Leonard Abess Jr is a banker who, when faced with a $60 million payout, went against type. He shared it all out amongst the bank's employees. And former employees. To 471 people all told, for an average of $127,000 each.
Digging deeper into the story, it's even more interesting, with a few unexpected twists.
Abess' father started the bank in 1946. Abess Jr started out in the print shop, and worked his way up. The bank was sold in the 1980's, but eventually got bought by a businessman who was convicted of fraud, and the bank fell into bankruptcy. Abess Jr then bought out the bank for $27 million, most of it borrowed. He built it back up to a profitable level, and didn't require any federal bailout funds. When he sold the bank for $927 million, he shared his $60m profit amongst current and former employees. "I knew some of these people since I was 7 years old. I didn't feel right getting the money myself."
He didn't publicise this himself either, and apparently hasn't been returning media calls.
One of the beneficiaries was a retiree who started at the bank as janitor, and worked his way up to vice president. Not something that might easily happen these days.
Abess was lauded in Obama's recent speech to congress. More reports here and here.
Answer to yesterday's puzzle: ebullient.
Showing posts with label finance. Show all posts
Showing posts with label finance. Show all posts
Thursday, February 26, 2009
Monday, September 22, 2008
Volatile capitalism and the short sell ban
The Australian government has banned short selling on the stock exchange for at least 30 days. Although this mirrors similar actions in ny other countries (including the US, Britain, Canada and Germany), few have extended such a ban beyond financial stocks to all short selling.
The stated aims are to reduce market volatility and to improve liquidity.
Short selling is a way of betting on the market: if you think share prices are going down, sell at current prices that which you do not own, with a commitment to supply the shares later - hopefully you buy them when lower.
All manner of Byzantine financial instruments and transactions have been created over the years to allow people to trade all manner of items in all manner of ways. In some cases, the type of transaction emerged as a way for productive entities to mitigate risk; others have their origins in speculative motives - ie gambling.
There would be valid business reasons for some to sell short, but it's clear that such a ban would have at least a somewhat soothing effect on the current turbulent market. Still, it's surprising that governments would countenance market restrictions that would affect legitimate business - but these are uncommon times. In one of the Murdoch papers, short selling is defended as an aid to price discovery. But there are myriad other ways for prices to emerge - if that's what you want - in a slower, more stable way.
Re-regulation is in the air, and the vultures arbitraging a living (or killing) from a position of extra knowledge at the margins (or simply from a willingness to gamble) are going to find their game stifled. Somewhat.
Elsewhere, analysts and journalists, too, are speculating (here, for example) within their metier. what if the world stops buying US currency and securities? How will China's massive surplus holding of same play out? In fact, they wouldn't tip the bucket (and sell US), because it would hurt them too. China is more likely to gradually diversify over time, which suggests an inevitable weakening of US fortunes. With world trade significantly denominated in US dollars, this too can create turmoil. For this reason, and for the current market chaos, we could quite soon see a scurry of central bankers collaborating in a more formal way to realign the financial stars for the new realities. And because of the clear origins of the current mess in the financial toxins released by America, its status could be irrevokably tarnished. Unless its regulatory hand is clearly brought to bear. If the rest of the world could vote on this basis, it wouldn't be for McCain.
The stated aims are to reduce market volatility and to improve liquidity.
Short selling is a way of betting on the market: if you think share prices are going down, sell at current prices that which you do not own, with a commitment to supply the shares later - hopefully you buy them when lower.
All manner of Byzantine financial instruments and transactions have been created over the years to allow people to trade all manner of items in all manner of ways. In some cases, the type of transaction emerged as a way for productive entities to mitigate risk; others have their origins in speculative motives - ie gambling.
There would be valid business reasons for some to sell short, but it's clear that such a ban would have at least a somewhat soothing effect on the current turbulent market. Still, it's surprising that governments would countenance market restrictions that would affect legitimate business - but these are uncommon times. In one of the Murdoch papers, short selling is defended as an aid to price discovery. But there are myriad other ways for prices to emerge - if that's what you want - in a slower, more stable way.
Re-regulation is in the air, and the vultures arbitraging a living (or killing) from a position of extra knowledge at the margins (or simply from a willingness to gamble) are going to find their game stifled. Somewhat.
Elsewhere, analysts and journalists, too, are speculating (here, for example) within their metier. what if the world stops buying US currency and securities? How will China's massive surplus holding of same play out? In fact, they wouldn't tip the bucket (and sell US), because it would hurt them too. China is more likely to gradually diversify over time, which suggests an inevitable weakening of US fortunes. With world trade significantly denominated in US dollars, this too can create turmoil. For this reason, and for the current market chaos, we could quite soon see a scurry of central bankers collaborating in a more formal way to realign the financial stars for the new realities. And because of the clear origins of the current mess in the financial toxins released by America, its status could be irrevokably tarnished. Unless its regulatory hand is clearly brought to bear. If the rest of the world could vote on this basis, it wouldn't be for McCain.
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