to particularly look into the allegations that Modi was involved in the killing of an MP in Ahmedabad's Gulbarga Society arson case.
The panel was asked to file its report within three months.
Pakistan president pulls out of press conference with Gordon Brown
Deepening divisions between Pakistan and Britain were exposed today when President Asif Ali Zardari pulled out of a planned press conference with Gordon Brown.
Downing Street played down talk of a snub, insisting it was happy that the Pakistan prime minister, Yusuf Raza Gilani, took part in the press conference instead.
"It is entirely appropriate that he has a press conference with his counterpart," a No 10 spokesman said. However, on his last visit to Pakistan in December, Brown and Zardari did stage a joint press conference.
Zardari and Brown met for a private meeting after the press conference. But his absence from the press conference comes as the Pakistanis chide British officials for overly hasty conduct after the arrest of 11 Pakistani students a fortnight ago. The Home Office refused to share any information about the arrests with Pakistan.
At the press conference, Brown defended the arrests.
"I think we have got to recognise that we have both got problems that are affecting both the security of our citizens and the sentiments in our country, with terrorist plots that have been planned and some people are trying to execute. We want to work together with Pakistan to deal with these issues and to tackle terrorism at its roots."
Brown flew into Islamabad after a whistlestop visit to Kabul and Helmand province in Afghanistan.
The Pakistani press had predicted that the prime minister would receive short shrift from Pakistani officials after the prime minister's condemnation of 11 Pakistani nationals who were arrested on terror charges in the UK.
At the time, Brown said UK intelligence services had foiled a "very big plot" before all were released without charge. Senior Pakistani defence officials have said the British authorities failed to consult them adequately, and greater cooperation would have avoided "embarrassing mistakes" for the British government.
In the days after the arrest of the Pakistani students, the government maintained its criticism of Pakistan with the immigration minister, Phil Woolas, saying that the allocation of student visas to young Pakistanis – between 2004 and 2008, 42,000 were issued – was the "biggest loophole in British border controls".
A memorandum of understanding had been presented to the Pakistanis under which the UK government was to have the right to deport any Pakistani on the grounds that he or she had become a threat to national security without having to follow due process.
In an interview with the Guardian on Saturday, the Pakistani deputy high commissioner, Asif Durrani, said he regarded constant British briefing that Pakistan was a hot bed of terrorism to be "vindictive" and "slurs".
Today Brown repeated his assertion last made on his December visit four months ago that three-quarters of Islamic terror threats originate in the border region between the UK and Pakistan
Downing Street played down talk of a snub, insisting it was happy that the Pakistan prime minister, Yusuf Raza Gilani, took part in the press conference instead.
"It is entirely appropriate that he has a press conference with his counterpart," a No 10 spokesman said. However, on his last visit to Pakistan in December, Brown and Zardari did stage a joint press conference.
Zardari and Brown met for a private meeting after the press conference. But his absence from the press conference comes as the Pakistanis chide British officials for overly hasty conduct after the arrest of 11 Pakistani students a fortnight ago. The Home Office refused to share any information about the arrests with Pakistan.
At the press conference, Brown defended the arrests.
"I think we have got to recognise that we have both got problems that are affecting both the security of our citizens and the sentiments in our country, with terrorist plots that have been planned and some people are trying to execute. We want to work together with Pakistan to deal with these issues and to tackle terrorism at its roots."
Brown flew into Islamabad after a whistlestop visit to Kabul and Helmand province in Afghanistan.
The Pakistani press had predicted that the prime minister would receive short shrift from Pakistani officials after the prime minister's condemnation of 11 Pakistani nationals who were arrested on terror charges in the UK.
At the time, Brown said UK intelligence services had foiled a "very big plot" before all were released without charge. Senior Pakistani defence officials have said the British authorities failed to consult them adequately, and greater cooperation would have avoided "embarrassing mistakes" for the British government.
In the days after the arrest of the Pakistani students, the government maintained its criticism of Pakistan with the immigration minister, Phil Woolas, saying that the allocation of student visas to young Pakistanis – between 2004 and 2008, 42,000 were issued – was the "biggest loophole in British border controls".
A memorandum of understanding had been presented to the Pakistanis under which the UK government was to have the right to deport any Pakistani on the grounds that he or she had become a threat to national security without having to follow due process.
In an interview with the Guardian on Saturday, the Pakistani deputy high commissioner, Asif Durrani, said he regarded constant British briefing that Pakistan was a hot bed of terrorism to be "vindictive" and "slurs".
Today Brown repeated his assertion last made on his December visit four months ago that three-quarters of Islamic terror threats originate in the border region between the UK and Pakistan
U.S. toxic-asset plan stirs fears
The Obama administration's impending effort to buy about $1 trillion in toxic assets in partnership with private investors -- aimed at solving the most intractable part of the credit crisis -- is now generating widespread fear that it is vulnerable to manipulation and carries sharp risks for taxpayers.
The program represents the biggest gamble yet in the federal bailout, but its still-hazy details have prompted bankers, economists, federal investigators and politicians to question whether it will solve the financial crisis. More than 400 written comments were recently submitted to the Treasury Department, many of them sharply negative.
The program is trying to create an artificial market for assets that have no known value, something that has never been done before on this scale. The only way to accomplish that is for the government to accept a mountain of risk.
In the process, critics fear that the banking system could be further damaged and the program subjected to a boom in fraud.
Nobel Prize-winning economist Joseph Stiglitz of Columbia University said the program violated so many laws of economics that it was little more than an "empty box."
