Charlie Gasparino reports that Attorney General Andrew Cuomo has subpoenaed John Thain and BAC chief administrative officer Steel Alphin for testimony, to find out “what they knew and when they knew it.” He can start here.
Archive for January 2009
Or he might keep his job. Who knows, really? What we do know is that the Bank of Amerillwide CEO is scheduled to meet with the board tomorrow, and 24 hours is more than enough time for *someone* to leak evidence of the scatological variety to Charlie Gasparino that says KL’s gotta go. According to NAB bank analyst Nancy Bush, who prognosticated Friday that Lewis would be gone by the end of the week, “We cannot rule out the possibility…that the roles of Chairman and CEO might be separated and a new CEO named in the near term, as we think that it is highly unlikely that large shareholders and other important constituencies are going to be happy with the preservation of the status quo.” Either way, you can be sure to find Lewis here post-meeting, with former Countrywide CEO and current BAC wingman-in-residence Angelo Mozilo.
It’s just that his success has made him a target, you see. That explains the new accusations that have emerged in the case against Paul Touradji and, if nothing else, provides us with the best case names and the most Godfatheresque dialogue we have ever encountered in a civil suit. That’s saying something.
Now it seems that, faced with rather stinging accusations by Gentry Beach (we know, we know) over some unpaid bonuses, our cranky hedge fund manager is said to have approached another employee and offered him $30 million to scribe out a nasty letter about Beach. Supposedly, the Godfather of 2 and 20 breathed something like:
“…things can go one of two ways for you now: Your life can be easy and financially secure or you can make it very difficult on yourself.”
Authorities have put a double watch on stables in the area in case a horse’s head becomes involved.
Touradji Case Includes Bribery Charges [The New York Post]
Earlier: No, Gentry Beach Is Not Just The Waterside Property Of An Island Plantation On A British Protectorate
This whole John Thain, Ken Lewis Rumble in the Bronx has been thrilling but clearly there are lesser-known, more hilariously-named cast members to speak of. Let’s start with Steele Alphin, chief administrative officer at Bank of America, and essentially Lewis’s right hand guy. He also served as Thain’s ambassador into the BAC world. For instance, we’re told it was Alphin who set the aggregated compensation level for Merrill bonuses, and convinced Thain to change the cash/stock breakdown from 60/40 to 70/30, because it would help BAC’s balance sheet (the cash coming from MER, the stock coming from BAC). Oh, and Steele’s also the one who can say definitively, despite attempts to leak stories to the contrary, that Thain never asked, per se, for a $10 million bonus.
Everyone’s flying coach! And by “everyone,” we of course mean the peons. Vikram and Co. will get their private jet yet.
From: Morgan McKenney, CFO – Global Transaction Services
Sent: Monday, January 26, 2009 6:54 PM
To: *AA All Global Transaction Services Employees
Subject: GTS Expense Restrictions
Dear GTS Colleagues:
Given the challenging macroeconomic environment globally, we are implementing a number of additional expense restrictions within Global Transaction Services, effective immediately, to ensure that we are pursuing all options to save on expenses that will not have an impact on our ability to execute for our clients with excellence.
Key areas of expense restrictions are summarized below, and will be added shortly as a link to the Citigroup Expense Management Policy (CEMP). These changes are more restrictive than the CEMP and will save our business millions of dollars this year. Thanks in advance for your support in adhering to these restrictions. Please contact [redacted] with any questions.
Air Travel must be non-refundable coach/economy class with 7 day advance purchase, unless otherwise indicated below:
I know all you people want is to see Vikram Pandit and his pals flying in style but it looks like that may not happen. Or maybe it will! I really don’t know what to believe. Yesterday, in response to questioning regarding Citi’s possible acquisition of a $50 million, French-made Dassault Falcon 7X, Bill McNamee, head of CitiFlight Inc., told the Post, “Why should I help you when what you write will be used to the detriment of our company?” which translates to “hell fuck yeah (HFY), we bought that bitch and I’m sorry, we’re not sorry we did.” Then Senator Levin (D-MI)– no relation– got worked up over the use of taxpayer money going toward’s Count Vikula’s late in life dream of joining the mile high club, and Obama (via spokesman Robert Gibbs) noted that private jets aren’t “the best use of money,” and Rep. Frank threw in his two cents, and we had a scandal on our hands.
Now the Big C has a statement out claiming it has “no plans to take possession” of the aircraft. But at the same time, Citi spokeswoman Shannon Bell told the Post that the bank is “exploring all of its options,” including “the potential lease of the aircraft,” and presumably also the potential not-leasing of the aircraft. Plus, Bell also reminded us that C is in the process of selling two planes, so, really, if you think about it, they’re down one, and need this thing.
UPDATE: According to Steve Liesman, Citi put out it’s backtracking statement after receiving a call from a Treasury official last night.
Senate Confirms Geithner (MarketWatch)
The Senate overlooked a minor tax inconvenience and relative inexperience to pull behind Mr. Geithner late Monday in a 60 to 34 vote. As has been pointed out before, Geithner carries on in the Goldman legacy (even if it is once removed), so there’s no worries for the Broad boys. President Obama on Geithner’s uniqueness:
“The president believes he [Geithner] has unique experience, unique intelligence and a unique background to tackle the economic crises that we face right now. He will be a tremendous leader,”
A Bad Showing At Nomura Holdings (Reuters)
The Japanese powerhouse showed down $3.8B Q4 on the heels of buying Lehman Brothers’ operations, exposure to Iceland, and Madoff.
