STUDY- U.S. Corporate Executives Received a Pay Raise of 27-40% Last Year



Chief executive pay has roared back after two years of stagnation and decline. America’s top bosses enjoyed pay hikes of between 27 and 40% last year, according to the largest survey of US CEO pay. The dramatic bounceback comes as the latest government figures show wages for the majority of Americans are failing to keep up with inflation.

America’s highest paid executive took home more than $145.2m, and as stock prices recovered across the board, the median value of bosses’ profits on stock options rose 70% in 2010, from $950,400 to $1.3m. The news comes against the backdrop of an Occupy Wall Street movement that has focused Washington’s attention on the pay packages of America’s highest paid.

The Guardian’s exclusive first look at the CEO pay survey from corporate governance group GMI Ratings will further fuel debate about America’s widening income gap. The survey, the most extensive in the US, covered 2,647 companies, and offers a comprehensive assessment of all the data now available relating to 2010 pay.

Last year’s survey, covering 2009, found pay rates were broadly flat following a decline in wages the year before. Base salaries in 2009 showed a median increase of around 2%, and annual cash compensation increased just over 1.5%. The troubled stock markets took their toll, and added together CEO pay declined for the third year, though the decrease was marginal, less than three-tenths of a percent. The decline in the wider economy in 2007, 2008 and 2009 far outstripped the decline in CEO pay.

This year’s survey shows CEO pay packages have boomed: the top 10 earners took home more than $770m between them in 2010. As stock prices began to recover last year, the increase in CEO pay outstripped the rise in share value. The Russell 3000 measure of US stock prices was up by 16.93% in 2010, but CEO pay went up by 27.19% overall. For S&P 500 CEOs, the largest companies in the sample, total realised compensation – including perks and pensions and stock awards – increased by a median of 36.47%. Total pay at midcap companies, which are slightly smaller than the top firms, rose 40.2%.




SCRET-JFIIT Intelligence Surveillance and Reconnaissance (ISR) Systems Handbook

The purpose of the JFIIT Tactical Leaders Handbook (version 5) is to provide ground maneuver commanders, battle staffs, and soldiers with information regarding Joint Intelligence, Surveillance, and Reconnaissance (ISR) and attack systems and how to leverage these combat multipliers during planning, preparation, and execution of military operations. JFIIT publishes a classified version of this document on the SIPRNET. The For Official Use Only (FOUO) Web version can be located at the NIPRNET address listed below.



TOP-SECRET from the FBI-Sheets, Sails, and Dormer Lights: The Case of the Pearl Harbor Spy

Pearl Harbor image with Bernard Kuehn inset

On February 21, 1942, just 76 days after the tragic attack on Pearl Harbor, Bernard Julius Otto Kuehn (pictured) was found guilty of spying and sentenced to be shot “by musketry” in Honolulu. What was a German national doing in Hawaii in the days leading up to the attack? What exactly did Kuehn do to warrant such a sentence? Here’s the story…

Bed sheets on clothes lines. Lights in dormer windows. Car headlights. A boat with a star on its sail.

Otto Kuehn had a complex system of signals all worked out. A light shining in the dormer window of his Oahu house from 9 to 10 p.m., for example, meant that U.S. aircraft carriers had sailed. A linen sheet hanging on a clothes line at his home on Lanikai beach between 10 and 11 a.m. meant the battle force had left the harbor. There were eight codes in all, used in varying combinations with the different signals.

In November 1941, Kuehn had offered to sell intelligence on U.S. warships in Hawaiian waters to the Japanese consulate in Hawaii. On December 2, he provided specific—and highly accurate—details on the fleet in writing. That same day, he gave the consulate the set of signals that could be picked up by nearby Japanese subs.

Kuehn—a member of the Nazi party—had arrived in Hawaii in 1935. By 1939, the Bureau was suspicious of him. He had questionable contacts with the Germans and Japanese. He’d lavishly entertained U.S. military officials and expressed interest in their work. He had two houses in Hawaii, lots of dough, but no real job. Investigations by the Bureau and the Army, though, never turned up definite proof of his spying.

Not until the fateful attack of December 7, 1941. Honolulu Special Agent in Charge Robert Shivers immediately began coordinating homeland security in Hawaii and tasked local police with guarding the Japanese consulate. They found its officials trying to burn reams of paper. These documents—once decoded—included a set of signals for U.S. fleet movements.

