McDermott's Unemployment Bill Passes House

McD, who withdrew his proposed economic stimulus package to focus on the less fortunate, is "down there bangin' for Main Street," says spokesperson Mike DeCesare. The Congressman has had a whirlwind 36 hours since attending the Robert Plant-Alison Krauss concert in Seattle on Wednesday night. " When he got on the plane [back to D.C. Thursday morning], he was going for the stimulus," explains DeCesare. "When he got off the plane, he got word that they were pulling his UI bill out to vote on it, so he withdrew his stimulus package." It's the second time McD has pushed a bill extending unemployment benefits through this year; a press release summarizing McD's latest House-clearing legislation is available after the jump.

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Topics: Business

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Congress Approves Bailout, Finally

Wall Street — and Main Street — can rest a little easier now. Or so we hope.

Topics: Business

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Did McDermott Draft Bailout Amendment at WaMu Theater Last Night?

After attending last night's Robert Plant/Allison Krauss show at the WaMu Theater, Rep. Jim McDermott hopped a plane this morning to head back to D.C. to deal with this nasty business of bailing out our financial industry. Now we get word that McDermott's planning to propose an amendment to the bill "that adds the economic stimulus package in order to lend a helping hand to ordinary Americans who are struggling in this Wall Street-created financial crisis," according to a press release issued by his office. What's more, says the release, "[McDermott] said the thousands of emails and telephone calls he has received in the last week have convinced him that people see the bailout as a Wall Street handout."

Was it the phone calls? Or could it have been last night's concert at a theater named for WaMu, the defeated thrift at the epicenter of our nation's biggest financial crisis since the Great Depression. The moment could not have been lost when Rep. McDermott stepped up to the WaMu Theater sign, perhaps for the last time. I attended a show there a couple weeks ago and, I must admit getting a bit emotional when I realized that my cup of Budweiser American Ale (which is different from normal Budweiser how, exactly?) was worth more than several shares of WaMu stock.

McD's full press release can be viewed after the jump.

McDermott photo by Harley Soltes.

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When Local Advertising Ruled

Automotive site Jalopnik has put up the classic old Rainier beer TV ad with the motorcycle and the mountain. Do I need to say anything more than "Rrrrrr-ai-neeeeeer...." to remind you which one that is? (Okay, younger readers who didn't watch TV in the '70s may not remember.)

As copywriter Ed Leimbacher explains here on his blog, the spots were conceived for famous ad maven Terry Heckler (whose partner in the early Rainier campaign was Gordon Bowker, also a writer and investor in SW's early history). Today, Heckler & Associates does branding for Starbucks and other national companies. And Rainier was sold in 1977, ceased local brewing in 1999 (its Georgetown and SoDo plants are being converted to lofts and such), and is now a label slapped on cans in California.

But once, in Leimbacher's original slogan, we were geared for thirst.

Topics: Business

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What JP Morgan Means for Me

Thanks to that little FDIC stamp on my bank statements, I haven't been worrying much about the cash I have at WaMu. But I decided to at least check to make sure there's still something there with which to buy debate-watching booze and maybe pay rent next month. It's still there of course, but here's the little note JP Morgan sent before letting me log in:

As of September 25, 2008, all WaMu customer deposits are now deposits of JPMorgan Chase, one of the strongest financial institutions in the world.

WaMu customer deposits — including checking accounts, savings accounts and certificates of deposit — remain insured by the FDIC and are now also backed by the strength and security of JPMorgan Chase. JPMorgan Chase has more than $2 trillion in assets and is America's #1 bank in deposits.

Translation: "Please stop taking your money out of the bank."

Topics: Business

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The Not-So-Fast-Paced World of Restaurant Lawsuits

Margaritagate is plodding slowly through trial. You can get the background here, with an update from the first days of oral argument, here (including an unfortunate slip by the defense attorney). Brian Hutmacher is still making his case that the Matador ripped Pesos off from the metal sconces to the enchiladas. Hutmacher's attorney, Daniel Woo, says he doesn't plan on calling the defendants to the stand until sometime next week.

