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!
Q: Glenn Schorr, UBS: How do you incentivize if you cant come to clearing price that isn't too putative?
A: Our objective is not to get everyone to participate so...we won't be paying too much...I can envision a firm taking a loss, because we're giving them cash that they can redeploy. We're soliciting ideas from all over the place.
Q: Guy Moszkowski, Merrill Lynch: Is your goal with the pricing mechanism to inject as much liquidity and capital or is it to force recognition of losses and consolidation so we can see who will survive and who will die.
A: Hard to say either of those extremes. It's a balancing act.
Some guy from Treasury says he wants people to focus on legislation, not implementation. One of his colleagues says he thinks that's a "very good idea."
Q: Mike Mayo, Deutsche Bank: Do banks have the option to purchase insurance or sell assets or does the option remain solely with the treasury once banks decided to participate?
A: Yes banks have the option to choose what program to participate in.
Q: Will insurance premiums be stretched out?
A: We don't know
Q: Will the Treasury still get equity stake in companies that chose insurance? Can the Treasury decide whether or not to let companies participate?
A. The Treasury will consider "long-term viability" of the firm. For the most part, we want to help the healthy banks get healthier as opposed to healing the failing banks.
Q: Eric Something, FSI: Will warrants for insurance programs be at similar ratios to asset purchases?
A: Yes.
Q: Mike Holt, Boston Company: when will the treasury start purchasing these assets? Wednesday? A couple weeks?
A: A few weeks, several weeks, once Congress passes bill
Q: But some people will fail before that?
A: We understand.
Q: Didn't catch the name, Davis Polk: When you decide to buy non,residential/commercial assets, do you have to ask for approval?
A: No, just consult with fed chair and send a note to congress
Q: Jeff, didn't catch firm name: Is there any way to ensure the purchased dollars are actually re-lent back into the system? will that be mandated?
A: No provision for that
Q: Can you add that?
A: We're always open and considering.
End scene, with 15 minutes to go before Entourage.
Posted by guest , Sep 28, 2008 9:02PM
How does this help the bailout?
SEC. 128. ACCELERATION OF EFFECTIVE DATE.
17 Section 203 of the Financial Services Regulatory Re1ief Act of 2006 (12 U.S.C. 461 note) is amended by striking ‘‘October 1, 2011’’ and inserting ‘‘October 1, 2008’’.
Posted by guest , Sep 28, 2008 9:02PM
Still on hold here too. No idea about this music. It's like Metallica doing flamenco.
Posted by guest , Sep 28, 2008 9:09PM
did they really play stairway to heaven?
Posted by guest , Sep 28, 2008 9:13PM
Dick Fuld (using falsetto voice):
"Yeaas, ahhh, this is Molly Jane Hatchet of US Securities Corp.... can you verify for me please the clause in this legislation that, in light of their already well-documented sacrifices and sufferings, indemnifies all present and past Wall Street leadership from any potential financial, civil, or criminal penalties?..."
Posted by guest , Sep 28, 2008 9:14PM
rodrigo y gabriela
Posted by Lowly Assistant , Sep 28, 2008 9:15PM
Stopped listening at, "We don't want to reward failure."
JK. I <3 the District.
Posted by guest , Sep 28, 2008 9:17PM
@4 - funny
Posted by Lowly Assistant , Sep 28, 2008 9:19PM
Bob Hoyt is loud as fuck!
Posted by guest , Sep 28, 2008 9:19PM
what, no hank? this will fail.
Posted by StupidEquityGuy , Sep 28, 2008 9:20PM
Thank You Bess...
~SEG
Posted by guest , Sep 28, 2008 9:22PM
Sounds like those fukkin retards managed to clone the US Tax Code - there's enough bullshit loopholes, what/ifs and if/thens to last 10 years. They should have called it the "Legal Profession Full Employment Act of 2008"
Posted by guest , Sep 28, 2008 9:25PM
Is the call over?
Posted by Investorcluzo , Sep 28, 2008 9:26PM
tim ryan! he's back...he used to work at jpm in the fig group (covering the gse's). I guess he didn't have enough fun with the rtc.
