Dumbest Moments in Business

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Dumbest Moments in Business

Post by deja vu » Mon Dec 29, 2008 9:30 am

We don't know whether to laugh or cry. Our annual list of the year's most laughable moves proves
that, even in moments of crisis, stupidity lives on. (Courtesy of CNN.com)

*Detroit pleads poverty - in style
Like someone arriving at a food bank in a limousine, the chief executives of the three major U.S.
automakers spark outrage when they fly their corporate jets to Washington D.C. to beg Congress
for a multi-billion dollar bailout.

Yes, we know that corporate jets are often a cost-effective way for the heads of far-flung corporations
to get around. But someone should have known this wasn't going to look good (and, sure enough,
Congress sent the auto chiefs away empty-handed). At the very least, couldn't they have shared a ride?

*Lamest road trip ever
Let's see...corporate jets are a no-no...the subway doesn't go that far...A bike ride might just kill
us...I know! Let's drive the 10 hours from Detroit to D.C. - in one of our cool hybrid cars!

Given a second chance after the private-jet fiasco to plead their case before Congress, the Detroit
3 take to the road (separately, of course) in a company fuel-sipper.

In the case of Chrysler's Robert Nardelli, the exercise in overkill is particularly awkward: The Dodge
Aspen Hybrid he drove will soon be discontinued.

*Paulson's 3-page plea for $700B
Treasury Secretary Henry Paulson learns how not to reach for $700 billion. In September, days after
Lehman Brothers collapses and two other giants teeter on the abyss, Paulson submits his "break the
glass" plan for saving the U.S. financial system.

All of three pages, the proposal seeks carte-blanche access to $700 billion in government funding to
buy up troubled mortgage assets at the root of the financial crisis - with scant details on how or
where the money will be spent.

Just as galling, Paulson includes a provision in the bill that will exempt his spending from court
challenges. Congress axes the legal cloak, prompting Rep. Barney Frank to quip, "We have disexempted him."

But the damage is done, and the proposal fails in the House Sept. 29 - triggering another massive market sell-off

From Henry Paulson's original bailout proposal: Decisions would be "non-reviewable." In other words...'trust me!"

*Bloating up the bailout
Maybe three pages wasn't such a bad idea after all...When Congress is done with it, Paulson's proposal
for saving the U.S. financial system balloons to 451 pages and is loaded with pork barrel spending
- including, unbelievably, a cut in taxes on toy arrows and an extended tax break on "wool products."

Backers of the arrow tax exemption - section 503, for the record - say it reverses a wrongheaded 2004
law that sharply increased tax rates on cheap kids' arrows.

*Mozilo's 'disgusting' reply-all
If you thought the former Countrywide CEO couldn't sink any lower, think again. Already under
attack as the overpaid, over-tanned and over-zealous pioneer of subprime mortgages, Angelo Mozilo
doesn't do himself any favors in May after reading a customer's e-mailed plea for help with his home loan.

Intending to forward the missive to a colleague, Mozilo instead hits "reply all" and sends a response
calling the beleaguered homeowner's request "unbelievable" and "disgusting." "Most of letters now
have the same wording," grouses Mozilo. "Obviously they are being counseled by some other person
or by the internet."

Mozilo's heartfelt reply makes its way onto the Internet - and the onetime real estate king finds himself
out of a job after Bank of America acquires Countrywide in July.

*An iPhone app for just $999.99
The release of the new Apple iPhone in July introduces to the masses the world of mobile video
games and other time-sucking applications designed by non-Apple software developers - most of
them available for less than $10.

But one application sneaks past Apple's gatekeepers and onto the company's new App Store: "I Am Rich,"
a $999.99 screen-saver whose sole feature is a glowing red jewel. Apple gets blasted for making the
application available for sale and then quietly removing it, but the real losers? The eight suckers who bought it

*Paulson's 'bazooka' backfires
Actions speak louder than words, Mr. Paulson. As shares of Fannie Mae and Freddie Mac plunge in
mid-July on worries about their viability, Treasury Secretary Henry Paulson assures Congress that merely
promising to give the beleaguered mortgage lenders access to Treasury funding would calm market
fears - at no cost to Uncle Sam.