The toxic assets are a multitrillion-dollar collection of mortgage loans, commercial loans and a variety of complex debt securities, in which many borrowers have stopped making payments and the value of the underlying properties have tumbled. There is so much uncertainty about the value of those loans -- held both by banks and by big institutional investors -- that they have become a black hole in the financial system.
Critics say the government's effort to engineer a solution is creating risks similar to the ones that created the financial crisis in the first place.
"We are repeating all the mistakes that the mortgage guys made," Stiglitz said. "In the worst case, the national debt goes up by $1 trillion."
Supporters of the program say that the economy would face bigger risks if nothing is done to solve the problem. The program, they say, represents a bold move by the government to unfreeze the financial markets. In the process, taxpayers could reap multibillion-dollar profits from the partnerships.
Indeed, when the program was unveiled one month ago, it was met by such euphoria that the Dow Jones industrial average shot up 500 points in a day.
The program, called the Public-Private Investment Program, is still being formed and basic answers about how it will work are being hammered out by officials at the Treasury Department, the Federal Deposit Insurance Corp. and the Federal Reserve.
The goal of the program is to create a market for the toxic assets that are now clogging the system. They sit on balance sheets, tying up funds and obscuring the condition of financial institutions.
The loans and debt securities are not worthless. In some cases, individual loans within complex bundles have not gone bad. And even in the cases of loans that have gone bad, the underlying homes or other assets still have some value. But because nobody knows how to value these loans and debt securities, nobody is willing to trade them.
If the program can help set prices for those assets and create markets for their sale, banks will more quickly regain healthy balance sheets and financial markets that trade in debt securities will regain their footing.
The government hopes to jump-start a market. Private investors would be enticed to join and, by competing against one another, finally set a price for the assets.
The Bush administration last fall had planned to simply buy all the toxic assets on its own, but there were concerns that it would end up overpaying and it didn't have enough money. With private investors involved, there is the hope that their competition and desire for profit will ensure that prices aren't set too high.
The government does not have to buy every bad asset, Treasury officials said, but simply get enough activity going so that buyers and sellers could begin to set prices on their own.
There are two separate pieces to the program -- one operated by the FDIC to auction bundles of troubled bank loans and another operated by the Treasury Department to buy securities without auctions from hedge funds, investment firms and others.
The money to operate these programs is coming from the $750-billion Troubled Asset Relief Program that was enacted last fall, along with additional lending by the Federal Reserve.
Under the Treasury plan, five so-called fund managers would raise a pool of private money, matched equally by the government. Then, the Fed would double that pool with loans or loan guarantees. Thus, the government would be putting up 75% of all the money.
The fund managers would negotiate to buy the toxic securities based on an analysis of the investments and a bit of educated guessing.
The FDIC program would rely on even more government-backed debt. A variety of partnership funds would be created with private investors kicking in 7.5% of the money and the government providing a matching 7.5%. The government would then provide the remaining 85% in loans or loan guarantees.
The partnerships would bid against one another in an auction.
Although the two plans address different parts of the credit crisis and use different methods, critics see many of the same vulnerabilities.
Stiglitz, along with others, believes the market will be far from perfect. Since the government is putting in so much more money, it would lead private investors to take on riskier investments. And the burden of that increased risk would fall almost entirely on the government, even though the government would share only half the potential profit.
The FDIC has said that if it faces too many defaults, it may have to assess new fees -- which are already increasing -- on the entire banking industry, a scary prospect for smaller banks.
Although the FDIC has downplayed the risk of such defaults, other experts are not so sure.
"We are in an economic climate that is still filled with a tremendous amount of uncertainty," said Rodney K. Brown, the president of the California Bankers Assn.
Brown said if the Treasury plan tanks and the FDIC has to increase insurance fees, it could saddle many small banks with losses.
Small banks are worried about such potential fees, said Jerry Cavanaugh, counsel to the Community Bankers Assn. of Illinois.
"These megabanks are receiving the lion's share of the Treasury loot, while community banks are called upon to restore the FDIC's financial position through increased premiums and special assessments."
Then, there is the criminal problem. The potential for manipulation, price fixing, collusion and other forms of fraud were outlined recently by special inspector general Neil Barofsky, who released a lengthy report that cited serious problems with the program. Barofsky said that collusion between investors or banks could result in kickbacks among bidders or sellers. For example, a bank could create a phony subsidiary to bid up the value of its own troubled loans. Or a network of banks could conspire to bid up one another's assets, kicking back profits to one another.
Other experts are not so sure the entire program will even help banks.
If banks have to sell troubled loans at too low a price, it could force them to take additional losses. Aaron Deer, a bank analyst at financial research firm Sandler O'Neill & Partners, said one potential risk was that low prices for loans at one bank could force other banks to mark down the value of similar loans that they had no intention of selling. On the other hand, if the loans are offered at too high a price, private investors will see no profit.
"We are hoping to hit somewhere in the middle," FDIC spokesman Andrew Williams said.
Scott Talbott, chief lobbyist for the Financial Services Roundtable, which represents large financial institutions, said that though his group supports the program, its biggest challenge would be determining prices for the assets. He predicted a reluctance to participate if that is not clarified.
Pressure for major changes in the program is growing.
"We expect that Treasury, the Fed, the FDIC and other regulators will take their concerns into account and incorporate any additional necessary taxpayer protections as they refine these programs," Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, said in a statement Friday.
