***Madoff’s Stolen Statue Recovered (FINalternatives)
This is some bull shit. The bronze statue of two lifeguards which was fittingly stolen from Bernie’s Palm Beach back yard last week is back.

***Horseman’s firm loses billions in scam (Times Union)
Snicker yourselves to death: “A hedge fund investor who poured millions into Saratoga’s equine economy has abruptly stopped all new construction on his huge horse farm and wants to sell his thoroughbreds after losing some $7.5 billion in the Bernard Madoff scandal.

Jeffrey Tucker, the founding partner of Fairfield Greenwich Group, bought Stonebridge Farm in Schuylerville in 2004, and has since built New York’s first track with a synthetic racing surface and indoor arena on the 188-acre farm. Tucker, 62, owns and cares for about 50 thoroughbreds on the site, considered one of horse racing’s premier training facilities, and recently purchased a 230-acre satellite farm in Gansevoort.”

***Concert Industry Bucks the Recessionary Trend (WSJ)
All this means to me is that a certain someone will be able to get his private Jonas Brothers concerts on the cheap. And that’s something I have no problem with.

The concert industry has so far bucked the recession, according to year-end data from trade magazine Pollstar, but promoters are bracing for a bumpy 2009.

Box-office receipts from North American concerts through December were $4.2 billion, up 7.8% from 2007. But the total number of tickets sold for the 100 top-grossing shows fell 3%, to 35.6 million, the second consecutive year of declines. The growth in revenue was the result of rising ticket prices. The average ticket to one of the 100 top-grossing shows cost $66.90, up $4.83, or 8%, from 2007 and more than double the average price in 1998.

That could spell trouble in 2009.

***The screen name belonging to one Bernie Madoff recently came back online a few days ago. The buddy icon appears to be the Grand Tetons. We’ll be auctioning off this and other noteworthy persons’ SN’s in the New Year, so take some time to devise the perfect IM now.

***Obama And That Other Ponzi Scheme (TSG)
Meaning Norman Hsu, charged last year with operating a $60 million Madoff scheme. Also, Matt Dillon drove too fast in Vermont for the police’s liking, but got a mugshot that I legtimately say could and should be his new headshot out of the deal.

***Help Wanted: The Next Neel Kashkari (Deal Journal)
Who needs a job?

***No bonuses for Vikram and Win this year. [SEC]

***Cerberus: “Who would have believed that in a short period of time we would see the collapse of Fannie Mae, Freddie Mac, Bear Stearns, Lehman, AIG, WAMU and Ambac? Who would have believed that even Citigroup would require significant injections of capital by the government to stabilize its business as we watched its stock trade from a 52-week high of $31 to $7.02 as of December 19, 2008? No financial institution has escaped this downturn. Banks, insurance companies, mortgage companies, investment banks, and other financial companies have all had severe problems. It has been the most difficult for non-deposit financial institutions. Any financial business that needs significant credit lines, other than deposit institutions, is either collapsing or, in the best case, experiencing severe stress.” [PDF]

We hope you all have at least marginally Happy New Years! Yes, even you. Back full-time on Monday, with the possibility of a surprise appearance on Friday with photos of NYE at the Guccione pad, starring the Hill Hearing Harem, depending on how the night goes.

Madoff Investigation Shifts to Offshore Role (NYT)
If, at the beginning of the year, someone had predicted that at the year’s end we would be knee deep in shit from a madman creating a $50B Ponzi scheme I would have simply replied “I’ll buy the drinks for that show”; it’s clear now that by the time this settles I would have been broke and suffering from liver/kidney failure.

At the Times we’ve got Madoff being investigated for his possible offshore activity - adding the “illegal” seems unnecessary as anything he was doing was actually in the commission of the biggest Ponzi ever pulled. They’re looking into tax avoidance and fraud - rumor has it UBS was consulted on the former back in the day but turned the gig down as they only deal with “large scale” operations.

Fed To Purchase $500B In Mortgages, Continued… (Reuters)
The Fed has announced that it plans on following through with the MBS purchase plan. If you weren’t paying attention at some point:

“The Fed selected investment managers BlackRock Inc (BLK.N), Goldman Sachs Asset Management (GS.N), PIMCO, and Wellington Management Co to implement the program.”

Who didn’t see Goldman popping up on the list? Really? I’m a massive fan of nepotism on a personal level, but in the wake of the SEC/Madoff mindfuck it seems that the prudent government move would have been to separate itself from the purchase of assets that could very well (further) influence what players are left on the Banking Field in the near future.

Credit Suisse To Sell Part Of Global Investors Business Line (Bloomberg)
The marginally less tax-evade-y Swiss bank in townhas announced it’s going to sell off part of it’s Global Investors line, which “includes fixed-income, equity and money market funds” to Aberdeen Asset Management for $361MM in stock.

GMAC Uses Fed Money To Create Liquidity (WSJ)
They’re going to be offering loans of the 0% variety on five vehicles, and loans ranging from .9% to 5.9% en masse it appears. I don’t know that any of this will help either the company or the American public/infrastructure at large, but it was a nice thought.

Paulson, Run Amuck (Reuters)
While (the real) Paulson (to us) is looking to buy distressed debt with his $36B baby Paulson & Co, he’s also slinging mud at the rest of the industry for gating redemptions and clawing for survival. Because opening up the Funds for full redemption won’t be anything like a bank run, or cause the sudden sell-off of Billions of dollars of equities. No, Paulson, people are completely rational right now.

UBS Sells Off Bank Of China Stake (Reuters)
“Straitened (sic) Swiss bank UBS AG said on Wednesday it had sold its stake in Bank of China at a discount to institutional investors and would book a gain of a “few hundred million dollars” in the fourth quarter.”

Here’s the story in a nutshell: UBS needs money so they’re selling off whatever they can. Banks (even ones in China) pose an unnecessary risk, so they’re the first to go.

1. But… he was self-administered! His costs for trading must have been so low!

2. Goldman did due diligence in 2001 [“no we didn’t”, “yes you did”] and they gave him a pass.

3. “C’mon… even if he does anything they will look the other way. He has friends on the inside!”

4. “I gave half to the preacher on television, and I gave half to the investment manager on television.”

5. “With all those parties, I figured he must be legit. You know… the Schwarzman rule.”

6. “I didn’t invest with Madoff. I invested with FGG. Their diligence process is serious business.”

7. “Screw FGG. Tremont is much more diligent.”

8. “You are both idiots. Pioneer Alternative has got my back.”

9. “He had the best Sharpe ratio in the whole world!”

10. “I said no comment. Oy vey.”

11. You tell us. (In comments).

$$$ Noel family Noël cards [Daily Intel]

$$$“The Noel sisters— with not a divorce or scandale among them— seem to have heeded the wisdom of their grandmother Trudy Haegler, who once wrote up her own 10 commandments for the family’s future brides, including: “Make your husband believe he is your Lord and Master, no matter what the feminists say”; “Tend to your home and kitchen with the greatest zeal and ardor, constantly renewing your imagination”; “Enjoy sex to the utmost. It is the key to happiness and a cure for almost all ailments, physical and spiritual.”

“Golden in Greenwich.” A 2002 article on the Noel girls’ from Vanity Fair. [Business Sheet]

$$$ Bethany McLean on Fannie Mae’s Last Stand [VF]

Since one of your fellow commenters has brought to light the plight of the less gifted contingent of the Dealbreaker community, we figured we’d remind them once again, in case it was missed previously, and previous to that:

Programming Note: We’re on an abbreviated vacation-esque schedule ‘til the first Monday of ‘09 (opening/closing wraps and very limited updates whenever the urge to reach out and touch you moves us). We still want to hear from you, though, so if Glenview closes up shop, or Bernie Madoff slips in the shower and you’ve got pics, do not hesitate to let us know.

Now, until we get back which, as indicated above, could be at any time, talk amongst yourselves. Here, conversation starter: New Year’s and your plans. For those of you in need of inspiration, after the jump, a preview of how our favorite Stamfordian is planning on kicking off the night:

One of our New Year’s Resolutions is to stop making fun of Steve Cohen. Though previous gentle ribbings have obviously been public demonstrations of love as expressed by a deeply cynical individual scared to tell the big guy how she really feels, apparently they haven’t penetrated certain fleece wearers up at 72 Cummings Point Road. Since it pains us to know we’re not getting through, and because the keys to the Zamboni machine are all we want in life, a new angle of attack is necessary. A kiss and make-up sheet cake and handwritten note seem like good jumping off points, but we’ll iron out the details later (speak up if you can facilitate this goal). Now that you know where we’re coming from, it should be understood that the presentation of the following data is meant to be not a criticism but a congratulations for a (relatively) kick-ass job well done.

U.S. Bankruptcy Judge Burton Lifland on Tuesday approved the transfer of $28.1 million to cover expenses tied to the liquidation of Bernard Madoff’s investment firm.

[…]

Irving Picard, the trustee presiding over the liquidation of Madoff’s investment firm, said he needed the $28.1 million to cover employee salaries and other costs, according to court documents. Bank of New York Mellon Corp. previously agreed to transfer the funds, but the bankruptcy judge first had to approve the transfer.

BNY Mellon already transferred about $883,000 to cover costs tied to the liquidation.

Picard will oversee the liquidation as the Securities Investor Protection Corp. attempts to help investors recoup their money. SIPC was created by Congress in 1970 to protect investors when a brokerage firm fails and cash and securities are missing from accounts. Funds can be used to satisfy the remaining claims of each customer up to a maximum of $500,000. The figure includes a maximum of up to $100,000 on claims for cash.

Madoff liquidation trustee receives $28M for costs [AP via Forbes]

Meanwhile, Kevin Bacon, who we know by virtue of the KB Law had to have been affected by Madoff, is getting screwed.

Of frosting our cookies. It’s become something of a bi or a tri weekly occurence for us to receive emails with some iteration of the subject line ‘Madoff Bro Pictures’ and for us to know we’re about to be staring at one or more images of Mark and/or Andy Madoff and a fish. Maybe it’s the himbo-esque looks on their faces, maybe it’s just their faces, maybe it’s me but this has become grating. Now, because these two have apparently done nothing but fishing (and posing) their entire adult lives, we’ve become something of a minor repository of Madoff family photos that fall under the categories of ‘sons’ and ‘aquatic hunting.’ You know what’s coming next.

BlackRock Adjusts Voting Rights (FT)
BlackRock has exercised its prerogative to adjust voting rights, downsizing Merrill’s influence from 49.5% to 4.9%, which is in effect BlackRock saying “Please go away, you’re not welcome here any longer.” In its void the firm has moved PNC Financial Services, which has 33% ownership in the company, to 47% voting rights.

Madoff scheme touches schools (Greenwich Time)
How will future Noel generations get into these “public schools” now? Damn you, Madoff. Damn you to hell.

Two Greenwich private schools and a Stamford-based Hebrew school are among the hundreds of nonprofit organizations across the country that were partly funded by foundations invested in Bernard Madoff’s allegedly fraudulent fund.

The three schools last year received nearly a quarter of a million dollars from The Valerie and Jeffrey S. Wilpon Foundation, a charity co-founded by Greenwich resident Jeffrey Wilpon, chief operating officer of the New York Mets.

The foundation is run as a charitable arm of Sterling Equities Inc., a Great Neck, N.Y.-based investment firm where Wilpon serves as executive vice president. That firm, which was founded by Wilpon’s father, Fred Wilpon, was allegedly swindled by Madoff, perhaps out of hundreds of millions of dollars.

In fiscal year 2007, the foundation donated more than $227,000 to Greenwich Country Day School, a private school where Wilpon serves on the board, according to a recent tally compiled based on foundation tax returns.

Wilpon’s foundation also gave $15,000 to the Brunswick School.

US Shores GMAC With $6B (Reuters)
The deal is $5B in senior preferred, at 8% plus $1B to GM to help GMAC through transition in to a bank holding company.

Ford’s Answer To The Auto Crisis (AP)
Now your American Made Car can self park: because you just can’t be bothered.

The Government Should Stick To Governing (Bloomberg)
The funniest part of accepting federal money has to be watching the congressional leaders that think they’re in charge of it tell you how you should spend it; their years in banking have affording them a certain experience in dealing with financial crisis most bank presidents wouldn’t have.

Daily Borrowing From Emergency Funds Down (AP)
The AP has numbers that suggest daily emergency borrowing is down on average of $1.9B a day to $86.3B.

Airlines Saving Cash (WSJ)
As goes fuel so goes the airlines - and now that the price of oil has dropped, they’re taking every opportunity to hedge and raise capital.

IMF Calling For More Global Action (FT)
“Across-the-board tax cuts or bail-outs of troubled industries such as the automotive sector are likely to waste government money while doing little to stimulate the global economy, the International Monetary Fund warned on Monday.”

The IMF is making a valid point; anymore the economy is the US isn’t based solely (or even by majority) on the happenings inside the US, but they’re missing something very, very important: US voters don’t understand that.

All they see is that “my tax dollars” are going out the window - but in reality, it wasn’t or isn’t their tax money. It’s the federal government’s tax money. Moreover, you never saw or had access to it, you couldn’t ever touch it: you have no claim to those funds.

Nevertheless, it isn’t going to happen: we’re not sending money oversees when Americans are losing jobs.

In the topsy-turvy world of contrite investment apology, split-second recognition of the language in a “Dear Investor” letter bearing bad tidings can mean the difference between slow malingering death in the face of debilitating investor lockups, or a quick escape to the islands where you will also conveniently avoid the jealous rage of your (former) fellow limiteds (and the phrase “fraudulent transfer”).

To sharpen your skills, and now that 2008 is drawing to a close, we bring you this DealBreaker quiz on the top ranking Dear Investor letter prose for the year. Match the prose to the firm and the world will be your oyster (in this case “world” is substituted for “present” and “oyster” is exchanged with “Attractive DealBreaker ‘don’t short me bro!’ mug.”

$$$ “Desperate to avoid steering his 25,000-person company into bankruptcy proceedings, Mr. Fuld dialed the Charlotte, N.C., home of Bank of America Chairman Kenneth D. Lewis. His calls so far that weekend had gone unreturned. This time, Mr. Lewis’s wife, Donna, again picked up, and told the boss of Lehman Brothers: If Mr. Lewis wanted to call back, he would call back.