Topics: Business

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Tully's Founder Speaks

In an e-mail this morning, Tully’s founder and Chairman Tom O’Keefe explains his support for a coffeehouse for soldiers that a group of veterans opposed to the war hope to open next month. “When I read the newspaper story about a group of young vets who wanted to open a coffee house near Fort Lewis I immediately reached out to them and offered my assistance,” O’Keefe writes. “I thought their story was compelling in that they wanted to help other vets transition back into day to day life outside the military.” O’Keefe, who’s the son of a Marine who served in World War II and the brother of a Vietnam vet, adds that he told the anti-war veterans that “while I didn’t necessarily agree with ‘some’ of their positions, I nonetheless respected their rights, and rights that they fought to protect, to have a different opinion than me.”

O’Keefe also relates a tale to show that he’s used to being in hot water. When he was class president of his senior year of high school in Issaquah, during the Vietnam War, he took stock of the fact that “college deferment wasn’t in the cards for many” and scheduled a draft counselor to speak to his class. “You can’t even imagine the fallout,” he writes.

Topics: Business, Iraq, and Politics

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MSFT Buys Back

Microsoft has announced plans to buy back $40 billion worth of its own stock. Presently trading around $25 per share, the stock was priced about 10 bucks higher last fall. Buy-backs are a common device to raise share prices, particularly after multiple splits and dilution of value. But who wants to buy boring old MSFT stock when the same amount could buy you all of the following...

• WaMu and the building it comes in
• A new Seattle pro basketball team you could call The Windows Warriors
• Votes from Alaska Sen. Ted Stevens on whatever bills you like, for life
• More wide receivers for the Seahawks
• At least a few blocks of Viaduct replacement or tunnel
• Enough new 520 bridge span to cross Portage Bay (then swim to Bellevue)
• Better TV ads for Dino Rossi
• Complete image makeover for Gov. Chris Gregoire
• Permanent housing for residents of Nickelsville and city's other homeless
• Bribe for Tim Eyman, just to make him go away
• A chain of alt-weekly newspapers, only slightly damaged

Topics: Business and Technology

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Gotham Can't Stop the Merger

Even the Joker couldn't stop these insurance behemoths from tying the knot.

As of today, it's official—Liberty Mutual owns Safeco, despite the protests of a mysterious group of New York Investors insisting their stock portfolios are getting hosed in the deal.

Topics: Business

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Breaking News: Nathan Myhrvold Not So Smart

On the one hand, Nathan Myhrvold was smart enough to retire from MSFT before the stink of VIsta and its sundry monopolistic practices could tarnish his halo. On the other, the former Chief Technology Officer, a boy wonder and future Ph.D who started college at 14, hasn't exactly distinguished himself since then. He's been cooking, raising kids, and otherwise geeking out—like of like a lesser Paul Allen without the museum and Hendrix fetish. (He's kept the beard, however.)

But in his latest venture, the Bellevue patent investment fund Intellectual Ventures, The Wall Street Journal reports that Myhrvold ain't so smart. He's raised $5 billion to acquire patents; then, on the licensing side, he's recovered only $1 billion in fees. Um, if you were still working at Microsoft, Steve Ballmer would've fired you for those results.

Still, Myhrvold defends his investment acuity to the WSJ, saying:

"You wouldn't expect a fund to be profitable at this point. We're way ahead of all our expectations. When we started, people told us to pound sand and said this wouldn't work. Actually, it's working pretty good."

Twenty cents on the dollar, or a 1 to 5 return on investment? That's "pretty good"? Dude, if that's true, then I should only have to come to work on Wednesday, since the other four workdays apparently don't matter. No wonder that neither one of us works for Microsoft.

Topics: Business and Technology

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MS Drops Seinfeld

From Valleywag:

Remember those awful Microsoft ads with Jerry Seinfeld and Bill Gates? Well, now you can forget them. Microsoft flacks are desperately dialing reporters to spin them about "phase two" of the ad campaign — a phase, due to be announced tomorrow, which will drop the aging comic altogether. Microsoft's version of the story: Redmond had always planned to drop Seinfeld. The awkward reality: The ads only reminded us how out of touch with consumers Microsoft is — and that Bill Gates's company has millions of dollars to waste on hiring a has-been funnyman to keep him company.

Topics: Business and Technology

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This American (Financial) Life: A Primer

Lehman Brothers NYC Offices, photographed by Peter Mumford on September 15, 2008

If all the news of the current financial debacle is making you wonder who exactly is responsible for this mess, what happened, and why, a recent episode of This American Life offers an up-close, straight-talking take on the market tumble. Pointy-headed financial terms are explained, with humor. It's called, tellingly, The Giant Pool of Money. Podcast here.

