By Barry Elias
GCC Staff  Writer
August 05, 2009

“Wilson gave $147.2 million in 2006 to charities, making him the 12th most generous donor in the U.S., according to a survey by the Chronicle of Philanthropy,” reported by Bloomberg   News on May 23, 2007.

Furthermore, the author indicates Mr. Wilson accumulated his wealth primarily as a hedge fund manager since 1968, and he plans to distribute 70% of his more than $500 million in assets to charitable causes.

The Foundation Center in New York City reports for the year ended December 31, 2007, The Robert W. Wilson Charitable Trust had total assets of $198,201,421 and total giving of $55,735,488.

An admirable endeavor, indeed.

In an interview published December 17, 2007 by Conde Nast Portfolio.com, Mr. Wilson responded as follows to the question, “Is Wall Street giving back enough?”

“I find the term giving back an offensive one. In the process of making their money, Wall Street professionals have been profoundly productive. You surely have read about collateralized debt obligations and structured investment vehicles and other forms of securitized debt, and how people don’t know what they’re worth, and how Wall Street has done something terribly wrong in packaging and selling them this way. But these guys have diffused the risk in the entire economy. Instead of banks closing down, as they would have 50 years ago, you now have risks spread all around the world. People who make money in this country are being more productive in making it than in giving it away.”

Really?

This reply, from one of the most “successful” financiers of our time, seems antithetical to the realities: disturbing in terms of industry product conceptualization and compensation justification.

Fast forward a year and a half.

According to Niall Ferguson on Fareed Zackaria GPS this past weekend, US wealth has reached 1989 levels:  two decades of wealth erosion occurred this past year.  Moreover, world governments are now injecting trillions and trillions of dollars in direct assistance, loans, and guarantees to resuscitate a failing financial system, with probably more aid to follow.

July 30, 2009, Moneynews reported nine banks received $125 billion in October 2008 despite incurring losses and remitting bonus payments.  The New York Times stated the losses totaled $81 billion and the bonuses, $32.6 billion.

It seems the $125 billion from the government conveniently covers the $81 billion losses and the $32.6 billion bonuses.

What to do with the $11.4 billion “surplus”:  small business lending to stimulate the economy?

The New York Times also reports that roughly 5,000 individuals will be receiving seven figure

bonuses, of which 300 at Goldman Sachs and Morgan Stanley will see over $5 million.  Some bank subsidiaries and brokers are excluded from this list, including one Citigroup trader, who expects to receive $100 million, despite a fall in revenues to 2002-2003 levels.

The protagonists may argue the compensation reflects their value added to the firm.

If this statement is accurate, who in the firm is “decompensated” for the losses incurred?

The securitization methodology camouflaged the inherent risks, thereby inflating market valuations and compensation packages in an artificial and deceptive manner.

Once the underlying economic realities materialized, asset values deteriorated, and the monumental destruction of wealth was absorbed by the rest of society.

It may take a decade or more to right this ship by instilling responsible values and implementing prudent, fair, and sustainable policy measures.

Editor’s Note: We would like to know what you think? dan@goldcoastchronicle.com

Source: Barry Elias