Mr. Fuld paused, then apologized for bothering her. “I am so sorry,” he said. [WSJ]

$$$ “Leave the Noel sisters alone!” [Guest of a Guest]

$$$ Peter Kraus’s new pad [TRD]

$$$

December 19, 2008

Mr. Lewis A. Sanders

4 East 66th Street Apt. 10

New York, NY 10065

Dear Lew:

This letter sets forth the terms of your Retirement Agreement with AllianceBernstein
Corporation (the “Company”) and AllianceBernstein L.P. (the “Partnership”).

*During these vacation-esque times, we ring the closing bell whenever we see fit.

And Bernie Madoff gets off yet again! Four words: untreated case of syphilis. Didn’t think Bernie Madoff’s spotted sexual history was going to play a part in his defense of the greatest Ponzi scheme of all time? Think again! As you all know, some personally, when syphilis enters the symptomatic tertiary stage, “it becomes a very serious medical condition” that can cause a person to go crazy and do crazy, illegal shit, against his own will. From the Daily News:

Lawyers for the accused scammer are exploring an insanity defense, we hear.

“Bernie’s family and his attorneys may argue that, somewhere along the line, he had a mental break,” says a Madoff acquaintance. “They may even say he has a multiple personality disorder.”

From the mailbag:

Robert Rubin is a part owner of the highend fly fishing shop Urban Angler (stores in NYC and DC), in which Andy and Mark Madoff are also investors.

Earlier: Madoff Family Photos

Credit Suisse Investors May Have Lost ~$1B With Madoff (Reuters)
So, Credit Suisse didn’t actually invest with Madoff, and the Hedge Funds they use/sell didn’t invest in Madoff, but their client base did. Is it possible the Credit giant knew better than to invest with Madoff, and if they did know better, what did they know?

Bernie Madoff A Ripoff ‘Victim’ (NYP)
Finally, this is getting interesting. According to a Palm Beach police report, a 5 foot copper statute of two lifeguards, valued at $10,000, was stolen out of Bernie Madoff’s backyard in Florida last week. No word on suspects, though you can probably take a crack at it (we’re leaning toward it being an inside job perpetrated to drum up sympathy).

The five-foot, copper artwork overlooked the Madoffs’ inground pool, and portrays two young lifeguards sitting on a raised stand.

PE Firms Close To IndyMac Deal (NYT)
J.C. Flowers, Dune Capital Management, and Paulson & Company are teaming with the FDIC and some ex Lehman Brothers bankers to put together the deal, though specifics aren’t known. IndyMac, you’ll remember, was one of the first “Too Big To Fail” banks that went on to fail, joined eventually by Wachovia and Washington Mutual. How? Oh, I’m glad you asked:

“The seizure came after panicked customers withdrew more than $1.3 billion of deposits over 11 business days. The withdrawals came after comments in late June by Senator Charles E. Schumer, Democrat of New York, questioning IndyMac’s health.”

NY Back On Top Of IPO Gambit (FT)
For the first time since 2005, NY is kicking China’s ass in something: with $25.4B in IPOs in 2008, we’ve dethroned China ($22B). Granted, $19.8B of that was Visa.

Japanese Insurers Look to Merge (Reuters)
“Shares of Mitsui Sumitomo Insurance Group Holdings Inc, Aioi Insurance Co and Nissay Dowa General Insurance Co surged on Monday on hopes that a merger would increase profits and reduce competition.

The three aim to reach a basic agreement by March 2009, a company source said, which would produce the country’s largest non-life insurer.”

Unions Look To Pick Up Perks Under Obama (NYT)
The recent hand down from Congress to the auto workers had some interesting caveats built in, included among them the haircut for labor. It didn’t take long for the UAW to tell the world they’ll be looking for better terms under the Obama administration, suggesting to me that they believe they’ve effectively bought their survival via election donations.

Latins Quiet About Madoff Losses (WSJ)

In a profile of Mr. Piedrahita last week, Poder, a Colombian business magazine, said that local investors may have lost as much as $200 million to Mr. Madoff’s apparent scam through the Fairfield Sentry fund, which had been promoted by Mr. Piedrahita in Colombia for the past 15 years.

“A lot of wealthy Colombians got burnt,” said one leading Bogota businessman. But to date, no Colombian investor has acknowledged losing money in the Madoff affair. Colombia has a history of kidnappings and businessmen are generally wary of talking about their wealth in the media.

Related? You tell us.

GMAC Isn’t Saying (WSJ)
No word from GMAC on whether or not the $38B debt restructuring had been backed. The deal would have them (GMAC) swapping $38B of debt for new debt (less) and preferred shares/cash.

—William Richards

A belated Merry Christmas, from the Corina and Andrés Piedrahíta branch of the Noel family! (via Semana)

How Do You Run a Hedge Fund? Colleges Are Showing How (NYT)
Yale School of Management is ramping up its effort “to educate students in the skills and knowledge most relevant to running hedge funds” such as freezing redemptions and the art of telling investors you’ve lost 77.9% of their money year to date but are still confident this thing’s gonna work out.

Blocking The Exits (NYP)
Doug Kass is not down with Cerberus’ plan to hang on to investor money. “From my perch, halting redemption requests, though permissible, is an unconscionable act by a hedge fund,” said the Seabreeze Partners manager.

GMAC Step Draws U.S. In Deeper (WSJ)
Federal regulators have given GMAC the okay to become a bank, by a 4-1 vote, so that’s exciting. Fifteen page statement on the matter from the gov o’ free love found here.

Madoff Victims Zapped (NYP)
SIPC limit of $100K per victim.

Greenwich Wants In On Bailout Money (GT)
“It didn’t exactly amount to the three wise men bearing gifts of gold, frankincense and myrrh, but a trio of Greenwich politicians held formal talks on Christmas Eve to discuss the town’s strategy for getting a piece of an anticipated $700 billion economic stimulus package for infrastructure projects.”

Full page ad taken out by Chrysler in the Journal:

Beauties Hit With Madoff Mud (NYP)
The Post does quite the hit job on the Noel sisters today, digging up anonymous sources who share that Lisina was prone to wearing white mink coats during her teens, that in their mother’s native Brazil the girls were known as the “Aspirina Sisters because they gave the Brazilian girls headaches by always stealing their boyfriends,” and that four of the five slept with the same guy in college. So, okay, DISGUSTING, but whatever. Not whatevs, and in fact totally unacceptable? Bringing the lovable and smiley Arki Busson, EIM founder/Madoff victim, into this with the “dirt” that he “didn’t start off in high finance either” and was in a movie in the 80s.

Hunting Monica & Walter Noel (Cityfile)
The team at Cityfile, who we love but who we must say is sorely out of practice with prank phone calls, tried all of the Noel family’s phone numbers (homes, cells) they could get their hands on until Monica answered. Then they hung up.

If The Money Didn’t Go To Charity, Then Where Did It Go? (Guest of a Guest)
Mostly themselves, but a little to Republicans.
_______________________________________________________
And speaking of the (Fairfield) Greenwich branch of the Madoff Movie of the Week, we were recently passed on this highly, highly, highly unfounded, possibly baseless rumor about the Noels and their white Christmases past:

With Roots in ’70s, Madoff Scheme Takes New Toll (WSJ)

From time to time Mr. Gettinger would try to engage Mr. Madoff in talk about his investment strategy. “I asked him about it several times and he wouldn’t talk,” said Mr. Gettinger. “Anytime you would talk to him about his business he would tell you he wasn’t going to make any disclosures, he had a proprietary trading system and he wouldn’t tell.”

Suspicions about Mr. Madoff’s trading also go back further than whistle-blowers have alleged. In 1991, a consultant hired to review a corporation’s investments with Mr. Madoff made in the late 1980s grew suspicious about his returns. According to client statements and other information gathered by the consultant and reviewed by The Wall Street Journal, between 1980 and 1990, the consultant found that Mr. Madoff claimed to his client to have earned 22.6% per year, double the average return on the Dow Jones Industrial Average during that time.

L’Oreal Heiress Bettencourt Said to Have Invested With Madoff (Bloomberg)
Given that he scammed 8 billion people it shouldn’t come as a shock that we’ve got some pretty good stats in there, like his victims included “the world’s richest woman” and the first-known talking dog, who resides in Boca.

Layoffs Watch ‘08: Glenview (NYP)
L-train has laid off a bunch of staff, and will probs cut compensation for existing employees significantly next year. This makes some sense.

SEC chief defends response to economic turmoil (Reuters)
Chris Cox: Orator (If you missed it, Track 1 can be found here.)

What we have done in this current turmoil is stay calm, which has been our greatest contribution — not being impulsive, not changing the rules willy-nilly, but going through a very professional and orderly process that takes into account unintended consequences and gives ample notice to market participants,” Cox told The Washington Post.

This caution “has really been a signal achievement for the SEC,” said Cox.

“When these gale-force winds hit our markets, there were panicked cries to change any and every rule of the marketplace: ‘Let’s try this. Let’s try that.’ What was needed was a steady hand,” he said.

He Can’t Speak Worth A Damn, But This Is Good (WaPo)
“Cox said the biggest mistake of his tenure was agreeing in September to an extraordinary three-week ban on short selling of financial company stocks. But in publicly acknowledging for the first time that this ban was not productive, Cox said he had been under intense pressure from Treasury Secretary Henry M. Paulson Jr. and Fed Chairman Ben S. Bernanke to take this action and did so reluctantly. They “were of the view that if we did not act and act at that instant, these financial institutions could fail as a result and there would be nothing left to save,” Cox said.”

You are getting one ‘Don’t Short Me, Bro’ t-shirt and a matching thong, on the house, Mister!

Jamie Foxx and Terrence Howard: Sing Off? (Blog)
Gary Busey apparently entered a celebrity lip syching contest and lost. That is some bull shit.

Programming Note: We’re on an abbreviated vacation-esque schedule ‘til ‘09, or the urge to reach out and touch you moves us. Off for the big birthday tomorrow, with opening/closing wraps today, Friday, next week. We still want to hear from you, though, so if Bernie Madoff slips in the shower and you’ve got pics, do not hesitate to let us know.

Oh, and Geoffrey Raymond has finally completed his Madoff/Tony Bennett, which he couldn’t have done without your help.

$$$ Walter & Monica Noel: The Millions Didn’t Go to Charity [Cityfile]

$$$ Access Executive Said He Would ‘Fight’ for Madoff Funds [Dealbook]

$$$ Let’s just put them in charge. [GT]

$$$ Marc Fisher Has Some Choice Words And Shoves For Walter Noel [GuestofaGuest]

DATE: Dec. 23, 2008

TO: All Wachovia Colleagues

FROM: Robert K. Steel, President and CEO

RE: End-of-Year Message

Here’s a clip of the investigative journalism team at Fox Business discussing footage of one of its reporters and a camera crew staking out Bernie Madoff’s accountant David Friehling’s house, during which Friehling’s son dumps water on the network’s van, and later, as DF files a complaint against Fox with the Clarkstown, NY police department. Anyway, from the b-roll, it looks like the accountant is putting up his office space for rent, so if you know anyone looking for a place, get in touch. 845-367-2247.

Bernie Madoff’s Accountant Goes On The Attack [Cityfile]

M E M O R A N D U M

Subject: TREASURY INVESTMENT IN AMERICAN EXPRESS

Date: December 23, 2008

To: All American Express Employees

From: Ken Chenault

Short version.

Long version:

It’s a day ending in the letter ‘y’ and you know what that means— another god damn picture of Andy and Mark Madoff fishing, or about to be fishing, or frying a fish or fucking a fish, ‘cause god knows the dare was challenged and accepted during one of the inordinate number of expeditions these two went on while the Ponz was going down in New York.

David Faber reports that the firm has informed investors that it is suspending year end redemptions for up to one year. Apparently the letter writers took the much favoured ‘markets are wrong’ approach, which is excellent.

Yes, we do have our fun sometimes, poking jests (some kind and some unkind) at the personalities that make up the modern world of finance. But it gives us no pleasure to relate this particular story of apparent suicide.

Rene-Thierry Magon de la Villehuchet, a founder of the hedge fund Access International Advisors, was found dead early Tuesday in his office in Manhattan, the French business daily La Tribune reported on its Web site, after losing as much as $1.4 billion that had been invested with Bernard L. Madoff, the money manager accused of running a $50 billion Ponzi scheme. Mr. de la Villehuchet, 65, committed suicide, La Tribune said, citing a someone close to Mr. de la Villehuchet.

True, it could not have been anything other than a failure of due diligence and an abysmal lack of diversification that permitted Made-off to do such damage to some investors, but you never want to see this sort of thing.

And here is where the really sinister part of the entire Made-off affair begins to show. The devastating psychological impact of being a victim of such a fraud, probably knowing that you should have known better all along, can be quite a bit to bear. To the French, such indiscretion in the service of greed, no doubt, is far less tolerable than it might be here.

Head of Fund Invested in Madoff Said to Commit Suicide [Dealbook]

Oh, hey, we didn’t see you there. Come on in, don’t be shy. Oops, mind the blood on the floor, we’re not yet done mopping that up. We’ll have that cleared in a jiffy, and in the meantime, if you slip and fall, don’t go trying to sue us, okay? Okay? I kid. Anyway we brought you here today because we’re hoping you’ll give us— hey, are you going to be okay? You look a little ill? Is it the sight of my ass being sutured back together? Yeah, sorry, should’ve warned you it’d be graphic. Don’t worry, you’ll get used to it.

At one time the integration you saw in a Madoff operation (self-administration) was probably considered a benefit, despite the fraud red-flag it should have raised. No more. We keep hearing rumors that fund of funds have been pulling back from the likes of DE Shaw, Millennium Partners and Caxton. Apparently, they are all self-administered.

True? False? Incomplete list?

You tell us.