Posted by guest , Sep 28, 2008 9:26PM
So what I'm hearing on exec comp is that companies should enter into long term contracts with their NEOs with a robust parachute structure tomorrow. They can't cut back on existing contracts, just new ones.
Posted by guest , Sep 28, 2008 9:27PM
all the oversight members from the executive branch + fed chair who's appt by pres. what a fuckin joke.
Posted by guest , Sep 28, 2008 9:31PM
Bob Hoyt is the General Counsel of the Department of the Treasury.
Posted by Investorcluzo , Sep 28, 2008 9:32PM
did I miss it, who's going to manage the assets once the treas owns them?
Posted by guest , Sep 28, 2008 9:32PM
Bottom line: This bill is the same as the initial Paulson plan..they threw in all the other "principles": oversight, exec compensation, taxpayer participation in the upside; in such a manner that they are worth ZERO. The Treasury Sec has FULL DISCRETION TO DO WHAT HE WANTS WHEN HE WANTS HOW HE WNATS WITH NO FORM OF JUDICIAL OR CONGRESSIONAL OVERSIGHT/OVERRULE!
Note that the guys from the Treasury Dept are so excited that they got all they want. The Treasury Dept just played the buffoons in Congress for what they are - buffoons. Checkmate!
I am from a Third World country and I never believed the day would come when I would be disugusted with the US govt as much as I am with my home govt.
The Empire has fallen!
Posted by guest , Sep 28, 2008 9:33PM
Bottom line: This bill is the same as the initial Paulson plan..they threw in all the other "principles": oversight, exec compensation, taxpayer participation in the upside; in such a manner that they are worth ZERO. The Treasury Sec has FULL DISCRETION TO DO WHAT HE WANTS WHEN HE WANTS HOW HE WNATS WITH NO FORM OF JUDICIAL OR CONGRESSIONAL OVERSIGHT/OVERRULE!
Note that the guys from the Treasury Dept are so excited that they got all they want. The Treasury Dept just played the buffoons in Congress for what they are - buffoons. Checkmate!
I am from a Third World country and I never believed the day would come when I would be disugusted with the US govt as much as I am with my home govt.
The Empire has fallen!
Posted by guest , Sep 28, 2008 9:33PM
Best news source in the world tonight. You're the only one reporting this live.
Nicely done.
Posted by guest , Sep 28, 2008 9:33PM
Bottom line: This bill is the same as the initial Paulson plan..they threw in all the other "principles": oversight, exec compensation, taxpayer participation in the upside; in such a manner that they are worth ZERO. The Treasury Sec has FULL DISCRETION TO DO WHAT HE WANTS WHEN HE WANTS HOW HE WNATS WITH NO FORM OF JUDICIAL OR CONGRESSIONAL OVERSIGHT/OVERRULE!
Note that the guys from the Treasury Dept are so excited that they got all they want. The Treasury Dept just played the buffoons in Congress for what they are - buffoons. Checkmate!
I am from a Third World country and I never believed the day would come when I would be disugusted with the US govt as much as I am with my home govt.
The Empire has fallen!
Posted by guest , Sep 28, 2008 9:34PM
Mike MAYO!!!
Posted by guest , Sep 28, 2008 9:36PM
@18.... there'll be a new Treasury secretary in months anyway.
Posted by Lowly Assistant , Sep 28, 2008 9:36PM
Love Mike Mayo. Such a prick, not reserved.
Not a talker. Not a talker.
Posted by Lowly Assistant , Sep 28, 2008 9:39PM
Oh snap, the operator's fucking up!
Posted by Investorcluzo , Sep 28, 2008 9:39PM
the operator fell asleep!
Posted by guest , Sep 28, 2008 9:39PM
awkward pause....
Posted by guest , Sep 28, 2008 9:41PM
What did Mike Mayo say... I missed it or at least missed his name - so I couldn't match the comments to the name.
Posted by guest , Sep 28, 2008 9:41PM
Ah, a lawyer question! Guidance as we go, that should be fun.
Posted by Investorcluzo , Sep 28, 2008 9:41PM
2 more questions - I thought there were a lot of callers to get through? wtf, does he have somewhere to go? maybe he wants to watch entourage too...