The program represents the biggest gamble yet in the federal bailout, but its still-hazy details have prompted bankers, economists, federal investigators and politicians to question whether it will solve the financial crisis. More than 400 written comments were recently submitted to the Treasury Department, many of them sharply negative.
The program is trying to create an artificial market for assets that have no known value, something that has never been done before on this scale. The only way to accomplish that is for the government to accept a mountain of risk.
In the process, critics fear that the banking system could be further damaged and the program subjected to a boom in fraud.
Nobel Prize-winning economist Joseph Stiglitz of Columbia University said the program violated so many laws of economics that it was little more than an "empty box."
The toxic assets are a multitrillion-dollar collection of mortgage loans, commercial loans and a variety of complex debt securities, in which many borrowers have stopped making payments and the value of the underlying properties have tumbled. There is so much uncertainty about the value of those loans -- held both by banks and by big institutional investors -- that they have become a black hole in the financial system.
Critics say the government's effort to engineer a solution is creating risks similar to the ones that created the financial crisis in the first place.
"We are repeating all the mistakes that the mortgage guys made," Stiglitz said. "In the worst case, the national debt goes up by $1 trillion."
Supporters of the program say that the economy would face bigger risks if nothing is done to solve the problem. The program, they say, represents a bold move by the government to unfreeze the financial markets. In the process, taxpayers could reap multibillion-dollar profits from the partnerships.
Indeed, when the program was unveiled one month ago, it was met by such euphoria that the Dow Jones industrial average shot up 500 points in a day.
The program, called the Public-Private Investment Program, is still being formed and basic answers about how it will work are being hammered out by officials at the Treasury Department, the Federal Deposit Insurance Corp. and the Federal Reserve.
The goal of the program is to create a market for the toxic assets that are now clogging the system. They sit on balance sheets, tying up funds and obscuring the condition of financial institutions.
The loans and debt securities are not worthless. In some cases, individual loans within complex bundles have not gone bad. And even in the cases of loans that have gone bad, the underlying homes or other assets still have some value. But because nobody knows how to value these loans and debt securities, nobody is willing to trade them.
If the program can help set prices for those assets and create markets for their sale, banks will more quickly regain healthy balance sheets and financial markets that trade in debt securities will regain their footing.
The government hopes to jump-start a market. Private investors would be enticed to join and, by competing against one another, finally set a price for the assets.
The Bush administration last fall had planned to simply buy all the toxic assets on its own, but there were concerns that it would end up overpaying and it didn't have enough money. With private investors involved, there is the hope that their competition and desire for profit will ensure that prices aren't set too high.
The government does not have to buy every bad asset, Treasury officials said, but simply get enough activity going so that buyers and sellers could begin to set prices on their own.
There are two separate pieces to the program -- one operated by the FDIC to auction bundles of troubled bank loans and another operated by the Treasury Department to buy securities without auctions from hedge funds, investment firms and others.
The money to operate these programs is coming from the $750-billion Troubled Asset Relief Program that was enacted last fall, along with additional lending by the Federal Reserve.
Under the Treasury plan, five so-called fund managers would raise a pool of private money, matched equally by the government. Then, the Fed would double that pool with loans or loan guarantees. Thus, the government would be putting up 75% of all the money.
The fund managers would negotiate to buy the toxic securities based on an analysis of the investments and a bit of educated guessing.
The FDIC program would rely on even more government-backed debt. A variety of partnership funds would be created with private investors kicking in 7.5% of the money and the government providing a matching 7.5%. The government would then provide the remaining 85% in loans or loan guarantees.
The partnerships would bid against one another in an auction.
Although the two plans address different parts of the credit crisis and use different methods, critics see many of the same vulnerabilities.
Stiglitz, along with others, believes the market will be far from perfect. Since the government is putting in so much more money, it would lead private investors to take on riskier investments. And the burden of that increased risk would fall almost entirely on the government, even though the government would share only half the potential profit.
The FDIC has said that if it faces too many defaults, it may have to assess new fees -- which are already increasing -- on the entire banking industry, a scary prospect for smaller banks.
Although the FDIC has downplayed the risk of such defaults, other experts are not so sure.
"We are in an economic climate that is still filled with a tremendous amount of uncertainty," said Rodney K. Brown, the president of the California Bankers Assn.
Brown said if the Treasury plan tanks and the FDIC has to increase insurance fees, it could saddle many small banks with losses.
Small banks are worried about such potential fees, said Jerry Cavanaugh, counsel to the Community Bankers Assn. of Illinois.
"These megabanks are receiving the lion's share of the Treasury loot, while community banks are called upon to restore the FDIC's financial position through increased premiums and special assessments."
Then, there is the criminal problem. The potential for manipulation, price fixing, collusion and other forms of fraud were outlined recently by special inspector general Neil Barofsky, who released a lengthy report that cited serious problems with the program. Barofsky said that collusion between investors or banks could result in kickbacks among bidders or sellers. For example, a bank could create a phony subsidiary to bid up the value of its own troubled loans. Or a network of banks could conspire to bid up one another's assets, kicking back profits to one another.
Other experts are not so sure the entire program will even help banks.
If banks have to sell troubled loans at too low a price, it could force them to take additional losses. Aaron Deer, a bank analyst at financial research firm Sandler O'Neill & Partners, said one potential risk was that low prices for loans at one bank could force other banks to mark down the value of similar loans that they had no intention of selling. On the other hand, if the loans are offered at too high a price, private investors will see no profit.
"We are hoping to hit somewhere in the middle," FDIC spokesman Andrew Williams said.
