Actual finance blog

For most banks, lending is all about the numbers.

If a customer has the right credit score, good financial records and a believable plan, the bank is interested in doing business. If they don’t, well, no dice, particularly in this economy.

Some banks are going beyond the numbers to develop long-term relationships, digging deeper to make sure business customers are doing all they can to survive the turbulent economy. It’s a long tradition among community banks, which focus on serving businesses, consumers and farmers in their local market areas.

The extra attention ranges from financial checkups or priority-setting sessions at Commerce Bancshares Inc. and National City to Enterprise Bank & Trust Co.’s college-style courses.

Sandy Washington, senior vice president of small-business banking at Commerce, said the bank has been doing its checkups for years, but customers are more receptive to them in the current environment.

"The more we understand what their goals and their objectives are, the more we can help them," Washington said.

Rick Sems, Missouri banking president for National City, said building relationships with business customers is nothing new for the bank. Twice a year, customers have a business priority agenda session with an account manager, a local branch manager and a cash management officer.

Jim Watson, president of Midwest BankCentre, said the bank also does checkups and sponsors regular gatherings with speakers who can help customers understand the economy.

"Communications is a mutual responsibility," Watson said. "Even our customers today are very concerned about how their bank is doing."

Kevin Eichner, who retired as chief executive of Enterprise Bank in May to become president of Ottawa University, said the bank started Enterprise University to give its business customers a chance to continue their education in a way that fit their schedules and their budgets.

"It’s part of a consultative approach" at Enterprise, said Jerry Mueller, the bank’s senior vice president of marketing. "The idea is, we want to partner with our clients and help them be more successful."

On a recent Wednesday morning, 20 executives sat at tables scattered around a classroom in an industrial building in Olivette.

Lori Lewis, Enterprise’s director of organizational development, was leading a class on "Managing Your Energy," based in part on "The Power of Full Engagement," a book by Jim Loehr and Tony Schwartz.

For nearly three hours, Lewis led the executives through exercises designed to help them manage their business and personal lives more effectively. Lewis, who has a doctorate in organizational psychology, sprinkled her lecture with a clip from National Public Radio, a Power Point presentation, handouts and a Sudoku puzzle.

Classes at Enterprise University range from marketing, sales and financial management to leadership effectiveness and personal financial planning. Some are taught by bank executives like Lewis or Stephen Marsh, the bank’s president. Other teachers include lawyers, business consultants or experts in things such as energy conservation.

The classes are open to anyone with an interest in the topics covered. There is no charge, and it’s up to attendees whether they’d like to be contacted by the bank after the class.

Kay Erb, registrar for the classes and a member of the bank’s marketing department, says between 300 and 500 people attend Enterprise University classes every semester. About 80 percent are presidents or top managers of their companies.

Jeffrey Jappa, president of JMC Manufacturing in Bridgeton, said the classes gave him a good introduction to the bank. He had been considering changing banks after he bought the wood products company from his father absolutely free credit report.

"Other banks sponsor seminars," Jappa said, "but not one that’s really put together like a university with a course load that’s really targeted to the small-business owner. Even though I was already interested in the bank, there was no selling whatsoever."

Jappa has since become an Enterprise customer, and likes their approach.

"Other banks just let you run, and you only hear from them when things are going wrong," he said. "My account manager is very interested in my business. He’s worked hard to create compliance targets that are reasonable and can be attained."

Mueller said Enterprise University has been a great way to set the bank apart.

"It enhances the relationship," Mueller said. "We can help (customers) improve their skills and show them ways to make their businesses more efficient."

Commerce Bank’s financial checkups include an hour-long meeting to review financial statements. Customers are encouraged to bring their tax advisers along. The bank may ask about the customer’s goals, the ways they’re collecting receivables or managing cash. Personal finance can be on the agenda as well.

"We always have an open door," Washington said. "We encourage our customers to meet with us regularly. As economic conditions change, so does the bank’s appetite to supply credit to particular businesses."

Washington said the bank recently worked with a family-owned bakery facing a downturn in its business because of a decline in the market for sweet goods.

"We sat down with the family and provided some reality checks," Washington said. The bank was able to help the business improve its collections and worked with an accountant to help the bakery manage its finances.

At National City, the agenda-setting sessions range from reviews of financial statements to discussions about cash management. Small-business customers’ personal wealth often is tied up in the company. Owners need to make sure their families are protected while they run the business, Sems said.