All fingers pointed at Kuehn. He had the dormer window, the sailboat, and big bank accounts. Kuehn was arrested the next day and confessed, though he denied ever sending coded signals. His sentence was commuted—50 years of hard labor instead of death “by musketry”—and he was later deported.

Today, his story reminds us how much damage espionage can do to our country. And why the FBI continues to rank counterintelligence as a top investigative priority.

TOP-SECRET – IMF Report on Switzerland Fiscal Transparency


1. This report provides an assessment of the fiscal transparency practices of Switzerland against the requirements of the IMF Code of Good Practices on Fiscal Transparency (2007). The first part is a description of practices, prepared by IMF staff on the basis of discussions with the authorities and their responses to the fiscal transparency questionnaire, and drawing on other available information. The second part is an IMF staff commentary on fiscal transparency in Switzerland. The two appendices summarize the staff’s assessments, comment on the observance of good practices, and document the public availability of information.

2. This assessment focuses primarily on fiscal transparency at the central
government (confederation) level. Given the unique character of political economy and
fiscal federalism in Switzerland, and that less than a third of general government expenditure
or revenue is accounted for by the confederation, this does not give a complete picture.
Cantons are responsible for important areas of economic and social policy, and have a strong
influence on the composition and impact of public spending, and the overall stance of fiscal
policy. Further work would be needed to prepare a comprehensive assessment of fiscal
transparency and fiscal risk covering the whole of general government.


A. Clarity of Roles and Responsibilities

Definition of government activities

3. General government is defined consistently with Government Finance Statistics
(GFS) principles and is well covered in the budget process. 1.1.1
General government is defined in accordance with the principles of the Government Finance
Statistics Manual (GFSM 2001) and comprises four main sectors (Box 1): The federal
government comprises seven departments and related offices, the federal chancellery, and
four special funds. The special funds cover (i) railway projects; (ii) infrastructure;
(iii) technical universities; and (iv) the alcohol board. There are 26 cantonal governments.
The cantons are sovereign states with considerable autonomy. There are 2715 communes,
which likewise have considerable autonomy. The four social security institutions cover
(i) old age and survivors protection schemes; (ii) the disability protection scheme;
(iii) income compensation allowances in case of mandatory service and maternity; and
(iv) unemployment insurance. These schemes operate essentially on a pay-as-you-go basis.


Box 2. The SNB’s Support for UBS as a Quasi-Fiscal Activity

The SNB has justified its recent support of UBS in relation to its role as lender-of-the-last resort. This explanation rests on three considerations, namely: that UBS is a systemically important institution; could provide sufficient collateral; and was solvent. On the last point, the SNB obtained advice from the Federal Banking Commission that UBS was solvent, enabling it to provide emergency support. It did so by funding 90 percent of the purchase price of distressed assets to the value of US$60 billion.1 These assets were valued by external assessors, and transferred to a Special Purpose Vehicle (SPV) under the SNB’s control. To reduce the risks of not fully recovering the funds of the SPV, the SNB has set up several safeguards against potential losses. UBS’ equity contribution to the stabilization fund, amounting to 10 percent of the assets purchased, serves as the primary loss protection. In the case of a loss on the SNB loan, the SNB’s warrant for 100 million UBS shares serves as secondary loss protection. This transaction should be classified as a QFA given the risk that the SNB may fail to recover all of its investment. In this case, the profits of the SNB distributed to the federal government would be lower, with a negative impact on the budget.
1/ On February 10, 2009, it was announced that the stabilization fund would acquire UBS assets for a lower
maximum amount than originally planned (approximately US$ 40 billion).

68. There are some areas, however, where the authorities could consider taking
further measures, in consultation with parliament where appropriate, to enhance fiscal
transparency and the presentation and management of fiscal risks. These are summarized

Disclosure of additional fiscal information by the federal government

69. Support provided by the federal government and the SNB to UBS and other
financial institutions affected by the global crisis is reported in, respectively, the
confederation’s and the SNB’s financial statements, supplemented by quarterly updates
by the SNB. However, in order to provide a comprehensive assessment, the federal
government should consider publishing in its financial statements information on the SNB’s
support operations alongside the report of its own activities.

