The Banking Industry

Shareholder group attacks banks over subprime-related losses

Anonymous. Financial Times. London (UK): Mar 11, 2008. pg. 19

Abstract (Summary)

The union-backed funds hold small stakes in the six banks and shareholder votes opposing directors' re-election are usually defeated. However, [CtW]'s move underlines the rising backlash against Wall Street's huge losses.

In a letter sent to Charles Noski, the chairman of the bank's audit committee, and copied to John Mack, chairman and chief executive, last month, the funds said the audit committee "failed in these duties as they relate to the company's exposure to mortgage-related risk". The letter, seen by the Financial Times, added: "The audit committee's failure is especially troubling given the financial expertise of its individual members."

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Full Text (354 words)

(Copyright Financial Times Ltd. 2008. All rights reserved.)

By FRANCESCO GUERRERA and BEN WHITE

A band of vocal shareholders will this week begin a campaign against a string of Wall Street banks, accusing them of failing to prevent their mortgage-related losses and are threatening to vote against several directors at upcoming shareholder meetings.

Union-backed CtW Investment Group, whose affiliated pension funds have more than Dollars 200bn under management, is expected to launch its first attack on Morgan Stanley and follow up with campaigns against some of the banks with the largest subprime-related writedowns, including Citigroup, Merrill Lynch, Bank of America, Washington Mutual and Wachovia.

CtW said it had not yet made a decision on whether to oppose the re-election of any directors.

The union-backed funds hold small stakes in the six banks and shareholder votes opposing directors' re-election are usually defeated. However, CtW's move underlines the rising backlash against Wall Street's huge losses.

Morgan Stanley's annual shareholder meeting, on April 8, precedes those of the other banks, making it the likely first target.

However, in a letter sent to Charles Noski, the chairman of the bank's audit committee, and copied to John Mack, chairman and chief executive, last month, the funds said the audit committee "failed in these duties as they relate to the company's exposure to mortgage-related risk". The letter, seen by the Financial Times, added: "The audit committee's failure is especially troubling given the financial expertise