The 5 Dumbest Things on Wall Street: May 14

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Citigroup's Silly Payout

Citigroup (Stock Quote: C), which is 27% owned by Uncle Sam, will pay director Robert Joss $350,000 for as little as three weeks of not-so-hard labor.

Talk about good work if you can get it.

Despite criticism by shareholder-advisory firm Glass, Lewis & Co. that he lacks the independence needed to serve on the board, Joss will advise on projects for "a minimum of approximately three weeks," according to a filing uncovered last weekend by Bloomberg.

"This is kind of an interesting situation, where you're not management, and you're not independent, but you're a director," said Joss, who joined Citi's board last July.

Wow! That's some paycheck for a "minimum" of his time and for a job he can't define. We would hate to see what Citi would pay Joss for a whole month on a job he could explain.

Not that we begrudge his qualifications, especially when compared to the slouches that used to oversee the belittled banking giant. As a former Wells Fargo big wig and Stanford University business school dean, Joss certainly has the skills to help solve Citi's ills.

But if Citigroup wants an overpaid, underworked poser to run things, it might as well bring back Bob Rubin.

Dumb-o-meter score: 75 -- Speaking of overcompensated do-nothing board members: Hey, Dick Parsons! What's new?

 

 

Fannie's Mayhem

Here's our advice to President Obama's Supreme Court nominee Elena Kagan: If you want to succeed in Washington, then "don't ask, don't tell" is the only way to go.

No, we're not talking about America's military. We're referring to a force even more powerful than the Army, Navy and Air Force combined. That's right, Fannie Mae (Stock Quote: FNM) and Freddie Mac (Stock Quote: FRE).

On Tuesday, the regulator of the mortgage finance giants said he had no clue as to how much taxpayers will ultimately end up shelling out to keep the two companies afloat.

"The actual cost I do not know," said Federal Housing Finance Agency Acting Director Edward DeMarco in response to a question from Sen. Jim Bunning (R., Ky.) at a Senate Finance Committee hearing.

DeMarco's stunning display of ignorance was timely, though, coming a day after Fannie announced it would need an additional $8.4 billion from the U.S. Treasury. The two firms have now tapped about $145 billion from the government, and the losses continue to mount.

Don't worry. President Obama -- clearly tired of asking when the bleeding will end -- has said he will backstop losses, no matter how high they go, through 2012.

Not that anybody would to be able to tell him anyway.

Dumb-o-meter score: 80 -- Fannie Mae continues its mayhem.

 

 

Deranged Exchanges

Investigators have yet to find the "fat finger" that ignited last week's flash crash. Nevertheless, we here at The Five Dumbest Lab have located a pair of fatheads pointing fingers over the debacle.

The blame game continued Friday between the Nasdaq Stock Market (Stock Quote: NDAQ) and the New York Stock Exchange (Stock Quote: NYX) in the wake of Thursday's 1,000-point intraday stock market plunge -- despite calls from both sides for a truce.

Appearing on CNBC Friday morning, Nasdaq CEO Bob Greifeld had some stinging criticism for the NYSE, accusing the hybrid -- half-man, half-machine -- exchange of walking away from orders. "It's equivalent to what happened back in the day when we had telephone markets, where traders didn't answer the telephone to incoming orders."

Bull! cried NYSE chief Duncan Niederauer in response. And we are not talking about a bull market.

"You take the plane off autopilot sometimes, and you fly the plane," shot back Niederauer, noting that trading moved to human auction in the certain stocks for periods of 30, 60 or 90 seconds during the Thursday mayhem. "And guess what? When they reopened here, they opened at basically where they had traded 30, 60 or 90 seconds ago."

After sniping at each other through the press, representatives from the two exchanges continued their verbal sparring on Tuesday in Washington at a congressional hearing.

The change of venue makes perfect sense to us. There's no better place on earth than Congress for pointless finger-pointing.

Dumb-o-meter score: 85 -- We say ditch the exchanges and bring back the Buttonwood Tree!

 

 

Boston Blackout

Be serious, Boston Scientific (Stock Quote: BSX). Do you really think you can hide your stupidity from us?

The medical device maker, which has been a frequent visitor to our esteemed Dumbest list, barred media from its shareholders meeting this Wednesday. The company did not offer a reason for closing its doors to the press. Previous meetings have been open to everybody, including ink-stained wretches such as ourselves.

What a joke! We already knew about the company's $1.6 billion first-quarter loss. How on earth could they top that? Announce another defibrillator recall maybe? Or how about pay Johnson & Johnson another $1.7 billion over a patent dispute?

And speaking of multimillion dollar misfires, the annual meeting in Boston was the first since J. Raymond Elliott took over last July as president and chief executive. The company paid Elliott a cardiac arresting $33.5 million in total compensation in 2009, according to a regulatory filing, the largest payout to any business executive in the region last year.

If all it takes to make Elliott's heart stop is a few tough questions from a bunch of journalists, then he should be using heart devices -- not selling them. Dumb-o-meter score: 90 -- Boston's dumb decisions are not-so-Scientific.

 

 

Obama Trashes Tech

America's first BlackBerry president made some pretty bizarre comments about technology last weekend.

In a commencement speech at Virginia's Hampton University, President Obama warned that the latest gadgets are placing new pressures on American democracy, singling out Apple's (Stock Quote: AAPL) iPad as a prime offender.

"With iPods and iPads and Xboxes and PlayStations -- none of which I know how to work -- information becomes a distraction, a diversion, a form of entertainment, rather than a tool of empowerment, rather than the means of emancipation," said Obama, according to the New York Post.

Wait a second here! Obama surfs into the Oval Office on a wave of Internet fund-raising and social media maneuvering -- and now he wants to pull the plug? That's just not fair, let alone good for an economy that relies on technological innovation.

Worst of all, the president's suggestions are just not practical. Apple has already sold more than a million iPads in the U.S., and America's kids would sooner surrender their siblings than their video game consoles.

Respectfully speaking, Mr. President, Pandora has opened her Xbox, and even an executive order can't close it back up.

 

Dumb-o-meter score: 95 -- The iPods are out of Steve Jobs' barn. And they aren't coming back.

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