The bank has had to get more creative on loans lately, tapping Community Development Corp. programs and working with business development groups to arrange financing or equity injections, he said. Recently, customers have been more concerned about how their accounts are titled to ensure that they have the maximum insurance from the Federal Deposit Insurance Corp.

"I really try to push that what we’re trying to do is advise, not prod and poke so much," Sems said.

Wayne Kissel, owner of K1 Creative, a design firm in Eureka, said sessions with his National City banker have shown him how to protect assets, change investment strategy and handle employee benefits. Kissel said he went with National City after looking at proposals from six different banks.

"My personal lender has been down to earth and easy to work with," Kissel said. The bank was instrumental in helping the business build its own building after years in less desirable rented space.

Bankers have to be careful about how much advice they give because of potential liability if a customer feels he or she was pushed to make a decision that turns out badly, said Rick Palank, senior vice president for finance at the St. Louis County Economic Council.

Palank said it’s rare for banks to go beyond the numbers, especially now.

"They’re very, very conservative now," Palank said.

jerristroud@post-dispatch.com

314-340-8384

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The global financial crisis will add at least 20 million people to the world’s unemployed, bringing the total to 210 million by the end of next year, the U.N. labor agency said Monday.

That will be the first time in a decade of record keeping that the global total has been above 200 million people, said officials of the International Labor Organization.

Global leaders need to focus on the impact on individuals rather than just financial institutions when they devise rescue plans, ILO Director-General Juan Somavia told reporters.

"We thought it was not good to talk about the financial crisis exclusively in financial terms," Somavia said. "We have to talk about the financial crisis in terms of what happens to people and in terms of what happens to jobs and enterprises."

He said it is already clear that people are going to be hurt by the financial crisis and that measures should be taken to provide unemployment compensation and other social protection.

"If we have enough resources to pump into the financial system, this is not the moment to say, ‘Yes, but we don’t have the resources to care about people,"’ said Somavia.

He said the first step in a global rescue plan remains getting out of "the credit paralysis."

"Hopefully, the decisions that have been taken are going to work," he said, adding that all measures should be taken to contain as much as possible the fall of the real economy and reduce the recession possibilities as much as possible.

But then attention should turn to "taking care of those enterprises that produce the most jobs," Somavia said payday advance lenders. "Those tend to be the small enterprises."

"The financial system has to go back to its fundamental function," he said, meaning providing credit to people with entrepreneurial spirit to set up a company that will produce goods and services and create jobs.

Another issue is protecting pensions, especially for those whose funds are invested in the stock market, he said.

"You better give enough credit to the pension systems so they don’t have to sell [shares] in a battered market," said Somavia, noting that the U.S. Congress had passed a US$700 billion rescue plan for financial institutions.

"Make sure some of that money goes to the pension systems so that they can pay pensions," he added. "People are very afraid all over the world."

The ILO based its unemployment projection in part on the latest forecast by the International Monetary Fund that the economies of the United States and Europe would virtually stop growing and that Japan would have only 0.5% growth, Somavia said.

The agency also factored in data from the United Nations and from countries that have produced recent statistics, he said.

"The estimate that we are now making is that as compared with January 2008 to December 2009 we are probably going to have about 20 million jobs lost, and this may be underestimated," Somavia said.

He said the agency had yet to break the forecast down by region or country. 

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Battered British banks, along with the United Kingdom Treasury office, are expected to unveil details of a massive capital raising plan early Monday, according to The Wall Street Journal, citing people familiar with the situation.

On Sunday night, the paper reported that the British government was close to a plan to take control of the Royal Bank of Scotland, injecting at least 15 billion British pounds ($25.5 billion).

Last week, the British government said it would make $87 billion available to the nation’s eight largest banks in an effort to shore-up their capital positions. In return for the infusion of capital the British government will receive preferred shares of those banks.

In addition to RBS, affected institutionss include Barclays and HBOS, a mortgage lender.

The announcement last week came a day after the U.K. Treasury teamed up with five central banks around the world to cut interest rates in an effort to bolster global economies.

"A healthy banking system is the cornerstone of the economy. But many banks, all over the world, don’t have sufficient capital," British Finance Minister Alistair Darling said after the rate cuts were announced. "What started in America, last year, has now spread to every part of the world. And I’ve made it clear that we will do whatever is necessary to maintain stability."