Posted by guest , Sep 28, 2008 9:42PM
it turns out Levin was the brains of this operation all along, who the hell knew... i don't know what the hell all the pee pee jokes were about...
Posted by guest , Sep 28, 2008 9:44PM
Second to the last question was from someone at Davis Polk (law firm) for Bob Hoyt.
Posted by guest , Sep 28, 2008 9:46PM
looks like main st just got screwed..
Posted by guest , Sep 28, 2008 9:46PM
I've seen this movie and it has a terrible ending.
Posted by guest , Sep 28, 2008 9:46PM
Lawyer question was from someone at Davis Polk: In putting together regulations, will you do a proposal and solicit comment, or issue them as emergency regs? Answer: We don't think we need proposal/comment for these rules, so we'll just do it as we go with "transparency."
Posted by guest , Sep 28, 2008 9:46PM
i don't believe glen schorr knows what 'putative' means
Posted by Investorcluzo , Sep 28, 2008 9:48PM
who ends a conference call with "bye, bye"...this isn't a call with your daughter who just started her freshman year a college. good grief!
Posted by guest , Sep 28, 2008 9:51PM
...and it should be moszkowsky from bofa, beeatch!
all in all don't think this will pass. it's a joke.
Posted by guest , Sep 28, 2008 9:53PM
Can someone please tell me why GE is worth more than Citi? I guess NBC is worth something. GE Capital has had a piece of every turd deal I ever worked on. At least Citi has access to the discount window. Seems like AIG II to me except instead of being short the CDS they directly own the underlying.
Posted by guest , Sep 28, 2008 9:56PM
@Bess -
Thank you again for live blogging the conference call. DB = greatest coverage out there right now.
Posted by Lowly Assistant , Sep 28, 2008 9:59PM
Cluzo,
What's even better was that it was more like, "k, bye bye." Sounds like he needs to get back to helping his 16 y/o daughter with the year-book commission. The shame.
I seriously cannot believe they wanted to steer away from the "implementation" of this bill, and focus more on "legislation." Is this fucking meet the press, or should we be more focused on the nuts and bolts of this "process?" One more ride on the merry-go-'round.
Posted by guest , Sep 28, 2008 10:30PM
@39, GE is much more than just GE Capital and NBC
Posted by guest , Sep 28, 2008 10:31PM
What's the over/under on how quickly they blow through the $250B and come back for more? 2 hours?
Posted by guest , Sep 28, 2008 10:34PM
@42 and AIG was much more than AIG Financial (or whatever that London office was called).
@43 If it passes Wednesday, I give them till Monday (depending on if WB can last until Wednesday, in which case Citi gets the cash and WB still fails)
Posted by guest , Sep 28, 2008 10:40PM
@44 yes but was GE issuing insurance on corporate debt, I thought they weren't a huge dealer in that or the mortgage markets.
Posted by guest , Sep 28, 2008 10:40PM
I read db more than Reuters now.....
Posted by guest , Sep 28, 2008 10:48PM
@45:
No they own a bunch of shit levered loans though. Seems like they're next in line in the toxic sausage factory.
Posted by guest , Sep 28, 2008 10:49PM
@45:
Those guys and Fortis would buy anything
Posted by guest , Sep 28, 2008 10:51PM
I've set DB as my homepage for the last few weeks because of this never ending shitstorm.
Posted by guest , Sep 28, 2008 10:54PM
@46, agreed. Bess, bravo on your coverage of this the entire weekend. Carney was correct when he said he left us in capable hands (insert sexual innuendo here readers [that means you HEDGEmony])
Seriously thought, good shit Bess. And fuck those hater trolls from the other post...you've got a loyal army here.
Posted by guest , Sep 28, 2008 10:56PM
Here's a audio transcript of the call, if anyone missed it.
http://thepiratebay.org/torrent/4418763
Posted by guest , Sep 28, 2008 11:06PM
That Henry Blodget guy is annoyingly ugly. Can you get the Business Exchange (whatever that is) to submit a less offesive banner ad for your site please?
Posted by Phobos , Sep 28, 2008 11:22PM
Going forward I don't see resolve.