Scott Talbott, chief lobbyist for the Financial Services Roundtable, which represents large financial institutions, said that though his group supports the program, its biggest challenge would be determining prices for the assets. He predicted a reluctance to participate if that is not clarified.
Pressure for major changes in the program is growing.
"We expect that Treasury, the Fed, the FDIC and other regulators will take their concerns into account and incorporate any additional necessary taxpayer protections as they refine these programs," Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, said in a statement Friday.
Faster Cuts and More Loans Key to G.M. Survival Plan
General Motors said on Monday that it needed $11.6 billion more in government loans and that it planned to file for bankruptcy protection if a debt exchange with its bondholders was unsuccessful.
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Fabrizio Costantini for The New York Times
Fritz Henderson, chief executive of General Motors, at a press conference on Monday at GM world headquarters in Detroit.
G.M. also said that, by 2010, it would phase out its Pontiac brand, eliminate 42 percent of its dealers, close 13 plants and cut 21,000 hourly jobs as part of its revised restructuring plan.
“We need to have a more stable and sustainable business model, because, candidly, we only want to do this once,” G.M.’s chief executive, Fritz Henderson, said at a news conference. “We don’t think that what’s being asked of us is too hard. Our objective here is to create a strategy where we can win, not simply survive.”
G.M. shares rose 25 percent in morning trading on the New York Stock Exchange after the plan was announced.
The cuts outlined on Monday are considerably greater and scheduled to occur sooner than G.M. had outlined in its February restructuring plan. The plan would result in the federal government becoming G.M.’s majority owner.
Since December, G.M. has borrowed $15.4 billion to keep it out of bankruptcy while it tries to restructure. The new request would bring that figure to $27 billion. The company originally said it needed between $22.5 billion and $30 billion to remain solvent.
In the plans announced on Monday, G.M. wants to persuade 2,641 of its 6,246 independently owned dealerships — 500 more than it previously announced — to close four years sooner than it had intended.
By the end of next year, it plans to employ 40,000 hourly workers at 34 plants, down from 61,000 workers at 47 plants. That is at least 7,000 more job cuts and one more plant closure than the February plan called for. An additional 2,000 jobs would be cut in 2011.
G.M. said the additional actions would allow it to break even at industry sales volumes as low as 10 million a year. Sales this year are expected to be slightly higher than that figure.
In addition, the company said it would give bondholders 225 shares, worth $414 as of Friday, for every $1,000 that they hold.
It urged the bondholders, who hold more than $27 billion in G.M. debt, to accept the deal to allow a faster out-of-court restructuring and said their bonds could be worth less or nothing in a bankruptcy filing.
G.M. said the holders of at least 90 percent of its outstanding bonds must agree to the swap by May 26 for the company to avoid bankruptcy.
“We do not intend to seek relief under the U.S. Bankruptcy Code if the exchange offers are consummated,” G.M. said in a regulatory filing.
By exchanging stock for its bonds and by converting its debt to the Treasury Department and to a retiree health care fund for the United Automobile Workers union, G.M. said it can eliminate $44 billion in debt. The Treasury and the U.A.W. would own up to 89 percent of the company’s outstanding shares, while bondholders would hold no more than 10 percent and current shareholders would hold 1 percent.
The Treasury would own more than half of G.M. on its own and therefore have control over the election of its board and other matters requiring the approval of shareholders.
In a bankruptcy, G.M. said it might separate itself into two companies: a new G.M. composed of desirable assets like the Chevrolet and Cadillac brands, and a collection of its unwanted assets that would then be liquidated.
G.M. has been negotiating with an ad-hoc committee representing large bondholders, but the two sides have been unable to reach a deal. The bondholders committee says G.M. has not been responsive to its requests in more than a month.
The Obama administration’s autos task force gave the automaker until June 1 to develop a more aggressive turnaround plan and to reach deals with its bondholders and the United Automobile Workers union. Talks with the U.A.W., which announced a cost-cutting deal with Chrysler on Sunday, are continuing.
Skip to next paragraph
Enlarge This Image
Fabrizio Costantini for The New York Times
Fritz Henderson, chief executive of General Motors, at a press conference on Monday at GM world headquarters in Detroit.
G.M. also said that, by 2010, it would phase out its Pontiac brand, eliminate 42 percent of its dealers, close 13 plants and cut 21,000 hourly jobs as part of its revised restructuring plan.
“We need to have a more stable and sustainable business model, because, candidly, we only want to do this once,” G.M.’s chief executive, Fritz Henderson, said at a news conference. “We don’t think that what’s being asked of us is too hard. Our objective here is to create a strategy where we can win, not simply survive.”
G.M. shares rose 25 percent in morning trading on the New York Stock Exchange after the plan was announced.
The cuts outlined on Monday are considerably greater and scheduled to occur sooner than G.M. had outlined in its February restructuring plan. The plan would result in the federal government becoming G.M.’s majority owner.
Since December, G.M. has borrowed $15.4 billion to keep it out of bankruptcy while it tries to restructure. The new request would bring that figure to $27 billion. The company originally said it needed between $22.5 billion and $30 billion to remain solvent.
In the plans announced on Monday, G.M. wants to persuade 2,641 of its 6,246 independently owned dealerships — 500 more than it previously announced — to close four years sooner than it had intended.
By the end of next year, it plans to employ 40,000 hourly workers at 34 plants, down from 61,000 workers at 47 plants. That is at least 7,000 more job cuts and one more plant closure than the February plan called for. An additional 2,000 jobs would be cut in 2011.
