$$$ The Google Stock Plunge [Dealbook]

$$$ HedgeFundGirls Dot Com [FINalternatives]

$$$ Marc Ecko: Gentleman & Patriot [1-2]

And from today's Wall Street Journal:

I know we work up a lot of righteous indignation on behalf of the short selling community over the ass backwardness that is the ban. All of it it warranted-- especially that which is thrown at people like the proprietors of GLG and Man Group-- but this might actually be the last time we act as a proxy for the particular injustice that is the Long Only Suction. Because it will probably be difficult if not impossible to top the richness of this latest episode. AMB Property (an Industrial REIT) was not one of the original Lucky 799. Since the barrier to entry was non-existent, the company requested it be added to the list last Monday. Then on Wednesday, it oh so coincidentally decided to slash earnings guidance for the remainder of the year (which, we're told, they did on a property tour in Europe that unless you were on or listening in on the internet probably didn't notice). And on Friday night, AMB proclaimed with flourish that they wanted off the list because, they told The REIT Newshound,* "It didn't feel right. We believe we're a good company and if someone wants to short us that's okay."

*Which is apparently "The Page Six of the REIT world."

At least if the Wall Street Journal is to be believed, the short sale ban will be extended for at least a week or two after the original October 2nd sunset date. Doubtless the incredible success of the plan (see attached chart after the jump), put into place on September 19th, and its immense popularity with market participants are the central influences spurring its renewal. Said the SEC at the time:

Under normal market conditions, short selling contributes to price efficiency and adds liquidity to the markets. At present, it appears that unbridled short selling is contributing to the recent, sudden price declines in the securities of financial institutions unrelated to true price valuation. Financial institutions are particularly vulnerable to this crisis of confidence and panic selling because they depend on the confidence of their trading counterparties in the conduct of their core business.

As we pointed out earlier today, Taiwan got in on the act and banned short selling outright. I don't know about the rest of you, but I am really enjoying my new found equilibrium based on the "true price valuation" of high leveraged financial institutions that feel no downward price pressure except that of their own bloated balance sheets.

Don't Blame Short Selling [Wall Street Journal]

Related: DealBreaker Swag

As you know, the Securities and Exchange Commission came out with some news today. We consulted an expert on the matter, and he suggested that Cox and Co. take things one step further. And when you think about it, it's really not that giant a leap from one to the next. His thoughts are after the jump.

A review of "fair value" accounting promises to be a long, painful procedure that not only carries with it the possibility of severe and potentially deadly infection, but entails a long recovery time and is likely to reveal any number of other tumors and growths that threaten to be a bigger deal than the original concern.

Accounting pathologists that we are, our attention has been rapt.

Take a seat in the visitors observation lounge. We're going in.

Press Release (plus Q&A!) from Coxville:

FOR IMMEDIATE RELEASE 2008-234

Washington, D.C., Sept. 30, 2008 -- The current environment has made questions surrounding the determination of fair value particularly challenging for preparers, auditors, and users of financial information. The SEC's Office of the Chief Accountant and the staff of the FASB have been engaged in extensive consultations with participants in the capital markets, including investors, preparers, and auditors, on the application of fair value measurements in the current market environment.

There are a number of practice issues where there is a need for immediate additional guidance. The SEC's Office of the Chief Accountant recognizes and supports the productive efforts of the FASB and the IASB on these issues, including the IASB Expert Advisory Panel's Sept. 16, 2008 draft document, the work of the FASB's Valuation Resource Group, and the IASB's upcoming meeting on the credit crisis. To provide additional guidance on these and other issues surrounding fair value measurements, the FASB is preparing to propose additional interpretative guidance on fair value measurement under U.S. GAAP later this week.

While the FASB is preparing to provide additional interpretative guidance, SEC staff and FASB staff are seeking to assist preparers and auditors by providing immediate clarifications. The clarifications SEC staff and FASB staff are jointly providing today, based on the fair value measurement guidance in FASB Statement No. 157, Fair Value Measurements (Statement 157), are intended to help preparers, auditors, and investors address fair value measurement questions that have been cited as most urgent in the current environment.

Bloomberg reports that the Swiss bank is going to eliminate 1900 employees in investment banking, equities and fixed income. They're also planning on announcing a $2.7 billion write-down, probably tomorrow.

[click to view]

Good Morning America interviewed Representatives Marcy Kaptur (D-OH) and Marilyn Musgrave (R-CO) this morning; both were on Team Nay yesterday at the Patriot Act Rescue Bill game.* If you don't have time for the six minute clip, just start paying attention at around 4:45. That's when Kaptur says "I think one of the problems is that Mr. Paulson is a day trader."

*That's another idea along the lines of the name change. Somehow we should convince people this is about football.

After the jump.

Yeah, it figures. Taiwan has banned short selling in equities. Period.

The brilliant and original move is aimed at "preventing short-sellers from depressing the market and [at] boosting investor confidence...."

Taiwan, I believe I may have detected the flaw in your plan.

Taiwan bans short-selling on shares of any company [Reuters]

Is there really anything else to add?

Mark-to-Market is a love it or hate it sort of topic. Either you think its critical to proper disclosure or you think its tearing the financial system apart. Either way, you probably will want to pay attention to what happens when the US Accounting Board and the SEC emerge from their tender love-making session, and who is wearing a grin.

Updates, along with FAS 157 discussion, to come!

US accounting board, SEC discuss fair value [Reuters]

CNBC has been building the fake suspense for three commercial breaks now. Who could it be? What penetrating commentary should we expect? We are game. And easily amused. So we got excited when we heard. We fantasized that it was David Einhorn of the Einhorn Eagle Scouts or someone.

It is "Ric Dillon." What a let down. President and CIO of Diamond Hill Investments. Hoo-ray. My excitement is testing the threshold of explosive incontinence, let me tell you. Well, he did short Detroit. Anyone who shorts that armpit can't be that bad.

If you don't recognize the name, he's kind of the typical looking Midwest football jock-come-mini-regional-bank-President. You know the one I mean. After living next door for 5 years he first met your parents when he came over at 3am and compelled his dejected looking son to admit that he had stolen your parents' car and gone on a joy ride out to the country and would they please not press charges because, after all, he didn't mean any harm and all the kids were doing it and he will wash it for free if they just forget about the police. Yeah. That guy.

I was really hoping for some sparks. I got nothing. He spent all of 15 seconds on short selling. Then he went on to deliver a very weak pitch for Apache (NYSE:APA). Christ.

The November issue of Vanity Fair has a story featuring two ladies near and dear to all of our hearts: Maria Bartiromo and Erin Burnett. Specifically, what may or may not be a network-manufactured rivalry between the "Money Honey" and the "Street Sweetie." Both parties claim the catfight is in no way based in reality, though Erin does admit to "getting it," telling writer Suzanna Andrews, "Maybe it's...a male-fantasy thing."

The timing of this article is actually quite a coincidence because just the other day we were wondering to ourselves if the fur was still flying between the two, or if the claws had been retracted. We were leaning toward the latter, and that made us a little sad. But since they whole thing is supposedly not real anyway, what we're thinking here is that we (you) should come up with some new scenarios that could be reignite things. Then we (me) will figure out a way to plant the seeds of said scenarios and we (me and you) will watch Catfight 2.0 grow. Or, since the whole thing's allegedly a sham (SO THEY SAY), you can just replay whatever we come up with in your heads as though it's real. Either way, someone wins.

Okay, so far, all we've got is 1. Some sort of love triangle involving Dennis Kneale and 2. A daily competition in which Charlie Gasparino places a piece of soprassata on set, equidistant between the ladies, and they must race, on-air, to grab it. Those both suck, but I bet you can come up with something better, and I challenge you to do so at this time. For inspiration, pics of the ladies from the article after the jump.

Congressmen supposedly want to hear from their constituents regarding the bailout. Unfortunately, many people are receiving the following auto response after shooting emails to their House Representatives to say "Hi? Could you please pass this thing? Thx" or "Fuck Fat Felines":

1. "Speculation that President Sarkozy's meeting with banking officials today will result in a guarantee of the French bank debt similar to the move in Ireland this morning."

2. "Whispers of a coordinated rate cut by the Swiss, ECB, Canada and US by noon tomorrow."

[click to enlarge]

Since you are businessmen and ladies, you surely know that even when every institution in the world is falling off a cliff, there's still money to be made. If you're not into buying put options or credit default swaps, might we suggest putting your powers of prognostication (and rumor-spreading abilities) to use? Round up your friends and foes and fill out the September Madness bracket that's been going around all morning (whoever created it: bravo, though Barclays prefers to be spelled with out a 'k.') Those participating in the DB pool are competing for the chance to win dinner with Dick Fuld.

All depositors are fully protected and there is expected to be no cost to the Deposit Insurance Fund. Wachovia did not fail; rather, it is to be acquired by Citigroup Inc. on an open bank basis with assistance from the FDIC.

[...]

The FDIC has entered into a loss sharing arrangement on a pre-identified pool of loans. Under the agreement, Citigroup Inc. will absorb up to $42 billion of losses on a $312 billion pool of loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing this risk.

This wouldn't be the first time we've pointed out that financial Newspeak (the purge of all meaning from some phrases and words and the concentration of it in others) seems to be all the rage with the kids today. I realize that, conflicted though it looks, one could interpret "expected to be no cost" and "Citigroup Inc. will absorb up to $42 billion of losses...." as something other than mutually exclusive. That catch-all word "expected" makes the world your oyster as a public relations professional. For example:

Lehman Deal Expected This Weekend [Wall Street Journal]

Lehman Expected To Follow Merrill's Route [Reuters]

Sales Of Some Lehman Units Expected Soon [Reuters]

Lehman's Chairman, Dick Fuld, Is Expected To Attend The Gala Dinner [Unknown]

Even as I type this, the usual CNBC wonks are salivating over that tasty FDIC Chairwoman, Sheila C. Bair. Apparently, she get's "three thumbs up." I guess the insight that FDIC insurance premiums might have to be bumped up after weeks and weeks of massive losses qualifies one as a brilliant master of all things finance. (At least it does in Newspeak).

All Sheila needs is a slight improvement, elevating her to the "heckofajob" level and she'll be unceremoniously dismissed fired a week later.

Citigroup Inc. to Acquire Banking Operations of Wachovia [FDIC.gov]

Hong Kong's Securities and Futures Commission (SFC) warned against abusive short-selling today which, of course, we are all for (abusive short-selling being curbed...not abusive short selling). The SFC issued this statement despite the fact that daily monitoring of the market indicates that short-selling activity is at the same levels as it was pre-financial crisis. This leads us to believe we (meaning Martin Wheatley, the SFC's Chris Cox) is headed down a slippery slope. Tomorrow it'll be a ban on abusive short selling. Thursday it'll be a ban on short selling in general. Friday, Wheatley is cutting $600 million checks for takeout food when he and his team burn the midnight oil to draft legislation establishing a fine for any adults who fail to buy at least 100 shares of each of the 10 stocks on the "mandatory longs" list.

SFC warns of action against abusive short selling [SFC]

So, this is kind of shady. Yesterday the Patriot Act Bailout Bill failed to pass, 228 nays to 205 yeas, with Representative Jerry Weller (R-IL) invoking the..."no opinion" option. At first we assumed Weller's decision to not cast a vote was merely a matter of him being a cough, pussy, cough. But maybe not? According to the Daily Journal, Weller not only missed yesterday's vote but all 30 votes since Friday. Additionally, his whereabouts could not be determined over the last few days. And, maybe most significantly, Weller already announced earlier this year that he would not be running for re-election, meaning he didn't have to worry about angering his constituents. We called the Congressman's office DC and Illinois just now; the former wouldn't comment (on anything), the latter went to voicemail.

Weller a no show on bailout vote [Daily Journal]

We have pointed out a few times that identifying a liquidity crisis and distinguishing it from a solvency crisis is something like an essential precursor to develop and execute a rescue plan (or to adopt "Plan B" if the first rescue plan fails to return the country and its many mistresses to the style to which they have grown accustomed).

Forgive us for nitpicking, but either market actors are so beyond reliable or rational function that they cannot bear price discovery, or solvency and liquidity are in equal measure gummed up all through the works.

"Quietly" injecting $650 billion of cash into the system, as the Fed decided to this week, may delay total chaos and prevent cats and dogs from living together before Easter, but it doesn't solve the basic issue faced by most (heavily leveraged) finance institutions: their liabilities may well significantly exceed their (still deteriorating) assets. As if that's not enough, almost no one knows how long and to what degree insolvency has been sloughing rotten skin off all over the new industrial ply carpet in various regional banks. Hopefully, this will limit the egg-splash to the first two rows around the dohyo, but certainly there is going to be some breakage. Here's hoping one of the wrestlers doesn't teeter over into the spectators.

Fed Pumps Further $630 Billion Into Financial System [Bloomberg]

By which we mean calling it a "bailout." As many have noted, one not so small factor in Congress's failure to pass the bill is that many perceived as a "Fat Cat Bailout." BUT! If we just swap that dirty little word for something more palatable, there's probably a decent chance all of the naysayers will suddenly say, "Oh yes, sure, pass it. Why are you bothering me with this? I'm trying to watch Two and a Half Men."

Yesterday, 78.8 percent of you agreed that the name of the bill should be changed to "The American Freedom and Anti Terrorism and Defense Of Marriage Finance Act." Before we send it along to our friends in the District, are we set on this one? We're fine with it, but is there anything else we should consider? The only other things we can come up with are "The Emaciated Dog Bill" (which would probably be popular as it is the opposite of overweight felines, and you know how people love their dogs), "The 2008 Ass Tourniquet Bill," and "The We're Going To Give You Guys The Money, But Upon Receipt, You Have To Promise To Strip Naked And March Down Wall Street Chanting We're Not Worthy Bill." Surely you can do better.