The government has already moved several times to increase the amount of long-term funding it is providing to banks under a special liquidity plan announced in April guaranteed approval cash advance loans. The amount, which has totaled over $176 billion year to date, was recently increased to upwards of $350 billion.

According to the Journal, the rout on Wall Street was responsible for pushing the U.K. to speed up the announcement, with at least some banks expected to say by Sunday how the capital will be raised.

Nothing is set in stone, however, including Monday’s deadline.

Under the plan, the banks will be required to raise an additional £25 billion ($42 billion) by year end, according to the U.K. Treasury Web site. The institutions can either raise the funds through private investors or through the British government.

RBS and HBOS are considered the two most likely to seek the funds from the government, said the Journal, according to people familiar with the situation and analysts that cover the two banks. The paper also said RBS Chief Executive Fred Goodwin has intimated that he would step down if that’s what it takes to shore up the bank’s financial position.

A person familiar with the U.K. Treasury’s plan told the Journal that an injection of taxpayer money would most likely lead to talk of executive departures, including Mr. Goodwin. 

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WASHINGTON–New applications for unemployment benefits rose slightly last week to a seven-year high due to a weakening economy and the impact of Hurricanes Ike and Gustav, the Labor Department said Thursday.

The department reported that initial claims for jobless benefits increased by 1,000 to a seasonally adjusted 497,000. That's significantly above analysts' estimate of 475,000. The total is the highest since just after the Sept. 11 terrorist attacks seven years ago.

U.S. stock futures declined on the report. Dow Jones industrial average futures dropped 102 to the 10,785 level, pointing to a lower opening for shares.

The hurricanes, which hit Texas and Louisiana earlier this month, added about 45,000 claims from the two states for the week ending Sept. 27, the department said.

The hurricanes have led to higher claims for several weeks. As a result, the four-week average of claims, which smooths out fluctuations, jumped to 474,000, up 11,500 from the previous week.

In the week ending Sept. 20, Texas reported a 22,235 jump in claims, while Louisiana said claims rose by 9,671.

The number of people continuing to receive benefits increased to 3.59 million, up 48,000 and higher than analysts' estimates. That's the highest total in five years.

Jobless claims are at elevated levels even excluding the hurricanes. Weekly claims have now topped 400,000 for 11 straight weeks, a level economists consider a sign of recession payday loans in 1 hour. A year ago, claims stood at 324,000.

The economy is struggling with the financial crisis and slowing consumer spending, leading to increased layoffs by the nation's employers.

Economists expect a separate Labor Department report Friday on payrolls to reflect further weakness in the labor market. They predict the report will show that the nation's employers cut 100,000 jobs last month. That's on top of 605,000 jobs that were eliminated in the first eight months of this year.

The report is expected to show that the jobless rate remains at 6.1 percent. The rate jumped above 6 percent for the first time in five years in August.

The financial crisis will likely cause greater job cuts in the coming months. Several large, troubled banks have been bought by competitors and layoffs are likely.

Citigroup Inc. on Monday purchased Wachovia Corp., which had about 120,000 employees. JPMorgan Chase & Co. last week bought Seattle-based Washington Mutual, which employed roughly 43,000.

Several companies have announced layoffs in the past week, including aluminum company Alcoa Inc., auto retailer CarMax, Inc. and chicken producer Pilgrim's Pride Corp.

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Britain is set to nationalize troubled bank Bradford & Bingley on Monday after Spanish bank Santander agreed to buy its retail deposits and branch network.

B&B would be the second British bank nationalized this year and the latest in a string of high-profile banks in Europe and the United States to fall victim to the global credit crunch.

Santander will pay about 400 million pounds ($735 million) to acquire 2.7 million Bradford & Bingley customer savings accounts containing some 21 billion pounds of deposits, a company spokesman said.

It will also take over the mortgage lender’s network of around 200 branches, the spokesman said. The B&B brand will remain for now but the accounts will transfer to Abbey, a British bank bought by Santander in 2004.

Finance minister Alistair Darling is expected to announce plans early on Monday to nationalize the remainder of Bradford & Bingley, people familiar with the matter said free credit report.com.

The Treasury led intense talks on the rescue of Britain’s 9th biggest mortgage provider over the weekend.

The government would have preferred a private-sector buyer to acquire all of B&B, but rivals appeared unwilling to take on B&B’s 41 billion pound residential mortgage portfolio amid the global credit crisis and weakening British housing market.

