IBM has failed to perform “the crucial backup of data for more than 20 state agencies,“ Mr. Perry wrote in a letter to Brian Rawson, who oversees the IBM contract for the state’s Department of Information Resources. “The agency has failed to implement a system of checks and balances that ensures data security, jeopardizing the ability of state agencies to deliver services to their constituencies.” ...
In a Monday letter, Mr. Rawson wrote that IBM is “not meeting expectations,” and has been fined $900,000 for a failure to complete timely backups, as required by its $863 million, seven-year contract. ...
Last week, The News reported that a July server malfunction in the attorney general’s Tyler Medicaid fraud unit destroyed nearly half of eight months’ worth of documents – compromising scores of prosecutions. In the months before that crash, more than 10 agencies complained about network breakdowns and server backup problems with IBM, The News reported on Tuesday – an indication that the attorney general’s documents weren’t the only ones at risk.
Texas lawmakers ordered the outsourcing of Texas’ information technology in 2005, and one by one, state agencies have been switching over to the IBM system. Mr. Tieszen said he doesn't know how many agencies will be affected by Mr. Perry's order. Currently, 27 state agencies are in varying stages of this transition, and many – including the Texas Department of Transportation and the Health and Human Services Commission – have expressed serious misgivings.
“We’re getting complaints and anecdotes in all the time about problems that have cropped up with this system,” said Mike Gross, the coordinator of the Texas State Employees Union. “They thought they would economize [by privatizing]. Instead, they took a one size fits all approach.”
A legal threat could scuttle Papermaster's move to Apple, however. IBM has asked U.S. District Judge Kenneth M. Karas in New York to issue an injunction that would bar Papermaster from taking on his new role at Apple. Karas could rule on the injunction as soon as Thursday. "We think IBM will see that the iPhone and iPod are not competitive with their business," Apple spokesman Steve Dowling said. IBM sued Papermaster, one of the main architects behind the Power PC processor, late last month alleging he breached a noncompete agreement.
By cutting expenses over the past two years, particularly in developed markets, IBM has delivered margin improvements that will see it through a tough economy.
The 67% vote of shares in favor of the so-called "say on pay" proposal marked the highest level of support for such a measure at a large-cap company, according to the measure's sponsor, and underscored the dissatisfaction and loss of patience among Sun shareholders. "We've reached a tipping point in the outrage toward extraordinary CEO pay unrelated to performance," said Rich Ferlauto, of the American Federation of State, County and Municipal Employee Pension Plans, which helped sponsor the measure. ...
A slew of investors gathered in Sun's corporate auditorium took turns at a microphone Wednesday to vent their frustration with the company, its management and its board: How can the company justify bonuses paid to any of Sun's executives? Why is Sun failing while its rivals continue to increase their revenue? What does the company's management have to say about the failed reverse stock split?
Pretty much all of Washington is shoveling hundreds of billions of dollars to shore up the nation's financial system and restore liquidity to the global credit system. And there is growing if belated support for providing direct aid to millions of homeowners who otherwise can't afford to stay in their homes.
But while these concerns are front and center, there's been little but hand-wringing when it comes to the huge losses suffered by individual retirement accounts, what's left of traditional private defined benefit pensions, and state and local retirement programs. The scale of the problem is illustrated by two sets of some pretty scary numbers.
Firms such as now-bankrupt Lehman Brothers and bought-out Merrill Lynch were big customers and provided millions of dollars worth of lucrative contracts to Indian technology services companies. ...
Consequently, in the past home-grown Indian outsourcing companies grew by impressive numbers. Infosys and Wipro, the big two employers in Bangalore, were each hiring 10,000 employees or more during recent years. Such spectacular ramp-ups are unlikely to recur any time soon. One large call centre with European and US customers is now refusing to hire anybody that does not stay within a five-mile radius of their centers: the costs are just too high. ...