Yesterday, the NYSE bell doesn't work. Today there was one person on the platform, which is usually stuffed to the gills with the entire cast of Biggest Loser. We don't have to tell you, this is not good for morale. Tomorrow, we want to see the barbershop quartet starring Stan O'Neal, Chuck Prince, Jimmy Cayne and Dick Fuld up there. Thursday, Bald and Beard. Friday, Angelo Mozilo and a gaggle of Oompa Loompas.

Bushie just addressed the press, and gave a slightly longer speech than his last one regarding the bailout. He is "disappointed by the outcome" and stressed that we need legislation that "helps the economy get moving again," as the "situation is urgent." He also mentioned the big huge number...777 points, and said that there will be "painful and lasting" economic damage if we (Congress) don't move our asses (to really drive the message home, 777 flashed on a green screen behind the president as well, before dropping into an animated lava pit, and emerging with what looked like severe third degree burns, with the question "Do you like scar tissue?" scrolling along the bottom).

Futures indicating rebound after historic sell-off (RTT News)
Oh, see. We're still here. The world hasn't gone anywhere. In fact the stock market is looking up this morning. A few hundred points. Sure it's just a sliver of what we lost yesterday. But did any banks fail last night? (Don't answer). Seriously though, Wall Street better cut out this "buying" stuff if it wants a deal to happen (just kidding!). Of course, others will say that the market is only up on high expectations of a deal. See: Next story.

Senate May Try to Revive Bank-Rescue Bill by Tomorrow (Bloomberg)
Ah, the swift discipline of the markets. Despite the "death" of the bailout bill, the Senate plans to vote on something tomorrow, and pundits increasingly expect a deal by the end of the week. Basically, conviction is one thing, but it's no match for diminished 401(k)s.

Market Drop Pressures Hedge Fund Managers (WSJ)
As part of that ideological gun being held to dissenting Republicans was the threat of end-of-quarter hedge fund redemptions, triggering a "cascade" of selling. Well, we're getting to the end of the quarter here, so we'll see if there's anything to it. Though we can confirm to you that some dude on CNBC just said he didn't think it was a real big deal.

2008 Presidential Election (Intrade)
Besides stocks, the other big loser in the markets was McCain. He's not at 37 cents on the dollar. And just look at the state-by-state map. He's basically losing everything that might be considered a tossup, from Florida to Ohio. We're talking Reagan-Monday here. Ok, not that bad. Prediction: This will tight up. Were we betting, we'd be more bullish on McCain's chances.

Presented without comment. (After the jump).

$$$ The world: yesterday and tomorrow [Master of None]

$$$ LEH's Demise Triggered Cash Crunch Around The World [WSJ]

$$$ Slick insight on monitoring oil mergers [The Deal]

$$$ Personal Banks [Newsgroper]

Supposedly, very supposedly, Morgan Stanley will hold talks tonight concerning a possible deal to buy the remaining parts of Wachovia, and Robert Steele taking over as CEO.

Decent commentary on the bailout is hard to come by. Certainly most "financial press" fails to fit the bill. It is a pleasant surprise, then, to see Posner describe the issues with something like clarity and aplomb.

A complicating factor was that the value of those securities was and is very difficult to determine, because each security represents a share in pieces of many different mortgages. The bank that owns the security cannot readily determine the value of all those different mortgages, since it has no direct relationship with the mortgagor, having sold the mortgage to the entity that issued the mortgage-backed securities.

[...]

If the Treasury pays the actual value (if anyone can determine what that is) of the securities, it will not be injecting new capital into the banking industry, but merely swapping one form of capital for another. If the Treasury pays more than the securities are worth, then it is contributing capital to the industry all right, but it is also enriching the owners and managers of the banks, which creates the familiar moral hazard problem as well as upsetting people by rewarding careless management practices. The more it overpays, the most costly the bailout plan to the taxpayer.

There is a rather serious issue here that has gotten only the smallest bit of attention. How difficult are mortgage backed securities to value? And, given that they are difficult or impossible to value, is it a coincidence that the Treasury seems to be using this opacity to funnel some extra cash.

The $700+ Billion Bailout [The Becker Posner Blog via Broken Symmetry]

Bailout Roll Call [House]

[click to view]

Source: THE HORSE'S MOUTH. 2:26: "And now it's time for all members of Congress to go back to the drawing board."

Hank Paulson is scheduled to address the press any minute now. While we wait, shall we predict what he might say? All I'm picturing right now is a re-staging of the picture at left, and some sort of declaration like, "I'm going to do to you what I did to my friend here. But with you I'll be less gentle."

What he actually said:

I'm very disappointed in today's vote. Leaders on both sides of the aisle have worked hard. I've spoken to them, and they're disappointed, too. Markets around the world are under stress, reducing available credit. Families, too, feel the credit crunch.* We're continuing to address the problem. I am committed to using all the tools I have to fix this. Our tool kit is substantial, but not sufficient. We've got much work to do, and this is much too important to simply let fail.

Q from reporter: Can the banking system withhold the pressure?
A from Paulson: Our banking system has been holding up.

*Really? I thought that's why this thing didn't pass? Because people who aren't on Wall Street supposedly don't understand the direness of the situation?

Remember how bad credit was for awhile after Bear Stearns imploded? Particularly in the repo market? We're back there again. Collateral holders seem to be in a great position in the repo markets as the demand for the stuff, treasuries, almost all special collateral, is soaring. Unfilled trades have been piling up. This gums up the works pretty severely and is beyond bad news if it gets any worse. We mentioned the issues in short, liquid paper markets last week briefly, but the problem seems much more severe now, but still has been getting very little play in the markets. Bloomberg and the Wall Street Journal both seem to have noticed the problem (finally). Let's hope it cools off before things get out of hand.

Dude on CNBC reflects on the non-passing bailout:

"If I were John McCain and Sarah Palin I'd be suicidal right now."

"Republican Congressmen fighting for seats just had nails put in their foreheads."

Everyone on CNBC keeps saying this thing didn't pass because it was perceived as a "Fat Cat Bailout." So:

Update: Steve Liesman reports that there won't be a new vote 'til Thursday. Congressional staff said they need time to figure out "how to bring this to the floor in a way that will pass." We say: name change.

Earlier: The Bailout Vote

Shares of National City plunged today, though the bank can't understand why. "Our funding and liquidity levels are good and that is represented by our strong pool of core depositors," Kelley Wagner Amen, a spokeswoman for NC said, taking a page from former Bear CEO Alan Schwartz's playbook. Amen added, "We believe there is extreme market volatility and a bit of irrational speculation at play." Also? "(National City) is far better capitalized than WaMu and Wachovia," so if you could please stop the comparisons that would be top notch.

Earlier: Checking It Twice

I wonder what they'll discuss. In related news, Pelosi has responded: "We delivered on our end of the bargain...but the legislation has failed. The Republican caucus has not gotten the message. The crisis remains."

Update: Bushie says, "We put forth a plan that was big because we got a big problem...we're going to attack this head on."

[click to view]

Cantor, speaking now, says that Nancy Pelosi's speech prior to the vote was too partisan.* Blunt said they felt rushed because of the Jewish Holidays.

*This is EXTREMELY rich, considering that Mr. Shit Eating Grin basically spent the entire weekend being all "Guysss, I don't know if this is going to happennnn."

205 v 228. Don't really know what say here. Obviously, 77.4 percent of us did not see this coming. Representative Jerry Weller (R - IL) did not vote. They've moved on to voting about minting commemorative coins now. For serious. According to the Times House leadership is planning a second attempt to pass the bill, though Steve Liesman is saying that there's no possibility it will happen today.

That's it! They've got 15 minutes...get YOUR say in before then.

1:35: 122 v 111, for v against

1:37: 137 v 139, for v against

1:39: 145 v 142, for v against

1:41: 168 v 172, for v against

Barnett "Barney" Frank!
1:44: 189 v 208, for v against

1:47: 203 v 227, for v against

Dow Down 500 Points
1:49: 205v 228, for v against

You can change your vote; ONE person has
1:53: 207 v 226, for v against

2:02: The 207 number is holding, because politicians are pussies and no one wants this pinned on them in case it backfires. I still have the C-span audio on and it just sounds like people milling around chit-chatting. Shouldn't now be the time for yelling? Or for Barney Frank to get into that fistfight?

Asking: "Does anyone wish to change their vote?" Some asshole does:
2:07: 205 v 228

This bailout shit is serious and that's why we offer this bit of constructive criticism completely sincerely. Watching Representative Boehner up there on the podium trying to scare the ass out of people regarding what will happen if we don't pass this, I can't help but thinking that he should've taken up Bill Maher's suggestion from the other day to shine a light under his chin in order to make the scary story-telling more effective. And maybe drop the pink tie.

Above, a dramatic interpretation of how we're feeling re: 1 o'clock at the House. But that's just us. Anyway, you know how we like to credit you people with having the best crystal balls on the market, so, ahead of the tally, let us know what's going to happen:

The WSJ reports that Lehman has reached an agreement to sell Neuberger Berman to private equity firms Bain Capital and Hellman & Friedman for $2.15, a number that has got to hurt, as it is a swift kick to the erstwhile bank's family jewels, once valued at nearly $8 billion.

Still watching the House. Rep. Bill Foster (D-IL): Let's do it so we can have the satisfaction of saying, "Yeah, we saved their butts."

Rep. Ginny Brown-Waite (R-FL) asks: "Do you like extortion?......This is so embarrassing...a vote for this bailout is a vote for business as usual in Washington."

Update circa 12:15ish: Okay, I get that Pelosi, who is up at the podium needs to cover her ass in case this thing backfires, but if you're trying to get this thing passed, is it really the best idea to say "The fundamental basis is almost arrogant and insulting"?

Citi held a conference call earlier to discuss the newly formed Shitichovia but I didn't listen to it and for that I'm sorry (I feel slightly better about this knowing that Meredith Whitney was not in on the call either). If anyone was worried about this being a crap deal, DO NOT FEAR: Vikram Pandit reassured everyone that Citi looked at this thing for a while, and everyone feels pretty okay about it. Below are Big C's talking points on the matter.

Download the PowerPoint presentation.

Update: The good people at Deal Journal listened in on the call. Choice moment: 11:19: Crittenden cannot stop kvelling. "We have a deposit base that is truly unassailable after this, the strongest in the country."

CNBC is running a special on a day trader named Tim Cutt. Why? I don't know but it's actually marginally entertaining. Tim shorted AAPL, even though it was his favorite stock, on September 18th. Now he's going long on Jobs. When asks why he'd rather take matters into his own hands instead of getting someone else to manage his money, Tim says "If you're going to lose a horse race, you'd rather do it on your own horse than their camel."

Update: Amazingly, the budding Buffett added, "I feel like a eunuch at a sex party. So much to do but no tools to do it with."

Bear Stearns
IndyMac
Lehman Brothers
Washington Mutual
Wachovia
National City

National City Drops 52% as Market Wonders Who's Next [CNBC]

Re: coming up with the $700 billion:

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

Top Of The Ticket [LA Times]

Hidden in the middle of a Wall Street Journal article on vulture investors is a small observation that suggests, perhaps unwittingly, that the Treasury might be on the eve of complicity in one of the largest cases of accounting fraud in recent memory.

Other opportunistic investors, though, say they likely will stick to the sidelines for now. They are skeptical that the government's purchase of distressed assets will accurately establish what they are worth. So far, there have been few transactions, despite the desperation of banks to sell, because of disagreements over pricing. (Emphasis ours).

If the Treasury buys assets at inflated prices and that permits banks to mark-to-the-Treasury-model, well... you get the idea.

Vulture Funds Plan to Buy Assets Ahead of Bailout

In advance of the 1 pm Vote on the Bailout, we're watching the C-Span Live Stream of the House of Representatives, and highly suggest you do the same. It's basically going to be two and a half hours of airings of grievances. Ron Paul got himself good and worked up a few minutes ago. Hopefully there'll be a fistfight before 1. I'm not sure who I think would be the most worthy opponent but I would like to see Barney Frank rumbling with one of his colleagues.

Update: Okay Rep. Paul Kanjorski (D-PA) just suggested that his colleagues who are against the bill "watch movies about the Depression to see what might happen." Movies. "Watch Cinderella Man, gang. Russell Crowe is too fat now to save us. Watch The Sting. Paul Newman is dead now and Redford looks like the suitcase in your attic, so there'll be no puckish scamps to bring good cheer with their lovable cons. If that's all out at Blockbuster, and it probably is, because you know people are feeling nostalgic, try Armageddon. This is serious, people."

Rep. Ted Poe (R-TX): Is Our Congressman Learning: "This bill is a hundred pages. That's a billion dollars a page* that the Wall Street Fat Cats want Joe Six Pack to pay for." Barney Frank adds, "While I think the gentleman was a little too hard on the Bush administration, I agree with what he had to say."

Update, 11:24: Rep. Maxine Waters (D-CA) adds the Wizards of Short Selling to her Enemies List:

"I hate the high priced schemers of Wall Street and their tricky products, and hedge funds, and short selling. I'm not voting for this bill because of Them, I am voting for it because of Main Street."

*Let's not be too hard on him, he's not off by *that* much.

You know, one of those really thick, syrupy, brownish antibiotic infusions that takes 25 seconds to pull into the syringe.

The Fed and the European Central Bank doubled to $240 billion the amount of dollars being made available to banks hungry for cash. In an announcement Monday by the ECB -- the central bank to the 15-nation euro zone -- said it and the Fed decided to double their temporary reciprocal currency arrangements, or swap lines, from $120 billion to $240 billion.

Europe has managed to fail to avoid the financial failure of the United States. All those smug, French-accented cat calls from last month are sounding a bit premature now. So is the premature Chinese investment in Fortis. Don't fret, China. We screwed Japan but good back in the '80s with real-estate.