G.M. said the additional actions would allow it to break even at industry sales volumes as low as 10 million a year. Sales this year are expected to be slightly higher than that figure.
In addition, the company said it would give bondholders 225 shares, worth $414 as of Friday, for every $1,000 that they hold.
It urged the bondholders, who hold more than $27 billion in G.M. debt, to accept the deal to allow a faster out-of-court restructuring and said their bonds could be worth less or nothing in a bankruptcy filing.
G.M. said the holders of at least 90 percent of its outstanding bonds must agree to the swap by May 26 for the company to avoid bankruptcy.
“We do not intend to seek relief under the U.S. Bankruptcy Code if the exchange offers are consummated,” G.M. said in a regulatory filing.
By exchanging stock for its bonds and by converting its debt to the Treasury Department and to a retiree health care fund for the United Automobile Workers union, G.M. said it can eliminate $44 billion in debt. The Treasury and the U.A.W. would own up to 89 percent of the company’s outstanding shares, while bondholders would hold no more than 10 percent and current shareholders would hold 1 percent.
The Treasury would own more than half of G.M. on its own and therefore have control over the election of its board and other matters requiring the approval of shareholders.
In a bankruptcy, G.M. said it might separate itself into two companies: a new G.M. composed of desirable assets like the Chevrolet and Cadillac brands, and a collection of its unwanted assets that would then be liquidated.
G.M. has been negotiating with an ad-hoc committee representing large bondholders, but the two sides have been unable to reach a deal. The bondholders committee says G.M. has not been responsive to its requests in more than a month.
The Obama administration’s autos task force gave the automaker until June 1 to develop a more aggressive turnaround plan and to reach deals with its bondholders and the United Automobile Workers union. Talks with the U.A.W., which announced a cost-cutting deal with Chrysler on Sunday, are continuing.
Warnings as swine virus spreads
A top European Union official has warned against travel to areas hit by an outbreak of swine flu, amid growing concern over the spread of the virus.
Experts suspect it has killed more than 100 people in Mexico. Cases have also been found in Canada, the US and on Monday in Spain.
At least five other nations are testing patients for possible swine flu.
President Barack Obama said the cases in the US were a cause for concern but not alarm.
World Health Organization experts are meeting later to discuss the global threat posed by the virus.
The UN has warned that the virus has the potential to become a pandemic. But it says the world is better prepared than ever to deal with the threat.
SWINE FLU
Swine flu is a respiratory disease thought to spread through coughing and sneezing
Symptoms mimic those of normal flu - but in Mexico more than 100 people have died
Good hygiene like using a tissue and washing hands thoroughly can help reduce transmission
The EU has called an emergency meeting of health ministers to discuss the situation and European Commission President Jose Manuel Barroso said he was monitoring the situation closely.
EU Health Commissioner Androulla Vassiliou said people should avoid travelling to virus-hit parts of Mexico and the US unless it was "very urgent".
On Sunday, Mexican Health Secretary Jose Angel Cordova said suspected swine flu cases in his country had risen to 1,614.
Of the 103 deaths in Mexico, only 20 are so far confirmed to have been caused by the new virus.
There are 20 confirmed cases in the US, six in Canada and one in Spain, the first case in Europe. In most cases outside Mexico, people have been only mildly ill and have made a full recovery.
In other developments:
• Tests are also being carried out on individuals or groups in New Zealand, Australia, Brazil, Britain and Israel who fell ill following travel to Mexico
• A top US health official has warned that there could be "more severe cases" to come
• Shares in airlines have fallen sharply on fears about the economic impact of the outbreak
'Evolving picture'
Health experts say the virus comes from the same strain that causes seasonal outbreaks in humans. But they say this newly-detected version contains genetic material from versions of flu which usually affect pigs and birds.
FLU PANDEMICS
1918: The Spanish flu pandemic remains the most devastating outbreak of modern times - infecting up to 40% of the world's population and killing more than 50m people, with young adults particularly badly affected
1957: Asian flu killed two million people. Caused by a human form of the virus, H2N2, combining with a mutated strain found in wild ducks. The elderly were particularly vulnerable
1968: An outbreak first detected in Hong Kong, and caused by a strain known as H3N2, killed up to one million people globally, with those over 65 most likely to die
Swine flu: Your experiences
There is currently no vaccine for this new strain, but severe cases can be treated with antiviral medication.
Dr Keiji Fukuda, the WHO's assistant director-general in charge of health security, said all countries were "looking at this situation very seriously".
"But it's also clear that we are in a period in which the picture is evolving... [and that] we have to be very careful to collect the best possible information," he said.
The WHO is advising all countries to be vigilant for seasonally unusual flu or pneumonia-like symptoms among their populations - particularly among young healthy adults, a characteristic of past pandemics.
Most of those who have died so far in Mexico were young adults.
A top US health official warned that there could be worse to come.
"From what we understand in Mexico, I think people need to be ready for the idea that we could see more severe cases in this country and possibly deaths," Richard Besser, acting head of the US Centers for Disease Control and Prevention, told ABC television.
President Obama described the situation as "obviously a cause for concern" that "requires a heightened state of alert", but added "it is not a cause for alarm".
He told a meeting of scientists that a public health emergency - declared after cases were found in New York, California, Texas, Kansas and Ohio - was a "precautionary tool" to ensure that all the necessary resources are available "to respond quickly and effectively".
