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CEO Daily: Tuesday, April 12

April 12, 2016, 11:04 AM UTC

Goldman Sachs agreed yesterday to pay $5.1 billion dollars and admit to “serious misconduct” in its handling of mortgage backed securities. The New York Times this morning says the company will receive tax benefits that make the actual payout closer to $4 billion, but it’s still real money. That comes on top of $13 billion from J.P. Morgan Chase, $16 billion from Bank of America, $7 billion from Citigroup and $3.2 billion from Morgan Stanley.

But don’t expect that to assuage the anger sweeping the American electorate these days. The public wants to know why the people running these big banks aren’t in jail. It’s become one of the most popular tropes in American public life: the big banks blew up the global economy, and nobody went to jail.


So why didn’t top bankers go to jail? It’s certainly not because of a shortage of federal and state prosecutors eager to make a name for themselves by putting them there. Nor is it because the criminal justice system is rigged, or because top bankers are somehow “too big to jail.”


No, the real reason these bankers aren’t in jail is because – brace yourself – they didn’t commit crimes. They may have been guilty of greed, negligence, lack of foresight, lack of oversight, lemming-like herd behavior, wilful blindness and even rank stupidity. But there is no evidence that they knowingly engaged in fraudulent activity.


That’s not a very satisfying answer. The mob wants a lynching. But with statutes of limitation running out, it looks like they’ll have to settle for a mere $44 billion.


More news below.


Alan Murray

Top News

  Exxon, Big Oil Under More Environmental Pressure
Some big investors are planning to 'stress test' ExxonMobil and other big oil companies to see whether their business models can cope with the impact of Climate Change policy on their businesses. Calpers, the New York state retirement and the Church of England's Commissioners are among those calling on Exxon and Chevron to analyze the risks they face if governments seriously implement last year's Paris accord on keeping the rise in global temperatures to a maximum 2 degrees Celsius. The call comes less than a month after the heirs of founder John D. Rockefeller publicly distanced themselves from the descendants of Standard Oil over their perceived failure to address the Climate Change issue.  Financial Times, subscription required

Alibaba Drops $1 Billion on E-Commerce Startup

China's biggest e-commerce company is expanding its global reach, spending over $1 billion to take over Lazada Group. Lazada services a market of around 600 million people across South-East Asia, with operations in Singapore, Vietnam, the Philippines, Thailand in and Malaysia as well as its home market in Indonesia. The deal is a welcome cash-out for the much-maligned German start-up incubator Rocket Internet, whose shares are up 3% this morning. But it hasn't moved the dial for Lazada's other anchor investor, British retailer Tesco Plc. WSJ, subscription required


 Italy's Banks Are Just Fine* (*for now)

Don't try telling Matteo Renzi that a chain is as strong as its weakest link. The Italian PM agreed with the country's strongest lenders and insitutional investors to set up a 5 billion euro ($5.6 billion) fund for recapitalizing smaller and more sickly banks. It's prompted a big rally in battered bank stocks, but whether it will be more than yet another sticking plaster on a system carrying $400 billion in non-performing loans is still to be seen.  FT, subscription required


A Time for Sneezing, and IMF downgrades

The International Monetary Fund is set to cut its global growth forecasts again when it publishes its latest quarterly update to the World Economic Outlook. Christine Lagarde already flagged the message during a visit to Germany last week. The headline “IMF Slashes Growth Forecasts” is as much a ritual part of spring as hay fever these days, which seems to say as much about the Fund’s institutional bias as it does about the actual health of the world economy. In January, at its last review, the Fund had cut its GDP growth forecasts for the U.S. this year and 2017 by 0.4% and 0.3%, to 2.4% and 2.5%, respectively. Any further cuts may put further pressure on the Fed as it tries to ‘normalize’ the level of interest rates.  IMF


Around the Water Cooler

'Loser', Meet 'Whiner'

Ted Cruz has labeled his biggest rival for the GOP nomination a 'whiner', in response to Donald Trump's complaints that the system was 'rigged' against him after a string of bruising defeats across the country over the last week. The 'anyone but Trump' movement in the Republican Party has picked up momentum as the early front-runner has stumbled, meaning that Trump needs a big win in New York on the 18th to head off the risk of a contested convention.   Fox

China's Hunger Threatens More Than Rhinos and Tigers

Huge tracts of forest land across Southeast Asia are being turned into virtual warzones as Chinese demand for rosewood and other luxury woods drives an explosion in illegal logging. A single ornately carved bed can cost a cool $1 million in plush Shanghai showrooms, meaning the potential profits are tantalizing for impoverished loggers, as well as the traffickers who spirit the lumber across porous frontiers. Last week, Cambodia, China, Vietnam and Thailand all jointly agreed to give countering Siamese rosewood trafficking the highest priority. They'll have their work cut out. Fortune


At Least Someone Still Wants Campbell's Soup

Seven prints of Andy Warhol’s famous Campbell’s Soup Cans have been stolen from an art museum in Missouri, and the F.B.I. is now offering a reward to whomever recovers them. The prints, which belong in a set of ten, were believed to have been stolen from the Springfield Art Museum sometime last Wednesday night, the Telegraph reports. They had been in the museum’s collection since 1985, and then they were gone—simply taken off the wall during a break-in.  Daily Telegraph





Led Zep stars face trial for ripping off Stairway to Heaven

Robert Plant and Jimmy Page, the two driving forces behind Led Zeppelin, are to stand trial over accusations that their most famous hit, Stairway to Heaven, was ripped off. A Los Angeles judge has ruled that there were enough similarities between the 1971 rock classic and an instrumental by the band Spirit to let a jury decide. The copyright infringement action has been brought by Michael Skidmore, a trustee for the late Spirit guitarist Randy Wolfe, who played on the same bill as Led Zeppelin in the 1960s, and claims he should be given a writing credit on the track.   BBC