Central Banks Inject More Cash As Money Markets Remain Frozen [Wall Street Journal]

We'll have a more extensive take on this later but right now, gotta say, not too pleased with what we're reading about the Warren Buffett biography, which came out today:

Buffett, [writer Alice Schroeder] says, is an "endless well of neediness'' -- a man hungry for affection who can't function without female companionship and who flees anything that might expose him to public criticism. When his first wife left him in 1977, "he wandered aimlessly around the house, barely able to feed and clothe himself,'' writes Schroeder, a former insurance analyst who spent more than five years on the book.

I'm not demanding we get some rosy picture of the life and times of The Oracle Of O, free of sadness and depression and unwise investments in Salomon, in which Buffett swims naked in a pool of Cherry Coke and is spoon fed a constant supply of See's candy by ten Playmates* who he in turn eats Oreo Blizzards off of every night but-- actually, that's exactly what I'm demanding. If we don't find more evidence of the aforementioned, we'll just have to write it ourselves. So far, this is making us feel slightly better:

[Buffett's] legions of admirers include porn star Asia Carrera, who called Buffett her "idol'' on her Web site.

Buffett Craves Love, Makes Mistakes, Billions in Authorized Bio [Bloomberg]

*He's old school, you know that.

The bell has yet to ring at the NYSE. Whoever is behind this-- well-played.

Fed chairman Ben Bernanke put out a statement this morning that he "welcomes the agreement by Congress and the Administration," which will "support the economy," lead to "financial stability" and "afford protections for the tax payer."

This was pretty much to be expected, but we were still holding out hope that he'd emerge from National Archives at dawn, completely disheveled, clutching a bunch of papers and running toward Pelosi's office, shouting about how he'd found a text published 5 years after the Great Depression that showed we're going about this completely wrong. He'd run up to the building but the front entrance is locked so he finds a side door and runs up the stairs and presses his face up against a glass overlooking Nance et. al. about to pass the legislation. He bangs on the glass screaming "Nancy! Nancy! Nancy!" At first she looks at him like he's crazy but then shouts back "Ben! Ben! Ben!" Dodd turns to Frank and asks, "Who is the guy? What's he doing?" and Paulson yells "Stay out of this!" and attempts to wrestle Ben to the ground. Frank grabs Nance and tells her "It's too late!" to which Madame Speaker shouts "Not for me!" Then they board a bus headed toward M Street, sitting in awkward silence.

Not saying it couldn't still happen, but it's looking bleak.

Could it be that certain experiences in childhood have driven boom-bust cycles into the financial DNA of the United States? What influences might create these deeply ingrained tendencies in the 13th generation? (I don't think the two guys in the picture are supposed to look like they are jumping out of a window, but it looks to me like they are).

How They Got Game

The Dollar Dominatrix was on CNBC just now discussing the Citi, Wachovia deal, sounding less than ebullient. Her lack of enthusiasm was probably the result of a confluence of factors including her documented disdain for both banks, the "ten billion dollar hole WB just put in C," and the fact that she's currently in Vegas, and had to get out of her bed at the Bellagio for this shit. (JK: she's been at the craps table since 7 am.) She noted she's still "a seller" of Citi, which was probably to be expected. Chiming in to contradict Whitney was Hank Paulson, who said he "commends the action." I know The Hammer can hold his own, but I'm not going to say I'm not still scared for him.

The FDIC insists that Wachovia didn't fail. No really. They swear. So the fact that it is the FDIC that is making the announcement that Citi is buying the banking operations of Wachovia is really just coincidence. Seriously. See, we call it "open bank assistance." As you can see that takes the emphasis off of negative and dangerous words like "failure" and refocusing attention on "open." They were considering a "running bank rescue," but that was before Sheila Bair pointed out the fact that a "rescue" implies distress and "running" sounds a lot like the bank executives are fleeing the jurisdiction.

Oh, Citi is assuming Wachovia's senior and subordinated debt, but that's just because Citi is an organization filled with generous souls who were moved into doing something to "give back to the community" after watching a really touching dog food commercial last night. You know, the one that asks "Shouldn't you give the best to him too?"

FDIC: Citi to Buy Wachovia's Banking Operations

World markets fall as US bailout seen taking time (AP)
Look, we're going to pass it, alright. Just hold your horses, and stop it with these nightly selloffs. We're spending like $1 trillion of our own money here. And it's pretty much a done deal. And after that the markets will be stablized. Pressuring us into passing it faster by selling off each night isn't going to help. Unless. Unless the market is saying that even a bailout won't help matters. Eh. Nah.

Credit Crunch Squeezes Franchisees (WSJ)
Sorta gotta feeling that the "Credit Crunch Squeezes _________" article could be a staple of business journalism for a while. You can pretty much fill in the blank with whomever you like: shipbuilders, farmer, sommeliers, basketball players, whoever. Anyway, today its franchisees, of all people.

Merkel's Bavarian Allies Lose 50-Year Grip on Power (Bloomberg)
A little politics note that has nothing to do with the two candidates here: Angela Merke's conservative majority in Germany has suffered a major blow, losing its grip on parliament. The news comes as the German economy (and the rest of Europe) pretty much goes to the tank. All around the world, parties in change are going to get whacked.

2008 Presidential Election Winner (Intrade)
And on the domestic politics front, Barack Obama now holds decisive leads in the polls and in the Intrade market he's up almost 60-40. So, two questions then: What's the October surprise, and how does he inevitably blow it? And if you really love the "Mac" here's William Kristol on how he can revive his campaign. We're not convinced that the answer is really "straight talk".

"People are starting to think, 'hang on, this is a rescue package but it's designed to forestall a complete collapse, not stimulate a rally,'" said James Chirnside, who manages $65 million at Asia Pacific Asset Management in Sydney.

Asian Markets Retreat Despite Bailout Agreement [NYT]

Wachovia is reportedly in "advanced" talks with Wells Fargo. Citi has not yet been ruled out entirely, but WFC is said to be the "preferred bidder."

8:54: Okay, someone please please dial in because the hold music sounds so damn familiar but I can't figure out what it is and it is killing me.

9:00: I'm still on hold

9:02: Yes, Stairway to Heaven! And still holding

9:04 Michael Peace (?) takes the mic "this is very positive...we've worked hard with congress...it'll be good...Neil from the treasury will go over how the warrants works and exec comp"

9:05 Broad discretion for the treasury

9:06 Neil takes the mic
You might've heard the headline number: seeking 700 bn. for residential and commercial assets. (yes, we're aware). "we sought broad authority and flexibility"

- They might use the authority for "other instruments"

- Let us be clear: "targeted at financial system NOT failing institutions, though there are some institutions in that system that are, you know, failing."

9:08: Any institution that has a "meaningful presence in the US" should be allowed to participate. Congress said they wanted: oversight, tax payer protection. OUR highest priority: "making sure it works"...it needs to attract companies to participate...warrants, exec comp were highly negotiated...we think we have enough flexibility to have a system that works.

- On warrants: tax payers should benefit
- Differentiates between "Market purchases" and "Direct purchases"
- Direct purchases: failing institutions that the treasury needs to help. "think bear stearns. think AIG"...we'll be very aggressive...In future cases, we'd do the same thing...nothing new here. We'll take as many or as few warrants as the treasury wants.
- Market purchases: institutions sell assets voluntarily. For companies that sell mor than 100 mm into this fund, they must give them warrants. Treasury had "broad discretion" to determine amount...For companies that sell more than 100 mm into this fund, they must then give warrants. Ex: if a company sells 200 mm, the first 100 will not have warrants associated, the second would.

- Unclear if bill gives them different powers in each situation or if they are just saying they will use "broad discretion" differently...Notes: "We don't want just failing institutions to participate, we want healthy institutions!"

- Executive Comp: people were "very emotional" both dems and republicans...we don't want to reward failure...in a direct deal, regarding exec comp, like aig, we'd prob fire management, get rid of golden parachutes. We feel this is appropriate.

- In market mechanism, the threshold is how many assets were put in the fund
- If they sell more than 300mm, then there is exec comp interference by us
- On a go-forward basis, for a 2 year authority, the firm cannot enter into new contracts with a "top 5 employee" that provides for a golden parachute. Existing contracts will not be touched.
- Tax provision: firms can deduct up to a million RIGHT NOW. if you contribute to the fund, that'll be reduced to 500k.

- If there's a loss after 5 years, the gov't can attempt to recoup losses; would go to the entire industry and not just participants...analysis will be done, sent to president, then sent to congress for approval, though no real method in place at the moment

"WE'RE GOING TO HAVE TO BE NIMBLE...WE MIGHT HAVE TO PIVOT."

9:20: mic goes to Bob Hoyt (sp?)
5 principle mechanisms for oversight
1. a board
2. a "significant role by" General Accountability office
3. Special "inspector general"
4. Congressional oversight panel of experts that will receive reports and conduct analysis
5. ample section on "reporting" on assets purchased, auction mechanisms, and how various "other purposes" are working

700 billion will come in tranches:
- 250 bn comes immediately

- when secretary determines he needs more, he'll go ask congress for the next 100 bn (no time limit here on when Paulson can ask...could ask the day after he gets the 250 bn)

-when the secretary determines he needs more after that, he'll go back to congress, and they'll consider for 15 days (no time limit here on when Paulson can ask...could ask they day after he gets the 350 bn)

Questions!

MEMORANDUM

TO: SIFMA Government Reps Committee

FR: SIFMA Washington Office

DA: September 28, 2008

RE: Conference Call w. Treasury / 9:00PM TONIGHT

At 9:00pm tonight, Sunday, September 28th, there will be a call with Treasury officials to discuss the Troubled Asset Recovery Plan. This call is specifically for analysts. Please distribute ASAP to analysts in your firm who might be interested in participating. We have also distributed this call notice through various SIFMA Committees to solicit analyst participation.

Please find the conference call information below:

Date: Sunday, September 28th

Time: 9:00PM ET

Toll-free Dial-in: 1-866-843-0890

Entry Code: 1812173#

House Speaker Nancy Pelosi said tonight that there will no more changes to the revised bill, currently posted on her website,* now that it includes caps on executive pay and protection for taxpayers. "Working in a bipartisan way, we have sent a message to Wall Street: 'The party is over.' No longer** will the U.S. taxpayer bail out the recklessness of Wall Street," Pelosi told reporters. According to Harry Reid's office, the House will vote tomorrow, the Senate on Wednesday.

*Which is not currently accessible.
**Commenter Legal Eagle asks: "Isn't this exactly what the taxpayers are doing?" Perhaps Madame Speaker meant we'll 'no longer' do it after this last one?

Speaking of Kuciniches and shit, here's the elder K losing his this afternoon.

Also, 60 Minutes is running a bizarre little special recapping the last few days that you would expect a month or a year after the fact. Paulson and Pelosi were interviewed about the Down On Your Knees heard round the world, and they were both super awkward about it. She started out by denying it had happened, and he immediately went on the defensive claiming it didn't mean anything, that it was a joke and he was merely injecting some much needed "levity" to the situation. I'm not saying they've got something to hide. But I'm not not saying they've got something to hide.

Best part: when Paulson says that the American taxpayers are concerned about the bailout and notes that "I would be too," perhaps implying that he is not in fact a tax paying citizen, which I think we can all agree would add an interesting twist.

Hill writer Jackie Kucinich (no relation?) is reporting that House Republican leaders expressed support for the rescue package in a "closed door meeting" of the Republican conference this afternoon. Minority Leader John Boehner (R-OH) is said to have referred to the bill as a "crap sandwich" though begrudgingly admitted it was one he'd have to swallow in the interest of, wait for it, Main Street. Minority Whip Roy Blunt (R-Mo.), Budget Committee ranking member Paul Ryan (R-Wis.), and, most surprisingly, Chief Deputy Eric Cantor (R-Va.), who has most vocally expressed his "I don't know, I'm nervous about this, I think we're moving too fast" position in the last 24 hours, all "came out strongly" for the revised bill, as well.

Update: Actually, there is a relation between Jackie and Dennis. She is his daughter.

John McCain's top economic adviser reiterated his conceptual support for the bailout to reporters...but a spokesman told Politico he's not sure the Arizona senator will actually be on hand for the vote, which now seems likely to come Wednesday.

In other news, Hank Paulson told CNBC's Steve Liesman: "I have great confidence the plan will work as originally envisioned. We had to make necessary concessions to protect taxpayers and respond to the political process, but this will result in meaningful assistance to financial markets."

Here it is, courtesy of CNN. Summary of 100+ pages by Commenter Guest: "new version-- taxpayers get a quasi reach around."

Politico's Daniel W. Reilly writes that Sen. Judd Gregg said this afternoon that the various people consulted with on the bailout claimed this was "worse than anything they had ever seen," and outlined "specific and graphic scenarios" that would ensue should Congress fail to act. Considering that Warren Buffett was one of those advisors, shall we take a gander at what sort of graphic picture was painted, the details of which we're sure to see in a snuff film released just in time for the holidays? I love the old kook but you know he went there* (*"You see, Gregg, if this thing doesn't go through, the US will be a lot like the extras on a Russ Meyer set after I drop by for lunch: screwed. Fucked. Ridden hard and put away wet. I don't want to scare you, Gregg, but we're staring down the barrel of this country becoming the equivalent of a dead hooker. And you know The Oracle has no use for those. No judgment here but I've yet to see the appeal of the necro fetish. If I was looking for zero response, I'd got with a Real Doll, am I right? Now, where'd that box of See's go? I just had it here.")

And apparently this is just like Iraq. Dennis Kucinich told reporters this afternoon, "I will tell you right now I don't know if they have votes...If the votes were there, this would be on the floor. The votes aren't there." In a meeting of House Democrats not so pleased with the $700 billion dubbed the "Skeptics Caucus," Kucinich claimed: "None of this has been subject to a critical analysis. We haven't had access to the books to the people who are claiming they are going broke. They rushed this Congress into the Iraq resolution and look what happened. Catastrophe for this nation as well as for the people of Iraq."