"If you've got a squirt gun in your pocket, you may have to take it out," Paulson tells legislators.
"If you've got a bazooka and people know you've got it, you may not have to take it out."

Congress delivers the bazooka, but investors aren't buying it. Two months later, Treasury takes over
both companies in a move that could cost taxpayers billions of dollars.

*Fannie's delusions of grandeur
Fannie Mae CEO Dan Mudd proves once again that his crystal ball is malfunctioning. In May, Mudd
predicts that the government-sponsored mortgage lender will "feast" on weakened competition in
the mortgage market - even as its own prospects dim amid mounting credit losses and asset writedowns.

By September, on the brink of collapse, Fannie gets a new owner - Uncle Sam - and Mudd loses a job

*Sex for oil
This fall, the division of the Department of Interior responsible for granting leases for energy exploration
and production in federal waters is caught with its pants down. The agency's Inspector General finds
that staffers were taking gifts, having sex and engaging in illegal drug use with employees of some of
the oil companies they oversee.

As the report detailing the ethical abuses puts it: "We...discovered a culture of substance abuse and
promiscuity in the...program."

*Global warming? What a 'crock'
The General Motors exec behind the Chevrolet Volt electric car hands environmentalists another twig
to beat GM with when he reportedly calls global warming "a crock of sh-t."

Bob Lutz, GM's vice chairman for product development, later addresses the uproar on his own blog:
"General Motors is dedicated to the removal of cars and trucks from the environmental equation,
period. And, believe it or don't: So am I!"

11-21 are coming up.
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Re: Dumbest Moments in Business

Post by deja vu » Mon Dec 29, 2008 9:52 am

11-21 as promised.

*Housing rescue comes up short
Remember Hope for Homeowners? We didn't think so. In July, Congress passes the only housing
rescue to date: a plan to guarantee up to $300 billion worth of mortgages and prevent more
than 300,000 foreclosures.

But to participate, banks must take steep losses -- and doing so is voluntary. The anti-climactic
upshot: A piddling 321 applications have been filed since the program's Oct. 1 launch - and not
one loan workout has been completed, according to the U.S. Department of Housing and
Urban Development.

*Cox's short-selling ban
Careful what you wish for. Under attack for not doing more to stop the market plunge, SEC chief
Christopher Cox finally institutes a temporary ban on shorting, or betting against, 799 financial stocks.

"The emergency order temporarily banning short selling of financial stocks will restore equilibrium
to markets," Cox promises.

But shares in banks, brokerages and insurance companies continue to plunge, losing a quarter of their
value during the three weeks the mid-September order was effective. Some investors say the short
ban hastened the flight of capital from stock and bond markets, by showing the government could
intervene in markets in unexpected and troublesome ways.

*McCain's economic denial
At least he warned us: On the morning of Sept. 15, as Lehman Brothers declares bankruptcy,
Republican presidential candidate John McCain declares "the fundamentals of this economy are strong."

By day's end, the Dow falls more than 500 points, the date becomes known as Black Monday, and
McCain starts backpedaling fast.

Maybe we should have seen this coming: In late 2007, McCain admits "the issue of economics is not
something I've understood as well as I should," adding, "I've got Greenspan's book."

*Obama's tough talk on NAFTA
In a rare off-message moment for Barack Obama's presidential campaign, a top economic adviser
privately assures Canadian officials in February that his candidate didn't really mean it when he
threatened to renegotiate the North American Free Trade Agreement, which U.S. blue-collar
workers complain has shifted jobs to Canada and Mexico.

"Political maneuvering" was how Austan Goolsbee described Obama's protectionist rhetoric to
Canadian authorities. Smart politics - until a Canadian government memo of Goolsbee's meeting
leaks out and Goolsbee is banished to no-media-allowed shed for the remainder of the election.

*Microsoft overbids for Yahoo
The headlines seem so quaint now: Microsoft makes a $44.6 billion play for Yahoo in yet another
bid to catch up to Google. The $31-per-share offer represents a 61% premium over Yahoo's price
at the time of the February overture.

