The Five Dumbest Things on Wall Street This Week: Oct. 12

5. Tessera's Travel Tips

Have no fear all you Californians getting killed by $5 bucks a gallon gas. Thanks to our friends at Tessera Technologies ( TSRA), we have found a solution to ease your pump pain: Commute from Connecticut instead.

No joshing. According to regulatory filings released late last week, the semiconductor and digital optics company plans to pay its CEO Robert Young a whopping $150,000 per year to shuttle back and forth between his Connecticut home and Tessera's San Jose offices. The stipend comes on top of Young's $684,000 annual base salary for 2012, and a bonus that can reach up to 100% of that amount.

Oh yeah, let's not forget the 550,000 stock options Young will be able to vest if he spins off one of his two divisions, or the $1.6 million in total compensation he pocketed last year.

You see Golden Staters! If Tessera is giving Young all that extra travel cash when he doesn't even need it, imagine what your company will give cash-strapped straphangers like yourselves!

Furthermore, don't be dissuaded from asking for the additional dough if your company is losing money. Tessera lost $8.5 million in the first half of the year and still found the scratch to compensate Young for his cross country commute.

"The 2012 compensation arrangement provides an additional financial incentive for Bob to pursue a key strategic alternative, and reflects the board's continuing efforts to closely align executive compensation with the best interests of stockholders," said company chairman Robert J. Boehlke about Young's arrangement.

Hey, its good work if you can get it.

And even better if you can get it 3,000 miles away.

4. Jack's Not-So-Quick Tweet

Sorry Dumbest fans. You surely know by now how much we hate talking politics here at the Lab and how hard we try to remain colorblind in the escalating battle between red and blue states. Quite honestly, it's not our thing (or, as better expressed in yiddish es pas nisht), and perhaps more importantly, we wade through so much stupidity right here on Wall Street that we just don't have the capacity to stomach any additional inventory provided by our friends in Washington.

So if you want us to take sides in the Presidential battle, we apologize, but no can do. For better or worse -- and we think it's better -- consider it outside our Dumbest domain.

All that said, former GE ( GE) CEO Jack Welch sent such silliness straight from his gut to ours last week that we simply can't remain mum. While we remain steadfast in our neutrality, Welch has forced us off the sidelines with his jobs report numbskullery.

In case you missed it, Welch tweeted that President Barack Obama's administration rigged last Friday's September jobs report because he lost the opening Presidential debate. According to the Labor Department, the economy added 114,000 jobs in the month and the unemployment rate dropped to 7.8% from 8.1%.

"Unbelievable jobs numbers...these Chicago guys will do anything...can't debate so change numbers," Welch told his 1.3 million followers.

Oy vey Jack! What a schmucky thing to say (no translation necessary we assume) about what should have been good news about the economy.

After opening Pandora's Twitter account, Welch momentarily backtracked by saying he was not "accusing anyone of anything" but then proceeded to double down on his conspiracy theory by telling his many doubters to "draw your own conclusions" and then triple down with a rambling op/ed in Wednesday's WSJ where he jabbered about the U.S. turning into "Soviet Russia" and "Communist China."

Come on Neutron Jack, you don't have to be a nuclear physicist to know that your conclusion is just partisan hooey. Forget about Big Bird, you're acting like a bird-brain over an admittedly imprecise number that will most certainly be revised next month.

"We have done a monthly survey since 1940 and the methods have broadly not changed," said Karen Kosanovich, an economist with the Bureau of Labor Statistics. "Fiddling with the numbers, I don't know how that would be possible."

Look, if anybody knows how to massage numbers for his own benefit, it's certainly Welch. As our good friend Barry Ritholtz over at Fusion IQ reminded everybody this week, Welch was a master at beating Wall Street earnings forecasts during his tenure atop GE, even when it seemed nearly impossible. Seriously, the man could magically make a penny appear out of thin air if it meant topping the consensus estimate.

Back then nobody on the Street dared challenge Welch's numerical legerdemain. This time, however, the ravenous political forces that behead would not allow Jack to get off that easy. When pressed for the statistical source of his assertion, Welch says he reviewed more than a dozen companies in different industries and none were stronger in the third quarter than they were in the second.

"You can't just call me old and senile," said Welch, who quit writing his Fortune column Tuesday after the magazine called him out on his now-infamous Tweet.

Fine. We'll just call you dumb instead and count the days until this election is over so we can go back to making fun of Goldman Sachs ( GS) again.

3. UBS Slush Fun

Even on the witness stand, you just can't take the BS out of UBS ( UBS).

A London court heard on Monday that a UBS trader named Darren Bailey discussed the idea of a "slush account" in an electronic chat with rogue trader Kweku Adoboli months before he was busted for losing the Swiss bank $2.3 billion. However, even while confronted by his own words, Bailey rejected the claim by Adoboli's lawyer that he had knowledge of and even encouraged Adoboli's illicit activities. Adoboli was arrested in September 2011, and has pleaded not guilty to two charges of fraud and two of false accounting.

In one group chat from March 17, 2011 read aloud in court, Adoboli and Bailey discussed the week's trading activities, which Adoboli described as "emotional."

"Have you used the slush acct (account)?" asked Bailey in response at the time.

Okay. So what did Bailey -- who is still employed by UBS mind you -- say when he was confronted in court with this blast from his very own past?