And in an effort to get those of us at home more wasted than we already are, DK added, "There is an attempt to create a fake partisan dichotomy here. This is not about Democrat versus Republican. This is about Main Street or Wall Street" (in an attempt to not die a little inside every time that stupid fucking cutesyism-- " Main Street vs. Wall Street"-- is uttered, we're now taking shots at each mention).

Reuters reports: "Senate seen voting on financial bailout bill on Wednesday at the earliest."

McCain, on ABC's "The Week" this morning: "Hopefully yes...This is something that all of us will swallow hard and go forward with...the option of doing nothing is simply not an acceptable option."

Obama, On CBS's "Face The Nation" this morning: "My inclination is to support it...While I look forward to reviewing the language of the legislation, it appears that the tentative deal embraces these principles [that I said needed to be in the package]."

Great, right? Anyway, since neither of them will wholeheartedly, without reservation, get behind something, we'll have to pick up the slack.*

The Wolf Blitzinator reports that leaders had said earlier that they would have text of the bailout online by 12; now it's "at some point this afternoon." Apparently Cantor is all, "I don't know, I'm nervous, I think we're moving too fast."

Blitz also spoke to Senators Judd Gregg and Chris Dodd about their thoughts on McCain and Obama's involvement in the deal. The former said he believed "McCain-- and Obama's-- involvement was constructive and helped move things along," while the latter rolled his eyes, shook his head, wrinkled his nose and turned to the gnome perched on his shoulder to ask, "You buying this crock of shit?"

From Pelosi's office:

Office of Speaker Nancy Pelosi -- Sept. 28, 2008

REINVEST, REIMBURSE, REFORM

IMPROVING THE FINANCIAL RESCUE LEGISLATION

Significant bipartisan work has built consensus around dramatic improvements to the original Bush-Paulson plan to stabilize American financial markets -- including cutting in half the Administration's initial request for $700 billion and requiring Congressional review for any future commitment of taxpayers' funds. If the government loses money, the financial industry will pay back the taxpayers.

3 Phases of a Financial Rescue with Strong Taxpayer Protections

* Reinvest in the troubled financial markets ... to stabilize our economy and insulate Main Street from Wall Street
* Reimburse the taxpayer ... through ownership of shares and appreciation in the value of purchased assets
* Reform business-as-usual on Wall Street ... strong Congressional oversight and no golden parachutes

CRITICAL IMPROVEMENTS TO THE RESCUE PLAN

Democrats have insisted from day one on substantial changes to make the Bush-Paulson plan acceptable -- protecting American taxpayers and Main Street -- and these elements will be included in the legislation

Protection for taxpayers, ensuring THEY share IN ANY profits

* Cuts the payment of $700 billion in half and conditions future payments on Congressional review
* Gives taxpayers an ownership stake and profit-making opportunities with participating companies
* Puts taxpayers first in line to recover assets if participating company fails
* Guarantees taxpayers are repaid in full -- if other protections have not actually produced a profit
* Allows the government to purchase troubled assets from pension plans, local governments, and small banks that serve low- and middle-income families

Limits on excessive compensation for CEOs and executives

New restrictions on CEO and executive compensation for participating companies:

* No multi-million dollar golden parachutes
* Limits CEO compensation that encourages unnecessary risk-taking
* Recovers bonuses paid based on promised gains that later turn out to be false or inaccurate

Strong independent oversight and transparency

Four separate independent oversight entities or processes to protect the taxpayer

* A strong oversight board appointed by bipartisan leaders of Congress
* A GAO presence at Treasury to oversee the program and conduct audits to ensure strong internal controls, and to prevent waste, fraud, and abuse
* An independent Inspector General to monitor the Treasury Secretary's decisions
* Transparency -- requiring posting of transactions online -- to help jumpstart private sector demand

Meaningful judicial review of the Treasury Secretary's actions

Help to prevent home foreclosures crippling the American economy

* The government can use its power as the owner of mortgages and mortgage backed securities to facilitate loan modifications (such as, reduced principal or interest rate, lengthened time to pay back the mortgage) to help reduce the 2 million projected foreclosures in the next year
* Extends provision (passed earlier in this Congress) to stop tax liability on mortgage foreclosures
* Helps save small businesses that need credit by aiding small community banks hurt by the mortgage crisis--allowing these banks to deduct losses from investments in Fannie Mae and Freddie Mac stocks

According to the WSJ, House Minority Whip Roy Blunt's office is saying that the first injection will be $250 billion, available "immediately," with another $100 billion "upon report to Congress," and $350 billion "only upon Congressional action."

Pelosi and her boys emerge from that shady-sounding meeting and address the press. NP says they've "committed to a deal." But they won't tell us what it is until they "have it on paper." Reid: "We had a breakthrough an hour ago...We think that we should have an announcement tomorrow." Rep-cum-Caroline's regular Barney Frank adds: "I'm happy to say that in a few days I won't have to speak to any of the people who are here."

Remember, though: not a done deal yet. Let us never forget Thursday. *Someone* could still very well pop in at the last second in an attempt to save ruin everything.

Pelosi and Co. have said that they'll continue to work through the night.

Update: According to CNN, the "breakthrough moment" had to do with CEO pay. Pelosi is credited with coming up with an "idea" regarding executive compensation.
Update II: CNN says actually, according to a Democratic aide, the "breakthrough" had to do with protecting tax payers, so they won't be on the hook.

We already know it's Paulson's modus operandi, but Politico reports others working on the deal are (probably) getting down on their knees as we speak (type): "Just before 11 p.m., Paulson, the two principal GOP negotiators - Sen. Judd Gregg (R-N.H.) and House Republican Whip Roy Blunt (R-Mo.) - Rep. Rahm Emanuel (D-Ill.), Pelosi chief of staff John Lawrence and White House legislative affairs aide Dan Meyer walked into Pelosi's office.

They offered no news to reporters waiting in the hallway, but the details of the negotiations were beginning to become clear. "

Sen. Kent Conrad has been walking laps around the House, according to ABC News. Pelosi is doing reps on the building's BoFlex, and Paulson is sitting on a couch. Oh, how the Hammer has fallen.

The Wall Street Journal reports that lawmakers have been consulting with Warren Buffett on the rescue plan, ensuring the new draft's language will be spiced up with many references to T&A, and that taxpayers will receive a year's free subscription to Hustler. "We've had Warren Buffett on the phone tonight, other experts that we've been consulting," Sen. Kent Conrad (D., N.D.) told reporters, declining to identify other people he spoke with, though hinting that The Oracle Of O had suggested they place a call to Ron Jeremy.

The mood was said to be "optimistic" entering the evening talks, according to a Senate aide familiar with the talks, after policymakers -- including Treasury Secretary Henry Paulson -- made progress during an afternoon negotiating session. Staff predicted a long night of negotiations, however, an observation backed up by the delivery of food from sandwich shop Cosi to Ms. Pelosi's office just before 8 p.m. EDT

Bailout Negotiations Enter Evening Session [WSJ]

Update: "Just after 8 p.m., pizzas arrived at Paulson's HQ in Boehner's office. Democratic staffers ordered in burgers from Five Guys." Thrilling, isn't it?

Live From The Capitol, It's Saturday Night [Politico]

Hey guess what? Nothing's happened yet. Thought we'd be super helpful and point that out. Continuing to be sheeple, here's something else that should already be obvious: the clock is ticking! Congressional leaders led by Barney Frank, Republican Rep. Roy Blunt of Missouri, Democratic Sen. Christopher Dodd of Connecticut and Republican Sen. Judd Gregg of New Hampshire "locked themselves in a room" starting at 3 today and Gregg told the Journal "once we get into that room we are going to stay there until we have an agreement." Apparently the "agreement" had less to do the bailout and whether or not to make "Seersucker Thursday" mandatory (they decided yes), because those participating are said to be currently "taking a break" and we do not yet have anything re: rescue package. Nancy Pelosi and Harry Reid both expressed "hope" that an outline of the plan can be released by tomorrow. According to CNBC, there have been "dramatic improvements" to the original plan. The new version calls for:

Apparently, Congressman Cantor DID NOT RECEIVE THE memo that publicity photos in this time of crisis must either show ANGER or CONCERN or DISTRESS, and not smug amusement.

Former Fed Chairman Alan Greenspan co-signed a letter calling for lawmakers to take action to relieve the financial crisis. [Real Time Economics]

Maestro69: you're welcome

Maestro69: "the oracle has spoken"

Maestro69: QED

GaldalFed: yeah, i saw your note. thanks, but I think we're good here

Maestro69: yeah, you are now, benji

Maestro69: dont think for a second, Gilligan, that they would've listened to you if I hadn't stamped it with my seal of approval. I own all those Hill Bitches (every time I hit the District it was a 1-2 punch. after i tapped it, i autographed it).

GaldalFed: whatever, busy here

GaldalFed: I've been up the last 8 nights straight reading texts from the great depression

GaldalFed: making sure we can avoid the next one

Maestro69: wow, benji, loosen up, you're too tight

Maestro69: you need to dip your wick in something sweet

Maestro69: when I was King I got so much puss it wasn't even funny

GaldalFed: stop it, i can't think about that now

GaldalFed: do you have any idea the dire straits we're in at the moment?

Maestro69: i told you, take the 3 rules from maestro's play(a)book

Maestro69: 1. talk like you know your shit, even when you don't

Maestro69: 2. cut rates like a thai hooker with the clap

Maestro69: 3. when in doubt, print it out

GaldalFed: with all due respect it's that kind of thinking that's turned our country into a banana republic

Maestro69: are you daring to sass me, pipsqueak

Maestro69: you hear that sound? that's the sound of the maestro's rolodex closing up on your ass

GaldalFed: what the hell are you talking about

Maestro69: i own every bitch's ass in corporate america

Maestro69: dont expect a cushy gig on the other side

Maestro69: you'll be back to playing D&D with your fellow academics

GaldalFed: alan, do you not get it?

GaldalFed: we'll be lucky if we're not all peddling apple carts in 6 months

GaldalFed: or worse, you and i could be hanging from lamp posts

Maestro69: maybe YOU will, you beared fruit

Maestro69: in 6 months i'll be headlining the UBS conference in the Maldives, pocketing 300 large for a giving a 5 minute speech and then sipping pina coladas with ten of UBS's finest investor relations bunnies

GaldalFed: why do you always have to do this alan?

Maestro69: preacha tellin' the truth and it hurts!

GaldalFed: I hate you

Maestro69 has signed off

Earlier: Fed Chairmen: They're Just Like Us!

$$$ Hedge Fund Star Stumbles [WSJ]

$$$ Freddie Mac hires, fires and places 'help wanted' signs [The Deal]

$$$ Hugh Hefner to sack Playboy bunnies amid financial crisis [Guardian]

$$$ The end of the BSD [Newsweek]

$$$ You Know We're in Trouble when... [Gary Weiss]

$$$ 8 Classic WaMu Commercials [WSF]

$$$ "Impossible Is Nothing"-- Hank Paulson [NewsGroper]

$$$ Warren Buffet Vs. Richard Fuld, A Lesson In Home Buying [GoaG]

Wachovia Begins Early Deal Talks With Citi [Dealbook]

Lehman head Dick Fuld has been personally named as an individual defendant in a suit brought by a Lehman preferred investors, or so says Reuters. Fogel Capital Management is trying to turn the matter into a class action suit to boot. Uh oh.

The lawsuit contends that the prospectus issued ahead of the offering was false and misleading because it did not reveal Lehman's significant exposure to the subprime mortgage market, and also did not disclose that Lehman was in desperate need of capital because of deteriorating market conditions and rapidly falling values of its assets.

Like anyone reads those "risk factor" sections anyhow.

We love a good round of "What did the Chairman know and when did he know it?" as much as the next financial tabloid. In this case, its fortunate that Dick's wife is an aspiring artist since he sold his own equity stake to fund the recent purchase of two Happy Meals^TM with the WALL-E action figure toy.

Let me tell you, a more piteous figure than that cast by Dick Fuld, with down-turned gaze mournfully counting off the last few pieces of silver in his hand before declining to take the cashier up on her "Wanna Super-Size 'dat?" offer, I have not heretofore encountered.

Investor in Lehman preferred stock sues for fraud [Reuters]

The WaMu name on the 5,000-seat theater at Madison Square Garden is likely to change because of the seizure of Washington Mutual by federal regulators on Thursday.

The nation's largest savings and loan -- which came to symbolize the excesses of mortgage lending -- was sold almost in its entirety to JPMorgan Chase for $1.9 billion.

There was no word on Friday if the Chase name -- which is also on the Arizona Diamondbacks baseball stadium in Phoenix -- will replace WaMu or if it will go without a name until another corporation makes a deal.

Hard not to gloat, isn't it? I suppose Dimon better not laugh too loudly, however. Or the Citi clan, for that matter. You people could be next.

WaMu's Troubles Likely to Mean Name Change at Garden

The U.S. Securities and Exchange Commission is ending its program to supervise large independent investment banks now that the five participants have collapsed or reorganized.

The announcement Friday coincided with criticism by the SEC's inspector general of the agency for failing to properly supervise broker dealer risk assessments in a program run by the Division of Trading and Markets.

Stage direction: SEC officials mount their horses, tip their hats, and ride off into the sunset. Pan back to show village burned to the ground and citizenry slaughtered, voiceover by Wilfred Brimley waxing poetic, "They did what they came to do. Their work here was done."

SEC ends program to oversee investment banks [Reuters]

Maybe! The Financial Times reports that the former Merrill chief is considering taking a job at Vision Capital Advisors, a hedge fund and private equity group, working in investor relations. Nothing's official yet, though, and O'Neal is apparently weighing other offers including:

- role of the guy that gets dunked in the dunk tank at state fairs (dunkee?)

- teller at newly formed Bank of Merrill

- Charlie Gasparino's assistant

- Member of barbershop quartet comprised of Stan, Chuck Prince, Jimmy Cayne, and Dick Fuld

That didn't take very long. Almost as fast as Barclehs got their logo on the digital Lehman walls.

