Jon Corzine: Too Big to Jail?

by Gerri Willis

The head of the Securities and Exchange Commission - Mary Schapiro - told Fox Business today that the collapse of MF Global is not a failure of regulation - just a failure of a firm making stupid decisions.

Investors in MF Global - the bankrupt trading firm run by Jon Corzine are still trying to get their money back! Nearly $600 million is still missing. So, how did MF Global become the eighth biggest bankruptcy in American history?

You only have to look at Corzine's connections to the business and political world for some clues: Corzine is the personification of the "Revolving Door" - going from Wall Street to politics and back again - a career spanning four decades. He first made his fortune as one of the so-called "Masters of the Universe" at Goldman Sachs. That is until he eventually was pushed out in 1999.

He then used about a quarter of his fortune - an estimated $100 million - smashing all sorts of spending records - to run as a liberal democrat - eventually winning a Senate seat - he then became a governor of New Jersey. Voters eventually fired him too - after he nearly wrecked the state. He left Trenton and became the CEO of MF Global.

Corzine very quickly tried to make the company into a mini-Goldman Sachs. He lobbied the New York Fed to make MF Global one of the handful of banks authorized as primary dealers of U.S. treasury bonds. Corzine got his wish: The man who helped him get it was the New York Fed's president and CEO - William Dudley - a partner at Goldman until 2007.

After MF Global collapsed, many including us here at the Willis Report are asking: Where are the regulators?! The chief regulator is Gary Gensler - he heads the CFTC - which is investigating this whole mess. Gensler, who just today announced he's recusing himself from this case, has long and deep ties to Corzine. When Corzine was running for governor, Gensler chipped in $10,000 to the state Democratic party - to help get Corzine elected.

Gensler also worked with Corzine on Capitol Hill - crafting rules and regulations for Wall Street. Corzine also worked along-side former Treasury Secretary Henry Paulson at Goldman Sachs, Paulson was the one who pushed for the massive bailout of Wall Street and the taxpayer rescue of Fannie Mae and Freddie Mac. Speaking of Fannie and Freddie - there's James Johnson. He joined Goldman Sachs the same year Corzine led the company.

Johnson was a top executive at Fannie Mae in the 1990s - and walked away with tens of millions of dollars in compensation - while at the same time driving the housing market off a cliff.

Nice work if you can get it.

Corzine has also been part of the ‘Bilderberg Group' a who's who of the rich and powerful international elite - including some boldface American names: Ben Bernanke, Timothy Geithner and Bill Clinton just to name a few. These guys get together every few years to solve the world's problems over cavier and chardonnay.

But it's not just former presidents Corzine rubs shoulders with - despite President Obama decrying ‘Wall Street Fat Cats' - Corzine has already helped to raise at least half-million dollars for President Obama's re-election.

And Obama's current EPA commissioner - Lisa Jackson - was also in the Corzine cabinent when he was governor of New Jersey. Corzine's No. 2 at MF Global, Bradley Abelow, worked for the Obama administration, was also in Corzine's New Jersey cabinet and was a top executive at Goldman Sachs!

As for that half-million? The Obama campaign says it will give the money back - if Corzine is convicted of a crime. But if history is our guide -the kind of Wall Street firms Corzine once ran became ‘Too Big to Fail.'

Maybe Corzine himself will be too ‘Big to Jail.'

Consumers: Make Your Voice Heard!

by Gerri Willis

Fifty million Americans had a problem with a product or service they bought within the past year, according to a new customer-rage study. I, for sure, am one of them. But consumers can fight back by making their voices heard - like we've seen this past week with Bank of America.

Here were some of the ways you can make your voice heard -- I mentioned them on tonight's show along with some helpful websites!


- Twitter (Tweet with business' handle)

- Facebook (Comment on business' Facebook page)


For example:




For example:




For example:






CEO Paid $100M to Step Down, But Still Employed?

by Gerri Willis

A demonstrator holds a sign showing the pay of some corporate executives during an Occupy Wall Street protest in lower Manhattan in New York October 3, 2011.When it comes to executive pay, there is a loud and growing chorus of people who maintain that all CEOs make too much. You don't have to go any further than a local Occupy Wall Street protest to hear those complaints. I believe that any executive who boosts a company's bottom line - share price or sales - should be rewarded. I say more power to him or her. In this country, the reward is financial. As a shareholder, I'm happy to pay for success.

