Soak the Bankers

If you are a well-paid banker, today's top business stories in the Wall Street Journal and New York Times cannot be considered good news. The Obama administration is in "serious talks" to overhaul compensation packages across the financial services industry, including, the WSJ says, "at companies that did not receive federal bailout money." The NYT adds the proposal being floated wouldn't stop at banks but would curb pay also at hedge funds and private-equity firms. The aim, no doubt a controversial one, is to align pay with long-term performance and to do away with, or at least modify, the more destructive aspects of today's bonus culture. Congress, too, is looking to introduce a crackdown on fat-cat pay that could help the White House in its mission. "House Financial Services Committee Chairman Barney Frank (D., Mass.) is working on legislation that could strengthen the government's ability both to monitor compensation and to curb incentives that threaten a company's viability or pose a systemic risk to the economy," the WSJ writes.

Already, the financial services industry appears set to fight the plan. "What would never work is detailed regulation of compensation," Edward Yingling, chief executive of the American Bankers Association, tells the WSJ.

Following the billions, the NYT has an update this morning on the Bernie Madoff saga. Roughly $12 billion was pulled out of the accounts at Madoff's firm last year, with "about $6 billion, or half ... taken out in just the three months before the financier was arrested in December and charged with operating an extensive Ponzi scheme," the NYT writes, citing sources in the know. While the revelation may raise the blood pressure of the defrauded, it's also potentially a big break for some victims. "Under federal law, the trustee overseeing the Madoff bankruptcy can sue to retrieve that money from the investors who withdrew it," the newspaper writes. There's been a big development in the case of another accused fraudster, Allen Stanford. According to the Houston Chronicle, Stanford's chief investment officer, Laura Pendergest-Holt, was indicted by a Houston federal grand jury yesterday on charges of obstruction of justice and conspiracy to obstruct justice. They're the first criminal charges yet in the vast alleged fraud. Stanford's CFO, James Davis, is already cooperating with investigators, and Stanford himself expects to be indicted as well, reports the Chronicle. 

The recession isn't just hitting today's pocketbooks; it's also going to hurt us in the future. Trustees disclosed yesterday that the Social Security trust fund will be cleaned out by 2037—four years earlier than estimated last year. As CNNMoney.com explains, "Demand for benefits has grown while money paid in has fallen because of growing unemployment and new tax breaks in the economic stimulus package passed in February." The state of the $468 billion Medicare program looks even worse: The Hospital Insurance trust fund is projected to be exhausted in 2017, two years earlier than projected a year ago, Business Week reports.

France has passed a controversial "three strikes" law designed to combat Internet piracy, the Guardian reports. The bill is designed to create a new government agency called the High Authority of Diffusion of the Art Works and Protection of Rights on the Internet that will enforce "the world's tightest copyright restrictions." Hadopi—despite sounding like a new Web 2.0 startup—will have the power to disconnect from the Internet for one year users found to be downloading music and films without paying for them. "Lawyers say France's determination to cut the courts out of the issue of internet access may contravene the European Convention of Human Rights, and could spark conflict with Brussels," writes the Financial Times. Back in the United States, the NYT reports on the festering legal battle between Apple and the growing legion of iPhone users and developers who are "jailbreaking," or customizing, their phones to enable features like video recording that Apple (AAPL) officially doesn't sanction. Jailbreaking opens up an "amazing world of goodies," according to one iPhone hacker, but it's hacking off Apple. "These modifications not only violate the warranty, they also cause the iPhone to become unstable and not work reliably,” says a company spokeswoman.

And, finally, here's a welcome silver lining to emerge from the global downturn: Flights are more likely to be on time these days. The Department of Transportation reports that "U.S. airlines' on-time performance during the first three months of 2009 was the best for that period since 2003," the WSJ writes. Nothing like a collapse in business travel and a slashing of flights to finally unclog the skies. But, as is always the case, there are winners and losers in the DoT figures. "Of the 31 biggest airports, Salt Lake City had the best on-time arrival and departure performance in both the month and quarter, with Newark, N.J., again having the worst figures," the newspaper writes.