That said I'm pulling my anger/lust for death and focusing on structuring gain, using this as upside in any conceivable manner.
Don't get me wrong, as far as shit storms go this one is a doozy. When it plays out in my head it deserves nothing less than Paganini as a soundtrack. But I've become too consumed by these movements, and lost sight of the only thing that really matters: gain.
-phobos.
Posted by guest , Sep 28, 2008 11:26PM
You don't adequately distinguish between the treatment for "Direct Purchase" cases, like AIG, and "Market Mechanism" cases who are voluntary. The voluntary ones get TOTALLY different treatment.
This was clear on the call, it was specifically clarified.
Posted by StupidEquityGuy , Sep 28, 2008 11:29PM
@ Bess, I will go on public record and say you kicked ass this weekend. From the time the market closed until it reopened in Asia, you have been the Blogging Goddess and from this point forward, no one can say it was the drunk handling the real deal shit.
You girl, kicked ass... and it needs to be said... you earned it...
~SEG
Who does a slow drunken bow to the "Blogging Financial Goddess"...Bess the BFG...
I like it... BFG... Bess The "BFG" L...
Posted by guest , Sep 28, 2008 11:37PM
Too long, didn't read.
Posted by guest , Sep 28, 2008 11:48PM
Fortis bailed out by the Belgian and Dutch governments. I figured that a country that can't even elect a government for months wouldn't be able to get it together in time, and never thought that not only would the Flemings and Walloons hammer it out, but get the Dutch and Luxembourg to jump in. Kinda impressive, actually.
Posted by guest , Sep 28, 2008 11:51PM
@53 Do you see resolve going backwards?
Posted by guest , Sep 28, 2008 11:59PM
will it work like this?
http://spreadsheets.google.com/pub?key=pH8M5koCbpH5iKl3rxzToQQ
Posted by guest , Sep 29, 2008 12:18AM
http://www.freedomworks.org/
Posted by Phobos , Sep 29, 2008 12:19AM
That's what I get for posting drunk, yeah?
Good call. I need to pull that down -- it was for shit.
Posted by guest , Sep 29, 2008 12:20AM
"who will survive and who will die."
Just in time for rosh hashanna.
Shana Tovah to all.
To the goyim, don't kill the market while we're gone.
Posted by shalimar , Sep 29, 2008 12:30AM
Section 122. Increase in the Statutory Limit on the Public Debt.
Raises the debt ceiling from $10 trillion to $11.3 trillion.
----
$700b = $1.3t ?
Posted by StupidEquityGuy , Sep 29, 2008 1:21AM
@56, Bess you Wench... no way you would have said it otherwise...
Oh my...
the jokes change's a bit now...
Posted by guest , Sep 29, 2008 1:23AM
@StupidEquityGuy-- "Bess you Wench"...huh?
Posted by guest , Sep 29, 2008 1:27AM
Links to Final Bill and a nive 6 page official House summary:
http://yourmortgageoryourlife.wordpress.com/2008/09/28/the-final-bill-language-but-not-the-final-bill/
Posted by guest , Sep 29, 2008 2:25AM
We put the recording on youtube now, too, in five parts.
Posted by guest , Sep 29, 2008 3:43AM
Heute Die Welte, Morgens Das Sonnensystem
Posted by guest , Sep 29, 2008 3:43AM
I'm just tryin' to get mines http://www.filthyrichmond.com
Posted by guest , Sep 29, 2008 4:09AM
It is the current exec that create this mess. If they participate, their comp should get the same hit as the shareholders.
Posted by guest , Sep 29, 2008 6:44AM
Thank GOD that existing compensation contracts won't be touched by this deal!
The only two things I was demanding were that the people who were behind this clusterfuck didn't have their compensation agreements touched and that no actual Wall St. execs would be expected or required to issue a mea culpa and explain what changes they plan to effect so that the practices that caused mess this would be cleaned up.
Ok, the $700B has been agreed to. Move along, people. Nothing to see here.
Posted by guest , Sep 29, 2008 6:51AM
What we need now is Al Gore running up and down Broad St. screaming that global warming caused the meltdown in the markets.