Seriously, what the fuck is feeling the "Whoo hoo!"^TM supposed to mean? And who the hell puts that right above a sympathetic hurricane outreach message?

The new WaMu website look, after the jump.

1 in 7 of the stocks listed on U.S. Exchanges are now members of the No-Shorts list. Let the good times roll. I hear Iceland is nice this time of year. No, seriously.

SEC's Ban on Short Selling Is Casting a Very Wide Net [Wall Street Journal]

Not trying to throw stones here but was it really necessary for CNBC to send one of its Jane Wells to report on the WaMu deal from a bunch of WaMu ATMs? And to interview people using said ATMs on what they thought of the whole thing? They could've at least had her deposit or withdraw some money to see if it "felt" any different today than it did yesterday.

You sort of knew that the Bangkok Bank Flu was going to hit the regionals and super regionals once they saw the haughty WaMu brought low. I suppose it means something that Dimon et. al. have made provisions for expensive refurbishing given that many WaMu branches don't have vaults in them. That has to be some kind of indicator worth paying attention to. (Recommendation: A PIPE transaction with Fischet).

National City has broken the $3 floor, after a 40%ish drop, its paper probably on its way to the non-existent WaMu vault. Fifth/Third, which had been pretending not to notice for some time, is starting to notice. Wachovia took at 30% haircut. Wells Fargo, however, having been sprinkled with Magic Buffett Dust^TM is up 5%. That stuff bends space and time to such an extent that Steve Jobs might defacto have given up his monopoly on the Reality Distortion Field.^TM

Update: Relax, Asian bankers. We weren't suggesting another Thai currency crisis or anything. Just a highly virulent fiscal bug that is going around in the new center of American Finance: North Carolina.

Wachovia, National City tumble on bailout, WaMu news [Reuters]

According to the AP, yesterday in the Roosevelt Room, Hank Paulson bent down on one knee and asked Nancy Pelosi to marry him. No, but he did beg her not to "blow it up" by withdrawing her party's support for the package. "I didn't know you were Catholic," Pelosi supposedly said, adding "It's not me blowing this up, it's the Republicans." Because he knew it, Mr. Paulson sighed audibly and replied, "I know. I know." So what the fuck was he doing there? Let's review the audio from the recorder we had the foresight to stick in a potted plant in the Roose. Room the last time we were in the District:

Not content to deal with its "underperform" rating, Wells Fargo prodded its way into an Y-class full coach fare "neutral," rating, hopefully on the way to an upgrade that will land it right smack in the middle of Business Class. Buffett and his minions are on a tear, it seems.

Between this and the massive cash spend yesterday to fill certain coffers, things could even be mistaken for being on the right track. The next thing you know Goldman-- who not 45 minutes ago was languishing in the demoralizing pool of the unwashed masses, choking back sobs and cursing the airport lounge's refusal to play anything but CNN election coverage with deafening loudness, and praying, just praying to hear its name called off the standby list, even if it is butchered through the gate agent's horribly distorted PA in the process-- will be slapping the Flight Attendant's ass after binging on that horrid red wine airlines insist on serving up in First Class, dropping trou before mounting the drink cart on its second pass down the aisle, and facing charges for indecent exposure, failure to obey crew-member instructions, disorderly conduct and public defecation following an emergency diversion by the captain to Dallas. No wonder Buffett bought NetJets.

McCain's said he'll debate tonight according to CNBC, so we're guessing yes. 'Cause what kind of dick would say he won't debate 'til we fix this thing AND THEN GO BACK ON HIS WORD?

Having been successfully nursed back to health by new boss, Credit Suisse CEO Brady Dougan, Erin Callan is finally ready to talk about old wounds. She spoke with Fortune about her dismissal from Lehman Brothers, and even though she's yet to thank us for the flowers, we'll share it here. To the question, "Were you forced out as CFO," E to the C told reporter Katie Brenner:

No. It was clear in the 24 hours after we announced second-quarter earnings that the market reaction was just terrible, and there was a rising sense in the organization that a management change was needed. I went back to my office and decided I was willing to step down. I'd only been CFO for six months and hadn't brought us to that moment, but I was the public face of the firm, and we had to show the world that we were making changes. Joe Gregory [then Lehman's COO and president] was thinking about stepping down, but he was not known to the outside world. It would have mattered a lot internally, but I didn't think it would have a big impact on the market. So we decided to do it together - to do the right thing for the organization.

In retrospect I was lucky to get out, but I was so sad. It wasn't a relief at the time. I never thought I would leave that firm. It had such a strong culture. People really lived their lives there. I think Dick felt personally horrible about it because I was his protégée. During this difficult conversation with me, he cried.

In an unedited version of the interview, Callan went on:

When the country's three largest banks reached agreement on Friday on how to structure a $75 billion fund to prop up distressed securities, an exhausted group of its top planners gathered in a Bank of America conference room to toast their success with 12-packs of Bud Light.

But the celebration might have come too soon.

Having settled on the fund's composition, officials from Bank of America, Citigroup and JPMorgan Chase will now have to raise more than $60 billion of the fund from dozens of financial institutions around the globe in the next few weeks. The goal is to have the fund operating by the end of the year. But the big question is: Will it actually help?

The answer, some analysts and big investors say, is probably not much. The backup fund will not save troubled structured investment vehicles, or SIVs, that hold billions of dollars in packaged loans, though it could delay their demise. It may help calm the turbulent credit markets by preventing a sharp sell-off of securities, though analysts say the fund will probably not be able to offset the deteriorating prices of the securities.

Ripped straight from today's headlines? Not really. Try November of 2007, actually. And that bailout plan bit the dust too.

Who the hell drinks Bud Light at the closing party? Well, I suppose it was only the end of a structuring party. Maybe the good stuff was packed away for a bigger event. Still, I have a sneaking suspicion that Bank of America's catering department keeps the cold ones stocked all the time, not just for special occasions. Still think that the post-merger integration with Merrill is going to go smoothly?

It's getting really hard to work up righteous indignation over this shit every single morning so please excuse the halfhearted tone of this one. SHLD, chaired by Eddie Lampert-- as in the founder and CEO of ESL Investments-- has seen its application to the 'no short' list accepted. Additionally receiving the protection o' Cox this morning, though in the sub-category of "WTF are you doing here" as opposed to "Gutless Hypocrites" are Wright Express Corp, ZALES, Apartment Investment and Management Co, Autonation, Grubb & Ellis, and Hersha Hospitality Trust.

We expected Bush to go crazy nuts and talk on and on and on. Boy were we surprised.

9:40:11 AM ohbabyitsbess: bushie in the house
9:41:15 AM ohbabyitsbess: "we have a big problem" [pause for smirk]
9:41:20 AM ohbabyitsbess: "we have a problem that needs to be solved" [pause for smirk]
9:40:30 AM ohbabyitsbess: god, do you not love how he always sounds like he's doing stand up?
9:40:35 AM ohbabyitsbess: "There is no disagreement that something substantial must be done." thank you captain obvious. that was unclear (except to bill o'reilly)
9:40:43 AM ohbabyitsbess: "we're workin' hard" [pause to internally add: "or hardly workin', oh yeah"]
9:40:53 AM ohbabyitbess: "we will rise to the occasion"
9:40:57 AM equityprivate: Opinions are like assholes.

At this point the address has ended.. yes... ended. Over.

9:41:11 AM ohbabyitsbess: what the fuck was the point of that
9:41:20 AM ohbabyitsbess: "we'll rise to the occasion"
9:41:24 AM ohbabyitsbess: thank you and good night
9:41:38 AM equityprivate: Not very pretty. Someone told him about the Sausage and Laws joke.
9:41:50 AM equityprivate: Way too busy to talk for more than a few minutes, you know.
9:41:57 AM ohbabyitsbess: why is cnbc making a big deal of how he didn't blame anyone?
9:42:02 AM ohbabyitsbess: the person to blame is mccain
9:42:03 AM equityprivate: CNBC, they are totally flabbergasted.
9:42:06 AM ohbabyitsbess: obvi he's not going to do that
9:42:10 AM equityprivate: They are amazed its over.
9:42:19 AM equityprivate: They need a commercial to catch their breath.

So, what's going to happen with that bailout bill? Now that McCain's come to save ruin everything, who the fuck knows! Bushie is speaking at 9:35 which is sure to be interesting but while we wait, I highly, HIGHLY suggest you listen to this clip from Bill O'Reilly's talk radio show last night, in which he expresses his feelings on the rescue package. For those who can't (I think there are people who can't, I don't know), I've transcribed it below, which wasn't even that labor intensive because I've listened to it many times, with pleasure. Note: this is a two and a half minute monologue. There is no one else talking.

Wild day, no deal (Politico)
We're still really confused by what's going on. They keep saying the deal is dead (fair enough), but it's the Republican reps who are recalcitrant, but the Democrats have enough votes to pass it on their own, right? So why don't the Dems -- if they believe in it -- just pass the damn thing. You know, man up. Anyway, apparently Treas. Sec. Hank Paulson actually got down on one knee in front of Speaker Pelosi. How odd.

Asian markets drop amid reports of U.S. bailout plan stalling (CBC)
Yeah, nobody in any market is going to be happy for awhile until they just go ahead and do something. Asian markets fell last night, as it became obvious that they're farther away from a deal now than they have been yet. It's a good thing McCain suspended his campaign, so politics wouldn't interfere. That sounds sarcastic, though actually, we're happy that they haven't ramrodded some nonsense through all the name of bipartisanship, and the need to wreck the rule of law in times of crisis.

Sarkozy Stresses Global Financial Overhaul (NYT)
The Europeans are LOVING all of our problems, which is fine, since we've been known to laugh at them from time to time. Like, did you know that in Germany, because of socialized medicine, some dentists office have equipment from the 70s? HAHAHA. Anyway, Sarkozy says the age of global unregulated markets was over. Good for him. Also in Germany, a Minister said the age of "Anglo-Saxon banking" with its "fixation on returns" is over.

Money-Market Rates Rise Globally as U.S. Talks on Bailout Stall (Bloomberg)
Of course, they're having their own problems over there, in the land of the Third Way. Interbank lending rates in Europe have spiked to their highest rate since the Euro was formed. One analyst called it a total breakdown of interbank lending. It's like Warren Buffett said on CNBC the other day: The economy is like a bathtup: Can't have warm water in the back and cold up front.

Survivor: theoretical physics (Information Processing)
Wall St. has long been a home to physicists that are more interested in dollars than reconciling quantum and astro physics. So with Wall St. jobs growing scarce, will we suddenly get some breakthroughs in the realm of the theoretical physics? It seems tough. Positions are still hella scarce -- particularly the cushy tenure track ones at prestigious universities. A hedge fund still seems like a more promising career choice, after reading this.

Beavers ride Rodgers' 186 yards to stunner over No. 1 Trojans (ESPN)
One word: Awesome. One other word: Hook 'em.

9:05:11 PM: I'm here, let's make this thing quick.

9:06: 27 PM: EP has joined me (and is pasting me the log, which you might notice is an hour behind, as she is in Central time).

8:10:16 PM equityprivate: That was the worst hold music ever. As soon as it got good for a second with that little-pseudo techno thing, the nasally operator cut in.
8:11:48 PM ohbabyitsbess: i bet it the wamu people are dj'ing
8:11:59 PM equityprivate: That would make sense.
8:13:06 PM equityprivate: Actually I'm pretty sure I heard this in their ATM vestibule today.

8:16:05 PM equityprivate: They certainly weren't pouring mortgage fee money into adjusting the volume on this stuff to keep it from clipping.
8:16:33 PM ohbabyitsbess: it's 9:16
8:16:36 PM ohbabyitsbess: where the fuck are they

8:17:18 PM ohbabyitsbess: also, i got banished to my bedroom to listen to this because apparently some people aren't don't want to hear this
8:17:48 PM equityprivate: They get annoyed when you take work home? How do you live?

8:17:51 PM equityprivate: Ok, the operator needs to take a diction course.
It's been 15 seconds and already it is a train wreck.

8:19:13 PM equityprivate: Jamie! Yay!
8:19:17 PM ohbabyitsbess: i love this man
8:19:24 PM ohbabyitsbess: yeah you should thank us for coming at 9:15, bitch
8:19:31 PM ohbabyitsbess: "if you're from wash mu"
8:19:32 PM ohbabyitsbess: haha

8:19:47 PM equityprivate: "Some WaMu employees may be listening."
8:20:07 PM equityprivate: I want a repeat of the JPM/BSC call. "I'm a shareholder and I am NOT voting for this merger!"

8:21:40 PM ohbabyitsbess: is jimmy cayne a shareholder?
8:21:42 PM equityprivate: I like how they announce both that they are spending a bunch of cash and, oh by the way, here comes $8 billion in dilution too.
8:21:47 PM ohbabyitsbess: i'd like to hear him stand up
8:22:37 PM equityprivate: They are leaving behind $20 billion in liabilities. Of course. And they are playing to the FDIC. WaMu must have been literally on the brink.
8:22:42 PM ohbabyitsbess: "we looove the branch banking business"

8:22:53 PM ohbabyitsbess: he's taking damone's advice too
8:23:01 PM ohbabyitsbess: wherever you are, act like that's the place to be
8:23:13 PM ohbabyitsbess: i wonder if he ordered for his date tonight
8:23:20 PM equityprivate: Ah yes! Damone!
8:23:26 PM equityprivate: Always a classy move.
8:24:05 PM equityprivate: Are they leaving behind the hold/ATM vestibule music liabilities?

Gnomes.

After the jump.

Bearpont Morgan Chase just announced a conference call taking place tonight at 9:15. No specs on what will be discussed. I don't think we should jump to conclusions.* Maybe Jamie just has some great news and wants to wait 'til after happy hour to up the chances of post-call phone sex?

