September 7th, 2011
Pictured is the guillotine at Place du Carrousel, used in 1792 an 1973.
Econintersect: The guillotine is a sophisticated French instrument designed to quickly chop off a head. The corporate guillotines were in heavy use Tuesday (September 6). Heads were rolling on bank and corporate board room floors in the U.S. and Europe. Follow up:
Follow up:Carol Bartz was fired after two years at the helm of Yahoo. According to The New York Times she announced her departure with an e-mail to employees. From The NYT:
In an e-mail she sent to employees from her iPad, titled “Goodbye,” Ms. Bartz wrote: “I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s chairman of the board.” Ms. Bartz was informed of the board’s decision while she was traveling to New York from Maine, according to a person familiar with the board’s action.
Business Insider reports that, according Belgian Nieuwsblad, Steffaan Decraene, the CEO of Dexia, Belgium’s largest bank suddenly resigned Tuesday. According to The Toronto Star, Dexia is a troubled giant:
We continue to think that Dexia is the most troubled publicly traded bank in the eurozone outside of Greece. Its exposures to sovereign debt in the PIIGS nations are larger than its core Tier 1 capital, it has an inadequate deposit base to support its loan book, and it is overly leveraged, in our opinion. We think Dexia is likely to undertake a highly dilutive capital raise, and wonder if it might come sooner rather than later given the management change.
With rumors of up to 30,000 layoffs to come over some unspecified period of time (Northern Voices Online), Bank of America started with two top executives. On Tuesday Joseph Price, head of small business banking and high profile wealth management head Sallie Krawchek both got the axe, according to Barron’s. PBS News reported on August 19 that Bank of America would cut 3,500 jobs by the end of September. Now there are only 3,498 to go.
Rumors abound that there may be more guillotine action (and maybe worse) coming for Bank of America. From Zero Hedge blog:
Oddly enough, just two years after hiring Sallie Krawcheck from Citi, BofA has just made her into the first sacrificial scapegoat. Odder still, is that Lehman also fired a women scapegoat a few weeks before it filed for bankruptcy. Coincidence? Find out when Brian Moynihan is fired in a few short weeks.
Bank of America appointed two COO’s, with David Darnell overseeing consumer divisions, and Thomas Montag overseeing investment banking and trading. This could be the first step in a process to separate commericial banking and investment banking, which would be a return to the type of banking structure in place through much of the middle decades of the twentieth century. The bank is struggling to deal with residual liabilities from the housing bubble collapse and mortgage backed securities problems.