Or, rather, Erin Burnett’s “To Harm” list? Those of you watching the last two minutes of Squawk Box this morning saw the heartwarming gift exchange between Erin Burnett and Mark Haines. I missed what EB gave to MH, but Big M apparently gifted his co-star with “a voo-doo kit.” Now, we were under the impression that CNBC was one big happy family (with Charlie Gasparino playing the (choose one) (a) uncle (b) crazy neighbor (c) butcher) but apparently, not so much. The last thing we heard E to the B say was, “I know just whose hair I need to gather” but damn her producers all to hell, we were left hanging! So.

First we had the problem where our NAV calculations suffered due to a division by zero error. Presently, there are other issues we must confront before we can, in the utmost haste, return your precious funds.

In the mean time, please allow us to introduce Prof. Dr. Imne Gibogi, of the Nigerian Oil Ministry who wishes the most urgent and confidential business relationship….

Dear Investor, You have endeavoured to subscribe for shares of Fairfield Sentry Limited (the “Company”) for the December 1, 2008 dealing day. You have also asked for a return of the proceeds of subscription. We are endeavouring to determine the legal position of the Company with respect to such proceeds of subscription. If legally permitted, we will seek to return such funds to you as soon as possible if those funds are in fact not funds of the Company. However, it is necessary that we first make this determination according to law. Once a determination is made, we will communicate with you further. However, in the interim, we have segregated these funds into a separate account. Yours faithfully, The Board of Directors

The Journal reports that JWM Partners will “lose” four (out of seven) partners, and will also misplace ten other employees, reducing the staff to twenty five in the coming months. This news was all laid out for investors in the firm’s November correspondence, which also contained the information that JWM’s flagship, the Relative Value Opportunity Portfolio, fell 42.78% YTD, to a net asset value of $554.8 million. Fun fact: all JWM letters are branded with a unique watermark bearing Mr. Meriwether’s face in various stages of distress during the whole LTCM sitch, which you’d think would serve as a sort of skull and cross bones warning of danger ahead, but apparently, not so much.

Earlier: Exits At JWM

Fuck hell yes, my friends. FHY. I know everyone (but particularly the Jews) are just about ready to pack it in and off themselves but on this third night of a Hannukah I offer you a glimmer of hope. Jeffrey Epstein is now free, five days a week. The Post reports the massage enthusiast has entered a work-release program which allows him to spend Mon-Fri in the office of his non-profit, the Florida Science Foundation.

Charles K. Ponzi, no! Times Online reports that Corina Noel, the eldest daughter of Fairfled Greenwich founder Walter Noel, and her husband, FFG partner Andrés Piedrahita, may have canceled their annual Christmas trip to Mustique. Apparently friends (Spanish billionaire Alberto Cortina, former Asprey owner Lawrence Stroll, EIM founder Arki Busson, etc) have been trying desperately to find out if everything’s going to business as usual this year, but no one will give them an answer! Should they make plans alternative to the traditional meet up on Boxing Day in Barbados, fly to Mustique by private jet, eat “turkey in the sunshine at Yemanja, the Noel family holiday home, and enjoy views that are reputed to be the best on the island” or what? Andrés and Corina have reportedly gone MIA, “refusing to answer calls to their Belgravia townhouse or their home in Madrid.” I’m going to go on record saying, not delusionally but in the spirit of Christmas hope, that we shouldn’t jump to conclusions. The couple may very well be busy orchestrating an even grander surprise the likes of which will be revealed to us post haste; soon we’ll all laugh about questioning their commitment to throwing a lavish party as Greenwich burns in the background, while we max and relax on the island. Because honestly? There is no other acceptable alternative. Let me remind you what we’d be giving up:

Madoff Investor Sues SEC (Reuters)
“Phyllis Molchatsky, a 61-year-old retiree from Valley Cottage, New York, is seeking $1.7 million in damages from the agency”

It looks like investors may have to return up to six years of withdraws from Madoff’s funds. Sadly, I don’t think holding the SEC responsible for this would solve anything in the long run. We can’t set the precedent that the SEC will be financially responsible for the monitoring of corporations: it would be an effective shift of risk from the investor to the government.

Irregularity Found At IndyMac (NYT)
Tales of palace intrigue at IndyMac, where two months before the collapse of the bank it appears as though a regulator “allowed the bank to backdate a capital infusion and gloss over its deepening problems”.

Mortgage Activity Surges At US Banks (FT)
The recent Fed move to buy mortgage bonds has given the companies just enough of a sense of security to start re-fi’s, and apparently business is booming. Chief restrictors of access to credit are going to be history and score, it appears - did mortgage companies learn their lesson?

Learning To Re-Count (WSJ)
This is a phenomenal f*ck up. Either FASB admits that the valuation model as was sucked and thus the change is warranted, or they stand behind the model as was and admit that changing it is flat f*cking stupid. Either way, counting by two’s may get you to a million quicker, but it doesn’t leave you with any more.

Coloradans Hear Noises (AP)
“Noises heard on plane that veered off Colo. runway”

Talks Of CDS Exchange Continue (Reuters)
Both ICE and CME are continuing their efforts in building a CDS platform.

TPG Will Let Clients Trim Cash Pledges by Up to 10% (WSJ)

In a Monday letter to investors — who include the California Public Employees’ Retirement System, General Electric Co.’s pension fund and the government of Singapore — TPG said it recognizes that “in the current highly challenging environment the global market declines have placed significant stress on many of our limited partners.”

The firm, whose portfolio includes luxury retailer Neiman Marcus and gambling outfit Harrah’s Entertainment, has offered several concessions. It will cut annual management fees — ranging from 1% to 1.5% of assets — by about one-tenth, regardless of whether investors choose to reduce commitments. The firm also said it won’t call more than 30% of an investor’s total commitment during 2009, unless approved by the firm’s advisory committee.

How are you, loves? All splendid on this end, except…oh, it’s so minor it’s barely even worth mentioning…and you know, to be plainly honest, we wouldn’t, were it not for the press, the bloody, meddlesome press, sticking their chippie asses where they know full well they don’t belong. Right then, what were we saying? Oh, right, while we have you…

$$$ Fairfield Greenwich Is Sued Over Madoff Investment [Dealbook]

$$$ Rent Bernie Madoff [Cityfile]

$$$ HSBC banker found dead [Times Online]

$$$ U.S. Helicopter Hopes to Resume Downtown Flights [City Room]

$$$ Brunswick Group Suspends Wife of Ex-Lehman Salesman [Bloomberg]

$$$ The Cause of, and Solution to All of Life’s Problems [1-2]

Wickford:

As you’ve probably heard, CNBC would like you to decide who should be bestowed with the dubious honor of this year’s “Power Player.” Unfortunately, with the exception of the Dollar Dominatrix, their options are woefully lacking in “playas.” We’ve rectified that, after the jump. We ask you to please choose ever so wisely, as there is a highly coveted prize at stake.

The best financial tabloid readers in the world (that’s you) aren’t buying Goldman’s Made-off denial. Some of the comments we’ve gotten include:

“Guess my memory of 7 years ago isn’t what it used to be. They are being disingenuous though. They did extensive due diligence on Tremont repping other buyer, side by side with Oppenheimer. Their buyer, Rabo or ABN, made multiple offers before dropping out.”

“Goldman is full of shit. Their client put multiple bids in. What a bunch of hacks.”

“Either Mr. Du Vally was not around in 2001 or he is misinformed. Goldman’s client made several bids on Tremont before Opp. won the bidding. They lost they auction - they were an active bidder.”

“I think Goldman is engaging in a bit of revisionist history. This is too bad because it is an easy lie to catch them in.”

We quote, you decide.

One thing that we would really like to see more of here in the United States is protests over economic and market conditions. We aren’t quite sure why Wall Street types don’t take to well… Wall Street after a 400 point drop in the Dow and start blowing their horns in unison.

For our money, the Ukraine has got it figured out:

Thousands of car drivers in the Ukrainian capital angrily blew their horns for several minutes Monday, protesting what they call incompetent and corrupt government policies that led to a devastating financial crisis.

The Ukrainian currency has lost some 40 percent of its value since September as a fall in the export of steel, the heart of the economy, led to a shortage of foreign currency. That was coupled with a loss of confidence in the hryvna and the banking system.

“We’ve had enough of the authorities,” said one protester, Ihor Ratushny.

Damn authorities.

Ukrainians protest financial crisis [Associated Press]

I suppose we all knew this was coming, but just keep talking like it’s a small matter. Try not to make eye contact and maybe it will drift away and raid the food table and eat all those mini-pickle covered crackers or drink three too many vodkas and pass out in the hallway.

Global merger volume totaled $2.89 trillion, marking the lowest annual volume since 2005, based on preliminary data from Thomson Reuters.

In perhaps the most dramatic sign of how troubled the M&A market was this year, a record number of previously agreed deals — over 1,100 — were canceled.

Global M&A falls in 2008 [Reuters]

You have been misled and, as a result, have misled your readers. Goldman Sachs did not work for Mass Mutual/Oppenheimer on the purchase of Tremont Advisors. We acted for a third party interested in bidding against Mass Mutual. Because we were not allowed to conduct any due diligence we advised our client against proceeding. Please withdraw your story and set the record straight as soon as possible.

Thank you,
Michael DuVally,
Goldman, Sach & Co

Earlier: Was Made-Off Legit As Late As 2001?

Update: Three different sources have contacted us to “call bullshit” on Goldman’s denial above, insisting that Goldman’s client was “an active bidder” for Tremont.

Hint: neither of them look as good up close as they do far away. You guys can figure out the first one. The second one is the Paul Tudor Jones Light Show^TM, which we checked out last night on the way to my buddy SC’s house for the first night of Hannukah. Video would’ve captured the thing better but then you would’ve heard me mouthing off to the cop and we couldn’t have that, so photos it is. Re the blurry ones: apparently a 15,000 bulb Christmas spectacular, synced up to Carol of the Bells, which lights from the bottom of the top and proceeds to flash over and over getting progressively brighter, replete with fake snow and a squadron of local police, much to the chagrin of an otherwise staid gated community is all good, but taking pictures of said display? Verboten. No matter. We’ll be back next year, provided the tip we dropped in the suggestion box (Vegas show girls as elves) is at least considered.

The escape and evasion tactics are beginning already for marketers and fund of funds that exposed the general public to the toxic sludge that was Bernie Made-off. Fortunately for some hawkers, particularly those in Europe, a hodge-podge of regulatory authorities are likely to create enough confusion to make recovery through entities like UBS very difficult. This from the Financial Times:

UBS sought to absolve itself from any duty to safeguard investor assets in a $1.4bn fund that channelled money into Bernard Madoff’s alleged $50bn Ponzi scheme.

The Swiss bank used an agreement that denied it was responsible for the assets - even though its marketing documents claimed it would be.

The Swiss bank is highly likely to evade responsibility, frankly. Unlike the sympathetic juries likely to adjudicate any conflict in the United States, the European process is far more likely to ignore the “fluff” of the marketing documents in favor of the legalese. UBS, likely, knows this. Knew this.

Subscription documents for the Luxalpha Sicav explicitly remove UBS’s liability if the fund’s assets are lost. Under European rules, custodians such as UBS must take responsibility for “safekeeping” of a regulated mutual fund’s assets. But the Luxalpha subscription form states that UBS “is not the safekeeping agent of the assets of the fund as the assets are safekept by the US registered broker-dealer”.

UBS seeks to deny duty over Madoff funds [The Financial Times]

Andrew Madoff and (soon to be former?) wife Deborah doing some last minute Hannukah shopping yesterday. [NYP]

One aspect of this whole Madoff sitch that’s plagued a lot of people is the issue of whether or not Bernie worked alone. From the get go, we were convinced that the sons, Mark and Andy, employees one and two, were in on it. How could they not be right? Then we watched some watched some footage of them giving fishing to tutorials and were sufficiently convinced that these two had no idea what daddy was up to. Then the matter of duo not letting their father get his hands on their charitable trusts came to light, and we were back on the guilty verdict. Now, checking out this picture of Mark, posing on, you guessed it, a fishing outing, looking like a veritable himbo, we’re once again at a loss. Not trying to be unkind here but, making a snap judgment, he looks idiotic enough that we could believe Madoff Senior told Junior (and his brother) exactly what was going on but the next generation just didn’t get it (or were too busy stringing his pole to let it penetrate).

We maintain that we have the best readers in all of financial tabloidom. Really. Today, a little bird slipped us some more Fairfield Greenwich Group documents. Of particular note are the tearsheet packages, which have summary results for what looks to be nearly all of the major Fairfield funds. Interestingly, there are a number of single manager funds.

We must admit to having been completely ignorant, for instance, of the Fairfield Icahn Fund, Ltd. (“Mr. Icahn’s view is that management of companies are frequently not properly incentivised to increase shareholder value. Mr. Icahn encourages management to take the appropriate actions that he believes will increase value.”) and Fairfield Renaissance (“The Fairfield Renaissance Institutional Equities FundLtd. is a quantitative computer model-driven fund based on the same technology developed by Renaissance Technologies Corp. for their Medallion Fund; this fund was launched in1989 and is now closed to outside investors.”)

Of course you will be most interested in Fairfield Sentry. (“The “split strike conversion” strategy is implemented by Bernard L. Madoff Investment Securities LLC (“BLM”), a broker-dealer registered with the Securities and Exchange Commission, through accounts maintained by the Fund at that firm. The services of BLM and its personnel are essential to the continued operation of the Fund, and its profitability, if any. The Investment Manager, in its sole and exclusive discretion, may allocate a portionof the Fund’s assets (never to exceed, in the aggregate, 5% of the Fund’s Net Asset Value, measured at the time of investment) to alternative investment opportunities other than its “split strike conversion” investments.”)

Quick: LET’S TALK ABOUT THAT [paying back the federal government]. WHERE ARE YOU IN TERMS OF BEING ON TRACK FOR THIS PLAN? THE BUSINESSES THAT YOU HAVE FOR SALE, DO YOU HAVE PEOPLE COMING UP TO YOU WITH STRONG BIDS FOR SOME OF THE BUSINESSES?

Liddy: WE DO. WE ARE ENCOURAGED BY THE LEVEL OF INTEREST. WE ANNOUNCED THIS MORNING THE SELL OF HARTFORD STEAM BOILER.