NEW YORK--(BUSINESS WIRE)--JPMorgan Chase & Co. (NYSE: JPM) will host a conference call at 9:15 p.m. (Eastern Time) tonight, September 25, 2008. You may access the conference call by dialing 1 877 238 4671 (U.S. and Canada) / 1 719 785 5594 (International) - access code: 814030 or via live audio webcast at jpmorganchase.com under Investor Relations/Investor Presentations. Materials and further communication will be available on this website at the time of the call.

*No one say WaMu.

Update:

"The U.S. government has brokered a deal for J.P. Morgan to acquire the deposits and some branches of Washington Mutual, according to people familiar with the matter. The deal won't impact the FDIC insurance fund.-- WSJ

$$$ Nice work, Cox: Ban on shorting financial stocks sends betting soaring [The Independent]

$$$ UBS Hires Bear's Mayer as Co-Head of Fixed Income [Dealbook]

$$$ Citi lawyers never sleep [City File]

$$$ NYT becoming a snarky, smug, supercilious bitch in her old age: "A gig as a barista or a model is not a job at Morgan Stanley (although neither is a job at Morgan Stanley, anymore)." [NYT]

$$$ Barclays hires Lehman's Houston energy bankers [The Deal]

$$$ "Okay, I'll guaranty your crummy bottle deposits too"-- Ben Bernanke [News Groper]

It's not a Q&A with Gary Busey's character from Fear and Loathing but we are nonetheless very pleased to see the apparent proliferation of fictional characters tackling the financial crisis in these last few hours.

"Son, we live in a world that has bonds and those bonds need to be bought by men with balance sheets. Who's gonna do it? You, you Lieutenant Fuld? I have a greater responsibility than you can possibly fathom. You weep for Bear Sterns and curse the short sellers; you have that luxury. You have that luxury of not knowing what I know: that Lehman's death, while tragic, probably saved firms and that my existence, while grotesque and incomprehensible to you, saves markets. You don't want the truth because deep down in places you don't talk about it at parties. You want me buying bonds, you need me buying bonds. We use words like TSLF, PDLF, Super SIV. We use them as the backbone of a life trying to defend something. You use them as a punch line. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom I provide and then questions the manner in which I provide it. I would rather you just said "thank you," and went on your way. Otherwise, I suggest that you pick a sub-prime option arm bond and pay par. Either way, I don't give a damn what you think you are entitled to."

[via a friend of a friend of a friend of commenter anal_yst]

Apparently having your balls cut off will do that to a disgraced public official. In an upcoming issue of Time Out erstwhile Governor Eliot SpitzorSwallows declined to talk hookers but he did tell the magazine, "New York is the place...where no dream is too big to come true."

CNBC did a quick spot earlier on poultry products company Pilgrim's Pride (PPC) being down about 38% which we wouldn't normally give a rat's ass about except when it means fewer leaf cookies for The Big Guy and in this case it does. SAC apparently owns 5,492,850 shares or 7.42%, according to a 13G filed on June 3rd. According to PPC's chart the big boy was buying when the chickens were running wild, between April 3rd and May 28th, probably pushing the market with their purchases. Now the tasty treats are getting killed by feed costs (corn), and SAC is probably out a $100M+ in a few months. But what's a unit and then some to the Big Guy? Considering it would take a monster truck to pull a crochet needle from his rectum, a lot.

With all the finger pointing going on, and consistent with our concern that incentives contributed to the clusterfuck that is the mortgage industry today, we decided to take a quick look at fees to see what kind of cash was flowing around in the business. A small, back of the napkin guess has become quite a large (if somewhat simplistic) model so I thought we'd share it with you and see what you had to say.

In summary, our incomplete and work-in-progress calculations figure for something like $2 trillion in fees flowing to various parties in the real-estate, mortgage, securitization and securitization^2 businesses between 2003 and mid-2008. That's some serious swag, and you don't have to look very far to see why no one was in much of a hurray to shut any of it down or to rock the boat.

Of course, we've made some pretty thick assumptions, particularly where management and underwriting fees come in with respect to the securitization layers of the industry. As usual, we are enlisting the help of the savviest readers on the street (Main or Wall). Browse on through the model, particularly the assumptions sheet, and if you see something you know is off, and if you can pitch us a decent source for better figures, we'll tweak it right up. Find something spectacular and we will buy you lunch from our newly minted Dealbreaker Swag Lunch Fund.

Or, if you are a Google Docs user yourself, take a copy for yourself and play with it. We'd love to see what you come up with. If you'd like to jump into a copy and do some collaborating, send me a request for an invitation at ep at dealbreaker dot com and I'll add you as a collaborator.

Edits:
3:47 pm: MBS underwriting fee adjusted to 1.25% (need a better source here but this might be close).

Dealbreaker MBS Fees Model

With thanks to Guest!

Open Letter to Bloomberg News about FDIC Deposit Insurance Fund

FOR IMMEDIATE RELEASE
September 25, 2008

Mr. John McCorry
Executive Editor
Bloomberg News

Dear Mr. McCorry:

Bloomberg reporter David Evans' piece ("FDIC May Need $150 Billion Bailout as Local Bank Failures Mount," Sept. 25) does a serious disservice to your organization and your readers by painting a skewed picture of the FDIC insurance fund. Let me be clear: The insurance fund is in a strong financial position to weather a significant upsurge in bank failures. The FDIC has all the tools and resources necessary to meet our commitment to insured depositors, which we view as sacred. I do not foresee - as Mr. Evans suggests - that taxpayers may have to foot the bill for a "bailout."

Let's look at the real facts about the FDIC insurance fund.

We are fully aware of the potential damage of an irresponsible media but the latest correction from the New York Times really grinds our gears:

A front-page headline on Wednesday with an article about Warren E. Buffett's plan to invest $5 billion in the Wall Street investment banking firm Goldman Sachs described that company as "ailing." While its stock has been battered and it has agreed to tighter government regulation and wants to raise more capital from investors, "embattled" would have been a more accurate headline description of Goldman's state than "ailing."

Seriously, Goldman Sachs? SERIOUSLY? I'm sorry but no. You got your precious no short rule, and your bank holding company and your investment from Warren Buffett. Fuck off and let these Times reporters have their (barely) hyperbolic adjectives. NYT we'd say we're disappointed in you for not having the pair to stand up to the GS flack that was dispatched to deal with this, but let's be honest, you're one in a long line of people who refuses to tell Blankfein and Co. where they can shove it. Kudos on putting the correction above an obituary, though. I did appreciate that. Subversive little minxes.

Corrections [NYT via NYM]

I realize we shouldn't expect much from the brain trust that is Congress, but it's extremely alarming that they may pass this bailout package with asking the most important question of all first. A watchful Dealbreaker reader points out that no one seems to be concerned with the logistics of the drop. Specifically, how many helicopters would The Helicopter need to distribute the $700 billion, and at what additional cost? $100 = 1 gram. 454 grams = 1 pound. $700 billion in hundos (that's how The Beard and Bald roll) = 15,418,502 lbs. It seems that the biggest readily available helicopter is the CH-53 SUPER STALLION. Payload = 37,000 lbs. Bald, Beard, and the Balardettes will need 482 (...or 48.2 and 10 days) of these babies to distribute the $700 billion. And who's going to foot THAT bill? They're primarily used by the military and let's be honest-- they could use the money and are probably going to take us for a ride. We'd be better off using one of those guns that shoots tee-shirts at sporting events. You know the ones I'm talking about.

Gasparino adds: "Done deal. Just gotta work out the specifics."

Oppose the Beard and Bald? Then join your friends outside the NYSE! Union workers are down on Broad Street circa now chanting "no bailout!" Lots of signs reading "protect our workers," "protect our homes" and "no blank checks for Wall Street."

You know, if I were the CEO of a company-- we'll call it Eneralgay Electricway-- and I knew I was going to have to announce that we'd blown earnings for the last quarter, I think that I'd try to break the news under the sort of conditions that would hurt us the least such as, and this is just a for instance, one in which my shares could not plummet. One way to do that would be to only tell one or two people about the "disappointing" results, and make them promise not to tell anyone but you know how people love to talk and it'd get out and once it did the evil shorts would be all over mine and "Eneralgay Electricway's" ass.

So even better would be to try and get on this special list of companies who no one is allowed to touch, no matter how badly they fuck shit up. Like, plastering sticky fifties on barnyard animals in the c-suite bad. I realize that this list is supposed to be taken seriously, and I wasn't one of the original lucky ones. But based on the insider information I have that it's not, and that the people in charge of letting companies in are pusses, and will let anyone in, I make a call. To my fellow inept CEOs-- got something not so good to share today, tomorrow, early next week? Fill these forms first, then let 'er rip.

We've had a cautious eye on Clusterstock since our old friend John Carney went over there to do "mature work." (It better pay better, because where's the fun in that?) Seems voyeuristic of us though, doesn't it? Spying on our old friend's new digs? That's why we only read Henry Blodget's pieces. (We kid, we kid).

Yesterday, Blodget penned a mostly insightful piece on Warren Buffett's bailout take. Blodget points out:

Warren Buffett, meanwhile, thinks the appropriate price would be the "market value," which he believes is below the price at which the banks are currently carrying their trash:

[If] they do [the bailout] right, I think they'll make a lot of money.... They shouldn't buy these debt instruments at what the institutions paid. They shouldn't buy them at what they're carrying, what the carrying value is, necessarily. They should buy them at the kind of prices that are available in the market. People who are buying these instruments in the market are expecting to make 15 to 20 percent on those instruments. If the government makes anything over its cost of borrowing, this deal will come out with a profit. And I would bet it will come out with a profit, actually...

Jump for more.

Shareholders apparently overwhelmingly approved the Wrigley - Mars merger, promising to create one, massive ball of chewing gum mixed with chocolate and nougat goodness. It's either a great thing, or akin to that time in sixth grade when you ate a candy bar without spitting out your gum cause it was your last piece. (C'mon, you know what I'm talking about, admit it).

Under the terms of the agreement -- announced back on April 28, 2008 -- Wrigley stockholders will receive $80.00 cash for each share of stock. Wrigley will become a subsidiary of privately held Mars, Incorporated, adding a number of brands to its portfolio - including Starburst(R) and Skittles(R), and remaining headquartered in Chicago. The combined strengths of Mars and Wrigley will create a dynamic $27-billion food company and the world's leading confectioner.

More after the jump.

We've heard from two totally random sources that collateral for daily funding, like any short term paper with even a semblance of liquidity, is pretty seriously gummed up. Reverse repo action from the Fed via T-Bills are being used to take up the slack in some cases. General chaos in the repo markets is another theme we keep hearing out there.

Combine this with LIBOR shenanigans (3.77% on 3 month LIBOR? I think not.) and the rumor that banks not even filling LIBOR+100 quotes (what's the point of quoting LIBOR if the reality is 100 basis points higher) and it sounds like the credit markets haven't learned a damn thing in the last 60 days. What's it mean when all the market actors are desperately trying to conceal real price discovery?

Can anyone out there give us a real, filled overnight rate quote?

Or can we just start to ignore LI(e)BOR already? NYBOR sounds so much cooler anyhow.

[click to view]

Before the Buffett acolytes get their knickers in a twist*...Yes, of course, betting on a telecom company named for a class of toxic securities (Level 3) is a bit different than investing in Goldman Sachs. Or is it?

*Analogy forthcoming

Okay people, I get that these last couple days have proven that we are a nation of idiots who can't find their way out of a paper bag with a butcher knife, let alone solve the economic crisis before us, but I'm thinking that when we start turning to fictional characters for the answers, it's a sign that we should just pack it in and leave. Yesterday at a press conference at the U.N., a reporter attempted to get some light shed on the "financial Armageddon on Wall Street" by markets guru...Michael Douglas. And, no, I'm not arguing that actors don't have the brain capacity to tackle such topics, because the reporter was speaking to him as though he was Gordon Gekko.

Financial crisis can have an ironically soothing effect on management. Suddenly you can mark a bunch of stuff down, fess up to fiscal disasters and blame it all on the recent "economic whirlwind." If you are clever, you can also claim some largess from pandering politicos at the same time. Sound like anyone we know? How about General Electric? Jeffrey Immelt had the poor manners to permit GE to disappoint a few times already. And now, after lowering their profit forecast for the second time in 6 months, they've also had to suspend a long-standing stock buyback program. Ouch.

GE hasn't seen $20 since 2003, but seems quickly headed there today. Seems like their Associate Membership in the Lamprey Longs isn't doing much for them.

A frequent Dealbreaker reader suggested to Bess yesterday that they should just merge with Morgan Stanley and become General Stanley. Think of the potential for skits at the annual shareholders meeting!

I am the very model of a modern Major-General, I've information vegetable, animal, and mineral, I know the kings of England, and I quote the fights historical From Marathon to Waterloo, in order categorical; I'm very well acquainted, too, with matters mathematical, I understand equations, both the simple and quadratical, About binomial theorem I'm teeming with a lot o' news, With many cheerful facts about the square of the hypotenuse.

- Major General Stanley, The Pirates of Penzance

GE Cuts Forecast, Suspends Buyback on Market Weakness [Bloomberg]

The SEC continued its quest to eliminate short-selling entirely from U.S. markets by investigating whether traders actually spread rumors. I also heard that the FBI might be checking into the accusation that teenagers are having sex in cars or even in their parents' bedrooms while adults are elsewhere. Like the parents of those kids, snooping through email and MySpace comments is the most effective discovery device to uncover these nefarious acts. No word yet on how long hedge funds will be grounded, or if they can go to prom.

According to a Wall Street Journal article today:

The [disclosure] order is akin to a subpoena and requires information to be handed over with a sworn statement attesting to its accuracy. It seeks a wide range of trading data and email communications over a period of three weeks involving American International Group Inc., Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Morgan Stanley, Washington Mutual Inc. and Merrill Lynch & Co.,

And, maybe it is just me, but is anyone else getting tired of the obligatory short sale description paragraph that some cabal of financial press editors seems to have mandated for any article on this topic? Can't we just put "Obligatory short-sale description is hereby incorporated by reference" in the footnotes or something?