B&B shares tumbled to a record low on Friday and closed at 20 pence, valuing the company at less than 300 million pounds. 

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Google Inc.’s announcement last year that it would give away software that could run cell phones was met by dizzy accolades from analysts who thought it would let the search engine company conquer the world of mobile advertising.

Fruit of that announcement is set to drop: T-Mobile USA will reveal Tuesday the first phone to use Android, Google’s software platform.

But a lot has happened in the world of cell phone software in the intervening year, and Google looks set for an uphill battle in trying to capture the desires of consumers and wireless carriers.

Research firm Strategy Analytics estimates T-Mobile could sell 400,000 phones this year, giving Google about 4 percent of the U.S. market for "smart" phones, a category dominated by Research in Motion Ltd.’s BlackBerry phones with competition from Apple Inc.’s iPhone, Palm Inc.’s Treos and Centros, and phones running Microsoft Corp.’s Windows Mobile software.

The new phone, called the G1 according to T-Mobile’s invitation, is widely expected to be a design from HTC Corp. of Taiwan. Based on previous Google demos of its software, it’s assumed that it will have a touch screen and a slide-out, full-alphabet keyboard.

The Wall Street Journal reported last week, citing unidentified sources, that the phone would sell for $199 and carry the Google brand absolutely free credit report. It’s likely that the phone will go on sale in a few weeks. Other details are scant, and it’s not clear exactly what the phone will be capable of, but Web browsing and e-mail are safe bets.

"This is the right moment for Google to answer some of the big questions that have been outstanding since Android was announced," said Morgan Gillis, executive director of the LiMo Foundation, which has created a rival cell phone software platform. "What will the consumer do on this handset that can’t be done on other handsets?"

The LiMo Foundation is behind one of the developments that has undermined the prospects for Android. In May, Verizon Wireless said LiMo, or Linux Mobile, would be the "preferred" software for its phones, starting next year, joining some European carriers.

Like Android, LiMo is based on Linux computer software and is given away free to phone makers. But the LiMo Foundation is designed as consortium of industry participants to assuage their fears that a single company would dominate phone software, like Microsoft does on PCs.

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NEW YORK — Morgan Stanley and Wachovia Corp. are in talks about a possible combination as the investment bank tries to come up with ways to survive the ongoing credit crisis, according to media reports.

John Mack, Morgan Stanley’s chief executive, received a call from Wachovia about a potential deal, according to The New York Times and Wall Street Journal. Both newspapers cited people familiar with the discussions. The talks are described as preliminary. Spokesmen for Morgan Stanley and Wachovia declined to comment.

Wachovia’s retail securities brokerage unit is based in St. Louis.

Other banks also have expressed interest in Morgan Stanley, according to the reports.

Shares of Morgan Stanley and fellow investment bank Goldman Sachs plunged Wednesday, a sign that investors fear they can’t survive in their present form as the last two major independent investment banks.

Executives of both companies insisted a day earlier, when they were reporting profits for the most recent quarter, that they do have the financial wherewithal to go it alone.

But analysts said the question increasingly is whether continued market turmoil could force them to acquire or be acquired by commercial banks, whose deposit-taking operation would provide a stable source of funding. The upheaval in the U.S. financial system has driven Merrill Lynch & Co. and Bear Stearns Cos. into emergency sales, and Lehman Brothers Holdings Inc. into bankruptcy.

Those in favor of such combinations believe that the sale of Merrill Lynch and collapse of Lehman Brothers might force the remaining investment banks to pursue some kind of transaction to stabilize results. The steady funding base of deposits held by commercial banks would go a long way in assuage investors concerned about volatility.

Anxious investors on Wednesday bid up the price of protecting against a default of debt issued by the two investment banks. The spike in credit default swaps has fanned fear on Wall Street that the investment banking model is in jeopardy of extinction.

John Mack, Morgan Stanley’s chief executive, struck back on Wednesday. He told employees in an e-mail that the No. 2 U.S. investment bank was "in the midst of a market controlled by fear and rumors."

"I know all of you are watching our stock price (Wednesday), and so am I," he said in the e-mail guaranteed cash advance. "After the strong earnings and $179 billion in liquidity we announced — which virtually every equity analyst highlighted in their notes this morning — there is no rational basis for the movements in our stock or credit default spreads."