Kernen: FOR HOW MUCH?

Liddy: IN TOTAL IT IS ABOUT $825 MILLION IN VALUE. THE BUSINESSES THAT ARE SINGULAR IN NATURE OR GENERALLY ONLY DEALING WITH ONE COUNTRY, THEY WILL GET SOLD FIRST. AS YOU MOVE UPSTREAM AND GET TO THE LARGEST BUSINESSES, AND THOSE WHO DO BUSINESS IN TEN OR 15 OR 20 COUNTRIES, THEY TAKE MORE FROM A DUE DILIGENCE STANDPOINT. VERY MUCH LIKE WE WERE, WE WISH THE CAPITAL MARKETS WERE MORE COOPERATIVE.

Kernen: THE JOURNAL SAYS IT WAS GOING TO BE SOLD BETWEEN $1.2 and $1.5 AND YOU PAID $1.2. YOU WOULD BE LUCKY TO GET TO THAT. IS THAT AND APPLES TO APPLES COMPARISON ON THE $825? ARE YOU LOSING OVER $300 MILLION ON THE SALE?

Liddy: IT IS MORE COMPLICATED THAN YOU CAN IMAGINE.

As you well know, there are between one and four villains and a seemingly endless number of victims in the Madoff Movie of the Week. The former (Bernie, plus maybe wife Ruth and sons Mark and Andy) needs our scorn; the latter, our sympathy and support. To that end— today, the Post runs a quote from Fairfield Greenwich Group founder Walter Noel’s wife, Monica. It is an obvious attempt to paint the woman (saint) as being (a) delusional (b) a liar (c) both.

FAIRFIELD Greenwich Group founder Walter Noel lost $7.5 billion with alleged Ponzi scheme scammer Bernard Madoff, but his wife oddly disputes that they were ever rich. “You write [that] our five daughters were brought up in the lap of luxury in their Greenwich estate. We don’t live in an estate. We live in a normal house that was a cottage on two acres,” Monica Noel, 66, defiantly told The Post’s Chuck Bennett from her swanky Park Avenue pad. Apparently, Monica forgot about the 2002 spread in Vanity Fair on that Greenwich “cottage” and the 2005 Town and Country feature on the family’s opulent tropical retreat on Mustique.

We’d ask, with righteous indignation, “Where do you get off, Page Six” but that’d only serve to get us more riled up. Instead, we’ll channel our rage into something more productive, namely offering up pictures of said home in Mustique, which the rag would have you believe is some sort of hedonist’s paradise, a palatial spread only the largest Ponzi scheme in history could have built. In reality, it is a veritable dump.

Barney Frank, the House Financial Services Committee Chair and poster boy for the liquidity imbalance that is the “Dream of American Home Ownership,” is shocked, shocked he tells you to discover that bank executives are being paid in here.

“Most of us sign on to do jobs, and we do them best we can,” said Mr. Frank. “We’re told that some of the most highly paid people in executive positions are different. They need extra money to be motivated!”

The shocking revelation:

An analysis compiled by The Associated Press has determined that the 116 banks that have thus far received taxpayer bailouts paid their top executives nearly $1.6 billion in salaries, bonuses and other benefits in 2007…

…and…

The AP review of annual reports that the banks file with the Securities and Exchange Commission found that the average paid to each of the banks’ top executives was $2.6 million in salary, bonuses and benefits.

These apparently “amount to a bribe to get them to do the jobs for which they are well paid in the first place.”

We have a soft spot in our hearts for Barney Frank. Unfortunately, we can’t find it today.

It is no secret that quant funds (and a number of what we will call “quasi-quant” funds) as a whole have taken it on the chin the last several months. Funds with heavy quant components of neutral equity market strategies, for instance, have been handed their mud-stomped hats in 2008- many with 40%+ losses in November alone. Some subsets of neutral equity market strategies, fundamental long-short strategies for instance, have performed slightly better, but overall, you would have done better investing in the S&P 500 index for 1 month, 3 month, 6 month, 1 year, 2 year, 3 year and 5 year periods than touching most neutral equity market funds.

But fear not. Quants, according to Reuters, have a place in the Aisle 5 cleanup taking place in the financial service supermarkets.

Many of these so-called quantitative analysts, or “quants,” graduating from elite financial engineering courses will end up writing computer programs that handle an ever greater share of market trading.

Because some of their mathematical models failed to take into account factors that later turned out to be crucial, quants have been blamed for compounding risk and exacerbating the crash in financial markets.

But far from going into decline, those with financial engineering degrees are still in demand as hedge funds and banks seek ways to measure previously unforeseen risks and factor them into their models.

Of course, doomsayers of the world (we are looking at you Taleb) have been doomsaying for a long time, so its pretty easy to take credit for the dip when you have been calling for a dip for 10 years, but quants make such easy targets. The deep stereotypes (pale skin, socially inept, Star Trek fans, or Star Wars fans, we understand the two divisions are in the midst of a blood feud at this very moment) make them subject to ridicule and scorn. But we’d like to be the first to call for a major resurgence of the quants. Seriously. We can summarize the thesis easily simply by quoting a drunk quant heard raving in the street outside of Marquee just this last weekend.

Sure he’s on “24 hour house arrest” but this is an enterprising (if not terribly inventive) man we’re dealing with. The fact that his yacht, after the jump, is rather modest for an individual of Madoff’s (fake) wealth will serve his plan to make a run for it well (inconspicuousness and whatnot— 56 foot R&S’s are a dime a dozen in the cesspool of Florida powerboating). Also, there is a handicap accessible elevator ready to transport Berns from the bridge to the aft deck, in the event he runs into a former investor on the way to the dock, and busted knee-caps ensue.

Giants Top Panthers For Top Seed, Home Field Advantage (Bloomberg)
“Brandon Jacobs scored the winning two-yard touchdown for the defending Super Bowl champions last night after Derrick Ward rushed for 82 yards on New York’s second overtime possession at Giants Stadium in East Rutherford, New Jersey”

Meanwhile:

“For the Jets to win the division and reach the postseason, they’ll need to beat Miami this week and have the Patriots lose to the Buffalo Bills. The Dolphins would capture the AFC East with a win over New York. New England needs to win its game and have the Jets beat the Dolphins to claim the division title.”

President-Elect Obama Expands Bounds Of Stimulus Package (FT)
The incoming administration is expanding the bounds of the package they’re looking to enact once sworn in: from 2.5MM jobs to 3MM, from ~700B to $800B.

Munich Re Picks Up AIG HSB For $742MM (Reuters)
HSB was a profitable line for AIG, to the tune of $158MM after-tax in 2007 and cost AIG $1.2B in 2000. Frankly, AIG got hosed in this deal - all we’re doing by forcing them to unwind is creating stronger foreign entities, if the US Government had a clue they would realize that. Good Job, Team.

Currency Traders Suck Least This Year (Bloomberg)
Volatility in the currency markets is making for good money: 3rd year VPs on the trading desk can expect $350 - $450k this year according to the Options Group. Overall, the currency desks are seeing cuts in the neighborhood of 15%, considerably less than the average 45%.

JP Morgan Still Acquiring (DowJones via CNNMoney)
UBS is looking to exit almost all of its commodities holdings - this sale has its Canadian commodities, energy, and global agriculture going to JP Morgan for an undisclosed amount of money, to be closed Q1.

Computer Nerds Still In High Demand (Reuters)
Synopsis: Hedge Funds are still trying to figure out what they missed in the recent downturn, such that it can be modeled on a computer. So they’re hiring these kids, who it turns out are some weird amalgamation of BSD and Best Buy employee.

Also, they bite when you try to pet them.

China Cuts Key Rates (Bloomberg)
China dropped both its one year lending rate and its deposit rate by .27% in an attempt to support its economy.

$$$ Like people want him dead or something? WSJ: “A judge has put Madoff under 24-hour home detention and ordered him to hire a security firm for protection.”

$$$ Even Winners May Lose With Madoff [NYT]

$$$ Job of the Week: Macquarie needs an independent self-starter who is flexible on working hours and manage multiple projects and deadline. I say go for it! [DBCC]

In July of 2001, Tremont announced it had agreed to be acquired by Oppenheimer. This followed, of course, diligence by Oppenheimer pursuant to pursuing a transaction. A little bird tells us that Oppenheimer, represented by Goldman and Weil Gotschal, spent three days at Made-off’s office running through the books before, it would seem, signing off. The announcement contained one of those platitudes straight out of the Corporate Communications 202 textbook that you grow used to reading:

“We are pleased to be joining forces with a leader in the alternative investment business,” said John V. Murphy, Chairman and CEO of OppenheimerFunds. “We believe Tremont’s multi-manager, funds-of-funds approach to hedge fund investing will appeal to many of our high-net-worth shareholders. Tremont’s unique product offerings in combination with our distribution network will open up the world of alternative investing to a new segment of investors.”

It sure did that.

Did they just miss the issues? Or was Bernie still straight back then?

Tremont Reaches Agreement To Be Purchased [secinfo.com]

From: Office of the President

Subject: Tufts and Bernard Madoff

To: Tufts Alumni

Date: Friday, December 19, 2008, 3:38 PM

December 19, 2008

Dear Friends:

I have promised to keep you informed when the economic news of these extraordinary times has special significance for Tufts. The news this past week has been dominated by a financial scandal of unprecedented scale and scope. I am sorry to report that Tufts is one of a growing number of victims of the crimes allegedly committed by Bernard Madoff.

U.S. District Judge Louis L. Stanton signed an order last night requiring Bernie-boy Madoff to provide a list of his assets and liabilities by the end of the year, which will be helpful in assessing who does and does not deserve sympathy cards with regard to rectal prolapse. And speaking of the now destitute individuals of Adolf’s world? Some are taking it better than others! Although his Fairfield Greenwich Group had its ass torn out of the revelation that Madoff’s biz was a Ponz, Walter Noel is apparently still living it up, in velvet dinner jackets, no less. So that’s nice. Unfortunately, then we have killjoy Ezra Merkin, liquidating his Gabriel Capital LP:

“Your inferiority sickens me. My superiority makes it all but impossible even to endure knowledge of your existence. There is, however, at least this: all your scumbaggery makes you the prefect target for my indignant ire, my evolutionary perfection. Even the likes of the senior Goldman Sachs executive is not worthy enough to painstakingly moisturize in the slow evaporation of my bath water.

You have been trying to ignore me for years, but now, as I reflect the glint from my Nobel Prize from the back row into your eyes during your presentation on the dangers of Value At Risk models, I can hear the irritation in your voice. You cannot ignore me forever. Not anymore. Not now that the New York Times prints whatever I write without so much as editorial review. All your Op-Ed are belong to me. Me, do you hear me? My star is rising. My time has come. I will leave you as you once left me. Buried alive. Even now I can hear the rage rising in you. Before long, the echoing scream ‘Krugman!’”

The Madoff Economy [The New York Times]

[Redacted] said he is “not guilty of any criminal wrongdoing” and that he will not quit [redacted]. “I will fight until my last breath,” he said. “I’m dying to answer these charges. I am dying to show you how innocent I am.”

The Wall Street Journal is reporting that “Six top Harvard endowment managers were paid a total of $26.8 million for the fiscal year ended June 30.” It should be pointed out that the endowment fund earned returns just south of 9% through June 30th next to double digit negatives for the S&P 500. Not bad. But it didn’t last, of course. The last 90 days have been brutal to most endowments, Harvard’s has been no exception shedding $8 billion (or around 22%) through early December. Somehow I doubt that any clawbacks are in the making for “Six top Harvard endowment managers” at year-end, whatever the endowment’s final figures end up being.

“You know I love you, so just stop it. How about you just tell me about your day at the office? Anything interesting happening? Anything at all? Video games, isn’t that what you were talking about last week? How’s that going. What? No, no reason. I just like to be a part of your life. You know, I like to be included. I like to, feel involved. What? No, who would I talk to? Secret, yes, I know. I know. Who would I tell anyhow? What? Maria? Maria who? Oh… her. Right. She was in Playboy? No! Get out! What do you mean? I had no idea. I swear. Well, I have lots of people’s numbers in my cellphone. I have Dick Fuld’s number in my cellphone, you think I’m sleeping with him too? Right. Ok then. So. Video games. What? No, I told you, I’m trying to be involved in your life. Wasn’t it just last month you were complaining about how distant I was? Well, this isn’t distant. This is close. I want to be close to you. Close to everything. Close to your work. Your deals. Your briefcase. You know. What? Of course I love you. You are my golden goo- er… my gorgeous girl.”

‘Golden Goose’ & The Pinup [The New York Post]

Free tonight? Depressed? Looking for a group of strangers with which to commiserate? Wachovia fixed income is holding its holiday “party” this evening at some place in Charlotte called Black Finn, to celebrate bonuses being down 95-97%. Starts at 4:30.

Earlier: Bonus Watch ‘08: WB

FGG’s due diligence process is deeper and broader than a typical Fund of Funds, resembling that of an asset management company acquiring another asset manager, rather than a passive investor entering a disposable investment.

[…]

“Operational risk” refers to the risk of loss resulting from inadequate or failed internal processes, human resources, or systems, or from external events. Operational failures, including misrepresentation of valuations and outright fraud, constitute the vast majority of instances where massive investor losses occur. Other operational risks include staff processing errors, technology failure, and poor data.

Pricing models, as well as the adequacy, independence, and transparency of valuation procedures, contingency plans, and other trading and settlement procedures are all matters for close scrutiny by FGG professionals.

FGG seeks a sound understanding of whether a hedge fund possesses key controls in the areas of portfolio management, conflicts of interest, segregation of duties, and compliance. FGG carefully assesses the controls and procedures that managers have in place and seek to determine actual compliance with those procedures, often suggesting modifications, separations of responsibilities, and remedial staff additions.

Excellent diagram after the jump.

As you might have heard—it’s comp day at Merrill. From the front lines:

First year equity sales and trading associates: 20k.

