Banco Popular still in decline

In many ways, Banco Popular is the perfect poster child for these dying capitalistic/socialistic/greed run amuck/corporations that perpetuate themselves at the expense of everything else. Yesterday, Moody's downgraded ratings of Banco Popular de Puerto Rico and its parent, Popular Inc., a day after the company suspended preferred dividends and announced an exchange offer to raise common equity. Amidst this turmoil, shares of Popular dropped Tuesday afternoon, falling 19 cents, or 7.4 percent, to $2.36.

Shares of BPOP were at $7.54 when I asked Why is Dick Carrion still CEO and President?. Now, nine months later, the stock is down another 68.7%. With their bonds quickly dropping towards junk and their stock bearing down on delisting, I ask again, why is Dick Carrion still CEO and President of Banco Popular Maybe it is more accurate to ask, why hasn't the Board of Directors of BPOP demanded his resignation?

The void

Here's what most of us don't get. What, we of the middle and lower classes, are witnessing is an elitist band of "good o'le boys" that are willing to do anything to sustain their luxurious lifestyles. While the line staff at their companies are laid off and increasingly asked to pay for their own health care and retirements, the golden parachutes are rapidly deploying around them. In addition, the true owners of these companies, have witnessed the elimination of such vast amounts of wealth, that they are literally speechless.

What I was told as a small boy was that when you screwed things up, you got punished. I was also admonished to take good care of my reputation, because it would follow me and impact my future. Now as an adult I witness the exact opposite. According to 2008 figures, here is the compensation for 4 executives from Banco Popular:

  • Richard Carrion - $1,395,622
  • David Chafey - $2,162,303
  • Brunilda De Alvarez - $747,925
  • Jorge Junquera - $801,232.
My worry from this situation comes from trying to teach my children well. What lessons do I use? What guidelines can I give them? Some have exploded over the possibility of President Obama getting involved in executive pay. I say, for the sake of our country, for the sake of capitalism, someone should. We've allowed a corrupt system to become cemented into common practice where executives are paid independently from their performance. This MUST stop! Executive pay must become predominantly based on merit. For executives of public companies, this means the price of their companies stock. Stock goes up, executives party. Stock goes down 70%, executives sell the yacht and the second beach house at Palmas. Seems fair to me.

3 comments:

Anónimo

19 de junio de 2009, 15:59
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dijo...

The fall of Banco Popular is coming and in the process it is hurting many good people. People who thought the company was operating intelligently and responsibly by fiscal standards. People who had their retirement in BPOP common stock and relied on the dividends to supplement retirement income. People who trusted Carrion and the knighted executives hauling down huge salaries to actually act with prudence. Well the dividends are gone, so is the value of all the owners (stock holders) retirement nest eggs. Soon that will go to zero. Even some of the people on the Board of Directors have been devastated by it in their personal finances.. Partly their fault? I don't know. Did management lie to the board all along? It sure looks like they at least presented rosy little fantasy views of things if not outright misrepresentation (lying). Why in the world didn't the bank act faster to reverse the dumb decisions made? Why didn't the board insist on it? Why did they not conserve capital earlier??? Because they all had their heads in the sand and thought.... housing prices in Puerto Rico only go up. Amongst other totally false beliefs. Foolish expansions into the US market lending like crazy on housing bubble properties.. Corporate jets and all the rest of it. Disgusting. Where is an executive who flies commercial and coach? T Boone Pickens did. No... this has cost me over 200K dollars. It has cost others I love much more. And it is not over. Popular (the name and buildings will continue) the owners (the common stock holders) will loose every single penny most likely. Some good people will loose essentially everything they have, they've already lost 90 percent of the stock value and 100% of their dividend income. Yes, people put themselves in this situation but.... what does it prove? It proves you can never believe a word the company tells you about itself..... Like a lawyer. How do you know they are lying???? Their lips are moving. Popular is looking to be like Enron, Wachovia, Washington Mutual... and others. Devastating the nest eggs and retirements of those who don't understand much of what was happening but believe the companies would do right by the owners... the shareholders not the executives. Of course Carrion is a major shareholder but he is rich in many other ways and will be rich even if Popular was taken over in a hostile bid by say Santander or somebody else and he was summarily fired. The golden parachute would kick in as well.... but he can never outlive this:::: The shame of ruining the family business and the knowledge of being partly responsible for the financial ruin of many, many, many people. however cannot be escaped from. Perhaps there is an opening window in his office to jump from. That is too harsh but.... the thought should cross his mind.

Admin

19 de julio de 2009, 19:34
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dijo...

Banco Popular has been abusing the Puerto Rico's middle class for many years. Popular's penetration into the economy of the Island is so deep that almost all bank accounts of the Commonwealth of Puerto Rico are being held by this bank. Now they have the monopoly to even sell tickets in goverment's owned installations and charge for the sale of the ticket. The have designed their own demise. Nobody's fault but themselves.

Basiliko

22 de julio de 2009, 00:28
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dijo...

Banco Popular no lograra su meta de completar con exito su Exchange Offer por las acciones preferidas de la misma institución. Comentarios de clientes en reuniones con la gerencia del BPPR, es que no aceptaran las condiciones de la oferta.