Different people mark the end of the year in different ways. One of my traditions is reviewing my work for the year, owning up to mistakes that I haven’t already corrected, and following up on some of what I’ve written. It’s not as much fun as passing out my wife’s delicious Chanukah cookies to my colleagues, another year-end ritual, but it has its uses.
• I predicted a difficult year for investors in 10-year Treasury securities. My February prediction — “buy today, cry tomorrow” about long Treasuries — has been accurate. But that was such an obvious call that it was like shooting fish in a barrel, as opposed to fishing.
• What turned out to be wildly wrong was my prediction that the 30-year, 6.55% bonds that Verizon (VZ) issued in September would tank. I mocked a friend of mine who bought them at 106% of face value the day they were issued. When last I looked, they were trading at 116. Score one for you, David.
• I apologize for getting more than 400 of you to waste your time sending e-mails to the Financial Accounting Standards Board urging it to require companies to disclose the U.S. income taxes they pay for a given year. (Not in a given year, which is already required, but for a given year.) FASB took note of the emails, but didn’t do what they asked.
Knowing actual taxes would allow the argument over corporate tax rates to be based on facts rather than on the fictional numbers companies use in their financial reports. FASB or the Securities & Exchange Commission could enlighten the debate in a minute by requiring companies to disclose the taxes-incurred information from their corporate tax returns, which would require almost no effort on the companies’ part. But absent a change, that’s not going to happen because there’s no major business or political constituency to force FASB or the SEC to do something that will irritate corporate America. Too bad.
• People wonder why I’m so down on the Volcker Rule, the subject of my most recent column. It’s because I consider it horribly and needlessly complex, and think that comparing it with Glass-Steagall — a piece of relatively simple Depression-era legislation that held up for decades — is ludicrous. All Volcker and Glass-Steagall have in common is that they’re named for people.
I’m no Paul Volcker fan. I had no dealings with him when he ran the Federal Reserve, but I watched him bungle Arthur Andersen after he was appointed to chair Andersen’s independent oversight board when the firm was marred by its role in the Enron scandal.
Volcker should have segregated the Andersen offices untainted by Enron and made them a new operation. A simple, obvious fix. Instead, he puffed on his cigars, held forth, and the firm was indicted and convicted on criminal charges. By the time the conviction was overturned, Andersen was long gone.
Emilie Feldman, currently an assistant professor at the University of Pennsylvania’s Wharton School (and a family friend), published a nifty paper in 2006 pointing out that had Andersen tried to combine with one of the other then-Big Five accounting firms, it would have violated anti-trust standards. Thanks in good part to Volcker, the Big Five firms are now down to the Final Four. That works great for college basketball — for accounting, not so well.
• I found myself in the unusual position of siding with JPMorgan Chase, which I don’t remember ever having done before. I’m no fan of giganticism or complexity, both of which afflict JPM (JPM). But the bank is not the source of all evil in America, as it’s being made out to be. The idea that JPM should not be allowed to deduct perfectly deductible payments it made to settle lawsuits brought by Fannie Mae, Freddie Mac and others is silly and unfair.
• And my ritual disclosure: One share of stock in a Detroit bank that I bought for $40 about 40 years ago when I was the Detroit Free Press banking reporter and wanted to make sure I could attend shareholder meetings has morphed into $2,350 of JPM stock.
• I’m glad that I managed to figure out that President Obama’s post-Presidential pension and other benefits are worth roughly twice as much as his Treasury proposal would allow regular people to have in pensions and retirement accounts without facing tax penalties. There are definitely abuses of the system, such as the likes of Mitt Romney sticking ridiculously low-priced assets into retirement accounts. But you know what? Had 401(k)s existed when I began my career and had I been able to max out on contributions, the value of my retirement benefits and pensions would likely have exceeded the proposed limit. And I’ve played it totally straight, no games.
• Two final follow-ups: When I referred to “survivors” in my column about deciding when to take Social Security, I was talking about children and grandchildren, not spouses. Each member of a married couple has his or her own benefits. I don’t think of them as “survivors.” Sorry for the confusion.
• When I wrote about the proposed spinoff of my employer, Time Inc., from Time Warner (TWX), I said that former Time Inc. chief financial officer Howard Averill, who left to become CFO of Time Warner, had forfeited a $1.75 million payment that he would have gotten if the spinoff were completed. Soon after my column ran, Time Warner disclosed that it had paid Averill $1.75 million to compensate him for the foregone payment.
And that will do it. Have a great end of the year, and a happy, healthy, and prosperous 2014.