Microsoft's strategy makes some sense, but CEO Steve Ballmer fails to anticipate Yahoo chief
Jerry Yang's intransigence, which ultimately scuttles any chance of a deal. Nor does Ballmer foresee
the economic crisis that, by year end, is dragging down the tech sector. With Yahoo shares trading
at $12 apiece, the company is now worth $17 billion. Ballmer, however, gets the last laugh: by year
end, he's still calling the shots at Microsoft. At Yahoo, Yang isn't.

*Yahoo turns down payday
If Microsoft's offer for Yahoo was wrong-headed, Yahoo's opposition to it was downright bone-headed.
It took until July, when Microsoft finally throws up its hands and walks away, for Yahoo CEO Jerry Yang
to fumble a deal that would have rewarded shareholders with a payday that was three times what
Yahoo shares were fetching at year-end.

Along the way, Yahoo flirts with Google - only to see any potential deal scuttled by antitrust regulators.
As 2009 approaches, Yahoo's chances of turning itself around look slim.

*SEC's Madoff miss
Leave it to the markets to do the SEC's job for it. It took plunging stocks to bring to light the largest
Ponzi scheme in U.S. history -an estimated $50 billion fraud orchestrated by Bernard L. Madoff, one
of Wall Street's best-known money managers.

The scheme - in which money from new investors is disguised as market returns for early investors
- allegedly goes on for decades before Madoff effectively turns himself in in early December.

As news reports reveal that the Securities and Exchange Commission had probed Madoff and his New
York City investment firm over the years, chief Christopher Cox cops to the embarrassing screw-up:
"I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly
investigate these allegations."

*Rage against oil speculators
With oil prices skyrocketing toward their $147-a-barrel high in July, people smell a rat. Oil traders,
hedge funds, Wall Street types...they're all to blame for artificially inflating the price of crude and
reaping huge profits at the expense of drivers everywhere.

Or so the thinking (and Congressional hearings) goes until prices suddenly collapse throughout the fall,
bringing oil down to about $37 a barrel. The culprit this time? Softening demand amid a reeling global
economy. So much for thinking fundamentals don't matter.


*Jobs' 'greatly exaggerated' death
Newspapers prepare obituaries of famous people before they die, but few publish them while the
subjects are still alive. In August, Bloomberg News accidentally releases an obit for Apple CEO Steve Jobs,
who - despite a well-publicized brush with pancreatic cancer - is still alive and kicking.

As if that wasn't enough, in October a post on CNN's user-generated site, iReport, claims that Jobs has
suffered a heart attack. The erroneous report sends Apple's stock down 10% in just 10 minutes.

At his next media appearance, Jobs appears in front of a giant screen with the message, "The reports of
my death are greatly exaggerated."

*Phil Gramm's 'mental recession'
In early July, as the financial crisis spreads to Main Street, McCain campaign co-chair and former
senator Phil Gramm appeals to voters and their economic anxieties by calling them a "nation of
whiners" and dismisses a troubled economy as a "mental recession."

McCain denounces his words and Gramm steps down, but the damage is done.

*Bill Miller's bad bets
The Legg Mason manager famously beat the market 15 years in a row, but now the market is
returning the favor - with a vengeance.

Miller's Legg Mason Value Trust was down 59% this year through Dec. 2, posting a far worse showing
than the S&P 500, which was down "only" 38%.

Miller's problems stem mostly from big bets on beaten-down financial companies earlier this year,
many of which then got even more beaten down. Among the biggest losers for Miller were Bear
Stearns, AIG and Freddie Mac - in which Miller had amassed an 8% stake on the eve of its
government takeover in September.

Courtesy of CNN.com
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Re: Dumbest Moments in Business

Post by dreamon » Tue Dec 30, 2008 11:11 am

They missed a couple of dumb moments:

*Banker Buys $37 Million Apartment After Getting $25 Million in Bailout Buyout

A former top executive at Merrill Lynch who received a $25 million golden parachute after just three months of work
has purchased a $37 million Park Avenue palace.