What I don't like is paying for is failure. And, we are seeing too much of that right now.

Take Eugene Isenberg - he's the outgoing 81-year-old CEO of Nabors Industries - an oil drilling company. He's been asked to step down from his post - though he'll remain Chairman.

Because of this "shift in responsibility", Isenberg will be paid a $100 million severance package - all despite the fact he's not even leaving the company.

How does he get so lucky?

It all comes down to the language in his contract - language which triggers automatic payment when he shifts jobs. By the way, he may end up getting another $30 million from that contract when all is said and done.

Now, I might be just jealous and not angry if it weren't for the following facts: Nabors stock is down 19 percent this year. It has underperformed the S&P 500 in one year, five-year and 10-year periods. The "hello, I must be going" bonus of $100 million is more than the company's entire profit for the third quarter.

But this is pretty much the way things have worked for Isenberg for years now. According to the group Corporate Library, Isenberg was the 5th highest-paid worst-performing CEO in the country in 2009!

  • Others on the list include Abercrombie & Fitch's Michael Jeffries - who took home more than $72 million in 2009 - after his company's stock sank!
  • James Stewart of BJ Services saw his company's stock halved in 2009 - but he took home nearly $35 million.
  • Brian Roberts of Comcast - a company lagging behind its competitors - took home almost $41 million in 2009.
  • The CEO of International Paper? As the stock fell 63% his company handed him more than $38 million.

Isenberg is not alone with his Golden Parachute either - former CEOs of Disney and Home Depot took home around $200 million each after their tenure was over.

But here's the thing - those guys actually left the companies!

Isenberg is just switching positions.

He's still going to be making millions in salary on top of his severance package.

We mention all the time how things would be better if government was run like a business. I still stand by that statement - as long as they don't use Nabor Industries as their model.

Obama's Empty Campaign Promises

by Gerri Willis

President Barack Obama delivers remarks on education at the University of Colorado in Denver, October 26, 2011. We all know campaigns are about promising lofty goals to the voters - telling them what they want to hear. And when these people get elected - for whatever reason - many of these promises just don't get carried out.

But apparently President Obama is the exception - at least if you ask him.

Here's what he said at a campaign fundraiser this week:

"I carry around a little checklist, and I think we've got about 60 percent of it done so far. And that's not bad for three years, because I need another five."

Sixty percent! That's a pretty good record! Too bad he's exaggerating his success rate slightly - according to the independent watchdog website: Politifact .com.

Candidate Obama made over 500 promises during the long campaign.

So doing his math that would mean he's kept more than 300 of them. Turns out he's only kept 151! That's less than 30 percent!

He did help some other proposals see the finish line - with a lot of compromise! But even if you include those - his record only goes up to 38 percent!

A lot of his broken or stalled promises come in the areas of the economy and taxes.

Now - not all of these failures are bad news. It just goes to show you when it comes to campaigns - even promises about promises must be taken with a grain of salt.

One of his biggest campaign talking points was increasing taxes on higher-income taxpayers - those making over $200,000 dollars a year.

We can give him points for effort here, but time and time again this promise goes nowhere because too many people know it would do more harm than good!

Now when he extended the Bush tax cuts - another broken promise - he also failed to include expanding the Child and Dependent Care Credit.

As seniors fought for a cost of living increase - they will get their first one since 2009 next year! Obama's pledge to end income taxes for low-income seniors has fallen off the radar!

When he joined forces with Joe Biden back in 2008, he and his new running mate promised to eliminate penalties for taking money out of your own 401(k) accounts.

That's not happening, and since day one, this president has seemed to have the oil industry in his cross-hairs. While he did manage to put off drilling - don't get me started on that - he failed to enact a windfall tax on their profits - or close loopholes many companies were using to save money on their taxes.

He also promised to restrict lobbying practices at the White House - but K Street plays as big a role as ever these days!

Obama did mention some of his big "accomplishments": ending the war in Iraq, ending ‘Don't Ask, Don't Tell', and of course, there's ObamaCare - the latter of which I'll agree to disagree.

Like I said, many of his promises did not come to fruition because they were and are simply bad policy. Blaming Republicans for your failures is not an answer.

Surprising Stats on Student Debt

by Gerri Willis

One-hundred billion dollars in new debt. Total debt? A trillion dollars.

