Oct. 12 (Bloomberg) -- Jim Chanos, founder of $6 billion hedge fund Kynikos Associates, and Bill Gross, who runs the world’s biggest bond fund, joined top asset managers in voicing understanding for anti-Wall Street protests as they spread to Manhattan’s Upper East Side, home to the city’s financiers.
Chanos said New Yorkers don’t appreciate the impact government bank bailouts have had on other U.S. citizens. Gross, who works at Pacific Investment Management Co., said that wage earners are fighting back after three decades of class warfare against them.
“New York is so finance-centric that people here underappreciate the reaction of the rest of the country,” Chanos, who was born in Milwaukee, said yesterday in an interview in New York. “People are angry, they feel the game is rigged, that they didn’t get their fair shake.”
Demonstrators in New York marched to the upscale Upper East Side neighborhood as the Occupy Wall Street movement that started last month in New York’s financial district spread to other U.S. cities. BlackRock Inc.’s Laurence D. Fink, who runs the world’s biggest asset manager, and billionaire investor Warren Buffett have said they understand the protesters’ frustration.
Hedge-fund manager John Paulson, who became a billionaire by betting against the U.S. housing market and then profited from the recovery of banks, criticized the movement. His townhouse was among those targeted by marchers who left a fake tax-refund check made out for $5 billion on his doorstep, which was barricaded by police.
Paulson Fights Back
“Paulson & Co. and its employees have paid hundreds of millions in New York City and New York State taxes in recent years and have created over 100 high paying jobs in New York City since its formation,” the $30 billion hedge fund said yesterday in a statement. “Instead of vilifying our most successful businesses, we should be supporting them and encouraging them to remain in New York City and continue to grow.”
The protest march, which organizers called a “billionaires walking tour,” targeted other executives including Jamie Dimon, who runs JPMorgan Chase & Co., and billionaire oilman David Koch.
Protesters have criticized the government for propping up hobbled financial giants, including Citigroup Inc. and Bank of America Corp., with a $700 billion taxpayer-funded bailout in 2008, while leaving Americans to struggle with unemployment, depressed wages, soaring foreclosures rates and slashed retirement savings.
Citigroup, based in New York, and Bank of America, based in Charlotte, North Carolina, have repaid money they received from the government.
Vikram Pandit, Citigroup’s chief executive officer, said he would be happy to talk with protesters, calling their sentiments “completely understandable.”
“Trust has been broken between financial institutions and the citizens of the U.S., and that is Wall Street’s job, to reach out to Main Street and rebuild that trust,” Pandit, 54, said today at a breakfast organized by Fortune magazine in New York.
Citigroup in January raised Pandit’s salary to $1.75 million from the $1 he told Congress he would take in 2009 until the lender turned a profit. In May he entered into a company profit-sharing plan that will give him an additional $25 million if the firm meets analysts’ expectations.
Since Sept. 17, thousands of demonstrators have transformed a park in lower Manhattan, near the site of the World Trade Center, into a sea of blue tarps, sleeping bags and tables offering free medical care and food.
In Boston, more than 100 people were arrested near the city’s financial district where scores have been camping out in tents since Oct. 1 to protest Wall Street policies, according to the organizing group, Occupy Boston. The arrests followed a march by thousands of students from Boston Common to the area where the tents are pitched.
Demonstrators in the U.K. are preparing to set up camp outside the London Stock Exchange, as well as the London offices of Goldman Sachs Group Inc. and Bank of America, with protests scheduled to begin Oct. 15, organizers said today.
Chanos, 53, said the “disjointed” nature of the demonstration, which started last month in New York’s financial district and spread to cities such as Washington and Seattle, shouldn’t be underestimated because protests in the sixties started in a similar way.
“The elderly and savers have been hurt by Fed policy,” said Chanos, whose firm is based in New York.
“Class warfare by the 99%? Of course, they’re fighting back after 30 years of being shot at,” Gross said on a Twitter post.
Fink, whose firm has $3.7 trillion under management, said last week he understands the concerns of protesters speaking out against financial companies in New York and other cities.
“These are not lazy people sitting around looking for something to do,” Fink, 58, said on Oct 5 during an event in Toronto. “We have people losing hope and they’re going into the street, whether it’s justified or not.”
Fink received $23.8 million in compensation for 2010, a 50 percent increase from the previous year.
Joe Dear, 60, chief investment officer of the $218 billion California Public Employees’ Retirement System, said yesterday in a CNBC interview that people are “waking up” to the fact that “the game appears to be rigged.”
‘Paycheck to Paycheck’
“The financial system gets bailed out, executives’ salaries stay high and the incomes of people who work for a living, paycheck to paycheck, continue to decline,” he said.
Buffett, chairman of Berkshire Hathaway Inc., said in August that the nation’s richest people have been “coddled long enough by a billionaire-friendly Congress” and called for higher taxes for the “mega-rich” in the U.S.
Buffett, the world’s third-richest man, according to Forbes Magazine, told Charlie Rose in New York during a Sept. 30 interview on PBS that class warfare is going on, “and my class isn’t just winning, I mean we’re killing them.”
To contact the reporter on this story: Saijel Kishan in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Christian Baumgaertel at email@example.com