Peter Kraus, 55, paid the staggering sum for a five-bedroom co-op on New York's posh Park Avenue after getting a $25 million
buyout from Merrill Lynch when the company was sold to Bank of America in September, the New York Post reported.


This is your hard earned tax dollars at work. Forget doing his job, you just helped him buy this $37 million
apt and will keep paying for it until he quits or is fired.

*Chrysler Faces Criticism for Full-Page 'Thank You' Ads

Chrysler is facing a backlash from taxpayers and conservative groups after the ailing auto company took out a series
of full-page newspaper ads last week to thank Americans for "investing" in the company through the government's
$17.4 billion auto industry bailout plan.

Critics say the company, which is expected to receive about $4 billion of that bailout money in the near term, should
not be spending its already limited resources on pricey advertisements.

"It's quite ridiculous to be spending that kind of money," said Princella Smith, national spokeswoman for American
Solutions, an organization headed by former Republican House Speaker Newt Gingrich. "Those ads are just a precise
example of the fact that they do not get it ... and it's just in our faces."

http://www.foxnews.com/politics/2008/12 ... thank-ads/

A full-page ad in The Wall Street Journal runs between $206,000 and $264,000, and a full-page ad in USA Today
runs between $112,000 and $217,000.
Clearly they learned from the private jet fiasco :lol:

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Re: Dumbest Moments in Business

Post by fishandchips » Tue Dec 30, 2008 6:19 pm

The $37 million apartment buyer probably had a clause in his contract for payment in case of being let go before his contract expired or in case of ownership change. How will he manage the $12 million shortfall on the buy? Did he get a loan or put it onto a credit card? By the way, some of the $25million would have been due to the IRS unless there was some tax shelter involved.

As for the companies and organizations that did not learn from their greedy ways-you have angered your customers and their anger translates into lost loyalty and business. Memories are long in this economic situation.

Re: $700 million bailout- I would like to read of bank customers, average folks, walking to their bank branches for loans without detailing how the loan money would be applied. Wishful thinking!
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Re: Dumbest Moments in Business

Post by dreamon » Wed Feb 25, 2009 10:10 am

Now its 2009 and the Dumbest Moments in Business are still going strong:

Bailed-out bank enjoys concerts, dinners, parties

A bank that received $1.6 billion dollars of the government's bailout money sponsored what reports are calling a lavish series of events in Los Angeles, California, last weekend.

Northern Trust, based in Chicago, Illinois, spent an undisclosed amount of money sponsoring a Professional Golf Association tournament and associated client events, including concerts, dinners and parties, according to celebrity Web site TMZ.com.

The bank spent millions of dollars on the event, which included -- on top of the sponsorship costs of the Northern Trust Open tournament -- concerts by Sheryl Crow and Earth Wind & Fire, a private party at music venue House of Blues and gift bags from Tiffany & Co., the Web site said.

http://www.cnn.com/2009/POLITICS/02/25/ ... index.html

So much for helping the general public survive in these tough times. No big surprise the banks just dont get the message. Will they pay it all back? I doubt it. They will complain it was a necessity and if that doesnt work im sure they have a few other excuses to try.

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Re: Dumbest Moments in Business

Post by yukon » Sun Mar 15, 2009 10:26 am

Can you say "Broken Record"? They clearly need a reality check, and its executives are laughing all the way to the bank.


AIG paying millions in bonuses despite bailout
Insurer, which has received $170 billion, agrees to restrain future payments

WASHINGTON - American International Group is giving its executives tens of millions of dollars in new bonuses even though it received a taxpayer bailout of more than $170 billion dollars.

AIG is paying out the executive bonuses to meet a Sunday deadline, but the troubled insurance giant has agreed to administration requests to restrain future payments.

The Treasury Department determined that the government did not have the legal authority to block the current payments by the company. AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history.

