Published December 22, 2011
Being among the biggest losers on Wall Street in 2011 is quite an accomplishment, given the incessant banker bashing from all sides of the political spectrum -- including Wall Street occupiers, Conservative Tea Party activists and, of course, the President of the United States. In assembling this list, we had a lot to work with; firms and their top executives lost money, made bad predictions, got in trouble and then to top it all off, held swanky parties while they were firing their own people.
But some on Wall Street emerged as bigger losers than others. For the first time in years, perennial loser Goldman Sachs (GS) doesn’t make the cut, though a former Goldman CEO does. So here’s our list of losers starting with the biggest loser of them all:
-Jon Corzine, and not just because he ran MF Global into the ground, but mostly because he’s trying to convince the world that he has no idea how he did it — and is failing. The former New Jersey governor, US Senator and chief executive of Goldman Sachs was the epitome of cluelessness during recent Congressional hearings into the firm’s bankruptcy and subsequent loss of as much as $1.2 billion in customer money. At one point during the hearings he tried to persuade Congressman Mike Grimm that he didn’t read a Wall Street Journal article about some of alleged shady dealings at MF Global. Grimm replied: “I don’t believe that answer, Mr. Corzine.” Maybe the most honest statement said during the entire event.
-Morgan Stanley (MS) comes in second because when you lie and get caught you’re a loser. Consider the following: For months, the firm’s PR staff denied that senior management was making plans for across the board layoffs amid a sharp decline in share price and overall lousy business environment only to announce just last week 1,600 across-the-board layoffs. Adding insult to the injury, the layoffs came as CEO James Gorman was throwing a lavish party for the man he replaced, John Mack. Even worse, shares of the firm are down over 40% for the year, as concern remains among investors that Morgan Stanley has exposure to troubled European sovereign debt. Morgan Stanley press officials say the firm’s exposure is minimal and “hedged.” But why should anyone believe what they are saying?
-Nasdaq CEO Bob Greifeld is a loser because he screwed up what could have been the deal of the century: A hostile takeover of the New York Stock Exchange. Such as deal would have upended the NYSE’s merger with the Deutsche Boerse, and made the Nasdaq stock market a dominant player in the global exchange business. His mistake: Telling the world that government antitrust regulators were on board with a Nasdaq-NYSE tie up, when they weren’t. Hopefully, Greifeld has learned to keep his mouth shut in time for the next deal.
-Meredith Whitney is a loser because if you listened to her you would have lost money — a lot of it. Her now infamous prediction that hundreds of billions of dollars in defaults would occur in the municipal bond market fell flat; defaults barely cracked $20 billion and only if you include airline and tobacco bonds, not just traditional debt issued by state and local governments. Meanwhile, munis were among the best performing investments for the year. Making matters worse, her doomsday prediction made on ‘60 Minutes’ never appeared in her actual research report, first obtained by the FOX Business Network.
-Bank of America is a loser because it’s maybe the most troubled bank in the country, and management seems to have no idea how to turn things around. CEO Brian Moynihan is a good man and works hard but apparently not hard enough. Shares have declined nearly 60% for the year, and briefly dipped below $5 – its lowest level since 2009. Among the issues the firm faces: liabilities from its ill-fated purchase of Countrywide Financial, and other legal issues stemming from its lending practices. Not even a $5 billion injection of capital from Warren Buffett seems to have appeased worried investors. Look for a possible spin-off of its Merrill Lynch brokerage and investment banking unit to generate much needed cash to finally write down these legal costs, which could make Moynihan a winner in 2012.