What was JPMorgan's Jamie Dimon thinking?
Recapping the day's news and newsmakers through the lens of CNBC.
Could your company handle a $13 billion legal settlement? If it could, congratulations! You've surely reached the very, very top. Over the weekend, JPMorgan Chase tentatively agreed to fork over that sum to settle the government allegations of shenanigans with mortgage securities. At least one expert, a former SEC prosecutor, says $13 billion is too much given the offenses were committed by two units that at the time were not owned by JPMorgan—units the bank bought later at the government's behest. Worse, he says, the settlement does not shelter JPM from criminal prosecution. But Jamie Dimon, the firm's CEO, says it's high time to get the issue resolved and move ahead. Banking analysts are keen on Dimon, think he will survive and the company's outlook remains strong.
"This number is absolutely preposterous. It's almost as if what we're getting out of federal regulators… is a roulette wheel or some kind of jackpot, how much can you jack up the fine."—Former SEC lawyer Jacob Frenkel, now head of corporate litigation at Shulman Rogers.
"We are going to resolve every matter as best as we can, and then we're going to move on and serve our clients."—JPMorgan Chase CEO Jamie Dimon
Open source salaries
Most executives want employees to keep their pay to themselves, else the place be overwhelmed with resentment and demands for raises—and even lawsuits alleging discrimination. But a few firms break with this near-universal practice. At Buffer, a social media firm, openness has been taken to the extreme. Everyone knows what everyone else is making, on the theory this prods the lesser paid to work harder. Many human resources experts doubt the benefits of extreme openness offset the potential problems. Transparency advocates, however, say that an open pay formula can help attract top talent by assuring folks they'll be treated fairly, and will get raises when they've satisfied the requirements.
"The key benefit is trust. There are no unanswered questions such as how much others make, or who may have negotiated higher salary. It encourages responsibility, fairness and helps us to keep the company flatter."—Buffer founder Joel Gascoign
A quarterly survey of corporate economists has some upbeat findings: nearly 70 percent forecast GDP growth at 2-3 percent, and that's pretty much in line with the 2.5 percent annual rate from the second quarter survey. That's not a stupendous growth rate, obviously, but it's not bad given some recent gloomy news. However, the National Association for Business Economics poll was done before the government shutdown, which may have hurt growth prospects a tad. Unfortunately, there's not a lot of encouragement for unemployed workers. Only 27 percent of those polled said hiring had picked up at their firm in the third quarter, down from 29 percent in the second. Sales growth and profit margins improved in the third quarter.
Offline in America
These days, everyone's on the Internet—except for the 15 percent of the 18-and-over population that is not. Those millions represent potential customers who won't be reached by the latest rage in advertising—web and mobile-app adds. So, are the non-networked worth going after the old-fashioned ways, through print, TV and radio? It depends, of course, on what you sell. Adult non-Internet users are most common among those 65 and over, Hispanics, people who did not finish high school, and those living in households earning less than $30,000 a year.
Keeping up with the Joneses' portfolio
How do the really-rich invest? Well, a survey of Tiger 21 members—people with median net worth of $75 million—shows that the upper crust have stuck pretty close to their long-term asset allocation. Cash makes up 11 percent of holdings, just a tad below the 13 percent median since 2008. Other holdings: stocks at 23 percent, hedge funds at eight percent, private equity funds at 19 percent, fixed income at 15 percent, real estate at 21 percent, and currencies and commodities less than one percent each. Of course, investors with very large portfolios generally have enough investing experience to not get rattled. And with lots of cash on hand, they can take a very long-term view.
"Don't invest in the latest fund or stock because it is hot. ... The prudent approach is to invest in what you know and invest for the long haul."—Tiger 21 founder Michael Sonnenfeldt
—By Jeff Brown, Special to CNBC.com