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NOVEMBER 19, 2007
Edited By Deborah Stead How Jolly on the Street? The mortgage maelstrom has generated at least $30 billion in losses on Wall Street—and fears that bonuses may be so low they'll crimp New York's economy. But for some bankers, bonus season may still be jolly, says Michael Hecht, an analyst at Banc of America Securities (BAC ). Revenues for 2007 could be record-breaking at the top five firms, he says—up 7% over last year's high of $127 billion. And the average end-of-year bonus may be 10% more than last year's (about $200,000, by one estimate). A sweet spot: mergers and acquisitions. As for the folks who trade mortgage securities, they may see up to 40% less in their envelopes, says New York compensation specialist Johnson Associates. By Mara Der Hovanesian Laundry 101: No Water Necessary How can Procter & Gamble (PG ) extend the reach of Tide, which already claims about half the U.S. detergent market? Create an anti-wash brand, Swash, that carries the Tide logo. Swash products, including a stain-removing pen and a "smoothing" spray, are designed to get rid of odors, stains, and wrinkles without using water. Some prime customers: college kids. In October, P&G, which sells the items at Swashitout.com ("Keep the clothes you love to rewear feeling clean"), opened a pop-up Swash shop near Ohio State University in Columbus. The company declines to give details. But Elizabeth Crawford, a vice-president at Iconoculture, a consumer trend firm, says it's wise to go after young adults this way. A loyalty to Tide may pay off later, when their domestic skills kick in, she says. By Robert Berner   City to Big MAC: So Long The Municipal Assistance Corp. was born in a blaze of tabloid headlines, but its passing is being relegated to the fine print. MAC, the state agency created to rescue New York City from the threat of bankruptcy in the mid-1970s, posted legal notices in October announcing it would cease to exist on July 1, 2008, the expiration date set by law. Big MAC, as it was called, hasn't had much to do since 2004, when the city—now the picture of financial health—refunded the last of its bonds, which totaled nearly $10 billion at peak issuance. New York State created MAC after President Gerald Ford refused in May, 1975, to provide an emergency federal loan to the city. "Our great fear, which we never discussed publicly, was that if the city went bankrupt, the state would, too," recalls Felix Rohatyn, the celebrated Wall Street banker who was MAC's chairman during the worst of the crisis. The city's closest brush with bankruptcy came on Oct. 17, 1975, he recalls, when the local teachers' union balked at using $150 million in pension funds to buy MAC bonds. By the time Albert Shanker, the union's famously militant chief, relented late that afternoon, "we were a few hours from bankruptcy," Rohatyn says. That night, MAC's chairman went to the restaurant Elaine's to celebrate. Spying Woody Allen, he congratulated the director on the prescience of his 1973 film, Sleeper. It was set in 2173, after civilization had been all but obliterated "when a man named Albert Shanker got ahold of a nuclear weapon." Recalls Rohatyn: "I started thinking of that line in the middle of the night, and I never did get any sleep." Sleep eluded him for a few weeks more until two unlikely allies joined the cause. At the behest of Rohatyn and others, Fed Chairman Arthur Burns raised the issue at a G-7 summit near Paris. The upshot: French President Valéry Giscard d'Estaing and West German Chancellor Helmut Schmidt warned Ford that a New York bankruptcy could trigger a global financial crisis. Ford signed bailout legislation soon afterward. "It was only then we were pretty sure we weren't going to go bankrupt," says Rohatyn, 79, adding that running MAC was "one of the best experiences of my life." By Anthony Bianco Who Gets the Worm Some 70% of those earning at least $75,000 say they are at their best in the morning, vs. 40% of those making under $30,000, according to a Gallup Poll of 1,019 adults. Would you be richer if you could just rise earlier? Not necessarily, says London consultant Leon Kreitzman, co-author of Rhythms of Life. He cites a sleep-habit survey by Southampton University researchers, who caught up 20 years later with people polled in 1973. Late risers were actually a bit wealthier. Being a lark or an owl is genetic, and the income disparity Gallup found may result from self-selection in job picking, he says. "It's not a willpower thing." By Sonal Rupani The Cookie Crumbles Consumer advocates are pushing for a national Do Not Track Registry to make it harder for Web advertisers to pitch tailored ads to users after tracking their site visits. Pam Dixon, executive director of the World Privacy Forum, says the idea is based on the Do Not Call Registry, which silenced millions of pitches by phone. But could a Do Not Track Registry result in more online ads? Yes, says one ad targeter. Web sites will try to compensate for the loss of revenue from targeted ads, for which they charge a premium, says Tim Vanderhook, chief executive of Specific Media. "The only way to make as much money," he says, is to charge users for content—or "show them more ads." By Catherine Holahan
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