Throttling Fat Cat Pay

A resurgent stock market on Thursday couldn't undo the sour mood on Wall Street after executives of the most powerful financial firms in the world learned the inevitable—new pay cuts are on the way. The Wall Street Journal called the caps "a one-two punch at the pay culture of banks and Wall Street firms blamed for the financial crisis." Pay czar Kenneth Feinberg said Thursday the highest-earning execs at the seven bailed-out firms getting exceptional federal aid will have their cash salaries capped at $500,000, and the group's total pay level will be slashed in half. And the Fed and state regulators will also begin reviewing compensation packages as part of their oversight of financial firms. As harsh as the new pay rules seem, the Washington Post notes that Feinberg could have gone even further—had some of the executives he was to monitor stayed on the job. "At Bank of America (BAC), for instance, only 14 of the 25 highly paid executives remained by the time Feinberg announced his decision," the newspaper details.

Wall Street reacted with skepticism, outrage and even revisionist logic to the pay-cut proposal, saying "the measures may hurt the very companies the U.S. is intent on saving," Bloomberg reports. The recurring argument is that the pay caps risk creating an imbalanced competitive market. When one banker's pay is capped, the argument goes, vulture recruiters circle and swoop. BusinessWeek reports there is some truth to this fear of executive recruiters targeting Wall Street's undercompensated and perhaps unmotivated. "Recruitment experts hired by Wall Street trading houses, which are expanding to handle booming stock and bond trades, say they are zeroing in on companies such as Citigroup (C), American International Group (AIG), and others that are under U.S. or European pay restrictions," the magazine writes.

Were the guts of the iPhone actually developed by Finnish telecoms giant Nokia and not Apple (AAPL)? That's the contention of a new lawsuit filed by Nokia accusing Apple of widespread patent infringement for its hot-selling handset. As BusinessWeek puts it, "Apple's iPhone has been giving Nokia smartphones a hard time in the marketplace. Now Nokia is giving Apple a hard time in the courtroom." Nokia contends that Apple is infringing on its patents that enable the handset to make phone calls and connect to the Internet—in other words, what makes the device a phone and not just a music player. Fortune's Brainstorm Tech blog notes that the move is hardly surprising given the drubbing Nokia is taking in the North American smartphone market at the hands of Apple. "Despite its best efforts, Nokia has steadily lost ground. It holds 40% of the market, down from 43% last year, according to IDC. And in the competitive North American market, Nokia is barely holding its own with just 3%," it reports.

Amazon has posted a 69 percent increase in third-quarter profit compared to last year in a "rosy outlook" that could bring glad tidings to Christmas retail figures, the WSJ reports. The mammoth online retailer said its income for the quarter increased to $199 million, or 45 cents a share, from $118 million, or 27 cents a share, a year ago. The results were pumped by a 44 percent rise in sales of electronics and general merchandise, including TVs and office supplies. It also saw a big jump in the sales of media products, not least the release of Dan Brown's new book, The Lost Symbol. That's likely to heighten the tensions in a growing Godzilla-like price war between Amazon (AMZN) and offline monster retailer, Wal-Mart (WMT).

Such is the malaise of the news industry nowadays that the New York Times Co. lost $35.6 million in its third quarter with advertising revenue dropping nearly 30 percent but still beat Wall Street's expectations, and so the news sent the company's stock price soaring by 22 percent. The company recently announced 100 newsroom layoffs but also believes that "the drop in advertising was slowing in the fourth quarter," the NYT reports on itself. Nevertheless the company has reached a "watershed moment": It now gets more revenue from readers than from advertisers, "in an industry where advertising revenue traditionally outweighed revenue from circulation by at least three to one."

And finally, leave it to a bunch of 4-year-olds to try to cheat the government out of a few grand. IRS investigators revealed Thursday that there were more than 100,000 fraudulent claims for the First-Time Homebuyer Tax Credit program. How low did some of these schemers go in trying to score a tax credit worth as much as $8,000? "Some of the filers for the credit were just four years old," BusinessWeek writes.