In a regular short sale, a trader sells borrowed stock in hopes that it drops and can be bought at a lower price.

If you don't know that yet, the Journal should be locking you on the other side of their paywall.

SEC Presses Hedge Funds [Wall Street Journal]

Mr. Buffett received a call at 4:30 p.m. that Saturday from a private investment firm trying to assemble a group to buy the embattled financial giant. "I'm calling about Bear Stearns,'" the private investor began, according to Mr. Buffett. "Should I go on?'"

Mr. Buffett recalls thinking: "It's like a woman taking off half her clothes and asking, 'Should I continue?' Even if you're a 90-year-old eunuch, you let 'em finish." Mr. Buffett says he passed on the proposed deal. Bear Stearns was bought by J.P. Morgan Chase & Co. the following day.

"You see, Wall Street Journal reporter, Bear Stearns was like a dirty, garish, very garish whore. You didn't want to slap a ring on her finger* like you did--or I did-- with GS, but what, were you going to say, excuse me, I can't be here, when she stuck her gigantic chemical ball breasts in your face? I think not. You people should know by now that that's just not how WB rolls.

Oh, and in case you were wondering-- yes, I do indeed have an analogy for every bank on the Street, which likens the firm to various women in my life. Lehman Brothers, of course, would be the hooker I accidentally killed in a cheap motel on the outskirts of Vegas in '89."

Earlier: "You Don't Want To Keep It--Cash-- Around Forever, Otherwise It's Like Saving Sex For Old Age. At Some Point, You've Got To Use It"

And Yet, This Is Still Preferable To Ace Greenberg Giving Us Intimate Details About Barbara Walters

*I can't speak to Jamie Dimon's proclivities.

General Electric revises 3Q, full-year outlook (AP)
It's a good thing they're on the no short list, cause GE has just lowered its quarterly and full year outlook. The predictable reason: gyrations in the financial market. The good news though, GE says it's committed to maintaining its AAA credit rating -- so presumably it won't be reluctant to raise capital at the first signs of rain.

Buffett Drove Hard Bargain With Goldman (WSJ)
Oh gosh, the Buffett the mythology lives on: "For six months, as the credit crisis deepened, billionaire investor Warren Buffett turned away a string of Wall Street firms that came hat in hand looking for help. On Tuesday, Mr. Buffett says, he was sitting with his feet on his desk in Omaha, drinking a Cherry Coke and munching on mixed nuts, when he got an unusually candid call from a Goldman Sachs Group Inc. investment banker." Really? Like, really? He was actually drinking Cherry Coke, his beloved soft drink, right when they called? It's only surprising that he wasn't eating See's candies as well, but then that would've just been too ridiculous.

Initial Thoughts On MySpace Music (AVC)
Fred Wilson's been advocating music sharing and social discvoery services for long than anyone, so he's as good a person as any to give his impression of the new MySpace Music, which just launched last night -- going head to head with Apple, and other big music sites. We saw a demo, it looks potentially interesting, but obviously we'll need to sing our teeth in it some more, to know.

Marc Faber: 14% S&P 500 Rally Post-Paulson (Paul Kedrosky)
It sounds like Mr. Gloom, Boom, Doom, is predicting a short end to the gloomb, a decent-sized boom... but then a return to doom (that's always how it is in th end). Should the Paulson plan go through (and it probably will... now that McCain is coming back to Washington, the Dems want to rush it through so it can't look like he's taking credit), he's predicting a 14 percent S&P 500 rally. Not sure where he pulls that number out of, but doesn't really matter? Doom lies just beyond that.

Short-Sale Ban Fails to Save Ambac, Farmer Mac From 50% Plunge (Bloomberg)
Yep, even with the no shorting rule, some financials have been getting absolutely crushed, Farmer Mac chief among them. It's just the curse of the Macs really. Nothing can save 'em. Ambac though, we were sure they were strong and can't believe that the stock might actually be falling on fundamentals.

$$$ Mozilo Arrest Watch [HP]

$$$ Morgovia all-ovia [CNBC]

$$$ Women, children, Goldman bonuses first [Bloomberg]

$$$ Paulson Gives Way on C.E.O. Pay [NYT]

$$$ FOR HIRE: 1,000s to Run Printing Presses [craigslist]

You know our thoughts on the short sell ban, and its participants. We've been encouraging those companies shielded by the Long Only Suction to send a message that they are strong enough to take whatever the market throws at them, and slowly but surely, they're coming around. We suspect that in the coming days, the non-pussies will come out of the woodwork and in doing so, not only lay their stones on the table, but shame those sticking with Cox. We will be calling the members of the ever-growing former list Einhorn's Eagle Scouts, the latter Lamprey Longs. We'll update the roster of each as the information develops. As of now, those learning to tie knots and bird watching with D-boy are: Diamond Hill Investment Group, JMP Group, Greenlight RE, and American Physicians Capital.

Maria Dominguez, "a money manager for a hedge fund," had her $3 million case against Vibe magazine and Sean Combs thrown out by Judge Doris Ling-Cohan yesterday. The suit centered around a shot of Dominguez topless in a pool with the caption "Mermaids gone wild," which the lady "wasn't too happy about, that's for sure," according to her lawyer. The judge argued that Dominguez shouldn't have expected privacy after she took her clothes off, especially since she did so at the annual White party, "a subject of tremendous interest." I haven't been in a court room in some time so I wont delve into the legality of the sitch but I will say this--in times like these, when you work at a hedge fund, your breasts are probably the only assets that haven't depreciated. Slapping them on the table (or on the pages of a widely distributed magazine) might just prevent other sorts of withdrawals and encourage additional deposits. Be a lady, and take one for the team.

Topless photo lawsuit against Diddy gets tossed [NYDN]

*She was born female, otherwise it'd most likely be SAC.

Can you lay claim to true financial geekery without being something of a Patrick Bateman fan? (Perhaps even a closeted one?) Depending on your answer, you may or may not consider turning American Psycho into an 80's musical. Like it or not, however, that's what's heading your way. Don't despair though. The project is just early enough to be killed off yet. Music rights from the likes of Huey Lewis and the News and Phil Collins have not yet been secured. Add a few lines to the anti-anti-short rule you are sending your Congressperson, why don't you?

'American Psycho' heads to Broadway [THR.com]

Perhaps he's taking the next few days to focus on wooing Cuomo?

Ok, we have heeded the call. We've opened up a very basic Cafepress shop for Anti-anti-short swag. We'll leave the very basic, vanilla logo clad stuff up for now, but eventually we have to slop our logo on the stuff, Microsoftify the package and commercialize the entire operation. Get it before we sell out of the pure stuff! (Supplies are limited).

Since none of the shorts impacted by the ban will return our calls, all profits are going to the Dealbreaker lunch fund (used to fund lunches, flowers, condoms and the like given away to random readers for services rendered).

Update: Of course, if you have other tagline ideas you prefer, and they catch our eye, we'll add them in a heartbeat!

Update 2: Ok, the speed with which mugs and shirts are flying off the shelves is frightening us. In a good way.

Dealbroken Cafepress Shop

This is an absolutely horrible rumor we hope not to be true. At left, we have Bella, in her Lehman Brothers directory photo. She's the guard dog at 745, loved by all for many years, but even more so after she attempted to bite Richard Fuld as he was leaving the building last week. Heartbreakingly, the newly formed Barclehs is allegedly not choosing to keep her on staff. We're going to go down there later in the week to try and talk some sense into the Brits, but we're expecting the worse, as they are not dog people. If that doesn't work, there has to be someone out there who'll take her in. Stevie would, but with the snipers and Tonton Macoutes, he's all set on security. Crab hands?

Update: A Times Square neighbor adds:

The LEH dog has been a source of amusement for many of the area high rise dwellers. The LEH building has a glass enclosure at its top which we look down upon from here. This enclosure is a few stories tall, has some equipment in the middle, but is otherwise a pretty cool open space way up high. A few times a day, there is a big black dog that is let out there. The dog runs around for a bit in its unusual glass penthouse and then goes back inside. A few months ago we had a summer associate look into the mystery of the dog, and reported back to us from his contact at LEH that it was most likely the LEH guard dog. The strange sight of a dog running around in a glass enclosed rooftop was always a welcome break from work and will be sorely missed.

What happens when you write $40 billion of equity index puts and the market tanks? Probably nothing, for another 14-18 years. According to the derivates disclosure section from Warren Buffett's Berkshire Hathaway's June 2008 10-Q, the Oracle of O sold approximately $40 billion worth of index put options between 2005 and 1Q 2008, receiving nearly $5 billion in premium. This morning on CNBC, O Cubed told Becky Quick that a financial-themed Pearl Harbor would occur if the Fed did nothing. Sounds like someone who wrote a bunch of index puts recently to DB. (Granted, indexes would have to be below 2007 levels in 14-18 years for him to have to take losses.)

Though many are psyched at the idea of Buffett diving into bed with Blankfein, is this the best idea right now? "Value plays" in financials have destroyed more than a few smart investors in the last 6 months and The Big O didn't even consult with the Charlie Munger on this one, much less his favorite girl at Scores (Very) West. (She is his usual confidant on such matters, you know.) To this pessimism, the Oracle of O would probably say "When people are greedy, be fearful. When they are fearful, be greedy." But he is also prone to give advice on nipple clamps and genital piercing, so your mileage may vary.

WaMu: BB- ---> CCC. [Bloomberg, Related?]

S&P 500 Index v. UltraShort S&P500 ProShares ETF. Ouch. Thanks Cox.

Chart after the jump.

Not content to let this anti-short list fad slip away without capitalizing (see what I did there?) Bess and I have designed the first series of anti-shortlist garments. These high quality and attractive pieces will announce to the world (or whoever has your pants off) exactly where Cox and Company can shove it. (And where they can't).

We are wearing them now.

Samples after the jump.

As you know, we've been encouraging the various firms on the "no short" list to say thanks but no thanks to Cox, and remove themselves from the ban. We were specifically hoping Goldman would send the message that they are strong enough to go it alone, but apparently they're not yet done being hypocritical pussies. Fair enough. Luckily, David Einhorny is no such HP.

Living up to his name, the Greenlight Capital founder has pulled Greenlight Re (GLRE) from the list. If 'Horny isn't afraid to expose his super-secret offshore Cayman island firm to the scrutiny of the market, what the hell is GS's problem? I guess they just don't have the stones for this business. Maybe they should think about moving into retail banki--oh, oh wait.

In related news, in association with Naked Shorts, we're considering printing and distributing 'Gutless Hypocrite' T-shirts. We just need the sizes of Peter Clarke, Noam Gottesman, a few others, and we're good to go.

[NASDAQ via Naked Shorts]

29.2 basis points on a 10-year treasury CDS. This is either a fantastic opportunity, or the beginning of the end. Salt to your own taste.

US 10-year Treasury CDS widens to record 29.2 bps-CMA [Reuters via Alea]

Wind windbag Pickens has seen better times. Caught on the wrong side of energy investments and leverage, his 30% and 84% losses in two funds have cast over $250 million of his personal stash to the winds and left investors another $750 million shy. To hear him tell it, the sudden dislocations in the energy market over the last three months caught him unawares. But don't worry, its all temporary. (Sort of like the sudden spike in energy markets the three months before that? One man's unfortunate dislocation is another man's genius thesis).

Pickens insists that "Oil likely will finish the year around $120 or $125 a barrel." If he really thinks so, wonder why he reduced his exposure to energy so dramatically when it toyed with $90. Between this and that whole Yahoo thing, we wonder if our favorite oilman should spend less time standing on a soapbox and more time with his analysts.

Hidden in the roar of bailouts, Congress and rising sea levels, GHL Acquisition Corp., a Greenhill & Co. affiliate, quietly agreed to acquire satellite phone provider Iridium Holdings LLC.

Motorola and a slew of greater fools had dumped $5 billion into the venture over the years only to have it picked up for $25 million out of bankruptcy in 1999 by Iridium Satellite LLC. Not the best recovery for the $4.4 billion in bonds that were outstanding at the time.

GHL will end up with 55% of the new entity, and it appears they plan to IPO list on Nasdaq hard upon. The equity holders will see about $77 million out of the transaction along with a hunk of stock in the new entity valued at around $300 million. The interesting part, however, is a cash injection by Greenhill that firm will spend to retire almost all of Iridium's debt.

There are value plays out there, it seems, and lots of dry powder to use on them. The company's new plans, however, look a bit like more of the same. $2 billion to replace their satellite fleet, this time with 10Mbps data capabilities. Wonder who the bondholders will be.

Greenhill affiliate to buy Iridium for $591 mln [Reuters]

Buffett/Becky live-blog finally gets interesting!

Backtracking, a slightly:

Beckster: You've said no to everything...why now?
InvestingInTheBuff: There's no better firm...the price is right...the people are right...it all just feels, SO RIGHT. I decided to write a check.

InvestingInTheBuff: I wouldn't be doing anything if the government wasn't going to back...I'm betting on them being rational...it would be a mistake [to do the deal] if they were going to walk away.
Beckster: Why would that be a mistake?
InvestingInTheBuff: There's just no telling what would happen.

Carl: Was last week the most frightening experience you've had in your life?
InvestingInTheBuff:The market could not have taken another week...I don't want to get into horror stories...but let me just say, never EVER give a fluffer a sand blaster and a bottle of Tabasco sauce without doing a background check first.

InvestingInTheBuff: Thank heavens Paulson had the imagination to step up with something like this. [Ed: Christian Scientists, while lacking any regard for their own well-being, have great imaginations.]

InvestingInTheBuff: The buyers of the instruments these days are going to do better than the sellers.

Joe: Some people are saying you're like a canary in a coal mine? You have a problem with that analogy?
InvestingInTheBuff: A. Yes, because you mentioned nothing about the canary banging all the other canaries in the coal mine, getting down there, rubbing coal all over each other. B. No, no prob as long as the canary lives.