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Re: Dumbest Moments in Business

Post by ice cream » Wed Mar 18, 2009 2:32 pm

Fannie Mae to Pay Bonuses of up to $611,000 for Four Execs

Government-controlled mortgage finance titan discloses plan for bonuses of $470,000 to $611,000 for four top executives, on top of their base salaries, as sibling company Freddie Mac plans similar awards.

WASHINGTON -- Fannie Mae is planning to pay retention bonuses of as much as $611,000 each to several top executives of the government-controlled mortgage finance titan. Sibling company Freddie Mac is planning similar awards.

Fannie Mae disclosed in a recent filing with the Securities and Exchange Commission that it's planning bonuses of $470,000 to $611,000 for four top executives, on top of their base salaries this year.

Freddie Mac has a similar retention plan in place, but has yet to disclose how much money top executives are in line to receive.

Both companies were seized by federal regulators last fall. Fannie has requested $15.2 billion in government aid, while Freddie has asked for nearly $31 billion in additional aid on top of the $13.8 billion it received last year.

From msnbc.com
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Re: Dumbest Moments in Business

Post by alohasand » Wed Mar 18, 2009 2:49 pm

"Retention policies" must mean for the executives to stay with the company, they want a regular incentive on top of their salaries to stay. Where do I sign up for the money too?
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Re: Dumbest Moments in Business

Post by smitty » Wed Mar 18, 2009 4:07 pm

My compliments to all of you for you are are looking at money matters to wastes of our money in the correct way.

Executives of most companaies & those higher up DO NOT know how to spend sensibly. We have been seeing it for hundreds of years.

Agree with all the above & NOW IAG is about to take the wind our of President Obama's sails for recovery. Looks like we are into a war with said companies that have NEVER knowen how to spend sensibly. Problem is even normal tax payers can get into the same way of thinking & THAT is why so many are trying to live on loans.

Our gun Club had an antique old natural gas furnace that dates back to the 50s. So in reality were are wasting natural gas. So some yrs since birth of this Club in '82 we have finally saved up some money. Believe me many of us did so much work on the different jobs to the donation of money to even products needed.

Finally we had enough to purchase a sensible furnace. Price was good, but only the President & Grounds/Building Chairman knew WHO was going to install it. Now our Vice-President, a home builder, said he would, but it would not be done in a week, but several weeks for his spare time was limited. They hired some other joe that did not know our plans or how to do it, not completed yet, but some heat can be sent about. On Sunday we knew it was NOT what we wanted in supplying the heat, no buttery-fly shut-off at the indoor handgun section when it is NOT being used. This butterfly bit is like turning down your heat when you are away from home. We do not know the cost or when it will be completed.

The President was also shooting last evening. Loved it, but knows nothing about heating, but good electrican, & turned up the heat to 12C in a while I had to remove my jacket made of same material as a sweat suit, as I was simply to hot. Fact is in all the yrs at this to the old Club i have never been warm & never complained. Fact is in the HOT weather with concrete floors, conctete walls to the concrete & steel at the back stop to heavily inforced roof (actually the ceiling in the lounge/kitchen). For so many new will say "do you guys have an air conditioner" so I point out the above along with NO windows while exits/entrances are strongly built.

Wasting natural gas, probably less then with the prior antique is NOT the way to save money. Our President thinks to much like some of the above we have been speaking about, but you can see he thinks like them which is quite normal amongst to many these days.

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Re: Dumbest Moments in Business

Post by CielOnTap » Wed Mar 18, 2009 4:25 pm

It is worthwhile to write out the specifications or desired aspects of the heating furnace purchase at a meeting but not limit the club to someone known to the executive. That someone's hiring/installation should be subject to checks about professional work and checking work and references on previous jobs. Just like Mike Holmes on Holmes on Holmes says.

Another way to have started the project is to have someone from the gas company come and tell your club what the current code is for new furnaces, etc. and club members could ask questions about costs.

But in reality, the ideal outcome usually has someone's ego in the way for s/he wants credit for the big actions/puchases and cannot be made to see reason. I have seen that happen enough in small organizations that I have learned to know when I will question it and when to let it go if others are so keen to plow ahead oblivious to concerns.
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