You'll hear from people all along the financial food chain, from a man with a no-questions-asked half million-dollar mortgage, to the former bartender who bundled NINA mortgages (that's No Income No Assets) into mortgage-backed securities subsequently purchased by big investment banks — among them, the now-bankrupt Lehman Brothers. (Their fancy NYC offices are shown above, photographed just days ago, giant L.E.D. displays still glowing.) Wall Street brokers at the top share their view, too, in this intimate portrait of the global economy.

A follow-up listen, recorded locally: economist Naomi Klein speaking with KUOW's Steve Scher about The Shock Doctrine: The Rise of Disaster Capitalism, her year-old book. Listening to Klein's smart, accessible explanation helps to further explain the motivations behind the mess.

Topics: Business

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WaMu's Tidal Wave

Fishman

Bigger is no longer better and greed is not quite as good. But Kerry Killinger is covered. He acquisitioned the rise of Washington Mutual and ducked out just before its mortgage free fall. Forced into retirement a week ago, the WaMu CEO took his $50-plus million in compensation over the last five years and went home.

His bank's stock, almost $35 a share last year, dropped 88 percent, on par with junk. The mortgage business he staked his career and bank's life on had imploded. Sell, sell, sell he had told his lenders. Find unqualified borrowers and don't ask them to make their payments. Surprise, those were houses of cards. Now the bank itself is on the multiple listings for fixer-upper American financial institutions, cheap.

More than half of the Northwest's 20 best-paid CEOs make at least $4.7 million, the Seattle Times reported last year, a 28 percent increase from the year before. Killinger topped the 2007 list of publicly traded companies with a pay package valued at $18.1 million:

Board members say they need to keep pay competitive or risk losing talented CEOs to companies that do. The result, says Shivaram Rajgopal, is a "Lake Wobegon kind of thing," a reference to Garrison Keillor's "Prairie Home Companion," the folksy radio show about a place "where all the women are strong, all the men are good-looking, and all the children are above average."...Rajgopal, an associate professor of accounting at the University of Washington, [said] "Nobody wants to be paid the average, and pay just keeps creeping up."

After ousting Killinger, the board brought in Alan Fishman, COO of the next-largest thrift, Sovereign Bank, to lift the tide. "I do think I have the skills to take it to the next level," he said. So far what he has done is keep WaMu afloat beneath its for sale sign. But Fishman is covered too. He has a $20 million salary and incentive package, bigger than Killinger's, good for at least one year. It includes a $7.5 million signing bonus which he presumably has already pocketed. If he screws up, he'll still get a golden parachute worth more than $2.5 million. Theoretically, he could quickly sell the bank and walk away flush. It may not be what Lake WaMu investors had hoped for. But it is above average, and apparently that's what matters.

Topics: Business

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It's Official: WaMu for Sale

To no one's great surprise, Washington Mutual is now soliciting offers for its acquisition by some sort of bank willing to provide a lot of capital. And we mean a lot. As The New York Times reports, WaMu's roughly 75 percent drop in share price means that it needs many billions to secure itself against bad loans in the subprime mortgage market. (Its market cap is down from about $40 billion to $4 billion.) Some analysts believe WaMu needs $5 billion immediately to survive, and may lose $28 billion through the end of next year.

Possible buyers include Wells Fargo, JPMorgan Chase, HSBC, and Citigroup. None of which, of course, are based in Seattle. If any of them bite, you can be sure that thousands will be made redundant—many of them here at WaMu's shiny new HQ on Second Avenue. No gloating here: Senior management all deserve to lose their jobs, options, and bonuses (along with departing CEO Kerry Killinger). But those really feeling the hurt will be the midlevel people, not the decision makers. And some of them now, too, may soon be having difficulty paying their mortgages, along with those subprime borrowers in foreclosure.

Unless Bill Gates or Paul Allen wants to buy a S&L, cheap. For now, WaMu is represented by Goldman Sachs. But, hey, to save fees—what about eBay?

Topics: Business

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Also in Mergers and Acquisitions: Tully's Goes to Vermont

While the world talks about banks and buyouts, Tully's—the little regional coffee chain that never quite could—was bought by publicly-traded Green Mountain Coffee Roasters for a cool $40.3 million. A press release this morning says the Tully's company and brand will remain as is, which is great news for anyone who loves the Crayola-colored former home of Rainier beer. Vermont-based Green Mountain's stock remains more or less unchanged after the announcement—currently at $33.55 a share.

Topics: Business

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