70. The government should publish its findings on tax expenditures and regularly
update them. Tax expenditures do not need to be appropriated each year, thereby escaping
scrutiny and the need to compete with other fiscal priorities in the budget process. Over time,
tax expenditures can result in insidious erosion of the tax base. The volume of tax
expenditures is significant, as a recent study by the FTA indicates. The government is aware
of the importance of keeping tax expenditures in check. It could consider publishing an
annual tax expenditure statement with the annual budget.36

71. The government should make an effort to disclose information on specific fiscal
risks, including contingent liabilities and QFAs, with the budget, in line with the IMF’s
Guidelines for Fiscal Risk Disclosure and Management, and eventually publish a single
statement of fiscal risks.37 In particular, the universal services provided by Swiss Post, Swiss
Rail, and others are partly financed through cross-subsidies, which represent a form of
interpersonal redistribution, and taxes and transfer payments from the budget are considered
more desirable to support such activities from a transparency perspective. QFAs are
disclosed only to a very limited extent.

72. The Social Security Funds should be clearly distinguished. Apart from the
unemployment insurance scheme, the other three funds are jointly operated. The old age and
disability pension funds are cross-financing each other, with the first fund running persistent
surpluses that are used to finance the deficits of the second. Clearly, separating the three
funds would make the financial health of each of them more transparent and facilitate the
necessary policy discussion about the sustainability of current policies. Parliament has
already passed a bill to separate the old-age and disability pension funds into two separate
funds. A referendum on the issue will be held in September 2009. In addition, an overview of
the finances of the social security sector and its relationship with the budget in the short to
medium term, in the context of an assessment of long-term fiscal sustainability, should be
included in the budget documents. More forward-looking information on the finances of the special funds would also be useful. Together, these measures would provide a better basis for
assessing the sustainability of current fiscal policy.

73. More information should be published on the sensitivity of the budget to changes
in macroeconomic variables and an alternative macroeconomic and fiscal scenario,
building on the useful analysis already published by the government. This would provide
a better basis for assessing the uncertainties surrounding the budget.38 In addition, the federal
government could consider extending and formalizing the process of external review of
macroeconomic forecasts and assessments of economic developments.

74. An overview of the finances of public corporations could also be provided in the
budget. Some corporations receive significant funding from the budget, and others conduct
QFAs, making it important to consider their financial position and profitability in the context
of fiscal policy.

75. Additional information should be reported on public debt management, namely,
the debt management strategy and performance against it, and the impact of parameter
changes on debt-servicing costs.

76. A summary statement of all new policy measures that are reflected in the budget
proposals, with an estimate of their fiscal impact, should be published, to supplement the
summary data on expenditure by tasks already provided in Volume 3 of the budget

77. Each federal government department should be encouraged to publish an
annual report that summarizes relevant information concerning their goals and objectives,
strategic priorities, operational risks, financial results, and nonfinancial performance. This
would be in line with practice in many OECD countries.



CONFIDENTIAL – Banks Profited from Trillions in Secret Fed Bailout Programs

JPMorgan Chase chief Jamie Dimon speaks to a lunchtime gathering of the Portland Business Alliance, Thursday, Nov. 3, 2011 at the Portland Hilton in Portland, Ore. As CEO of JP Morgan Chase, he told shareholders that his bank used the Fed’s Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He neglected to mention that the bank’s total TAF borrowings were almost twice its cash holdings. (AP Photo/The Oregonian, Randy L. Rasmussen)

Secret Fed Loans Helped Banks Net $13B (Bloomberg):

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.

A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”

Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.

“When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio who in 2010 introduced an unsuccessful bill to limit bank size. “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”

The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News, won a court case against the Fed and a group of the biggest U.S. banks called Clearing House Association LLC to force lending details into the open.

The Treasury Department relied on the recommendations of the Fed to decide which banks were healthy enough to get TARP money and how much, the former officials say. The six biggest U.S. banks, which received $160 billion of TARP funds, borrowed as much as $460 billion from the Fed, measured by peak daily debt calculated by Bloomberg using data obtained from the central bank. Paulson didn’t respond to a request for comment.

The six — JPMorgan, Bank of America, Citigroup Inc. (C), Wells Fargo & Co. (WFC), Goldman Sachs Group Inc. (GS) and Morgan Stanley — accounted for 63 percent of the average daily debt to the Fed by all publicly traded U.S. banks, money managers and investment-services firms, the data show. By comparison, they had about half of the industry’s assets before the bailout, which lasted from August 2007 through April 2010. The daily debt figure excludes cash that banks passed along to money-market funds.