Screening
Countries across the world are taking measures to prevent the spread of the virus.
In the Mexican capital schools, bars and public buildings remained closed and many people were staying indoors.
The BBC talks to people in Mexico City about the flu outbreak.
In pictures
Soldiers handed out six million masks in and around the capital region, where the outbreak is centred.
In Canada, cases were recorded at opposite ends of the country, in British Columbia and in Nova Scotia, while in Spain, a young man who had recently returned from Mexico was found to have the virus. He was said to be in a stable condition.
A number of countries in Asia, Latin America and Europe have begun screening airport passengers for symptoms, while Germany's biggest tour operator has suspended trips to Mexico.
Several countries have banned imports of raw pork and pork products from Mexico and parts of the US, although experts say there is no evidence to link exposure to pork with infection
Experts suspect it has killed more than 100 people in Mexico. Cases have also been found in Canada, the US and on Monday in Spain.
At least five other nations are testing patients for possible swine flu.
President Barack Obama said the cases in the US were a cause for concern but not alarm.
World Health Organization experts are meeting later to discuss the global threat posed by the virus.
The UN has warned that the virus has the potential to become a pandemic. But it says the world is better prepared than ever to deal with the threat.
SWINE FLU
Swine flu is a respiratory disease thought to spread through coughing and sneezing
Symptoms mimic those of normal flu - but in Mexico more than 100 people have died
Good hygiene like using a tissue and washing hands thoroughly can help reduce transmission
The EU has called an emergency meeting of health ministers to discuss the situation and European Commission President Jose Manuel Barroso said he was monitoring the situation closely.
EU Health Commissioner Androulla Vassiliou said people should avoid travelling to virus-hit parts of Mexico and the US unless it was "very urgent".
On Sunday, Mexican Health Secretary Jose Angel Cordova said suspected swine flu cases in his country had risen to 1,614.
Of the 103 deaths in Mexico, only 20 are so far confirmed to have been caused by the new virus.
There are 20 confirmed cases in the US, six in Canada and one in Spain, the first case in Europe. In most cases outside Mexico, people have been only mildly ill and have made a full recovery.
In other developments:
• Tests are also being carried out on individuals or groups in New Zealand, Australia, Brazil, Britain and Israel who fell ill following travel to Mexico
• A top US health official has warned that there could be "more severe cases" to come
• Shares in airlines have fallen sharply on fears about the economic impact of the outbreak
'Evolving picture'
Health experts say the virus comes from the same strain that causes seasonal outbreaks in humans. But they say this newly-detected version contains genetic material from versions of flu which usually affect pigs and birds.
FLU PANDEMICS
1918: The Spanish flu pandemic remains the most devastating outbreak of modern times - infecting up to 40% of the world's population and killing more than 50m people, with young adults particularly badly affected
1957: Asian flu killed two million people. Caused by a human form of the virus, H2N2, combining with a mutated strain found in wild ducks. The elderly were particularly vulnerable
1968: An outbreak first detected in Hong Kong, and caused by a strain known as H3N2, killed up to one million people globally, with those over 65 most likely to die
Swine flu: Your experiences
There is currently no vaccine for this new strain, but severe cases can be treated with antiviral medication.
Dr Keiji Fukuda, the WHO's assistant director-general in charge of health security, said all countries were "looking at this situation very seriously".
"But it's also clear that we are in a period in which the picture is evolving... [and that] we have to be very careful to collect the best possible information," he said.
The WHO is advising all countries to be vigilant for seasonally unusual flu or pneumonia-like symptoms among their populations - particularly among young healthy adults, a characteristic of past pandemics.
Most of those who have died so far in Mexico were young adults.
A top US health official warned that there could be worse to come.
"From what we understand in Mexico, I think people need to be ready for the idea that we could see more severe cases in this country and possibly deaths," Richard Besser, acting head of the US Centers for Disease Control and Prevention, told ABC television.
President Obama described the situation as "obviously a cause for concern" that "requires a heightened state of alert", but added "it is not a cause for alarm".
He told a meeting of scientists that a public health emergency - declared after cases were found in New York, California, Texas, Kansas and Ohio - was a "precautionary tool" to ensure that all the necessary resources are available "to respond quickly and effectively".
Screening
Countries across the world are taking measures to prevent the spread of the virus.
In the Mexican capital schools, bars and public buildings remained closed and many people were staying indoors.
The BBC talks to people in Mexico City about the flu outbreak.
In pictures
Soldiers handed out six million masks in and around the capital region, where the outbreak is centred.
In Canada, cases were recorded at opposite ends of the country, in British Columbia and in Nova Scotia, while in Spain, a young man who had recently returned from Mexico was found to have the virus. He was said to be in a stable condition.
A number of countries in Asia, Latin America and Europe have begun screening airport passengers for symptoms, while Germany's biggest tour operator has suspended trips to Mexico.
Several countries have banned imports of raw pork and pork products from Mexico and parts of the US, although experts say there is no evidence to link exposure to pork with infection
Sunday, April 26, 2009
After Off Year, Wall Street Pay Is Bouncing Back
The rest of the nation may be getting back to basics, but on Wall Street, paychecks still come with a golden promise.
A Survivor of the Financial Crisis: Pay Levels at Investment Banks Readers' Comments
Readers shared their thoughts on this article.
Read All Comments (199) »Workers at the largest financial institutions are on track to earn as much money this year as they did before the financial crisis began, because of the strong start of the year for bank profits.