On the jobs board of a Top-5 MBA program:

The Mayors Office Fellowship Program attracts bright, highly motivated individuals, gives them a broad overview of municipal government and provides a unique, hands-on experience.^* Fellows participate in budgetary, legislative, and programmatic areas of city government and work directly with Mayors [sic] Office staff. Mayoral Fellows are afforded an unparalleled opportunity to learn about public service and policy-making by directly contributing to the executive office of the City of Chicago.

[…]

Fellows are paid at a rate of $20 per hour.

To download an application, please visit http://www.cityofchicago.org/mayorfellowship

[HT: LF]

^*Oh, of this we have no doubt.

Yeah, we know we have to deal with this other guy for the duration or so, but we are betting that those years are going to look a lot like the Carter Administration, and last about as long. (Hey, OPEC, you listening? Get it together people). How likely is this administration to see a second term? Let’s analyze:

1. Lofty (to say the least) expectations.
2. Dismal (to say the least) prospects.
3. The early signs of class warfare. Certainly, it has been declared on us. (“Schemes and Greed?” That’s our bloody job description!)
4. Dangerous rumblings in the land of the rock-grown poppy.
5. Japanic.
6. Imminent death of organized labor predicted.

Yeah, so, we’re going long Clinton. If nothing else, she’s got a great card to play in the Middle East with the price of oil where it is and a conflict with Iran brewing. Secretary of State fits her nicely. We’re all over it.

Hedge fund managers and their charitable foundations are amply represented among the largest donors to former President Bill Clinton’s charity, according to a list of donors released yesterday.

While the focus has been on the foreign governments who have given generously to the Clinton Foundation—it is believed that the list was released as part of a deal between Clinton and his wife, Sen. Hillary Rodham Clinton (D-N.Y.), and President-elect Barack Obama allowing Sen. Clinton to be appointed Secretary of State—alternative investments players have also donated millions.

Hedgies Among Big Donors To Clinton Foundation [FinAlternatives]

Inside you’ll find the answers to questions like “Who is Madoff?” “What are the origins of the Jewish faith?” “Who originally settled the tract of land known as Boca” “Do you know of any available timeshares in there?” “How are the Mets going to do next year?” “What’s on tap for XMAS, Chinese food and a movie?” “What are the odds of Spielberg making a movie about this, good or bad?” “And could I be an extra?” Oh, and:

(Note: This is the ETN, not the per-barrel price).

Richard Severin Fuld, Jr. sighting: “Got a glimpse of a very relaxed looking Dick Fuld in a casual green button down riding first class from JFK to Fort Lauderdale. I guess he isn’t tortured enough by what happened to fly coach. That, or he’s just biding his timing until his Platinum Medallion status winds down.”

The White House plans a $17.4 billion rescue package for the troubled Detroit auto makers that avoids bankruptcy, officials said. President Bush was set to make an announcement at 9 a.m. The deal would extend $13.4 billion in loans to General Motors and Chrysler in December and January, with another $4 billion likely available in February. The deal is contingent on the companies showing that they are financially viable by March. —WSJ

Dimon And Rubin To Skip Bonus Season (Reuters)
Rubin’s opted out of even requesting a bonus, but (and this may come as a shocker) Pandit hasn’t. If public outrage over compensation structure is at a two right now, we can fully expect to see that bitch lit up if Pandit elects into a bonus structure on the heels of $306B.

Dimon opted out, which really makes me lift brows. J.P. Morgan is one of the few banks that has made it through the past 6/12 months in decent financial shape, yet the head bows out of something he rightfully deserves for keeping things solid. So here’s the question: is Dimon bowing out of his bonus because of public sentiment and the need to do right, or is he bowing out because in days of future passed the bank is going to face some hard times? Could J.P. Morgan be sitting on some assets that, when they go bad, people will question why in the hell Dimon took his bonus if he knew this was coming?

Deutsche Bank Faces Strike Over Refusal To Pay Bond (FT)
DB (the other DB) has recently come forward to say that they are not going to pay $1.42B bond that’s due in January, which has people shocked and pissed. Strikes are looming.

Possible Survival Loans For Auto Industry (Bloomberg)
So, we’re talking what? About $16B (realistically)? Here’s an objection to that: even if you can stay above water for the next 14 weeks, you’re fucked after that. Chrysler is paying its workers while its shut down is extended, because the UAW contracts stipulate that it does so - which is such a ridiculous inefficiency I think it caused one of my ears to start bleeding.

White House Doesn’t Rule Out Bankruptcy (NYT)
We’ve done this before, you know where I stand. Tear it down, build it back up: pensions, UAW, and management all go.

To the point in the article that a bankruptcy would kill sales: it would. That’s why this should be sold as a restructuring, with the full faith and credit (what’s left) of the US government behind it. It’s important to note though, that can only happen after the UAW is out - if the UAW knows that the government can and will support the car companies ad infinitum, then there’s no hope of a net positive balance sheet.

GE’s Outlook Lowered By S&P (Reuters)
S&P should have its dead corpse dragged behind an automobile. I’ll leave it at that.

You Bastards: The Man Was Just Trying To Help (CNBC)
What’s the world coming to when a guy can’t tell his wife who tells another guy (or 20) about something coming down the pipe? People have yachts to buy here people. This is just dumb.

Japan Cuts Key Rate (FT)
Not to be outdone, Japan lowered its overnight rate to .1%. Other moves by the JFED:

“The BoJ also moved to increase its outright buying of Japanese government bonds to Y1,400bn ($15.7bn) a month from Y1,200bn. The central bank will also add floating-rate, inflation-linked and 30-year bonds to its buying operations, and will also temporarily buy commercial paper outright.”

$$$ On Excommunicating Bernard Madoff [The Atlantic]

$$$ “Doubledown Media’s Failure Only Matched By Those At Portfolio aka Is This What America Really Stands For?” [TS]

$$$ Madoff’s Mansions [Cityfile]

$$$ Alan Greenspan: “Banks need more capital” [The Economist]

Investment Objective and Strategy

The Partnership seeks to provide investors with long-term capital growth and a return linked to a three times levered exposure to the economic performance of the Rye Select Broad Market Fund, L.P. (the “Reference Entity”). The Partnership intends to achieve this return by entering into a total return swap transaction with one or more designated counterparties (each a “Counterparty”) on a leveraged basis (the “Swap” or the “Transaction”). Furthermore, if, at any time, it becomes advantageous to achieve the foregoing investment objective by utilizing another type of investment transaction (e.g., note, option, etc.), the Partnership, in its sole discretion, may discontinue its use of the Swap in whole or in part. At present, the General Partner (as defined herein) serves as general partner to the Reference Entity. The General Partner may, from time to time in its sole discretion, invest the Partnership’s assets directly in the Reference Entity (and other investment vehicles of which the General Partner may or may not serve as general partner) or in any other manner that the General Partner, in its sole discretion, believes is consistent with the investment objective of the Partnership.

Rye Select Broad Market XL Fund LP - PPM 12.1.08.pdf

Rye Select Broad Market XL Fund, L.P - Fact Sheet.pdf

Rye Select Broad Market XL LP - Subscription_Agreement 12 1 08 _FINAL_.pdf

Rye Select Broad Market XL LP -LP Agreement 12.1.08.pdf

Tremont - Form ADV Part II.pdf

Tremont - Privacy Policy.pdf

President-elect Barack Obama named three new members of his economic team with a promise they would “crack down on the culture of greed and scheming” that has led to a crisis in U.S. financial markets.

Uh oh. If this is true, you’re fucked, Goldman.

Obama Vows Regulators Will Crack Down on ‘Greed and Scheming’ [Bloomberg]

The longer the silence continues, the more it appears that Big Auto is facing some form of bankruptcy. Leaving matters in the hands of the current administration, rather than some initiative on the part of the legislature, certainly upped the odds that you’d see a Chapter 11esque move, but the long days of bailout silence this week (and the increasingly desperate mewing on the part of GM in particular) have solidified the probability. The New York Times picks up a few more suggestive clues:

Mr. Bush, answering questions at the American Enterprise Institute, said he was concerned about “putting good money after bad.”

…and…

Chrysler’s decision to close for a month or more because of plunging sales was seen as ominous.

Rather than worry about what might happen if the automotive industry in the United States collapses, it may simply be time to admit that the automotive business in the United States has collapsed.

I wonder what the Black Lake Golf Club would go for in bankruptcy, or is that too much to ask for?

Bush Weighs ‘Orderly’ Bankruptcy for Automakers [The New York Times]

CNN: Some are blaming the [Securities and Exchange Commission], saying for years they did not investigate any claims. Chairman Christopher Cox said there were some credible accusations against Madoff made nearly a decade ago that were never referred to the commission to act. So what’s your take on the oversight, how the SEC and government handled this?

Trump: I would not blame the SEC. This guy was a total crook. The people in his own organization supposedly didn’t know about it. Now, that’s another thing; I find that hard to believe. He’s got two sons, and they didn’t know about it? And they worked there for years? I think the whole thing is a swindle. I think even that’s a swindle: The father said, “Look, you guys turn me in and pretend you don’t know anything and I’ll save my two sons.” But it’s impossible for me to believe that his sons didn’t know about this.

CNN: So you also think it’s impossible that he acted alone.

Trump: I don’t know how you could act alone. They had three floors of a major office building. How could one man be manipulating that much money without all of the people knowing — without at least a large number of the people knowing about it? So I would certainly think that his sons are guilty.

Trump: Madoff a ‘sleazebag’ [CNN]

Despite being up nearly 25% in their flagship fund, (non-trader) employees at Caxton Associates were supposedly just informed that they will receive nothing vis-a-vis bonuses this year. Traders will be gifted with a “crushingly smaller” percentage of the return on their book.

Breathe easy, my chippies. Geoffrey Raymond, who needs no introduction, has finally thrown his two cents into the Madoff Movie of the Week, in the form of some paint on canvass that looks a bit more like Tony Bennett than Bernie Madoff (and yet: who cares, really?). But he’s not done yet cause he needs YOUR help. Raymond has requested that Dealbreaker readers share their thoughts vis-a-vis Mr. Ponzi, preferably in the form of one-liners, which he will then annotate onto the thing. Looking forward, think about scraping together $28,000, which is the asking price for the masterpiece.

Where Greg Newton sees evidence of unfitness, we see indication that the new SEC will do what it can to make sure even white collar criminals are afforded the right to inter-species sex, as established by her acceptance of man-on-egret fornication.

Schapiro has troubled these pixels but once, when we reported that in 2003, during a period when she was opining vociferously on hedge fund-related broker-dealer disclosures and the adequacy thereof, her valiant sleuths swept through the offices of Bayou Securities LLC in Scamford, Conn.

There, they found $8500 worth of allowing “two individuals to execute transactions…without first obtaining registration as equity traders…” and failing “to update written supervisory procedures reasonably designed to achieve compliance with said regulations…” The missing however many hundreds of millions it was by then quite escaped their attention as, boxes all checked and wrist-taps to come, the sleuths boarded the train back to Boston.

Nobody else has spent so long at such high levels of the long captured US securities regulation complex. She has been a big part of building the regulatory problem for two decades; Stockholm Syndrome means she is unfit to be part of the solution.

If Mary Schapiro’s the answer. . [NakedShorts]

Are you working out of 72 Cummings Point Road? If you answered yes, do not order lunch today because there will be celebratory sheet cakes at noon on the house. What’s there to celebrate, you ask? I know it might seem like nothing, what with the money, yours and investors’, walking out the building, but au contraire my little she-males. There is MUCH to pump fists, bump chests bitch tits, and gorge yourselves on flour and water slathered in sickeningly sweet frosting over.

You know how old people can kind of be unfiltered assholes? Probably ‘cause they figure, fuck it, I’m old and I don’t care (who I insult), etc? I’m sure many of you came to the conclusion eons ago that Eliot Spitzer was a bit of a self-righteous prick, but it’s still marginally entertaining to watch him embrace his inner dick and just let it all hang out, since it’s not like he’s got potential voters— or anyone really— to impress anymore. Spitz was asked recently by Moe Tkacik what he thought of Obama’s pick for Treasury Secretary, New York Fed Chair Tim Geithner. Sayeth Eliot:

“Tim is a good guy, but he’s not a thinker. He’s the status quo.”

Bonus? Sure! How about some of this toxic paper?

The bank will use leveraged loans and commercial mortgage-backed debt, some of the securities blamed for generating the worst financial crisis since the Great Depression, to fund executive compensation packages, people familiar with the matter said.

[…]

The securities will be placed into a so-called Partner Asset Facility, and affected employees at the bank, Switzerland’s second biggest, will be given stakes in the facility as part of their pay. Bonuses will take the first hit should the securities decline further in value.

Oh, Credit Suisse, I think I love you.

Credit Suisse to Use $5 Billion of Illiquid Assets for Bonuses [Bloomberg]

Good to see the SEC finally coming around to what we’ve known all along: Ruth Madoff, wife of Bernie, was the mastermind behind this whole thing. For now, her lawyer Ira Sorkin reminds us, the co-author of a book on Kosher cooking has not been charged with anything. But evidence that she “may have helped track payments,” “maintained secret records” and, you know, conceived the entire scam is being investigated.

As you may be aware, business school applications are at an all time high this year. Something about some economic disruption, problems in investment banking or suchlike. Getting in is rather a tough ride this year. So the celebratory glee with which a “Top 10” acceptance would be greeted could border on hysteria. But those who the gods would destroy they would first elevate. The gods of Kellogg, that is.

Northwestern University’s prestigious Kellogg School of Management this week erroneously sent notices of acceptance to 50 applicants it had decided to reject. The applicants are not happy.

One of them, a 28-year-old Chicagoan, excitedly phoned his parents and enjoyed a celebratory dinner Monday after being notified by e-mail that he had been accepted. But the next morning, when the Lincoln Park research analyst logged onto the college’s Web site to learn more about enrolling, he found out he actually had been rejected.

Is it overly mean of us to cite Nelson? Ha! Ha!

Kellogg applicants accepted, then rejected [Chicagobreakingnews.com]

GM is merging with Chrysler. No, they have no intention of merging. Yes, they are merging. Any day now. No, not merging. Never. Ok, maybe we are talking about it. No, really, we aren’t. At all.