TARP and the Fed lending programs went “hand in hand,” says Sherrill Shaffer, a banking professor at the University of Wyoming in Laramie and a former chief economist at the New York Fed. While the TARP money helped insulate the central bank from losses, the Fed’s willingness to supply seemingly unlimited financing to the banks assured they wouldn’t collapse, protecting the Treasury’s TARP investments, he says.

“Even though the Treasury was in the headlines, the Fed was really behind the scenes engineering it,” Shaffer says.

Congress, at the urging of Bernanke and Paulson, created TARP in October 2008 after the bankruptcy of Lehman Brothers Holdings Inc. made it difficult for financial institutions to get loans. Bank of America and New York-based Citigroup each received $45 billion from TARP. At the time, both were tapping the Fed. Citigroup hit its peak borrowing of $99.5 billion in January 2009, while Bank of America topped out in February 2009 at $91.4 billion.

Lawmakers knew none of this.

They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average.  The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible.

Mark Lake, a spokesman for Morgan Stanley, declined to comment, as did spokesmen for Citigroup and Goldman Sachs.

Had lawmakers known, it “could have changed the whole approach to reform legislation,” says Ted Kaufman, a former Democratic Senator from Delaware who, with Brown, introduced the bill to limit bank size.

TOP-SECRET – U.K. Embassies Preparing for Collapse of Euro

As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.

Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.

The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.

A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.

“It’s in our interests that they keep playing for time because that gives us more time to prepare,” the minister told.

Recent Foreign and Commonwealth Office instructions to embassies and consulates request contingency planning for extreme scenarios including rioting and social unrest.

Greece has seen several outbreaks of civil disorder as its government struggles with its huge debts. British officials think similar scenes cannot be ruled out in other nations if the euro collapses.

Diplomats have also been told to prepare to help tens of thousands of British citizens in eurozone countries with the consequences of a financial collapse that would leave them unable to access bank accounts or even withdraw cash.

Fuelling the fears of financial markets for the euro, reports in Madrid yesterday suggested that the new Popular Party government could seek a bail-out from either the European Union rescue fund or the International Monetary Fund.

Large-Scale Cash Smuggling Drives Billions of Dollars Out of Syria

Demonstrators protesting against Syria’s President Bashar al-Assad wave old Syrian flags as they march through the streets on the first day of the Muslim festival of Eid-al-Adha in Alsnmin near Daraa November 6, 2011.

Syrian capital flight intensifies (Financial Times):

Money has been streaming out of Syria as fears for the unstable economy lead Syrians to seek a safer place for their assets, according to members of the country’s business community.

Cash is being smuggled over the border to Lebanon “every day, every hour,” said one Syrian businessman, while another claimed Syrian money is being stashed in the grey economy that has long existed between the two countries.

In what many see as an example of the cross-border transfer, Syrian state news reported last month that officials had intercepted over $100,000 worth of Syrian pounds being smuggled across the Lebanese border under the seat of a car.

Samir Seifan, a Dubai-based Syrian economist, estimated Syria’s middle and upper classes had moved between three and five billion dollars out of the country since unrest broke out in March, alarmed by pressures on the currency and the dearth of investment opportunities.

The squeeze on Assad – June 30, 2011 (The Economist):

Public finances are in deep trouble. The president has raised government salaries and various subsidies to appease the populace. He cannot afford to do this. The government will probably print the money to meet its promises, so runaway inflation is likely, further fuelling popular anger as cash deposits become worthless.

Capital flight is rampant. Drivers on the roads into Lebanon talk of clients going from their bank in Damascus straight to one in Beirut, carrying large bags. According to one estimate, $20 billion has left the country since March, putting pressure on the Syrian pound. To slow capital flight, the government has raised interest rates. A phone company controlled by the Assad family sent out messages urging people to put money back into their accounts.

But a run on the banks cannot be ruled out. Over the past few years, about 60% of lending in Syria has been for people to buy their own cars. Many can no longer keep up with payments. A leading financier says, “If one of the smaller banks defaults, we all go down.” Some branches are even displaying millions of dollars—in bundles of notes piled head high—to reassure worried customers. Some keep enough cash in the vaults to repay almost half their depositors on the spot.