Even as the industry’s compensation has been put in the spotlight for being so high at a time when many banks have received taxpayer help, six of the biggest banks set aside over $36 billion in the first quarter to pay their employees, according to a review of financial statements.
If that pace continues all year, the money set aside for compensation suggests that workers at many banks will see their pay — much of it in bonuses — recover from the lows of last year.
“I just haven’t seen huge changes in the way people are talking about compensation,” said Sandy Gross, managing partner of Pinetum Partners, a financial recruiting firm. “Wall Street is being realistic. You have to retain your human capital.”
Brad Hintz, an analyst at Sanford C. Bernstein, was more critical. “Like everything on Wall Street, they’re starting to sin again,” he said. “As you see a recovery, you’ll see everybody’s compensation beginning to rise.”
In total, the banks are not necessarily spending more on compensation, because their work forces have shrunk sharply in the last 18 months. Still, the average pay for those who remain — rank-and-file workers whose earnings are not affected by government-imposed limits — appears to be rebounding.
Of the large banks receiving federal help, Goldman Sachs stands out for setting aside the most per person for compensation. The bank, which nearly halved its compensation last year, set aside $4.7 billion for worker pay in the quarter. If that level continues all year, it would add up to average pay of $569,220 per worker — almost as much as the pay in 2007, a record year.
“We need to be able to pay our people,” said Lucas van Praag, a spokesman for Goldman, adding that the rest of the year might not prove as profitable, and so the first-quarter reserves might simply be “sensible husbandry.”
Indeed, last year, when Goldman lost money in the fourth quarter, it did not pay out some of the compensation it had set aside when earnings were stronger.
At other banks, pay scales tilt in favor of particular units. JPMorgan Chase, for example, is setting aside what would total $138,234 on average for workers. But in the bank’s trading and investment banking unit, if revenue stays at first-quarter levels, workers are on track to earn an average of $509,524 over the year. That figure was $345,147 in 2006.
To try to blunt criticism of high pay, some banks have introduced reforms to take back bonuses from individual workers whose bets later lose money. Moreover, executives say that for many well-paid bankers, a good portion of their bonus compensation is in stock, whose value can decline if the performance of the bank lags.
Representatives of several of the largest banks said much of their compensation budget covered expenses other than bonuses, like salaries, health care, pension plans and severance.
Still, the compensation expense is the only publicly disclosed figure related to pay at the banks, and it is the best figure for calculating pay per worker.
This expense includes money for year-end bonuses. For high earners, bonuses can account for three-quarters of pay.
Compensation is among the most cited causes of the financial crisis because bonuses were often tied to short-term gains, even if those gains disappeared later on. Still, as profits return, banks do not appear to be changing the absolute level of worker pay — or the share of revenue dedicated to compensation.
Historically, investment banks have paid workers about 50 cents for every dollar of revenue. The average is lower at commercial banks like JPMorgan Chase and Bank of America, because they employ more people in retail branches where pay is lower.
But every dollar paid to workers is a dollar that cannot be used to expand the business or increase lending. Some of that revenue, too, could be used by bailed-out banks to pay back taxpayers.
Wall Street, of course, has a long history of high wages. Not all that long ago, most investment banks were private partnerships, and the workers were also typically the owners. Even when those firms began listing their shares on public stock exchanges, a standard was set in which half of their revenue was paid out to workers.
Their argument is that such lofty pay retains the best employees, who help earn more money, ultimately benefiting shareholders. The set-asides in the first quarter for pay can also help raise morale within the banks.
Some shareholders, however, contend that the earnings pie should be reapportioned. They argue that shareholders have lost a lot of wealth as bank stocks spiraled, so as revenue picks up, more money should be returned in the form of dividends.
“The money should go to shareholders,” said Frederick E. Rowe Jr., a member of the pension board in Texas and the president of Investors for Director Accountability, a nonprofit group. “The fact that the compensation as a percentage of revenue has not gone down is an indication that the root problem has not been addressed.”
Some analysts point to Morgan Stanley as an example of the compensation conundrum. The bank had a dismal quarter, losing $578 million, but still put aside $2.08 billion for compensation. That amount, though lower than the compensation at Goldman, was 68 percent of revenue.
Mr. Hintz, the analyst, said the bank could have avoided losing 57 cents a share if it had reserved less revenue for compensation.
In an interview, Colm Kelleher, Morgan Stanley’s chief financial officer, said the compensation set-aside was based on the bank’s full-year earnings expectations, not just the first quarter. And Morgan could drop its compensation expense only so low, he said, because much of it consists of fixed expenses, like salaries.
“The number of fat cats making loads of money is much less than you think,” he said.
If shareholders do not like compensation policies at banks, they can simply sell their shares. Still, several banks cut bonus pools last year, as losses mounted. And the government is restricting certain pay at banks that received bailout money.
The rule, which applies only to the most highly paid workers, has prompted some banks to try to return the government money as fast as possible.
Executive recruiters in the sector say prospective recruits are still being offered pay packages on par with those of earlier recruits. Some banks that received taxpayer help are even offering guarantees to recruit workers.
Part of the way banks are supporting high pay for their workers is by shrinking their work forces. Citigroup, for example, has dismissed 65,000 people since the start of 2007. That has left Citigroup paying the same amount on average to its remaining workers, though the quarterly cost to Citigroup is down by 25 percent, to $6.4 billion
A Survivor of the Financial Crisis: Pay Levels at Investment Banks Readers' Comments
Readers shared their thoughts on this article.