Shares of investment banks have been sideswiped by a wave of short selling, which can cause big swings as investors bet that a stock’s price will fall so they can profit from it. Morgan Stanley shares fell as much as 44 percent Wednesday and closed down 26 percent, and Goldman shed more than 35 points before narrowing its loss to about 18 percent.

The Securities and Exchange Commission on Wednesday took measures to rein in aggressive forms of short-selling.

Roy Smith, a professor of finance at New York University’s Stern School of Business, believes the companies can survive on their own but remains concerned about the current environment in which they operate.

Morgan Stanley had hoped to stem investor panic about its financial health by releasing third-quarter results a day earlier than planned. On Tuesday, the company posted better-than-expected profits, and while Goldman Sachs’ profit slumped 70 percent, it did finish the quarter in the black.

Goldman Sachs Chief Financial Officer David Viniar and Morgan Stanley CFO Colm Kelleher both said their firms were able to navigate through the market dislocation and vowed to remain independent. The CFOs said their firms have enough cash on hand and no need to raise more.

Spokesmen for both investment banks declined to comment Wednesday about the plunge in their shares.

Glenn Schorr, an analyst with UBS, on Wednesday said the market reaction was "insanity." He said Goldman and Morgan Stanley aren’t running out of money and remain profitable.

"The world should really be concerned about this because if we continue to squeeze the financial system’s balance sheet and see fewer players in the business, the available credit to corporations and hedge funds will shrivel up and the cost of capital will continue to skyrocket across the board," he said.

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Secure Energy Inc., a St. Louis-based company developing a $550 million plant in Decatur, Ill., to convert coal to natural gas, has entered a long-term sales agreement with a unit of oil giant BP PLC.

Under the agreement, Secure Energy can sell gas to industrial customers in Decatur. BP Canada Energy Marketing Co. will purchase any unsold fuel — up to 67 million cubic feet of gas a day.

The agreement represents a milestone in the development of the Decatur plant, which is expected to be complete by the summer of 2011, said Lars Scott, a former Peabody Energy Corp. executive who co-founded Secure Energy several years ago.

Technologies to convert coal into other energy forms, such as natural gas or diesel, aren’t new, but they were cost-prohibitive in the era of cheap oil. Today, they’re getting another look because of higher petroleum prices.

The price of natural gas, which ranged between $1 and $2 per thousand cubic feet the 1990s, has averaged almost $10 per thousand cubic feet so far this year electronic check payday advance. The price also has been especially volatile, spiking above $13 in June only to fall below $8 this month. Despite the decline, the project remains viable, Scott said.

The plant will use about 1.4 million tons of high-sulfur Illinois coal a year to produce 20 billion cubic feet of natural gas — enough to heat 250,000 homes.

Secure Energy is in talks to find a coal supplier, Scott said. A previous agreement to purchase coal from International Coal Group Inc.’s Viper Mine in eastern Illinois expired.

The plant, to be built on a site purchased last year from Caterpillar Inc., will employ about 60 people, he said. Construction is expected to take 20 to 24 months.

Secure Energy received an air permit from the state in April 2007 and it has other major permits required to begin construction.

jtomich@post-dispatch.com | 314-340-8320

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Declining property-tax revenues, high energy prices and other financial headwinds will create greater economic hardships in 2009 for most cities across the U.S., a new report says.

City budget officials say they expect more layoffs for municipal workers, cutbacks in parks and recreation programs and library hours, and higher fees for everything from garbage pickup to building permits.

"Cities for a long while now have been on the upside of the curve, generally experiencing pretty good growth in revenues," said Chris Hoene, director of policy and research for the National League of Cities, which collected data from 319 municipalities in its annual survey. "Now we’re coming over the top of the curve and heading down the wrong side of it."

The housing crisis has already damaged municipal coffers in 2008, especially in the West, with rising foreclosures and falling home prices resulting in decreased property-tax revenues.

Four out of five budget officials who responded to the survey of U.S. cities say next year is likely to be worse.

Small but fast-growing suburbs that used low tax rates to attract families are most vulnerable to budget constraints.

The three main sources of revenue for cities - income tax, property tax and sales tax - are all declining, the report warns. In the meantime, health care, public safety and fuel are getting more expensive.

Two of every three cities with more than 50,000 residents say it’s harder to meet basic city needs this year than last, the survey found. One in two budget officials responding to the survey say they have raised fees on city services during the past year.

The report follows a litany of gloomy financial news for the nation’s local and state governments in recent months.