No, I'm not talking about credit card debt or mortgage debt or even the debt of our federal government. I'm talking about student loan debt - money owed by students and former students to the federal government to pay for college.

At a time when Americans have been rolling up their sleeves and paying down credit card and mortgage debt, student loan debt stands out as the one category growing by leaps and bounds. That debt has doubled in just the past five years - and it's pretty easy to see why.

Colleges charge students more and more to attend school. The published tuition charges - $7,600 for in-state students at public four-year colleges and $27,000 thousand at private schools way understates what students might pay. After all, you've got to live somewhere - then there's the pizza and the beer. And, books.

The problem of high costs is compounded by the fact they go up - a lot - every year - puts average annual college cost inflation at 8 percent - at that rate the cost of college doubles every nine years!

To soften the blow, the federal government has eased loan repayment terms - true, you will eventually have to pay it back - even bankruptcy isn't an excuse not to pay - but still you can slow or stop payments for a variety of reasons if you meet requirements of the feds.

But that's not the real answer to all this overblown debt - debt that causes students to delay marriage, the purchase of a home - and just about every other critical financial milestone. As one New York politician once said - the rent is too damn high - in other words, colleges are charging too much - in their war for paying customers - expensive perks and features have become a critical way to win the best minds.

But a sushi bar in the lunchroom isn't the way to do it. A state of the art gym open at all hours for all comers isn't it either.

Any solution shouldn't be about kicking the can down the road. Delaying the payment of debt in the hopes that maybe later we can afford it. I feel the pain of students - but the answer isn't to put the burden on others - like taxpayers. Lower rates on federal loans is not free and better terms for borrowers will come at the cost of someone down the road. Most likely that next generation.

It's Open Enrollment Season! Are You Prepared?

by Gerri Willis

It's that time of year again -- open enrollment. That's when companies that provide health insurance to employees announce tweaks to their plans. If you've been employed anytime at all, you know the drill. You get a complicated looking packet from your HR office and you try like heck to compare the plans. Often, you're not successful. The only thing you're likely to figure out - that your contribution to your coverage will be more than it was last year.

And, so it is this year. Despite all the promises of ObamaCare -- that it would slow health care inflation or that it would allow you to keep your plan -- the costs continue to rise and the options narrow. The average annual premium this year $15,073 for a family and $5,429 for a single person -- the family premiums are up 9 percent year over year.

And, if your premium is different -- well consider, that the numbers differ across the country!

Don't get me wrong, I am glad that my employer offers health insurance -- job-based coverage is still the most common type of health insurance in the nation, covering just shy of 60 percent of folks who aren't retired.

And, contrary to conventional wisdom, America is not the land of the uninsured. The percentage of working-age Americans with coverage is 81.5 percent.

Still, things could be better. For example, this year more than ever you are likely to be offered something called a high-deductible plan. It allows you to save money on monthly premiums -- but at a cost. If you do find yourself in need of health care, you could face a deductible of a thousand dollars or more. Typically, younger workers use these plans because they don't expect to face expensive illnesses.

But if you ask me, that's asking for trouble. Setting aside money in a tax-protected account may help you meet those bills -- just in case, you get hit by the proverbial bus.

Other changes most of us will see -- deductibles jumping 7 percent on average. And, watch out for what insurers are calling "co-insurance," that's your charge for care. Think of it as a co-pay on steroids.

Also keep your eyes peeled for changes in networks of doctors and hospitals. Some providers are making those networks smaller.

One positive here: More employers are offering incentives to workers who actively try to improve their health by say, reducing their body mass index, or signing up for cholesterol or blood pressure screening.

And, one more thing -- most workers spend less than an hour deciding what plan to go with -- if you're new to the company and even if you're not -- do yourself the favor of figuring out the details. Your health is on the line.

Fed Drifting into Obama's Territory

by Gerri Willis

I spoke at the top of today's show about the need for leaders to stop using the terms "fixing" problems and "spending" money on them as interchangeable. But it happens all the time. As a matter of fact, the Wall Street Journal reports today that Federal Reserve officials are beginning to think about a new program to help the struggling housing market by cutting mortgage rates.

Now, the Fed doesn't directly control mortgage rates but it does influence them. In fact, Federal Reserve Chairman Ben Bernanke has been holding rates close to zero for three years - and mortgage rates have moved to 50-year lows - rising slightly only recently. None of that effort has paid off with a rising housing market yet - but the Fed may well double down on that policy.