GM denies Chrysler merger talks revival report [Reuters]

So, remember last week when Wachovia held a call to announce that bonuses would be down 90 percent? Yesterday at 5:30 the co-heads of investment banking and capital markets gathered everyone up to recant because apparently someone down south got the math wrong. Bonuses will actually be down 95-97% percent, year-on-year.

Earlier: WB Bonuses Down 90 Percent

Schapiro To Take Over For Cox Under Obama (WSJ)
It looks like the embattled Cox will be retiring from the SEC after this year: Obama has elected to replace him with Mary Schapiro, head of FINRA since 2006. There has to be a question about vetting, as in: did or didn’t the administration actually look into Mary’s past. Mary’s the one that appointed Mark Madoff to the National Adjudicatory Council in 2001, which we have to assume is an oversight on the part of Obama’s camp if for no other reason than it’s so bloody insane it defies all bounds of logic. And then there’s the whispers that Mary didn’t really do much at FINRA except make things pretty by protecting the old people from annuity salesmen - and I’m not saying that’s not important, I’m just proposing maybe it shouldn’t be the chief qualifier for the next chair of the SEC. On the flip side, at NASD she worked through the perilous bid/ask “spreads” BS back in the mid 90’s, and “oversaw” the merger between the NYSE regulatory unit and NASD.

Goldman Bonuses Off 80% (FT)
“Partners at Goldman Sachs are set to see their bonuses fall by up to 80 per cent this year and the cash component of their year-end packages capped at $400,000”

We posted first year analyst numbers yesterday, and there were some comments suggesting first year associate numbers would come in at approx $100,000 - but this is really the first we’ve seen of a hard cap on the upper echelon. We don’t know what the rest of the comp package looks like yet, but it’s the same 5 year vest (and remember they’re moving from 55 year retirement to 60) that was mentioned earlier.

MS is also mentioned in the article as announcing yesterday that it’s bonus pool is seeing a 50% cut to reflect its “sharp fall in annual profits”, but until we see the actual numbers side by side there’s no knowing if GS has been usurped.

If you have numbers, send them to us at tips (AT) dealbreaker (DOT) com.

Bonus Structure Criticized, Again (NYT)
A rather long piece criticizing the bonus structure of the banks, and taking great pain to explore the paychecks of everyone they’ve ever heard of. One wonders if this isn’t a public appeal piece on behalf of our great Attorney General, but I digress.

I think there needs to be a concerted effort to move banks away from the use of the word Bonus, because in the rest of America it’s meant to be a term used for when someone does something particularly outstanding. Here though, it’s a part of the compensation plan - which should (does) have a completely different meaning - and the mass majority of people are just flat out missing that.

Of course I still hold that the mass majority of people are raging morons, but still.

Blagojevich Will Not Fill Senate Vacancy (FT)
I can’t believe that was even a headline.

US Tax Code To The Rescue (Bloomberg)
Just when the masses needed it most, the Government showed up on a white horse (no, not cocaine people, calm the fuck down):

“Capital-gains taxes paid by investors may be refundable for 2005 through 2007, lawyers said. In addition, they said investors probably can convince the Internal Revenue Service they are victims of theft, which would let them deduct losses from their income taxes dating back to 2006. Any unused theft losses could be used to reduce tax liabilities for the next 20 years.”

BNP Paribas/Fortis Merger Killed (CNBC)
The French/Dutch love child plan was killed after a court decision was handed down that effectively enforced a suspension. Apparently Fortis had a cold, and wanted her first time to be “special” - wait what?

$$$ Madoff Victims: “Before I reached for a bedtime Tylenol PM that night, I Googled the Hemlock society. I wanted to know a painless way to die. Would you believe the Hemlock society no longer exists?” [Daily Beast]

$$$ A Wall Street Soirée, Amid the Storm [Dealbook]

$$$ “Chrysler said it will idle all manufacturing operations at the end of the day Friday for at least a month in an effort to align production and inventory with U.S. market demand.” [WSJ]

$$$ Attention Paulson lovers and haters: Bald will be speaking at the 92^nd Street Y tomorrow night. DO YOU HAVE SOMETHING YOU WOULD LIKE TO ASK? Submit your questions circa now, and the best one will be asked by moderator Stephen Adler of BusinessWeek. (The discussion will also be airing on CNBC and Bloomberg TV).

Is Merrill to blame? Let’s try. From BAC’s internal website:

Changes to Recognition & Reward programs for 2009

Wed 17 Dec 2008

Bank of America remains strongly committed to recognizing the achievements of associates; however, in light of the current economic and business environment, the company will no longer offer its current Recognition & Reward programs beginning Jan. 1, 2009. This includes the Award of Excellence, Spirit Medallions, Spirit Rewards points, Spirit Cards and service anniversary gifts. Associates will continue to receive a lapel pin and desk memento to commemorate milestone anniversaries.

We’re not even a week into the Madoff Movie of the Week and it seems as though the victims, and their truly saddening sob stories, will not stop piling up. Old people in Palm Beach who’ve lost everything. Charities that are being forced to close up shop. The fate of Arki Busson’s perma-grin, hanging in the balance. And yet. There are also some unintended consequences that we must stop and give thanks for. For instance, earlier today, a CNBC reporter stood outside a courthouse waiting for Bernie Madoff, and when the accused emerged, followed him to his car and shouted, “Why did you do it? Why did you confess? Anything to say to your victims? Did your wife have anything to do with this?” as though he were on Hard Copy. The network ran it over and over, not because any footage of Madoff equals ratings but because it was downright hilarious. Also comical? Recent action taken by Yeshiva University.

As we mentioned earlier, the Jew-y institution of higher learning was affected by the fact that they were putting money (by way of Ascot Partners) into a Ponzi scheme. They penned a letter to the YU community yesterday to discuss the matter, and noted that while the school’s financial position is still “strong,” make no mistake: “Bernard Madoff is no longer associated with our institution in any way.” Harsh words, but President Richard Joel was upset and entitled to his feelings. But it did not stop there!

From the mailbag:

Pretty sure Ivy has a fund - Ivy Beacon Fund - which was setup wholly for the purpose of investing in Madoff. Amazing a firm that supposedly prides itself on great due diligence has now gotten hit by Amaranth, and now Madoff as well!

Heard anything? Get if off your chest.

Update: We’re told Ivy has no exposure whatsoever to Madoff.

Did you invest in securities directly through Bernard L. Madoff Investment Securities, LLC?

Have you or your company invested in a Hedge Fund that failed to perform its due diligence before investing with Bernard L. Madoff Investment Securities, LLC?

If you answered “Yes” to either of these questions, the attorneys at Frier & Levitt, LLC can help you recover your losses.

You knew this was coming. Ah, freedom.

Attention Hedge Fund Investors And Securities Fraud Victims Of Bernard L. Madoff Investment Securities, LLC [Frier Levitt]

When we heard SEC chairman Chris Cox was going to be holding a press conference with regard to the minor accounting issues at Madoff Investment Securities LLC, our first thought was: resignation. Not ‘cause he hasn’t been doing a bang-up job at the joint, which he definitely has. Just for, you know the drama. His response to the following question changed our minds. We need the uber-phallically named Chris to stay for the entertainment value inherent in watching a man mix so many metaphors and still fail to come up with anything resembling something that makes sense.

Reporter: “Can investors be confident that there aren’t any other Madoff schemes out there in operation?”

Things that would’ve been preferable to the words that actually exited Cox’s mouth:

1. “Yes.”

2. “No.”

3. “Everyone should flee the market, do panic. Do not make an orderly line for the exits. Do trample over the old ladies in the back row on your way out. And when you leave, set fire to nearby buildings. It’s all over, bitches!”

What he actually said:

“We say that a rising tide lifts all boats. When the economic tide goes out, some of the skeletons that wash up on shore are Ponzi schemes such as this one. So one of the ways that these things are unhappily discovered is the roof falls in because of market conditions. “

Also:

If you are going to defraud, make sure you include the personal places of worship of all the really good prosecuting authorities you can muster.

Moments ago, U.S. Attorney General Michael Mukasey confirmed that he will be recusing himself from the ongoing investigation into Bernie Madoff. The Justice Department didn’t specify a specific reason for his decision to step aside—early reports have suggested that Mukasey’s son, Marc, may be planning to represent a defendant in the case. But we can report a much more likely—and personal—reason why the Madoff case poses a serious conflict for the AG. Mukasey’s own synagogue was ripped off by Bernie Madoff’s Ponzi scheme.

We are beginning to respect this Bernie character.

Revealed: Mukasey’s Synagogue a Victim of Madoff [Cityfile]

From the front lines:

GS sales and trading [analyst] class of ‘08 got 20k but prorated since they started in summer so only 10k. After taxes, 5. Happy Hannukah.

Dear Yeshiva University Community,

I would like to speak with you, members of the Yeshiva University Community,
about recent events in the news. As a result of the last week’s revelations
regarding Bernard Madoff, much concern and speculation has arisen regarding
Yeshiva University. I write to you to make our situation clear.

And tell me if you know what today is. I’ll wait.

B: “Hey, Mark, Andrew? Boys? I want to talk to you for a minute. Now… you know how long I’ve been watching out for you? How I’ve spent years guiding and shaping your lives, and providing for you?”

M: “We love you, Dad. You know that.”

A: “Aren’t we playing golf today?”

B: “But, boys… listen to me.”

A: “We have fishing planned next week, don’t we?”

M: “I almost forgot about the fishing!”

B: “Ok, I want to be serious for a minute.”

A: “We are very serious about fishing and golf.”

M: “Very serious!”

B: “Listen, boys. Just look at me.”

A&M (in unison): “Ok, Dad”

B: “I want to make sure I look out for you financially. Be sure nothing happens… make sure you maximize your returns. “

M: “Uh… yeah, forget it, Dad.”

A: “It’s not that we don’t trust you, Dad. It’s just that we don’t trust you with our money.”

M: “Lehman Brothers seems like a much better spot to me.”

A: “I’m awfully happy with how Neuberger Berman is working out at the moment.”

B: “You boys are breaking my heart. Breaking it.”

A: “Ok, where are my clubs?”

M: “You left them in the plane.”

A: “Oh, yeah.”

The Curious Philanthropic Activities of Bernie Madoff [Citifile]

In the confines of his East 64th Street penthouse. CNBC reports the joyous news that Bernie Madoff, whose bond hearing was previously scheduled for yesterday at 1PM, then postponed ‘til today at 2PM so he could find a couple of people to co-sign the thing, has been canceled. According to a sufficiently vague filing, the terms of the bail agreement “have been modified” and thus leave no need for this afternoon’s meeting. Also, wife Ruth has agreed to surrender her passport. It’s unclear if that is standard procedure (as of yesterday she was a signatory on the $10 million bond), or if it’s ‘cause authorities have realized she’s the mastermind of the whole thing.

Update: Brace yourselves, as no one, ourselves included, saw this coming. Berns was apparently unable to find two more people, in addition to his wife and brother, to co-sign the deal. Instead— since just sending him to jail wasn’t an option…— authorities allowed Ruth Madoff to put up two more properties for collateral (houses in Montauk and Palm Beach). Lady Madoff has also agreed to a 7PM to 9AM curfew. Mr. Madoff will have one of those electronic collars around his ankle, a la Martha. So that’s fun.

Earlier: Bernie Madoff Needs Your Help

Ok. Listen up people. I’m very worried. I think investors could well get hurt. Seriously. Hurt. If you guys slack off we are seriously going to have some problems. ‘kay? Thanks. Bye.

- Bernie Made-off.

If Only the S.E.C. Had Taken Madoff’s Advice [Dealbook]

David Faber reports: Citadel has closed its special situations group.

Earlier: Citadel Freezes Withdrawals

December 16, 2008

To: The Faculty and Staff of Yale University

From: Richard C. Levin

I know that all of you are concerned about the effect of current economic conditions on the University, and I recognize that these are trying and uncertain times for all of us. The precipitous decline in housing prices and stock market values has had consequences for many of us personally, and, naturally, for Yale as an institution. The officers and I have spent the last six weeks analyzing the implications of the downturn for Yale, and last weekend we recommended a course of action to the Yale Corporation. I write now to describe how we have been affected and how we will respond. By acting thoughtfully and strategically, I am confident that we can weather this storm while continuing to advance our most important objectives, albeit at a slower pace.

Customers of New York City-based Citibank have lost access to much of their account information because of a computer outage.

Many of the troubled bank’s clients haven’t been able to retrieve account details online or by telephone since Tuesday afternoon. Others can access only parts of their account profiles.

First the trains… now this. Seriously, Citi, what gives?

Citibank’s computers down, blocking account info [AP]

It is no secret that one of the things holding what remains of the economy together is low oil prices. That’s more than somewhat recursive, of course, since its the anticipated slack demand brought on by global recession (or fear thereof) that’s depressing oil prices. But Western salvation is Mideast disaster. As OPEC members, many already well under their petrol-augmented budget lines owing to subsidy stuffed fiscal policy, begin to panic all sorts of strange tactics emerge. Cooperation with Russia, for instance. 2 million barrel per day cuts. Earnest promises that there will be “no cheating this time” and economics lessons from oil ministers who enjoy touting phrases like “the consumer appreciates a robust market for oil.” All of this, of course, masks something approaching panic. This should concern us. What does a panicked OPEC do if this cut fails (as is probably quite likely)?

OPEC ready for deepest oil cut to rescue prices [Reuters]

To: Global Banking

From: Ned Kelly

Cc: John P. Havens

Cc: ICG Management Committee

Cc: Citi Executive Committee

Subject: New Organizational Structure for Global Banking

During the past decade Citi has maintained its leadership in corporate banking and built a world-class investment bank. Our capabilities in both corporate and investment banking extend to the newly emerged markets of Asia Pacific and Latin America, as well as the more traditional markets of the US, Europe and Japan. As everyone continues to fight the headwinds of an ongoing global financial crisis and an economic downturn, we need to provide our clients with an even more coordinated and focused effort driven by a team that is committed to helping them through these difficult times.