“Nomura said it would cut some executive bonuses and salaries, not pay a dividend for the current quarter and may sell businesses as it integrates the Asian, European and Middle East operations it bought last year from failed Wall Street bank Lehman Brothers”
Tuesday’s Pirate Update (BBC)
The head of the Indian Ocean Tuna Commission is screaming bloody murder over the 30% decrease in Tuna production due to piracy, which (according to some economic law or another) means higher Tuna prices.
Yes, ladies, it appears the damn Pirates are snatching up all the Tuna.
Fannie/Freddie May Have To Seek Additional $51B (Reuters)
Freddie is probably going to have to absorb another $35B (we’re going high side here) in preferred capital after its rather large subprime portfolio took another round of losses in its most recent quarter, leaving a paltry $16B for Fannie. The loss will mean that Freddie has still only used about half its initial $100B allowance, though the need tramples the expected needs as predicted by Barclays ($26B).
Paulson & Co. Scores Big On RBS Loss (Bloomberg)
In a move sure to draw ire from some corner of the universe, Paulson has effectively shorted the shit out of RBS for a gain of $420MM over the trailing Quarter (roughly).
“Paulson held a short position of 0.87 percent in Edinburgh- based RBS on Sept. 19, according to regulatory filings. The shares traded at 213.5 pence at the time, and Paulson’s disclosure indicates he borrowed almost 144 million RBS shares with plans to buy them back at a lower price. He reduced his short position to less than 0.25 percent, or about 98.6 million shares, as of Jan. 23, according to a filing yesterday.”
$$$ CEOs Dropping out of Davos [Portfolio]
$$$ Bernie Madoff Pissed Off the Wrong Trust-Funders [Daily Intel]
$$$ No jet for Vikula? [zerohedge]
John Thain: I Couldn’t Live With The Shag Rug And Disco Ball In Stan O’Neal’s Office, Okay? Is That What You Want To Hear?
By Bess LevinMARIA BARTIROMO: Thanks very much. Well, while I’m in Davos, Switzerland, right now covering the World Economic Forum, John Thain is in New York City. And he joins us now with this exclusive interview to talk about the events of the day. John, thanks very much for sitting down with us. We appreciate your time.
JOHN THAIN: It’s no problem, Maria. It’s happy– I’m happy to talk to you.
MARIA BARTIROMO: Last week you were asked to step down from your job of running Merrill Lynch, just three months after agreeing a deal– to a deal with Bank of America. Can you tell us what happened?
JOHN THAIN: Well, Maria, I would first say I was surprised. We were only 20 days into the combination. I had agreed to stay because I thought there was a great opportunity– for the companies. I thought the strategy made sense. And I thought I could help a lot with the transition process. And it’s always difficult when you’re combining two organizations. And I thought– my ability to try to help– with that transition and– and help build the team going forward would be– a good opportunity. And, frankly, the first 20 days, the results were very good. So I– I was surprised.
Financial News reports that more than half of SAC Capital’s London staff has left the building since October, including partners James Van Den Bergh and David Morant. It was not made clear whether the departures were voluntary or precipitated by scar tissue associated with having a deep-fryer thrown in one’s direction, but we have our guesses. If anyone has anything to get of his (or her or his/her) chest, do not hesitate to get in touch. In more joyous, sheet-cakes for everyone! news, former Deutsche Bank executive Drew Lubin has joined the London team. Please do your part to make him feel welcome.
Do we even have to go through the exercise of putting this through Equity Private’s Guidebook for Financial Fraud Analysis (1st Edition)?
New York and federal officials are investigating a Hauppauge investment firm that has indefinitely halted payouts to clients, citing setbacks on commercial real estate loans.
The firm, Agape World, specializes in short-term, high-yield loans to developers and builders, offering investors returns of as much as 14 percent in as little as 72 days.
The firm’s founder, Nicholas Cosmo, told investors on a 1 p.m. conference call on Friday that three borrowers had defaulted on loans, forcing the halt in payments. Cosmo told more than 150 investors on the call that he had hired a law firm to foreclose on the projects and recoup investments, but that the process could take as long as one year.
“My job is to make sure that principal is paid back in total,” Cosmo said on the call.
Cosmo did not immediately respond to e-mails seeking comment. Attempts to reach him by phone were also unsuccessful.
Agape clients invested between $5,000 and $3 million each to fund what are known as bridge loans that usually lasted 10 to 12 weeks, but which could extend for several months.
Need I go on? Really? Alright.
In 1999, Cosmo was sentenced to 21 months in federal prison and ordered to pay $177,000 in restitution for his role in defrauding investors of a Long Island securities dealer. The court also ordered him to undergo gambling therapy as part of his sentence.
Cosmo founded Agape World soon after his release from prison in August 2000 with money from family and friends.
This is my favorite part though:
Entrepreneur Magazine last year named Agape one of America’s fastest-growing companies.
Then there’s this:
Angry victims of an alleged Ponzi scheme stormed the Hauppauge offices of Agape World, and one of them socked owner Nick Cosmo upside his head Friday.
I mean, you can’t make this stuff up.
Update:
Posted by Anal_yst, Jan 26, 2009 4:20PM
This.Is.Awesome!
Want pics of the carnage asap!
Your wish is my command. Pics after the jump.
LI investment firm halts payouts, under investigation [Long Island Business News]
Agape investor packed a punch [LI Biz Blog]