Read All Comments (199) »Workers at the largest financial institutions are on track to earn as much money this year as they did before the financial crisis began, because of the strong start of the year for bank profits.
Even as the industry’s compensation has been put in the spotlight for being so high at a time when many banks have received taxpayer help, six of the biggest banks set aside over $36 billion in the first quarter to pay their employees, according to a review of financial statements.
If that pace continues all year, the money set aside for compensation suggests that workers at many banks will see their pay — much of it in bonuses — recover from the lows of last year.
“I just haven’t seen huge changes in the way people are talking about compensation,” said Sandy Gross, managing partner of Pinetum Partners, a financial recruiting firm. “Wall Street is being realistic. You have to retain your human capital.”
Brad Hintz, an analyst at Sanford C. Bernstein, was more critical. “Like everything on Wall Street, they’re starting to sin again,” he said. “As you see a recovery, you’ll see everybody’s compensation beginning to rise.”
In total, the banks are not necessarily spending more on compensation, because their work forces have shrunk sharply in the last 18 months. Still, the average pay for those who remain — rank-and-file workers whose earnings are not affected by government-imposed limits — appears to be rebounding.
Of the large banks receiving federal help, Goldman Sachs stands out for setting aside the most per person for compensation. The bank, which nearly halved its compensation last year, set aside $4.7 billion for worker pay in the quarter. If that level continues all year, it would add up to average pay of $569,220 per worker — almost as much as the pay in 2007, a record year.
“We need to be able to pay our people,” said Lucas van Praag, a spokesman for Goldman, adding that the rest of the year might not prove as profitable, and so the first-quarter reserves might simply be “sensible husbandry.”
Indeed, last year, when Goldman lost money in the fourth quarter, it did not pay out some of the compensation it had set aside when earnings were stronger.
At other banks, pay scales tilt in favor of particular units. JPMorgan Chase, for example, is setting aside what would total $138,234 on average for workers. But in the bank’s trading and investment banking unit, if revenue stays at first-quarter levels, workers are on track to earn an average of $509,524 over the year. That figure was $345,147 in 2006.
To try to blunt criticism of high pay, some banks have introduced reforms to take back bonuses from individual workers whose bets later lose money. Moreover, executives say that for many well-paid bankers, a good portion of their bonus compensation is in stock, whose value can decline if the performance of the bank lags.
Representatives of several of the largest banks said much of their compensation budget covered expenses other than bonuses, like salaries, health care, pension plans and severance.
Still, the compensation expense is the only publicly disclosed figure related to pay at the banks, and it is the best figure for calculating pay per worker.
This expense includes money for year-end bonuses. For high earners, bonuses can account for three-quarters of pay.
Compensation is among the most cited causes of the financial crisis because bonuses were often tied to short-term gains, even if those gains disappeared later on. Still, as profits return, banks do not appear to be changing the absolute level of worker pay — or the share of revenue dedicated to compensation.
Historically, investment banks have paid workers about 50 cents for every dollar of revenue. The average is lower at commercial banks like JPMorgan Chase and Bank of America, because they employ more people in retail branches where pay is lower.
But every dollar paid to workers is a dollar that cannot be used to expand the business or increase lending. Some of that revenue, too, could be used by bailed-out banks to pay back taxpayers.
Wall Street, of course, has a long history of high wages. Not all that long ago, most investment banks were private partnerships, and the workers were also typically the owners. Even when those firms began listing their shares on public stock exchanges, a standard was set in which half of their revenue was paid out to workers.
Their argument is that such lofty pay retains the best employees, who help earn more money, ultimately benefiting shareholders. The set-asides in the first quarter for pay can also help raise morale within the banks.
Some shareholders, however, contend that the earnings pie should be reapportioned. They argue that shareholders have lost a lot of wealth as bank stocks spiraled, so as revenue picks up, more money should be returned in the form of dividends.
“The money should go to shareholders,” said Frederick E. Rowe Jr., a member of the pension board in Texas and the president of Investors for Director Accountability, a nonprofit group. “The fact that the compensation as a percentage of revenue has not gone down is an indication that the root problem has not been addressed.”
Some analysts point to Morgan Stanley as an example of the compensation conundrum. The bank had a dismal quarter, losing $578 million, but still put aside $2.08 billion for compensation. That amount, though lower than the compensation at Goldman, was 68 percent of revenue.
Mr. Hintz, the analyst, said the bank could have avoided losing 57 cents a share if it had reserved less revenue for compensation.
In an interview, Colm Kelleher, Morgan Stanley’s chief financial officer, said the compensation set-aside was based on the bank’s full-year earnings expectations, not just the first quarter. And Morgan could drop its compensation expense only so low, he said, because much of it consists of fixed expenses, like salaries.
“The number of fat cats making loads of money is much less than you think,” he said.
If shareholders do not like compensation policies at banks, they can simply sell their shares. Still, several banks cut bonus pools last year, as losses mounted. And the government is restricting certain pay at banks that received bailout money.
The rule, which applies only to the most highly paid workers, has prompted some banks to try to return the government money as fast as possible.
Executive recruiters in the sector say prospective recruits are still being offered pay packages on par with those of earlier recruits. Some banks that received taxpayer help are even offering guarantees to recruit workers.
Part of the way banks are supporting high pay for their workers is by shrinking their work forces. Citigroup, for example, has dismissed 65,000 people since the start of 2007. That has left Citigroup paying the same amount on average to its remaining workers, though the quarterly cost to Citigroup is down by 25 percent, to $6.4 billion
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