The Center on Budget and Policy Priorities reported Sept. 8 that midyear shortfalls opened in the budgets of at least 13 states in the current budget year. At least 29 states and the District of Columbia faced or are facing combined budget shortfalls of $48 billion in the fiscal year that began July 1.

The Rockefeller Institute for Government said in July that adjusted state tax revenues remained in decline for the third quarter in a row and that sales tax collections were flat for the first time in six years.

Cities that rely mostly on property taxes are in for the toughest ride because the loss of revenue from a foreclosed house today won’t be felt in budgets for months.

Home prices for the 20-city Standard & Poor’s/Case-Schiller index peaked in July 2006, and some economists predict prices won’t recover until mid-2009 or later.

For cities already tightening their belts, the squeeze could get even stronger.

– In Columbus, the city is facing a $75 million budget hole and planning 100 job cuts, including about 40 layoffs. All spending over $1,000 is now under close review. Revenue from the city’s income tax grew by at least 4% a year for 40 years, including the recession of the 1990s cash advance. Since 2000, that revenue has topped 4% only once.

– In Palm Bay in central Florida, one of the country’s fastest-growing cities in recent years, officials have eliminated 32 jobs out of about 850, cut public-pleasing events like the annual Easter Egg hunt and are raising fees on the cost of renting ball fields and other park facilities.

– In Indianapolis, city officials ordered a 5% budget reduction this year and plan to continue it next year. A proposal to hire 100 additional police officers is on hold. Next year’s budget includes a proposed reduction of the city’s $1.5 million arts budget by a third and millions cut from the parks program.

"As we spend more and more on the public safety side, taking away from the investments in education and the developmental things, are we in fact creating bigger problems for ourselves down the line?" said Jackie Nytes, a city-county councilwoman.

Among the report’s other findings:

– Cities on average are facing a 2.8% budget deficit this year, forcing fee increases, reduced spending or use of rainy-day funds.

– The biggest spending pressures on cities are coming from increases in fuel costs; maintaining roads, bridges and water and sewer systems; keeping up police and fire services; and increases in employee costs, including wages and health care.

– Three of every four fiscal officers in Western states reported their budgets were worse this year. Conditions were most optimistic in the South, with one in every two budget officials responding to the survey saying conditions were worse in 2008.

In pothole-ridden Tacoma, Wash., officials planning a long-awaited street repair program were counting on $19 million during the current two-year budget cycle. But that figure is down to a projected $12 million as real estate tax revenue plunges, including a 50% drop from July 2007 to this past July.

One of the biggest problems for cities is that revenue from sales and property taxes are declining together for the first time in decades. As consumer confidence sags in the face of declining home values, people are less likely to make big-ticket purchases.

Fortunately, most cities have healthy rainy-day funds, filled as buffers in recent years as it became clear to local governments that state and federal funding was drying up.

Not every city is ready to raise fees or taxes.

In Riverside, Calif., in the state’s inland region, the budget was cut by $10 million from 2007 to this year as numerous departments saw reductions, including fewer hours and staff at libraries. Riverside, with a population of 294,000, saw 2,500 foreclosures last year and could have another 7,500 homes at risk.

"If you take the premise this is the worst economy in the inland area since World War II, it’s not good time to raise fees,"said Mayor Ron Loveridge. 

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The likely disappearance of investment banks Lehman Brothers and Merrill Lynch presents a double-barreled hit to an already wounded job market, and will likely depress salaries on Wall Street.

With Lehman headed for bankruptcy and Merrill swallowed by Bank of America, two of Wall Street’s four pillars have crumbled overnight.

Headhunters and consultants said the U.S. financial services sector, already suffering from a glut of unemployed talent after shedding more than 100,000 jobs this year, must now brace for up to 50,000 more.

“The resume flow will start on Monday like there’s no tomorrow,” said Michael Karp, chief executive at executive search and consulting firm Options Group in New York.

“This is seriously going to impact compensation this year, across the Street and all over the world as well,” he said.

“The golden years of compensation in the financial services industry are over, and it doesn’t help with the Bear Stearns people still looking for work.”

On Sunday, eleventh-hour talks to sell Lehman failed, making bankruptcy a certainty instant payday advance.

At the same time, Bank of America, the second-largest U.S. bank, was wrapping up a surprise acquisition of Merrill, the world’s largest brokerage, in a deal that would save Merrill from Lehman’s fate. 

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