Archive for November 2007

Job Of The Week: Credit Analyst!

Pretty much everyone needs more credit analysts these days. New York Life Investment Management LLC, one of the largest managers of high yield and leveraged loans in the United States, wants to add a Credit Analyst to its Leveraged Loan team. Get on it!

We’ve now ventured into the dangerous territory of financial accounting three times in the past two days to raise the possibility that the deep discount on asset backed securities obtained by Citadel when it bought E*Trade’s portfolio may amount to a major mark to market event for Wall Street. We knew when we started discussing this that the banks and brokerages would not be eager to make further write-downs to their ABS books. But what we didn’t know was that so many of our readers would be eager to provide the rationalizations for avoiding the mark downs.
We’re told that the bulk of E*Trade’s credit portfolio consisted of prime residential first lien loans. According to one E*Trade document DealBreaker has obtained, E*Trade had assigned a book value of $1.4 billion to mortgages rated AA or higher, $590 million were rated A, and $285 million were Triple B. With the secondary market for mortgages largely opaque—to the extent it exists at all these days—we thought it was rather obvious that a large public transaction in these securities should at least cause accountants to take a second look at their supposedly marked-to-market portfolios.
The main objection to viewing this as a mark-to-market event seems to be that because Citadel bought more than just asset backed securities and because the securities they did buy were a heterogeneous lot, it’s difficult if not impossible to derive a market price for the individual securities. This strikes us as a daring dodge but we’re trying to keep an open mind about this. Please feel free to explain in the comments below why further discounts of ABS books are not called for.

Scots Take The Wind Out Of Trump’s Hair

Donald Trump’s $2 billion proposal to build “the world’s greatest golf course” in Scotland, the home of his ancestors, has been shot down. Councilor Martin Ford, who cast the deciding vote against the 15-mile construction of two 18-hole golf courses, 950 apartments, 500 homes and a 450-room luxury hotel, said the wildlife damage it would cost would be “too high a price to pay,” though Trump claims that the area would “maintain its environmental integrity.” In one of those rare moments that you couldn’t say, “Wow, what an unjustifiably smug twat, he’s clearly only gotten this far on his looks,” Trump admitted that he was “surprised and disappointed.” Thank god he had the good sense to add, “The appeal should go rather quickly and successfully…This is what I do all my life. In the end it works out because I do succeed.” In other news, who knew Trump was Scottish? I certainly didn’t. Seriously, some days I am too stupid to function. Other days, no joke, I’m a fucking genius.
Trump’s In The Rough [NYP]

  • 30 Nov 2007 at 3:45 PM
  • NatWest 3

The NatWest 3 Guilty Plea: Risk Management

We noted our disappointment yesterday with the decision by the three British bankers—called The NatWest 3 by British tabloids—to plead guilty to one count each of wire fraud. The rubber hose and brass knuckles style of regulating business through the criminal justice system scored another undeserved victory, and unfortunately this will no doubt vindicate the zealous prosecution of Enron’s failure in the minds of many.
Houston attorneyTom Kirkendall, who writes the brilliant Houston’s Clear Thinkers blog, notes that the threat of long jail sentences and a jury pool that is virulently anti-Enron probably made the guilty plea inevitable. The defendants were facing years of jail in a foreign land—Texas!—and the convictions of Ken Lay and Jeff Skilling were not exactly re-assuring about the likely fairness of a trial.
“Given those choices, my sense is that the NatWest Three’s choice was a rational and reasonable decision. It’s simply not a choice that they should have been forced to make,” Kirkendall writes.
Somebody was guilty because they were guilty [Houston’s Clear Thinkers]

Ben Bernanke’s Tool Kit

BenBernankeIsAllUpInYourHosAnd Cutting Your Interest Rates.bmp
Hi, it’s Bess, Carney and I are tag teaming this post. Anyway, here’s my comment: HAHAHA OMG OMG OMG OMG isn’t the internet hilarious?!?!?! You are totally justified in clogging up your friends/colleagues/Dealbreaker’s inboxes with this shit and the message “Scroll down, TOO FUNNY!!!” LOLZ LOLZ LOLZ.

Germany: Inspiration From An Unlikely Source

maeby_funke.jpgWe like laying blame and we like public humiliation. (Ed.’s Note: this is where I wanted to end the post but Carney said I had to go into greater detail.) If you can add in something about “pretentious know-it-all dicks,” marry me? Hence, German finance minster Steinbrück’s comment to the Financial Times that the “snooty” attitude of bankers and financiers who believed themselves to be “cleverer than the others” is to blame for the credit crisis is pretty much our own personal perfect storm. Steinbrück also said that while these incompetent managers were guiding us into the current global “disaster,” they were also “mocking” and “deliberately misunderstanding” his proposal for increased transparency, which was genius and could’ve saved the planet. Pumping yourself up = cherry on top.
This is what we need more of. No more sidestepping the question of who’s to blame when things go wrong (assuming in the first place that $8.1 billion writeoffs aren’t right). No more blaming inanimate objects, or pretending to fall asleep when you should be flashing a picture on the screen of Jimmy Cayne meeting his dealer on Vanderbilt and the words “Is there a connection” with three or five questions marks and an exclamation point. Mack: Was the $3 billion writeoff Cruz’s fault? Cruz, is Mack making you the fall girl in a desperate attempt to justify the free set of steak knives he gets every year from William Henry? Let it out, you two.
‘Snooty’ bankers blamed for crisis [Financial Times]

The completely predictable caterwauling over the proxy access decision by the SEC has already begun.
“The tensions over proxy access may tarnish Mr. Cox’s image as a self-proclaimed investor advocate,” the Wall Street Journal’s Kara Scannell claims in an article the editors of the Journal headlined as “Cox Puts Legacy On The Line.”
We’ve said again and again that the so-called “proxy access” reforms were a bad idea. In the first place, this kind of corporate governance is best left to the states. What’s more, far from increasing the power of ordinary investors the move would have left them vulnerable to exploitation by special interests, especially union dominated pension funds.

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  • 30 Nov 2007 at 12:23 PM
  • CNBC

On Whores

dina.jpgFor a while there, it looked like CNBC was going to keep doing its thing as the “serious” business network, and not lower itself to Fox’s, shall we say, looser format. “Skanks don’t move markets,” everyone* at Englewood Cliffs said during the first week of FB’s debut. “Those hos won’t last a month.” How wrong was CNBC? Dead wrong. An informal poll of five traders shows that Fox Business is still in fact on the air, almost two months later. This unforeseen turn of events has everyone in NJ wetting themselves in fear (why do you think they’re always behind a desk?) and scrabbling to tart it up in order to compete, with a more “ouch, what are you doing?” than pleasurable outcome. Take this morning, for example. A piece on Victoria’s Secret, a Limited Brands company carried the headline “Vicky’s Panty Raid,” Erin Burnett half-heartedly making a joke about “Becky Quick’s interesting Victoria’s Secret story,” and then a shot of Mark Haines eating a sandwich. It’s just sad because they don’t even know how to properly whore themselves out, and they’re fumbling around and fucking it up and just looking awkward. It’s like watching Dina Lohan trying to compete with Lindsay. Horribly depressing and giving me the worst case of secondhand embarrassment.
*Everyone, that is, but Kudlow, who insisted we give him credit for knowing that “Skanks *do* indeed move markets” from the beginning.