Some outsourcing companies see a bright lining to the cloud--lower attrition rates. In the last few years, Bangalore firms have averaged attrition rates between 20 to 40 per cent, the highest in any Indian city. The head of the business process outsourcing unit of Wipro once told me the unit churned its entire workforce every four years or so. If attrition rates were in the low two-digits, that used to be a talking and selling point for the company. Expect this to become the norm in future. Indian outsourcers may also be able to prospect for gold amid the rubble of the collapsed Wall Street firms. Some analysts seem to think that, as the fall of financial firms leads to business slowdowns for the Accentures and IBMs in the US and Europe, they may move more work to lower-cost offshore locations such as Bangalore.
"American workers lack pension security, beyond Social Security, because individual commercial retirement accounts are tied to the volatility of finance markets, are inadequately funded, have poor net-of-fees returns, and do not pay a guaranteed rate of return for the rest of a retiree's life," said Teresa Ghilarducci, a professor at The New School for Social Research and author of "When I'm Sixty-four: The Plot Against Pensions and the Plan to Save Them."
The inequities in the health insurance market were described in a recent report by the National Women’s Law Center and in an article by Robert Pear in The Times. If women are covered by an employer’s group policy, they are usually protected by federal antidiscrimination laws. The states, however, regulate the market for individually bought policies, and most offer women few protections against discrimination. New York is a notable exception.
After checking policies around the country, Mr. Pear found that women can pay hundreds of dollars a year more than men for identical coverage. The Law Center’s analysis of 3,500 individual health insurance plans found that insurers charged 40-year-old women anywhere from 4 percent to 48 percent more than they charged men of the same age.
The study also found that in some states insurers are allowed to reject applicants for reasons that effectively exclude many women, such as having had a Caesarean section or surviving domestic violence, and that the vast majority of individual policies don’t cover maternity care.
"The American health care system has pushed itself into a corner where even the most routine care is not financially accessible for the average family," said Dr. Steven Tucker, an oncologist in Singapore who is president of the International Medical Travel Association, a nonprofit group of health care providers and medical travel agents.
Estimates on the number of medical tourists vary widely and depend on how the term is defined. A new report by the Deloitte Center for Health Solutions, a research arm of the accounting firm Deloitte LLP, says that 750,000 Americans traveled abroad for medical care in 2007. Meanwhile, Josef Woodman, author of the consumer guide "Patients Beyond Borders," puts the 2007 number closer to 180,000.
"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.
Across the industry, bank executives and directors are discussing how they will handle the need to remain competitive in paying top people without incurring the anger of lawmakers and regulators. People familiar with the situation inside several of the top U.S. banks told Reuters most compensation decisions will not be made until next month. These people also say the firms still intend to compensate valued employees. "The government cutting or controlling pay is a non-starter. Bank heads think it's dangerous and it sets a bad precedent," one bank insider said. ...
Goldman, Morgan Stanley and Merrill Lynch have set aside $20 billion as compensation in the first three quarters, with two-thirds typically earmarked for year-end performance bonuses. These amounts were put in reserve before August 31, ahead of Lehman's collapse and last month's Treasury intervention.
Compensation is accrued throughout the year and usually equals 45 percent to 55 percent of revenue. For instance, nine banks paid out an estimated $50 billion in bonuses in 2007, based on the total compensation expense for the companies and assuming that, for investment banks, about 60 percent of total compensation was allocated for bonuses, while commercial banks allocated about 20 percent for that purpose.
The total of these obligations at some firms exceed what they owe in pensions to their entire workforces, the Journal said.
Bonuses? The stock prices of the firms have plummeted in the past year, Lehman Brothers has collapsed completely, the bungling executives have caused a global financial crisis, and the five remaining banks are down now down in Washington loading up their share of a $700 billion taxpayer bailout. They get bonuses for that?
The math is infuriatingly easy here: This $70 billion executive payout means that honchos in these firms will siphon off 10 percent of the bailout funds that were supposed to shore up our economy – not reward executive failure.