Morgan Stanley Posts Loss (MS)

NEW YORK, December 17, 2008 - Morgan Stanley today reported income from continuing operations for the fiscal year ended November 30, 2008 of $1,807 million, or $1.54 per diluted share, compared with $2,563 million, or $2.37 per diluted share, a year ago. Net revenues were $24.7 billion, 12 percent below last year. Non-interest expenses of $22.5 billion were 9 percent below 2007. The return on average common equity from continuing operations was 5.2 percent, compared with 7.8 percent the prior year.

The loss from continuing operations for the fourth quarter was $2,195 million, or $2.24 per diluted share, compared with a loss of $3,588 million, or $3.61 per diluted share, in the fourth quarter of last year. Net revenues were $1.8 billion, compared with negative $0.4 billion in last year’s fourth quarter. Non-interest expenses of $5.2 billion, including non-cash charges of $725 million related to the impairment of goodwill and intangible assets, decreased 3 percent from a year ago.

Net income for the year was $1,707 million or $1.45 per diluted share, compared with $3,209 million, or $2.98 per diluted share, a year ago. The return on average common equity for the year was 4.9 percent, compared with 8.9 percent a year ago. For the quarter, the net loss was $2,295 million, or $2.34 per diluted share, compared with the net loss of $3,588 million, or $3.61 per diluted share, in the fourth quarter of 2007. Net income for fiscal 2007 included the results of Discover Financial Services (Discover), which are reported in discontinued operations. Costs in fiscal 2008 related to a legal settlement between Discover, Visa and MasterCard are also included in discontinued operations.

Ex Morgan Stanley Employee Sentenced (WSJ)
Not a bad little read on the (former) MS employee that was sentenced yesterday for stealing a list of hedge funds and the rates it charges them.

Dollar Falls Against, Well, Everything (BBC)
Adventures in the patently obvious:

“The US interest rate is now the lowest among developed countries.”

We’re at zero (effectively), which takes a whole new, special kind of talent.

Parisian Models Disrobe In Protests (Reuters)
Parisian models stripped to nothing braving the cold in protest of wages and a ban on artists’ tips - called cornet. I’m calling for a world wide stance on this to be taken, all models need to get naked, everywhere. Right now. By God people, your fellow workers are struggling and they need your help: assemble, disrobe, and call me and tell me where.

SEC Issues Statement, Set To Open Investigation (NYT)
The statement is fairly self scathing for a government organization, which seems only appropriate given the magnitude of individual losses.

The commission said it received credible allegations about the scheme at least nine years ago.”

[…]

One of the commission’s investigative teams that had examined the Madoff firm was headed by a lawyer named Eric Swanson, who served for 10 years as a lawyer at the commission and left in 2006.

[…]

In 2007, Mr. Swanson married Shana Madoff, a niece of Bernard L. Madoff and daughter of his brother, Peter Madoff, the firm’s chief compliance officer. Ms. Madoff is the firm’s compliance attorney.

And the official statement from the SEC.

Asian Hedge Funds Profit From Prop Desk Death (Reuters)
The article points out that most if not all of the prop desks at the banks have been effectively scaled back to represent our target rate, and that affords Asian Hedge Funds with an opportunity to enter the market and acquire ass loads of potentially profitable distressed debt.

I don’t have to tell you, of course, that this breeds a homogenous environment such that when and if failures happen, there will be a multiplier effect -good for you Asia.

$$$ Love Connection: Starring Bernie Madoff and the SEC [The Deal]

$$$ The Next Financial WMD? [TSC]

$$$ Madoff investors face off in Palm Beach [Jose Lambiet]

Want support for your theory that ‘ole Bernie couldn’t have done it alone? The guy loved his vacations, and yet the firm apparently provided clients with trade-by-trade reconciliation of returns. Someone had to be doing all that backtesting to come up with trades that fit the numbers, and that’s probably not as simple when you are in the South of France for months at a time.

Madoff Scheme Was ‘Impossible’ to Do Alone, Says EIM’s Busson [Bloomberg]

Yes, you may have lost your job after being duped by Marc Dreier. Yes, Bernie might have made off with all your cash. Yes, you should be worried that the target rate is 0.00 - 0.25%. Yes, you can’t make a buck in this market, country’s going to hell faster than when that sonofabitch Roosevelt was around… too much cheap money sloshing around the world. The biggest mistake we ever made was letting Nixon get off the gold standard.

There is some good news though. Goldman’s effective tax rate will be 1% for 2008, or about $14 million, and we’ve got that going for us, so that’s nice.

Goldman Sachs’s Tax Rate Drops to 1%, or $14 Million, for 2008 [Bloomberg]

On the bright side: Even if Bernie pissed all your money away and there aren’t any assets left to cover you, you can still sue any third party providers that didn’t bother to do due diligence of any sort before dumping 50% of their assets with the guy. They still have the other 50% for you to raid, don’t forget.

On the not-so-bright side: You had to invest through one of these third parties to get at that cash, probably.

On the bright side: The SIPC protects investors up to $500,000 per account.

On the not-so-bright side: Coverage is “murky” when the securities you were supposed to have in our account never existed.

On the not-so-bright side: Bernie’s investment advisory business wasn’t covered, only the broker-dealer.

On the not-so-bright side: The SIPC reserve is “only” about $1 billion.

On the not-so-bright side: It will take about two years to get money out of the SIPC.

Feeling better yet?

Madoff’s Indirect Investors May Recover Some Money, Lawyer Says [Bloomberg]

We sent this clip your way yesterday but failed to mention the highlight at 5’20. Take it away, Bernie:

Dreier, LLC will be seeking bankruptcy protection and so, likely, will its founder Marc Dreier, this according to a receiver appointed to run the firm.

I suppose in many ways Derier timed this wonderfully. Taking advantage of the Made-off scam (accidentally, of course) has permitted him to avoid almost any attention from the gentle mercies of the press during this whole affair. What’s $380 million to $50 billion, after all? And who is surprised when a lawyer turns up crooked- compared, that is, to the likes of the eminently likable Bernie?

Prominent NY law firm to seek bankruptcy [Associated Press]

Who is surprised? The records in the Made-off case are so unreliable “There are some assets, but I have no idea what the relationships of the assets available are to the claims against them….”

I’m not remotely surprised. Are you?

Add to this the increasing pressure on the SEC to explain itself, particularly given it had reviewed the firm last year and brought no action…

“Senator Dodd is concerned not only about the people caught up in this reported scheme who may have been misled, but how such a massive fraud could have gone undetected…”

…and you have quite a recipe for an entertaining trial, recrimination and general melee phase.

Comfortable seat? Check.
Popcorn? Check.

Madoff’s Records ‘Utterly Unreliable,’ Says SIPC Head [Bloomberg]

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

Considering that the latest ARM resets and Alt-A issues haven’t even begun to rise to the surface, I think we can confidently say that the Treasury and the Fed might have to turn to the balance sheet (again) sooner rather than later. Nay?

What bubble might we “accidentally” inflate next?

[Mondovisione]

I know there are a few of you out there having trouble relating to, or feeling empathy for, the many Jews (and wives) of those suffering at the hands of Madoff. Perhaps some small measure of compassion can be drawn from your hearts of stone and souls black as night from this tale. Arki Busson, he of EIM and betrothed to Uma Thurman fame, has $230 million in exposure to Madoff. Will he ever grin like this again?

Obviously there are going to many lessons to be learned from the Bernie Madoff Movie of the Week, including but not limited to “don’t run a Ponzi scheme” and “you wouldn’t think it, but apparently fishing is a good enough alibi.” One big one, mostly for the now destitute victims of the scam, is to diversify. You have got to diversify! Not only with your investments, but also in life. For instance: if your father, let’s call him Walter Noel, Fairfield Greenwich Group founder, is going to put a metric fuckton of his assets into a Ponzi scheme, let’s call it Madoff Investment Securities LLC, maybe don’t marry one of his employees.

I don’t think we should jump to any conclusions but according to a very sad John Mackette:

Comp day at Morgan Stanley today. No increases and many associates, vice presidents and executive directors getting no bonus. Total comp down over 40%, even at lower levels.

I know this is an awkward time to be asking, considering the events of the last week but we couldn’t in good faith not pass this on. CNBC reports that Mr. Madoff, who was supposed to report to prison today at 1PM, has been granted an extension on his deadline to post ($10 million) bond. All we’re asking for is two more people to co-sign, his brother and wife having already done so. Who’s going to step up to the plate?

Hey you non-Madoff investors! Are you feeling a little left out of the fun? ‘Cause maybe you put your money with Tosca or Citadel and are losing it the old fashioned way? Now you can get fleeced by Madoff too!

Bernard Madoff Investment Securities Fleece [eBay]

30,000 to 35,000 heads to cut and they’ve got to start somewhere. Bank of America relieved some 20 high-ranking executives last week, apparently from the “band 1” layer of management, one rung below Mr. Banker of the Year. According to the Journal, some of the employees cast out on the street were “longtime loyalists” of CEO Ken Lewis, which apparently is supposed to indicate to skeptismos at Merrill Lynch that KL “won’t necessarily act provincially as he absorbs a prominent New York securities firm.”

It’s been nearly a week since Bernie Madoff admitted to some minor accounting issues at his firm, Madoff Investment Securities. It probably seemed like a good idea at the moment, since (hopefully) in doing so he’ll spare the younger Madoff generation from going to prison, which this fish will be relieved to hear. But in that time he’s incurred the wrath of every Jew in New York and Palm Beach, including Steven Spielberg, fueled speculation that he in fact bears foreskin, and apparently finished the job that a certain mustachioed Austrian could not. And he’s most definitely going to have to shoulder the guilt of every paper cut this guy sustains. The only thing that’s consoled Big B while he remains holed up in his 64th Street apartment (stop by) are his cigars and wife (the mastermind of this whole thing?). And neither the cigars nor the wife will be available in high supply during his stay in prison. Clearly Berns has realized this, just like he’s also realized that old men don’t do so well in the big house. So.

How did our friend Bernie manage to escape notice so long? Even in the face of letters to the SEC suggesting he was bent? Inquiring minds are beginning to wonder. Perhaps he had friends on the “inside”? Arthur Levitt, insists Arthur Levitt.

“We were not socially friendly,” Levitt said. “I knew Bernie the way I know [former Citigroup CEO] Sandy Weill or [ex-Merrill Lynch chairman Dan] Tully. He received no special breaks from the commission.”

Levitt’s comments come as the search for reasons why Madoff’s alleged scam went unchecked for so long. As a result, the SEC, which oversees the activities of broker-dealers, has begun to face some tough questions.

At the center is Levitt, who earned a reputation as a supporter of the average investor during his reign as SEC chairman from 1993-2001. However some said Levitt may have ignored red flags when it came to Madoff.

So, we’re taking bets. Insider, or not?

EX-SEC BOSS: NOT ME [The New York Post]

Beware of anything Illinois passes without a single dissenting vote. Yikes.

The Illinois House of Representatives voted 113-0 to form a committee to determine whether that body should bring as yet undefined charges against him, which if approved would result in a trial in the state Senate and his possible removal from office.

One can hope.

For those in the audience hoping for popcorn consuming excuses, you will have many, if Blago’s lawyer is to be believed:

“He’s not stepping aside. He hasn’t done anything wrong. We’re going to fight this case,” Genson said.

Personally, we attributed this kind of statement to the jaded worldview of the Illinois political mind. In the face of such widespread and blatant corruption, how can Blago’s quid pro quo even look unusual? Never underestimate the power of desensitization.

Illinois lawmakers launch impeachment of governor [Reuters]

Just try to raise some debt, Illinois.

Fishing and fraud, that’s what the Madoff family does (perhaps exclusively)!

Goldman Sachs Reports Earnings Per Common Share of $4.47 for 2008, Fourth Quarter Loss Per Common Share Was $4.97 (Market Watch)

Goldman Sachs today reported net revenues of $22.22 billion and net earnings of $2.32 billion for the year ended November 28, 2008. Diluted earnings per common share were $4.47 compared with $24.73 for the year ended November 30, 2007. Return on average tangible common shareholders’ equity (1) (ROTE) was 5.5% and return on average common shareholders’ equity (ROE) was 4.9% for 2008.

Goldman Sachs reported fourth quarter negative net revenues of $1.58 billion and a net loss of $2.12 billion. The diluted loss per common share was $4.97 compared with diluted earnings per common share of $7.01 for the fourth quarter of 2007 and $1.81 for the third quarter of 2008.

Full results from GS after the jump.

Heading For Zero (Reuters)
Bald has had a tough couple of months, and it doesn’t look like it’s getting any easier for the little fella: the Fed is looking to lower interest rates today, which means money is getting dangerously close to free. Free isn’t often something the Fed endorses: the last time the discount rate and fed funds rate were this low was 2001/2002 - before that there had been 30 years of numbers considerably higher.

“Economists expect the central bank to lower its target for benchmark overnight rates by at least a half-percentage point, to 0.5 percent, and clearly state it will aggressively use unconventional measures to restore growth.”

Bank Of America To $9? (Reuters)
“Bank of America Corp … was rated underperform by Friedman, Billings, Ramsey Group Inc analyst Paul Miller in a note, citing the bank’s “thin tangible common equity” as a chief concern.”

Shorting of coming out with the news that Pandit is taking over the Charlotte giant, Bank of America is going to stay stable. Though, in my most humble of opinions, if required to take ownership or possession of anything called a “spirit point” I would suggest rioting.

National Lampoon Chief Faces Charges (NYT)
While the movies of recent have by and large inspired spontaneous suicide, this is the company that helped bring you the “Vacation” movies and “Animal House.” For Christ’s sake people: Animal House.

Apparently Laikin (CEO) was charged with Securities Fraud on Monday as he and his cronies (in Pennsylvania none the less) sought to artificially inflate equity prices. Trading was halted on Monday at 9:30 @ $.73 a share.

