Levine on Wall Street: Smaller Fines, Bigger Paychecks

Also, Liberty Media's managers "spend an awful lot of time trying to avoid corporate-level income tax," and Fiat is spending some time grousing about Chrysler's IPO.

JPMorgan would prefer smaller fines

"J.P. Morgan Lawyer Criticizes Big Bank Fines," as well he might, hahaha. Also, "It was surprising to hear J.P. Morgan's general counsel raise such questions just three days after the announcement of the bank's $13 billion settlement with the Justice Department," but it would be even more surprising to hear him criticize the fines three days before the settlement. Once you get rid of all your government lawsuits in one go, I suppose you get your swagger back. Really, the feds should have asked for $12 billion and a nondisparagement agreement.

(Other fun fact from this Wall Street Journal article: JPMorgan's general counsel, Stephen Cutler, used to work at the Securities and Exchange Commission, where he once fined JPMorgan $135 million and then issued a gloaty press release about how the fine would make JPMorgan think about what it had done etc. I suppose that doesn't say much about the appropriateness of last week's settlement, which after all is two orders of magnitude bigger.)

Swiss voters are okay with bigger paychecks

That big Swiss referendum that would cap executive pay at 12 times what lowest-paid workers get, failed, getting rejected by about 65 percent of voters. Everyone seems pretty relieved, including Economy Minister Johann Schneider-Ammann, who said, "We know there would have been lots of ways to circumvent the restrictions," which is sort of a defeatist thing for the guy who would have been in charge of enforcing the restrictions to say. But there you go. The corporation is a tough problem for a democracy: The Swiss initiative would have interfered with private contracts between the corporation and its employees, so it seems a little overreaching, but the alternative of disclosing huge pay disparities and hoping that shareholders will reject them doesn't really work either.

Liberty Media prefers not to pay taxes

Do you know what Liberty Media does? The official answer has something to do with cable television, probably, but the real answer is "lots of financial engineering." There are spin-offs. There are tax-free exchanges. There are tracking stocks. It is the business. This delightful DealBook article is sort of about how Liberty, run by chairman John Malone and CEO and financial wizard Greg Maffei, is looking to take over Time Warner Cable. But the story is mostly about Liberty's long and entertaining history of financial engineering, which is active enough that "the company Mr. Maffei oversees today contains precisely zero of the assets it held when he took over seven years ago." No time to focus on cable assets; Liberty has more important things to do. "We spend an awful lot of time trying to avoid corporate-level income tax," is how Maffei puts it.

Some people like Spanish bonds more than U.S. ones

Here is an article about how peripheral euro-area government bonds have become more attractive than U.S. Treasuries, or at least less volatile. I cannot tell you how to measure attractiveness. But Spain and Italy are less terrifying than they once were, while the uncertain prospects of Fed tapering have rendered U.S. bonds a bit more exciting. One imagines that there might be intentional policy there: Quantitative easing brings down the risk-free rate, but keeping the taper timing uncertain might bring down the risk premium: If Treasuries are a headache maybe you should go buy some traditionally riskier assets.

Fiat doesn't want a Chrysler IPO

But it's happening anyway, apparently. Chrysler is basically owned jointly by Fiat, which is a car company that wants to own Chrysler, and a United Auto Workers health-care trust, which is not a car company and mostly wants to maximize the value of its stake. The UAW trust has demanded an initial public offering for part of its stake, to raise some money and to get a mark-to-market for the price that Fiat would have to pay to buy the rest. Fiat would prefer not to deal with the headaches of an IPO. One could imagine investors also not wanting to deal with the headaches of buying into a company with a controlling shareholder that wants to take it private, though one could also imagine those investors seeing an opportunity for a quick profit and liking the IPO.

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    Matthew S Levine at mlevine51@bloomberg.net

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