Meanwhile, there’s the loudly ballyhooded effort by Congress to restrict future pay for the big shots at banks getting bailout money. Congress’s bark was ferocious, but its bite turns out to be harmless. The banks are limited to a tax deduction of only $500,000 for each executive’s pay. But there’s no limit on how much total money is doled out to the execs – meaning they can still be paid $5 million or even $50 million a year. The banks wouldn’t get a tax break on the big sum, but – hey – they’re already getting billions of our tax dollars from the bailout, and that money can be used to maintain the extravagant paydays of those at the top.
These are not merely loopholes in the bailout scheme – they amount to blatant frauds.
Really? Then, why is there no requirement in the bailout plan that banks must actually make loans as a condition of getting the money? Have you heard about this? America’s nine largest banks – including Bank of America, Citigroup, Goldman Sachs, and Wells Fargo – are being handed 125 billion of our tax dollars with no strings attached. The Bushites say they “hope” the bankers will use this largess to help the American economy… but that it’s up to them. Indeed, Bush’s chief bank regulator says he will not even monitor how the recipients use our money.
For their part, the Big Nine say they feel no urgency to move the funds into the credit system. After all, they sniff, we have lost a ton of profit in the past few months, so we'll need the bulk of the handout to beef-up our own balance sheets.
Worse, some market analysts expect the banks to use Washington’s gift to buy up smaller competitors. Yes, that means that our tax dollars will go toward the elimination of banking competition in America! Not only will consumers and businesses be left with fewer choices, but this also will increase the size of poorly-managed megabanks that Washington and Wall Street have already designated as “too big to fail.” The Bushites are right. This is not a bailout – it’s a scam!
You might recall that we've always been told that there’s no money to do such big American projects. Really? Then where did they find that $700 billion they're now handing out to Wall Street?
He lied. There never was any connection between the bailout and credit flow. Indeed, the bailout czar is now doling out billions with absolutely no strings attached – no requirement whatsoever that the recipient banks start making loans to “your street.” The unclogging rationale was a scam.
Instead, Paulson & Company are using the bailout funds to restructure banking in ways that’ll harm your street. Behind the scenes, the Treasury Department is actively encouraging big banks to use their taxpayer windfall to buy out our regional and local banks, eliminating these smaller competitors from the marketplace. The big banks, of course, are delighted. For example, JPMorgan Chase got $25 billion from us, and a top executive recently gushed about being able to use it “on the acquisition side or opportunistic side for [taking over] some banks who are still struggling."
Thanks, Hank! By forcing this consolidation, Paulson will reduce banking choices and services for us consumers, while driving up the fees we pay. He’ll also drastically enlarge the very giants that made the mess we’re in – banks that he told us are already “too big to fail.” This bailout has gone from scam to scandal! Where is Congress? Paulson shouldn’t just be stopped – he should be impeached.
Take the Big Three's recent hope for government loans in the $25 billion to $50 billion range. How short are the memories of those who forget that Chrysler is headed up by Bob Nardelli, who left Home Depot in shame -- OK, maybe not that much shame, seeing as how he got a $210 million goodbye present on the way out. Somehow it seems ironic that his company is among the ones asking for government help. Perhaps some of these rich dudes could kick in some cash when their companies are floundering? Call me crazy.
Shareholders should pressure their companies for say-on-pay policies and reasonable salaries. It's not unheard of. Costco and Whole Foods Market jump to mind as two companies that have been ahead of the curve when it comes to reasonable pay for CEOs, and some of the most brilliant minds in business and investing, like Peter Drucker and Berkshire Hathaway's Warren Buffett, have taken stands against excesses in CEO pay.
I think golden parachutes in particular should be viewed as symbols of decadence and thievery, not to mention the antithesis of true free-market dealings. Failure should not pay. In the case of bailouts and government assistance, then both shareholders and the public at large are the ones who get their pockets picked for a whole lot of nothing. I don't see why this stuff has gotten by so easily for as long as it has -- it's low on both ethics and logic. So many of these guys have been paid millions year-in and year-out anyway, sometimes making terrible decisions that don't come out in the wash until years later (like now).
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