To do that, the Fed would buy mortgage-backed securities -- the assets that nearly cratered the financial industry during the financial crisis. And that means it would print money or use its own reserves to buy them - both of which could cost us in the long run by raising inflation.

Look, I think there is widespread agreement that the factors standing in the way of a housing recovery aren't mortgage rates - after all, 30-year fixed rates stand at 4.18 percent - while a 15-year mortgage rate is just 3.47 - according to The real problem for a housing recovery is 9.1 percent unemployment.

Without jobs, consumers can't buy homes. No income, no loan.

And that's the other problem - qualifying for a loan these days is difficult - lenders want sparkling credit scores and solid employment histories. In other words, just as bank loan officers were loosey goosey during the housing boom they are incredibly strict in their terms now.

The Fed seems to be drifting into territory that the Obama Administration itself has failed at time and again. Whether you talk about HAMP or HARP or any one of a number of other programs - none of them have worked.

The main reason? Banks just haven't wanted to lend - regardless of the benefits or perks or muscle applied by the White House.

Ultimately, our housing market will have to shake off these doldrums on its own - work through the downdraft. More government spending and more federal promises aren't going to do it.

Leaving Your Bank? Do Your Homework First

by Gerri Willis

We've focused a lot on this show on Bank of America's new $60-a-year debit card fee. But they are certainly not alone in raking up the costs for consumers. And the worst part? Higher bank fees are here to stay.

New rules have curtailed various kinds of traditional fees - such as overdraft and late fees - so banks are being forced to create brand spanking new charges.

In addition to Bank of America, Citigroup will charge $20 a month starting in December to some customers who don't keep a balance of $15,000 dollars or more.

Wells Fargo and JP Morgan Chase are testing three dollar monthly debit card fees in a handful of states. SunTrust started a $5 monthly debit card fee back in June.

Regions Financial kicked off a $4 fee this month.

These fees have become a hot-bed of anger and frustration among consumers - especially those camped out downtown Manhattan.

And for many - they could be enough to push customers to go through the hassle of switching banks.

A new survey by Research Intelligence Group says about a third of consumers will leave their bank if debit card fees are put in place.

And it's not just lip service - the weekend after Bank of America announced their new fees - the nation's largest credit union saw new account openings skyrocket more than 20% percent.

But as I said - switching banks can be a hassle - especially if you have direct deposit, online bill payments or you do a lot of business directly with your bank.

USA Today outlined some things to consider before making the switch.

For starters - you can save a lot of money if you go to an online bank.

Some of these banks have the lowest checking costs - and some even have high interest rates and will re-imburse you for using another banks ATM. Not ideal for those who use a lot of checks - something to keep in mind there.

Now those ATM fees are a major concern for those thinking of switching to a credit union or a small bank!

So do some research - find out if they have agreements - as many do - with larger ATM networks rr see if they waive such fees.

Also - just because you hear a headline about bank fees - don't automatically run to your local branch and close everything!

Some fees may not apply to you - such as if you use direct deposit - or meet a minimum balance - or pay online.

So again, I can't stress this enough - before leaving your bank - do your homework.

But don't be afraid to move your money around if there's something out there better for you and your family.

Occupy Wall Street: Going Pro?

by Gerri Willis

A flag made by Occupy Wall Street campaign demonstrators is seen in Zuccotti Park, near Wall Street in New YorkOccupy Wall Street is going pro.

You might have thought they were just a bunch of grumpy college kids who couldn't find a job -- but more and more they are starting to look like -- well, like the very corporations they despise.

Consider -- they now have property -- which can be hard to come by in pricey lower Manhattan -- a bank account with $300,000 and a bunch of committees and "working groups."

Let's break it down: The property is a storage space loaded with supplies -- all donated -- located a block from Wall Street on Broadway. They've stashed blankets, pillows, sleeping bags, cans of food, medical and hygiene supplies (no word on what that really means) plus some oddities like a box of knitting wool and 20 pairs of swimming goggles -- apparently to protect protesters from pepper spray. Occupy Wall Street is receiving 300 boxes of "stuff" a day from supporters all over the country.

The property comes gratis from the United Federation of Teachers. Naturally, we've already seen websites and other support from the unions for Occupy Wall Street.

