Profit Not Satanic, Says Wealthy Banker

The moment everyone expected but no one was waiting for has arrived: Unemployment is in the double-digits. The New York Times says that 10.2 percent is a 26-year high in the 60-year history of government record-keeping. Only 1982, when 10.8 percent of workers were sidelined, was worse. Dampening the bad news, President Obama signed an extension of unemployment benefits for the jobless, allowing them to spend nearly two full years on the dole. The article dives into the metrics but also the psychology of long-term unemployment. It cites one worker who, after a year and a half, continues to drive to his unemployment office, send out job applications, and return home to “his sagging couch and his television, where cheerful news anchors tell him that the economy is looking up.”

But, is unemployment 10.2 percent or 17.5 percent? The latter figure includes underemployment, and that actually beats the high of 17.1 percent set in December of 1982. The discouraged and the part-timers who want to be full-timers are counted in this figure, notes the Times. “Ten percent is a terribly important number,” a democratic pollster noted in the Wall Street Journal’s take on the figures. No word on his thoughts regarding 17.5 percent.

Citigroup (C) is granting its employees options to convince them to stay, the Times writes. Options grants, which the article says have long been criticized as creating perverse incentives, are being presented by the bank as a way for employees to rebuild their nest eggs while remaining with the company. Employee savings were nearly wiped out when Citigroup stock plunged in value during the height of the financial crisis. Despite the long-standing criticisms of options programs, the construction of this one may make sense: It requires three years of vesting, has a strike price slightly above current share pricing, and preserves capital for the bank. As such, one critic of options grants told the paper, “They are trying to reward staff that had the guts to hold onto their stock during this turbulent period for the company.”

Hedge funds are on edge after several high-profile arrests on insider trading charges were made in recent weeks. The Times reports that executives are dropping a dime—to their lawyers—to re-examine their compliance with insider information laws. “Defcon 2” is how one executive described the effort not to run afoul of the rules. Because the executives fear wiretaps, they’re telling staffers to think of phone conversations the way they think of e-mail: as if it could end up on the “front page of The New York Times.” Meanwhile, the Journal says SAC Capital may soon be part of the broader and ongoing insider trading investigations.

AIG (AIG) is profitable again, but executives say the road the company is on won’t necessarily remain smooth. Regulatory filings indicate that its investments are performing well, even as insurance sales are faltering. Looming over future balance sheets is the massive debt the firm must repay to the U.S. government and a $5 billion charge related to its restructuring. A topic AIG didn’t discuss in its filing was employee retention, but the Times notes several executives have jumped ship to work on a competing venture with Hank Greenberg, who was AIG’s CEO for nearly 40 years.

Goldman Sachs (GS) wanted to buy tax credits from Fannie Mae (FNM), which has lost so much money that the credits are useless. The government said no, reports the Journal, because the deal would be a net loss for taxpayers and because it didn’t want to appear to be favoring the pre-eminent investment bank in such savvy deals. Meanwhile the Times says Fannie will soon ask for another $15 billion in bailout funds, on top of the $50 billion it’s already received.