"I am genuinely shocked by this. I don't know what the context to that could have been. I am genuinely surprised," replied Bailey, clearly contradicting his testimony from last Friday when he said he was unaware of any slush or umbrella account at all.

Sigh. Forget about Captain Renault being "shocked to find that gambling is going on" at Rick's Café in Casablanca. We're shocked that somebody could be so insincere -- and outright stupid -- on a witness stand.

And the silliness snowballed from there. Adoboli's defense lawyer pounced on Bailey's bad performance, labeling the comment as proof that Bailey and others at the bank were aware of Adoboli's actions, thereby legitimizing them.

Or, in other words, Adoboli's defense is that all the traders at UBS were doing it, so why is everybody picking on him?

Good question counselor. Unfortunately for your client, we have $2.3 billion answers for you.

2. J&J Meets G&G

We got a chuckle over Johnson & Johnson's ( JNJ) troubles this week courtesy of our friends over at Goldman & Goldman ( GS).

No, that's not a typo. We doubled-up on Goldman for a reason. Allow us to explain.

The investment bank's research analyst Jami Rubin downgraded the drug giant to sell from neutral Tuesday based on her belief that the company's focus on getting bigger is causing it to become less competitive. Shares of Johnny John, as Wall Street traders call it, sank 1.5% to $68 on the news.

"In our view, JNJ's focus on M&A versus cash returns to shareholders or a break-up strategy (like PFE, ABT, COV, BAX) puts it at a disadvantage as other companies get more aggressive. We advocated a creative strategy in our May 30 note, The case for breaking up J&J, which we believe would unlock significant value that is currently trapped in JNJ's conglomerate structure. However, our sense is that management has low interest in this approach to capital allocation," wrote Rubin.

Alright, she's entitled to her opinion, and it certainly is a candid one considering we rarely see bulge bracket investment banks telling clients to dump Dow components, and especially established ones like J&J. But that's not what tickled our funny bone though.

No, what amused us about this particular sell call is where J&J's management got the bright idea to bulk up in the first place. Guess who planted the seed in J&J's mind to get bigger? Come on, give it a shot.

Yep, Goldman Sachs itself. As pointed out by TheStreet's very own Antoine Gara in his Street Whispers column Tuesday, Rubin's bearish outlook on J&J -- predicated on a misguided M&A strategy -- comes only a few months after Goldman's investment bankers helped seal the healthcare giant's largest-ever acquisition.

"The real surprise is how arguments floated by Goldman's research analysts appear to undercut the bank's front and center role as an advisor to J&J on its $19.7 billion acquisition of medical device maker Synthes, the largest deal in the company's 126-year history. The downgrade is especially noteworthy given that Goldman's advisory work for J&J was also likely considered to be a capstone 2012 success in a relatively weak year for dealmakers," wrote Gara.

Look, we appreciate that Goldman's research arm is finally showing its independence after all the troubles it heaped on itself during the tech bubble (the last one that is). It really is refreshing to see a conflict of interest within an investment bank, as opposed to one between an investment bank and its client.

That said, you gotta admit the whole thing is laughable. And it will be even more so when J&J eventually takes Rubin's advice and breaks itself up. You just know they will. And guess who will pocket the advisory fees when they decide to get smaller?

Come on, give it a shot.

1. Wells Fargo's Fakery

WTF Wells Fargo ( WFC)? Just shut up and pay the fine like everybody else.

Wells Fargo was the big loser among the largest U.S. financial companies on Tuesday, falling 2% to $35 per share, after the government announced it was suing the nation's fourth largest bank -- and Warren Buffett's favorite one to boot -- for hundreds of millions of dollars in a civil fraud lawsuit. The Feds are targeting Wells over its underwriting of Federal Housing Administration-backed (FHA) mortgages issued over a decade that eventually defaulted.

According to the complaint, Wells certified more than 100,000 loans for FHA insurance between May 2001 and October 2005, even though the bank was aware its underwriters barely lifted a finger to qualify its borrowers. And here's another fun fact from the government's allegation: During a 7-month stretch in 2002, at least 42% of the bank's FHA loans failed to qualify for the insurance they were submitted for, even though the bank's benchmark for such violations was 5%.

Put plainly, holy crap that's a lot of crappy loans!

"As the complaint alleges, yet another major bank has engaged in a longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance," Manhattan U.S. Attorney Preet Bharara said in a statement.

Yeah, and like the rest of its buddies in the banking business, Wells paid big bonuses to its employees during the housing boom to underwrite bogus government-backed loans and now the government wants its money back.

Sorry, we meant to say our money back.

Unfortunately, the folks at Wells don't see things Uncle Sam's way. In a statement responding to the suit, Wells denied the allegations, professing "it acted in good faith and in compliance" with both the FHA and the Department of Housing and Urban Development. Wells added that it plans to "vigorously defend itself against this action".

Listen Wells, it took the government this long to get around to making its case, so stop the charade and just pay the damn fine, ok? We all have better things to do and we all know how this is going to end. Citigroup ( C) settled for $158 million. Deutsche Bank ( DB) remunerated $202 million. Bank of America ( BAC) paid $1 billion for Countrywide's subprime sins.

So hop on your stagecoach, ride over to Preet's office and cut him a check. It's your turn to pony up.

-- Written by Gregg Greenberg in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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