Then there's the bank account -- and the money -- some $300,000 in cash donated through the movement's website and by people giving money in person at the park. You should know the group has parked its cash at a union-owned bank -- not one of the big money center banks they are protesting.

And, then, there's the "Demands Working Group" -- these protesters who meet once a week to try to figure out --well, why the group is protesting in the first place. So far the New York group seems to agree that jobs and civil rights should be part of the agenda but others say that even having an agenda would be a bad thing.

So there you have it -- people protesting evil corporations who have managed to attract capital, property and put in place a bureaucracy with no discernible product or goal! Only in America.

But that is where the parallels with Corporate America stop. Normally you'd expect to find some sort of charismatic leader inside an organization which has momentum like occupy Wall Street -- but it doesn't appear to have one.

Instead, the old radical thought leaders from the past keep cropping up -- like Saul Alinsky -- the '60s radical that transformed protesting and viewed Al Capone as a positive social force.

President Barack Obama has been accused of inspiring occupy Wall Street with his severe public condemnation of bankers and brokers.

Democrats, though, would do well to remember another protest movement -- the 1968 riots in Chicago during the Democratic National Convention. Thousands of protesters rioted setting in motion a wave of violence that ultimately led to Richard Nixon's election.

It is undoubtedly true that it's not clear where occupy Wall Street will lead, if anywhere. But the tacit backing of the group by Obama is a poor substitute for actually leading us out of our economic and political morass.

Because the President is not a disenfranchised college student. He's the leader of the free world. And he has a responsibility to set us on a better track.

A Complete Waste of $1.2 Billion? (It's YOUR Money!)

by Gerri Willis

Solar panels sit on the roof of SunPower Corporation in Richmond, California March 18, 2010You've heard me talk about the ridiculous loan guarantee program at the Department of Energy before - and goodness knows if ever there was a waste of taxpayer money it was the half a billion dollars we gave to a solar power company called Solyndra that then went belly up.

But wait: It gets worse.

Thanks to that "loan guarantee program" - another California solar company is getting more than twice that amount!

SunPower manufactures solar panels, tiles, and even builds ranches. And just before the program expired last month - it got a sweet $1.2 billion in taxpayer money!

So what are they going to do with this money?

The Department of Energy says it will create 350 temporary construction jobs. And 15 permanent jobs!

$1.2 billion for 15 jobs. Let's do the math again - since this Administration apparently doesn't: That comes out to $80 million dollars per job! The company will also be opening up another plant that will surely bring in more jobs. So where is that plant going to be? Mexicali, Mexico!

Taxpayers are giving this company money to help boost the Mexican job market.

How did they even qualify for such a big loan?

Well turns out, it pays to have friends in high places - and what's higher than the halls of Congress?

Democratic California Congressman George Miller has been on the Hill since 1975. He's a big fan of SunPower - which apparently converted an old plant into a major manufacturing facility in Miller's district. His son also happens to work for the company as a lobbyist!

And Miller's not the only fan. SunPower Pac - yes, this company has its own pac - donated nearly $15,000 to democrats in the 2010 elections. The top recipients include Senate Majority Leader Harry Reid - not a bad man to have on your side! And they've already started doling out funds for 2012.

They also have a fan in Interior Secretary Ken Salazar who after visiting the company last October said, "The path to a clean energy economy starts here, in places like SunPower's research and development facility."

Now who does he sound like?

So Solyndra and SunPower are the companies of the future? Well we all know how well the whole Solyndra thing turned out. Is SunPower's future any brighter?

Not really. First of all, SunPower is facing a host of lawsuits from investors - including a class action suit - claiming the company made false statements to the public.

These lawsuits have yet to be resolved. When comparing stock charts from the last decade, SunPower hit its peak in December of 2007. $133 a share. That's when the company was worth $13 billion. Since then - it's lost 94% of its value - trading at under nine bucks.

That means today it's market cap is $800 million, just shy of its debt - of $820 million!

So let me get this straight, we gave a company with more than $820 million in debt. That's only worth 800 million dollars - $1.2 billion?! It also issued an earnings warning right after they got that government loan!

Once again the math doesn't add up with this administration.

What is it going to take for them to realize these green companies are not the job creators they make them out to be- they're not the wave of the future - they're barely staying afloat!

If you want to help them out so much - you buy stock, you invest...

But this Administration needs to stop picking winners and losers and using our money to do it!


On Twitter