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Tuesday, November 11, 2008
Former Treasury Secretary O’Neill Talks to FBN
Kathryn Glass
FOXBusiness
Former Treasury Secretary and Alcoa ex-CEO Paul O'Neill said he approves of three of the possible candidates for his former post.
“I think all of the people who have been part of the speculation about the next treasury secretary are worthy and they bring different things to the job,” said Paul O’Neill of three rumored candidates: former Treasury Secretaries Robert Rubin and Larry Summers, as well as current president of the New York Federal Reserve, Tim Geithner, in an interview with FOX Business Anchor Liz Claman on Tuesday afternoon.
O’Neill, a former Treasury Secretary himself, did not, however, consider Paul Volcker to be a good choice for the position.
“Paul’s been retired for a long time and I think he can bring a lot to the table, but I think he’d be well advised to be ‘of counsel’ to the new Treasury Secretary rather than take it again himself,” O’Neill said.
O’Neill does not think it necessary that the candidate have experience working on Wall Street, but mentioned he’s a “fan” of current J.P. Morgan Chase CEO, Jamie Dimon.
He also had strong feelings about the recent talks of a government bailout for General Motors (GM) and the automobile industry.
“If we’re going to put a lot of taxpayer’s money into these institutions, then I think we should insist that they finally come to grips with the fact that they have a failed business model,” O'Neill said. “Getting them to make hybrid cars or more energy-efficient cars is not going to solve the basic business problems they’ve got.”
O’Neill went on to explain that the Big Three auto makers, Chrysler, Ford (F) and General Motors, were having problems long before the current economic crisis, and suggested one of these problems is that all three companies are paying a premium for labor costs.
Unless Chrysler, Ford and GM tend to the employee compensation issue, competitors will have the edge, and any government
backing, “is really a way of overcompensating people beyond what the market is demanding,” O’Neal said.
“It’s not a good thing for the federal government, as we seem to be increasingly tending to do, to become a participant in
private sector activities,” O’Neill continued. “I didn’t want us to be shareholders. Being a lender was okay with me, being
a shareholder in the private sector is a terrible idea.”
O’Neill believes one quick and easy way to prevent future problems in the housing market would be to require all home buyers be able to put 20% of the home’s value down, eliminating subprime borrowers.
“I’d get rid of anything that doesn’t have a 20% equity component so that people have a reason to want to stay in the house,” O’Neill said.
However, O’Neill did say he thinks lending institutions should work with homeowners to prevent more foreclosures, as long as the borrowers can provide a reasonable amount of money for payments.
In regard to taxes, O’Neill hopes President-elect Barack Obama will dispose of the current tax code and institute an new policy that is easier enforce, so that authorities could save the $400 billion in taxes that go collected each year .
“Then I think if you have $400 billion worth of new revenue, you can abate the pain,” O’Neill said.
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It's time to let you in on a dirty little secret: You may not own the stock you own. That's right, if you invest with a brokerage firm, the shares you bought are almost certainly not held in your name. Technically, they're held in the name of the Wall Street firm you do business with, hence the term "street name."
No, you haven't been robbed. Ultimately, the decision to hold shares on the books under a different name doesn't affect the economic ramifications for you. You¿re listed as the "beneficial owner," even though the firm is the official owner of the shares. But, you are giving up some rights, and investors concerned about good corporate governance might want to get that stock back in their own names.
Here's the problem: If your stock is technically owned by, say, Merrill Lynch, then Merrill Lynch gets to do things with it that might work against your wishes. Take short selling. Investors who want to sell shares short need to first borrow those shares. The lenders are often the big Wall Street firms that are handing out Street-name shares. So, if you feel that a company you own is a victim of aggressive short selling, chances are your own shares are being used to fuel the shorting.
Also, your brokerage firm can cast ballots on some corporate matters affecting a company without getting your input. Technically, this can only happen in votes considered ¿routine¿ by securities regulators. But, there's a big catch: some big events, like board elections, are considered "routine" under law.
The good news is that you can easily fix the Street name problem: Just request that your brokerage firm makes you the listed owner of the shares. If they refuse, find a new firm.