Merrill Oil Analyst Trying To Piss Off OPEC (Bloomberg)
Famed ML analyst Francisco Blanch lets it be known that he’s calling for $25 barrels in 2009, but cautions that if shit takes off too fast we’ll see prices in the $150’s. Blanch is best known for calling the oil high at $147.25, and has since then been revered for his magic powers. Like that little Leprechaun.

$$$ A Look at Madoff Trading Records [Dealbook]

$$$ Stan O’Neal in trubs? [Cityfile]

$$$ Giving away my wife’s handbags free Chanel Louis Vuitton Hermes [craigslist]

$$$ The Trader Who Will Fly for Sex [Daily Intel]

$$$ Steve Feinberg Revealed [Cityfile]

$$$ “Madoff remained cloistered in his Upper East Side penthouse, a neighbor on E 64th Street said.

The neighbor, who asked not to be identified, said he saw the alleged con artist looking forlorn and puffing a cigar by his window at 3 a.m. yesterday. His wife, Ruth, came and cradled his head in her arms.” [NYP]

A lot of people are dubious as to whether or not the Madoff brothers, Mark and Andy, really had no idea the firm they were working for was—what’s the word?—a Ponzi scheme. How could they not, right? Perhaps because while daddy was busy defrauding everyone in the Western world, they were giving fishing tutorials.

Earlier: Caption Contest Monday

The Madoff brothers, Mark and Andy, in better days. Montana fishing trip. Date unknown.

The hits just keeping on coming out of 72 Cummings Point Road today. We don’t want to believe it but supposedly:

SAC is making every PM sign new contracts. Changing the holdback. It used to be 5%-10% that got held back and paid in February. Now it’s 20%-25% being held back for 3 years, with a 3 yr cliff vesting, and claw back provisions over the 3 yrs.

And separately, it’s been rumored that Dan Berkowitz is being pressured to sell his Porsche, the sight of which has enraged Mr. C since the automaker made sweet rape to the firm a few months back. No, just kidding. But seriously think about it. Solidarity and whatnot.

I know we all have our collective panties in a bunch over the Ponzi scheme du jour but there are bigger issues on hand, and you god damn well know it. The fact that we’ve been going on and on and on about the so-called Madoff “victims” while the biggest victim of all suffers, about to stand trial, not knowing what his fate will be is truly sickening. And completely unmelodramatically, makes me lose all faith in humanity. As coincidence has it, he, like those with whom Madoff made off, is a Jew. That’s really neither here nor there as it relates to this particular struggle, but I just thought I’d mention so we’re clear that this man, this saint, is no stranger to strife, whether or not you people can get it up to care.

There’s nothing to sharpen the Schadenfreude like a good list of Made-off victims. Of course, we delight in seeing big (and preferably pompous) names on the ever-increasing list of Made-off victims lists. The snide aside “He was a Made-off investor, you know…” has quickly become the socialite jab of the month, usurping “That sweater is 100% acrylic” by a landslide in this week’s survey. As a proxy telling us who didn’t bother doing diligence (no-name accounting firms? C’mon people!) there are few better indicators. So, we bring you the best list we’ve found yet, hosted by FinAlternatives.

List Of Victims Of Madoff’s Alleged Ponzi Scheme [FinAlternatives]

OPEC has announced not only that it is planning rather drastic production cuts, but also that it expects Russia to help. One more cause for us to start snickering to ourselves in the office, drawing concerned gazes from our colleagues and visitors.

Oil at $75 a barrel is “satisfying” to producers and consumers, Khelil said. Prices below $70 may cut investment in production, risking a renewed supply crisis, he said, adding that the scope of production cuts will decide how long it takes to remove surplus inventories from the market.

Seeing Big Macs at $9.50 is probably “satisfying to producers and consumers” too, I suppose.

OPEC Favors Cut to Trim Stocks, Expects Russian Help [Bloomberg]

An odd thing about Made-off. He seems to have gotten himself into quite a number of YouTube videos. Viral, the guy was. Seriously.

See the stuff strutted here.

Far be it from us to judge the now destitute wives of once rich husbands, and, in fact, we’re actually sharing this not so much as a criticism but as a service guide to the many of you who’ll find yourselves in the same position in the near future (Ken, Bernie, etc). According to Daily Beast Kathy Fuld, wife of erstwhile billionaire Dick Fuld, has been having some difficulty adjusting to her new lifestyle as a merely marginally rich woman. Once a proud shopper, Lady Fuld has apparently taken to breaking her sessions into $5,000 to $10,000 hits and doing so in secrecy, like a regular junkie. For now, she’s apparently just asking stores to give her unmarked bags so as to not draw attention to the fact that she’s buying items that could go a long way in paying off her husband’s bookies (no judgment!). But it’s a slippery slope to making her purchases out on Long Island.

We snicker to ourselves (sort of out loud though) when we hear anything about T. Boone. (One letter less and we’d have ourselves an excellent Gangsta’ Rapper name).

The Pickens seems to have gotten himself all twisted around. Long on oil when he should have been short, flat when he should probably be long. Hard to marvel at the old guy anymore, except to shake your head at the political morass his causes have become.

These days they have another name for people who do what I did. Carl Icahn and I laugh about it. He says that if I had hung around longer as a raider, I’d be known as an “activist stockholder.” That’s a better title.

(Does anyone else think the article title is TMI?)

T. Boone Pickens Uncut [Men. Style.com]

Enough is enough. This time the economy really has gone too far. When times hit La Boheme, it is time for an arts bailout. Seriously. We can save AIG but not MB?

Before each performance of Puccini’s “La Boheme” at the San Francisco Opera house this fall, company director David Gockley stepped through the curtain and delivered a grim message to the audience.

Gockley told them he wanted to “address all of your concerns about how the San Francisco Opera is affected by the tumultuous state of the economy.” Opera fans could expect “fewer and less elaborate productions,” he announced.

Yes, the whole Madoff “scandal” seems real but I know you’ll all agree that it’s not official until Geoffrey Raymond, the greatest artist of our time, chimes in. For those of you waiting, that day has come. We just received word from Raymond that despite working on a Pandit at the moment, he’s decided to drop everything and put his back into Bernie. On one condition— Dealbreaker readers’ participation. Raymond writes:

Okay, we know this might not mean much, but— if you can get through this without pissing your pants in laughter, you will have won our deepest respect.

He stopped posting scores in May 2000, when ramping up the Ponz. presumably left little time for golf but in any event, NakedShorts reports:

Today’s obviously going to much worse, what with everyone’s grandparents suddenly being destitute, and Detroit falling off a cliff, and Goldman Sachs bracing us for news no one wants to hear, so let’s start things off on a high note, shall we? You might not be having a holiday party this year but guess who is? Freddie Mac! And why shouldn’t they, you know? It’s not like they don’t deserve it. Supposedly the soiree is planned for December 18, in-house so as not to draw too much attention, though I’m not sure why anyone would begrudge these people an over the top celebration this year.

A Palm Beach Enclave, Stunned by an Inside Job (NYT)

“He just didn’t make mistakes,” said Richard Spring, 73, from Boca Raton. “He was just a sound, smart, reasonable guy.”

Mr. Spring recounted meeting Mr. Madoff in the early 1970s when they shared a helicopter each day commuting from Long Island to Wall Street.

He said he vividly recalled one commute when Mr. Madoff “bawled out” one of his traders for sloppy work, not protecting against a downturn.

Impressed, he later invested with Mr. Madoff, over time putting more than $11 million into the firm, virtually every cent of his savings, he said.

BofA Holds On To Construction Bank, Keeps Plans To Shed People (Reuters)
Shares of Construction Bank fell 4% in trading as Bank of America announced it was going to hold on to it: a sure sign that the Chinese markets completely appreciate BoA’s position. Had the move gone through, it would have raised approximately $3B in capital for the firm, whereas the shedding of 35,000 jobs over the next 7 years is going to effectively save the firm $7B. There’s a further argument that by dumping the shares now, BoA would be opting out of any downside that the Chinese market will offer in the next couple of years - something that should be considered and then dismissed.

Hedge Fund Industry Downsizing (Bloomberg)
While we all saw it coming, Bloomberg is running a story calling for about a third (roughly 3300) fund failures/mergers in coming years. Generally speaking (and when it doesn’t strike so close to home) we all know that consolidation can be healthy for an industry, I just wish it had been coupled with rock bottom bourbon prices and severance packages that lasted for a couple of years.

Work Slowing For China’s Children (AP)
Human Rights mogul China is showing signs of a waning economy, as is evidenced by factory output falling to its lowest levels in the better part of a decade.

You Paid Too Much (Reuters)
“U.S. home values lost $1.9 trillion from the first of the year through the end of the third quarter, and will probably fall further in the fourth quarter. One in seven of all homeowners, or 14.3 percent, were “underwater” by the end of the third quarter, the reports showed.”

Nationally, I would think it’s fair to say people paid about 20% too much for their houses. I know there was talk of a mortgage bailout in days past - I think a better idea is just to let these people write it down on their taxes (much like a bank would write down an asset). Amortize it over 5 years, take the offset in taxes owed and allow the consumer to apply it towards the principal of the loan.

Oil Climbs On OPEC Meeting (FT)
Oil’s pushing $50 a barrel in trading ahead of the OPEC meeting scheduled for this week. While the days of $150 barrels aren’t likely to return for a while, there’s a serious concern here that interests in the middle east (like survival) could push prices higher, effectively knee capping the manufacturing/shipping sectors - not to mention the cascading effect through everything else. What’s more worrisome, however, is that I can see congress instituting price control measures in order to protect the American consumer. Don’t worry consumer: your government will protect you.

In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner’s name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm’s hallmark.

It occurs to me that this is a subtle version of “the last round problem.” Of what reputational value is the owner’s name when the owner is in his 70s and beginning to contemplate the beginning of the end?

Color us surprised. Citadel has frozen withdrawals in their two largest funds until March (for starters).

Investors who asked to withdraw money at year end from Kensington and Wellington, with a combined $10 billion in assets, won’t be allowed to, the Chicago firm said in a letter on Friday. Otherwise, $1.2 billion would have come out, complicating Citadel’s attempt to resuscitate its performance following its hedge funds’ worst-ever year.

The move follows repeated assurances from Citadel that redemption requests wouldn’t pose a problem. The firm’s total assets have shrunk to about $13 billion from $20 billion at the start of the year. Mr. Griffin says in the letter that “in today’s highly volatile markets, maintaining financial flexibility must be a priority.” (Emphasis ours).

Well, I suppose the redemption requests did not actually pose a problem. For Citadel, that is.

Citadel Freezes Its Funds Through March [The Wall Street Journal]

Illinois, which has often served as this author’s home state away from her home state, is rapidly descending into what can not rightly be called anything other than political, legal and financial clusterfucking chaos.

Governor Rod Blagojevich has refused to step down, instead taking pains to be seen repeatedly in prayer with a cross-section of prominent ministers, even in the wake of events that have cut open the tissue of state government to expose the normally hidden skeletal frame of Illinois- bleached white with corruption. This is an extraordinarily disturbing picture.

As if matters were not dim enough, the allegations against the Governor now include his purported withholding of $8 million from the Children’s Memorial Hospital of Chicago and affiliated entities as retribution for the refusal of the hospital’s CEO to make a $50,000 contribution to the Governor. (You stay classy, Illinois Politicos).

Frustrated with the multi-week impeachment process required by the General Assembly, Lisa Madigan, Illinois Attorney General and daughter of sometime Blagojevich foe and Speaker of the Illinois House of Representatives, Michael Madigan, moved the Illinois State Supreme Court to strip the Governor of his powers on the basis of incapacity, a measure typically reserved for conditions of medical disability or mental incapacity. This is beyond unprecedented- even in Illinois, Chicago, Cook County, or perhaps Pinochet’s Chile.

While political squabbling may seem a small matter, payments to Medicaid patients, hospitals, pharmacies, nursing homes and schools numbering in the billions of dollars remain outstanding pending short-term borrowing efforts by the state. At issue is the requirement that Madigan certify borrowings to be free of any legal proceedings detrimental to state administration, which Madigan, for obvious reasons, refuses to sign off on in the face of the current crisis. It would be understating the matter to suggest that Madigan is manipulating the issue for her own personal gain. Holding Illinois as a fiscal hostage in pursuit of the cold sushi of political revenge for a thousand Blago slights is only mildly “you-stay-classier” than Rod’s increasingly apparent “hold out to the last bullet” psychosis.

The crisis means that everything from food deliveries to prisons, gasoline for state troopers, or health care services that rely on state reimbursements could be frozen, and firms with significant state revenues and limited liquidity might have to shut their doors or file for protection from their creditors.

Even as this carries on, Blagojevich continues to sign legislation into law and otherwise conduct himself as if the office is unencumbered- hardly the case given that his chief of staff, John Harris, resigned owing to his own indictment in the bribery scandal.

Stripping a sitting, and uncooperative, Governor (who, despite appearing to be in dire legal straights, has not yet been convicted of any crime) of his executive powers through creative use of emergency incapacity rules— rules designed to provide for a line of succession beginning with the Lieutenant Governor in a medical emergency— strikes this author as deeply concerning and dangerous. A multi-week impeachment process, however, is equally alarming.

It will be interesting to see how events impact credit default swaps on Illinois issued debt. (Anyone have any quotes?) Either way, it can safely be said that corruption and its umbra has become so intrinsically linked to Illinois that the best course of action might be a quick jab of the finger to the “emergency reboot” button on Illinois’ back panel. Retroactively disqualifying any Illinois political figure whatsoever (and I do mean all of them) from ever holding national office of any kind might also be a wise precaution at this stage. This may seem extreme, but this ass-fucking-backwards nonsense is entirely endemic to Illinois and only appears overt now because Rod is such an insecurity-driven megalomaniac that the normal pretense of concealment triggered by self-preservation urges in other Illinois politicians has left him entirely. The word “Illinois” on a political resume should henceforth simply be a codeword for “member of the national political blacklist.”

(Oh, no, don’t worry. I’m sure we’ll still get the Olympics, Mr. Mayor).

$$$ Blackstone cutting 70 jobs. [Breaking Views]

$$$ Rod Blagojevich’s Facebook Account [Gawker]

$$$ New York Mets Owner’s Firm Was Madoff Client [Dealbook]

$$$ The Softer Side of Citi [Cityfile]