Beckster: How does [your partner] Charlie Munger feel about the deal?
InvestingInTheBuff: I actually didn't tell him about it 'til it was done...he had a bad fall in Rochester, the sinner. But I called him last night. He's all for it.

InvestingInTheBuff: I try to bet on brains. And, you know. And it just so happened that GS had a rack I wanted to sink my teeth into.

One small step for bank, one giant leap for bank-kind, at least in the eyes of a Goldman alum:

This Buffett thing is not only good for GS but it will SUPPORT THE MARKET, in my opinion. I'm not going to say straight up 10% from here, but here you have a guy who is drawing a line in the sand, and it's not just any guy. How many investors can pony that up without hitting the frozen credit markets? He did not choose Morgan Stanley, or Citi (that he once owned assloads of), he chose his very first investment in GS, when the PRICE FINALLY GOT CRAZY.

1x book.

Hear that? I don't care if their growth rate will slow and their regulators will be crawling up their asses from here to Sunday -- they are going to find a way to make money, and it sure got a lot easier with some of the chumps (competition) out of the way. Buffett knows this because Byron Trott can get this guy to pull the trigger on just about anything, and by getting this done -- the mother of all "let me make one phone call" trades -- I'm going to be one of the first to say he will be running GS within the next 5 years (or sooner).

Another banker that is marking the bottom? Chris Flowers -- former GS banker of course -- who has looked at every finance deal since the start of 2007 but finally pulled the trigger on a bank in Missouri. Not sexy. Yes, Missouri. But it will allow him entry to buy distressed assets (FINANCIAL assets). When you finally get this shit -- the PE guys and BUFFETT -- buying shit, it's time.

I don't want to cause a panic buy out there, but dilution schmilution.

Of course, not even The Oracle can prevent Congress from fucking it all up. While I don't suppose that Buffett has been coached by Hank, he has to have enough feelers out there to judge better than most whether a palatable government deal gets done or not ... and he usually votes with his wallet

Let's just say I like my chances with Warren and the PE vultures better than Uncle Sam.

A source close to the matter indicates that Lehman Brothers had retained service providers to facilitate "massive asset sales" as early as mid-August. This may or may not mean anything, as firms facing even a possibility of bankruptcy often prepare contingency plans early, but it would be interesting to go back and look at Lehman's public comments in that timeframe. It could also be that "massive asset sales" were contemplated at Lehman before bankruptcy was considered a possibility. Either way, its unusual that the contract language for these providers didn't change by so much as a comma in the days before Lehman filed. Or it could all be bunk. Just saying, is all.

Asian Markets Are Jittery as US Bailout Doubts Persist (CNBC)
By jittery, the article must mean "not every single stock on the market soared", cause for the most part, it seems the Warren Buffett injection actually brought some cheer to the other side of the earth. Financial shares were up, and generally the indexes ended in the green. In Europe it sounds like stocks are up marginally.

Pickens Funds Down About $1 Billion (WSJ)
Spending too much time filming commercials advocating wind? Apparently T. Boone Pickens hasn't done so well at his fund, having lost $1 billion on the steep decline in energy. Personally, he's lost $270 million, and he admits that this is his worst run in 10 years. Like many money losers, Pickens has an explanation for the decline in energy that makes him feel better: "I'm not willing to accept that [the downturn] was due to a global slowdown" reducing energy demand, he says. "When there's deleveraging in markets it will affect everything." We've all been there on that one.

Exec pay limits gain support as bailout questioned (AP)
We'll see if this is just posturing, or if this is something the Dems are really able to stick with. The opposition is right, but you still have a hard time making the case politically that firms who might be dead but for the largesse of the American taxpayer, ought to be paying multi-million bonuses to top brass. In the end, it's hard to see something like this going through. But it's also hard to see a plan going through that doesn't have a lot of strings. And it's also hard to see a plan not going through at all. So there you go.

China Withdraws Milk as Fonterra Decries Sanlu Delay
There's some joke in here about China scrambling to withdraw tainted milk and comparing it to money market redemptions. At the moment, we don't know what that joke is, exactly. Too early.

$$$ They said the same thing about the Titanic. [1-2]

$$$ Dick Fuld allegedly not home. [City File]

$$$ Merrill employee sickened at idea of working for BoA [Ivy Gate]

$$$ The Pandit Era: Tougher Internal Memos [Deal Journal]

$$$ Paulson Plan 2.0 [Zamanksy]

$$$ The Spiral - Part IX - Paulson [GP]

$$$ Will Barclays turn its back on Lehman's ETN holders? [The Deal]

$$$ Harbinger down a little. [Bloomberg]

$$$ Texas Hedge Fund Guy Takes Out Scary Full-Page Times Ad About New Bolshevik Revolution [Gawker]

But don't worry! It's delicious Buffett-flavored dilution.^TM

Berkshire Hathaway will invest $5 billion in Goldman Sachs. In addition, Goldman will raise at least $2.5 billion in common equity in a public offering. Berkshire will have warrants to buy another $5 billion in common stock. -- WSJ

I don't think I have to tell you, this is huge, people. Consider the out of nowhere sex analogies that will come from the Oracle of O diving into bed (or up on a desk, or behind a back alley) with LB. That's probably half the reason he agreed to this thing. Threesome-view with Blankfein, Buffett and his gal-pal Becky Quick tomorrow morning? CNBC hasn't said anything but we've got our fingers crossed.

Update: The Quickster just confirmed to Kudlow that the interview will go down tomorrow at 8 am! Obviously, we will be live blogging the fuck out of it.

Update 2: Goldman's press release:

Not sure how we missed this but House Oversight Committee Chairman Henry A. Waxman has announced the creation of the "Lehman-AIG Tip Line." The power o' subpoena and your tax dollars no longer being an effective means of gathering relevant information regarding whatever shit did or did not go down at the Houses of Fuld and Hank, former and current employees and friends, as well as "Wall Street insiders," are now being encouraged to send any dirt they might have Waxman's way here. You can additionally call 1-800-LEH-NARC or 1-800-AIG-NARC.* We also hear that the committee is considering renting out the services of Chaz "I'll bust open your knee-caps" Gasparino to aid in the investigation, which, and we say this completely sincerely, would probably class up the operation several notches.

*Full disclosure: calls to these numbers are routed to Dealbreaker.

1. That Congress plans to stick the following in the rescue bill:

a. "Salary cap for executives of $400k for any co that dumps their toxics in the rescue fund. Don't know yet for how long a period."

b. "Homeowners will able to tap their 401k and IRA's tax free to pay their mortgage."

2. Dick Fuld was seen spotting Charlie Gasparino at Gold's Gym. (Tipster, please. Those who track such things know that Gaspar vowed to never work out with DF again, after The Gorilla failed to call him back.)

I realize that the Morgan Stanley analyst who issued the report on the New Goldman Sachs probably would've been locked in the Mary Meeker room if he'd even joked about criticizing the recent changes at 85 Broad. But are we not laying it on, what's the phrase I'm look for here, a bit thick, when we (you, Morgan Stanley analyst) conclude with flourish that "benefits of bank holding company (BHC) status outweigh costs" when we (you, Morgan Stanley) are undergoing the very same sex-change operation? And also, if it was such a grand plan, why didn't you do it months ago? Regardless, we (me) are pleased to see you've taken the advice of the incalculably wise Mike Damone: "...act like wherever you are, that's the place to be."

The attitude dictates that you don't care whether she comes, stays, lays, or prays. Whatever happens, your toes are still tappin'. Now when you got that, then you have the attitude.

The correlation between Congress holding court on anything market related and the S&P 500 would be alarming if it wasn't so obvious. Why hasn't someone already started the Congressional Hearing Leveraged Opportunities Fund?

Update: Count on our readers to have this one figured out already.

Singer, a Libertarian-leaning former investment banker with more than 20 years experience covering small-cap stocks, runs the Singer Congressional Fund (SCF), the strategy of which is based on a unique theory: that the markets do significantly better on the days when our Congressional lawmakers are on vacation. For example, August is a good time to be long stocks, and so is the end of October, Singer says. Singer buys stock indexes, individual small-cap stocks and derivatives; but, he is out of the market (or has significantly reduced positions) when Congress is in session.

Fund Manager thinks government is bad for business [Registered Rep]

Chart after the jump.

Corporate India is in shock after a mob of sacked workers bludgeoned to death the chief executive who had dismissed them from a factory in a suburb of Delhi.

Lalit Kishore Choudhary, 47, the head of the Indian operations of Graziano Transmissioni, an Italian-headquartered manufacturer of car parts, died of severe head wounds on Monday afternoon after being attacked by scores of laid-off employees, police said.

The incident, in Greater Noida, just outside the Indian capital, followed a long-running dispute between the factory's management and workers who had demanded better pay and permanent contracts.

Not that we are suggesting this sort of thing is really a good idea, but I bet labor likes the idea quite a lot. It's a bit more brutal than litigating a fallen CEO into a heart attack (or a faked death) but it has a certain... honesty to it. That makes it, if nothing else, damn refreshing. And if anything is going to get murder condoned, it's a credit crunch and high gas prices in the United States. Ouch.

CEO murdered by mob of sacked Indian workers [Times Online] (Hat tip - Anonymous DealBreaker commenter)

Oppenheimer analyst Meredith Whitney speaking at a private lunch right now (presumably dining on the flesh of Vikram Pandit): Wachovia is a "wacky bank." Shall we see if the negative comments affect the stock price? Oh, wait...

Senator: "How long were you the CEO of Goldman Sachs?"

Paulson: "From May of 1999 til I left to come down here in mid-2006"

Senator: "You said didn't realize the maze of regulatory problems that we have here on the hill and that you and other companies like yours were dealing with here. You made that statement to us."

Paulson: "I said you have to get down here look at the people and look at the plumbing to understand it"

Senator: "But you were dealing with it on a daily basis"

Paulson: "Well I said you've got to see it up close and personal and step back and look at it and think about it"

Senator: "In other words you're telling me that you didn't know or someone at your firm didn't know about the regulatory burdens that were placed on your firm?"

For those of you not watching the uncensored version, Paulson, went on to add:
"Senator you're obviously not aware how this worked. Regulators came to 85 broad. I gave them the books and a rubber stamp. They pressed one against the other. We had coffee, little heavy petting, I clown faced them, and then they left. If it worked differently at other shops that's their problem."

Oh yeah.

Chart after The Jump.

In the digital sense. As you know, we are good and fed up about the lack of face time with Richard Severin Fuld over the last week or so. If he wants to go Jodie Foster on us and hole up in a panic room with a diabetic pre-teen that's fine, there's nothing we can do about it (for now). But it goes too far when he scrubs the internet of last Saturday's Weekend Update sketch that featured Jason Sudeikis playing the Gorilla naked in a barrel, teetering on the edge of insanity, trash talking the Fed, and discussing various new lines of work he's considering taking up in the wake of his personal bankruptcy. Every episode of SNL can be found online on one site or another, and other scenes from the one in question have been posted by NBC, Hulu, YouTube, YouPorn* etc, including parts of this particular WU, like an (amazing) spoof of American Apparel CEO Dov Charney.* But NO FULD. So here's what. The first person to find the clip, will receive lunch for the next week, on us. No questions asked. Just put it in our hands.

*Some people might get off on it, in a hate-fuck Dick Fuld sense.
**Shout-out to SAC! Moving up in the world, shemales!

Paulson and The Beard are facing the panel. What glee!

11:30: Lots of hammering away on the issue of mortgage foreclosure assistance. If the issue was bad lending, the argument goes, why aren't we doing more for foreclosure assistance?

What other plans did the Treasury consider before adopting the plan that is before the congressmen and congresswomen now? (This should be good).

Paulson: Oh, the market, baby, the market is the answer. Except when it isn't. When you "have to buy mortgages or securities way above fair value" (emphasis mine).

Bernanke: "As you know I am a student of financial crisis and financial history." Indeed!

The situation we have now is unique and new. It's not about failing institutions. Our amazing financial innovation is so amazingly complex, we can't handle it like those simpletons, the Japanese.

Q. What banks would be eligible to participate?

All of them. (Ahem).

Granted, you might prefer to take with a grain of salt anything Hugo Chavez says, but it is amusing (because it is so biting) to hear him welcome President Bush into the realm of socialism. Cue Bloomberg:

I nationalize strategic companies and get criticized, but when Bush does it, it's OK," Chavez said on weekly television program Sept. 21. "Bush is turning socialist. How are you, comrade Bush?"

We've maintained for the last week that there is nationalization and there is Nationalization and that the "financial press" seems to enjoy using both interchangeably. When the Treasury forcibly seizes Barclays assets and takes its time paying $0.04 on the dollar, we'll revist. Still, till then, it's beyond amusing when Chavez scores a point.

Lula, Fernandez May Mock U.S. at UN After Financial Turmoil [Bloomberg]

Despite the feelings of emptiness we're working through right now, born out of having the momentary exhilaration of picturing Jamie Dimon displaying the pair to go it alone ripped out from under us, we stand by yesterday's statement. Taking yourself off the short sell ban list SENDS A MESSAGE. A message that you are long, strong, down to get the friction on. And prepared to take whatever the market throws your way. And it puts your competitors in the awkward position of either doing the same, or exposing themselves as pussies (terrified that their tenuous relationship with the truth about level 3 assets might bite them in the ass). And I think we can all agree, watching Goldman agonize over the decision would be great fun. (LB ponders: "Delist or pussy, what shall I do?").

Nationalizing healthcare or healthcare insurance is pretty much off the table at this point no matter who gets elected. Wall Street put the brakes on that very quickly by removing any prospect of getting it funded. Who says you have to spend money on lots of expensive lobbyists to kill social programs. You just need to create an environment which mandates your bigger, more urgent social program.

How to trade the bailout? Go long healthcare.