New Haven Independent

Posted by: Maria | March 17, 2008 10:38 AM

I don't think people appreciate the magnitude of this meltdown. We've got a seriously ugly recession underway. The only question is, how ugly will it get.

Posted by: concrenedwestvilleres | March 17, 2008 10:46 AM

Representative Dillon makes some very good points regarding the effect the Wall Street mess will have on the state budget. I would make one point,though, as to how this will affect this year's income. Many businesses and some individuals are required to pay estimated taxes for the year. If they are seeing a downturn in their revenues and expected taxes, I would assume that the revenues would start to decline during this year. Also, not only is the financial sector a significant employer in Connecticut, there are most likely a significant number of people employed in the New York financial sector that reside in Connecticut.
Reducing state aid to cities will wreak havoc especially when New Haven has a mayor who is addicted to spending and then blaming the state for the city's financial condition. Other cities are in the same predicament. New Haven is heading into a financial disaster as is evidenced by the $17 million shortfall this fiscal year and some questionable assumptions in the next fiscal year (reducing overtime for police and fire, saving by sending out the city's healthcare for bidding, etc.). I hope that many people will make their voices heard in the Aldermanic meetings and community meetings regarding the budget.

As for the two executives at Bear Stearns, they most likely knew that a liquidity crisis was brewing. To exercise options at $0 and then sell for $89 when JP Morgan bought the company for $2 per share in a fire sale indicates something is not "kosher". If a person or company declares bankruptcy and has given money to charitable causes in the 3 months prior, the bankruptcy court can order those organizations to return the funds for distribution to creditors. It would seem appropriate that a similar if not more lengthy rule apply to the exercising of options and sales of shares. If a company fails within 6 -12 months after the exercising of those options and sale of the shares, the executives exercising the options should be required to return the funds and receive the amount per share that the shareholders receive. The other option is to make it illegal for executives and insiders to be paid in stock options. Hopefully something will be done soon-- we can't wait until January 2009 for this to change.

Posted by: robn | March 17, 2008 1:07 PM

GREAT! so we're going to outlaw executive stock options...just like everybody said we were going to do after Enron collapsed! hurray!

Should we be surprised that Corporate CEOs are getting away with this when we allow them to function in a system with zero accountability? For example...

Angelo R Mozilo built up one of the country's largest lenders, ran it into the ground with crappy lending practices but still walked away with about 100 million bucks.
http://www.forbes.com/static/pvp2005/LIR7G33.html

James E Cayne dipped Bear Sterns into the cold water of subprime mortgages and got sucked under water..and his 5 year compensation was about 130 million.
http://www.forbes.com/lists/2006/12/9X3I.html

Wouldn't a federal seizure of overpaid executive assets go a long way towards softening the blow to taxpayers? (populist fantasy...ain't gonna happen)