Opening Bell: 02.27.09

Posted by William Richards, Feb 27, 2009, 8:14am

U.S. to Take Big Citi Stake and Overhaul the Board (WSJ)
"The deal, announced Friday morning, is designed to ease jitters about the soundness of one of the world's largest financial institutions. The Treasury has agreed to convert some of its current holdings of preferred Citigroup shares into common stock, a move that could better protect shareholders against future losses.

As a condition, the government is demanding that the New York company overhaul its board of directors. Citigroup's board will soon include a majority of new independent directors, the company said Friday. Chief Executive Vikram Pandit is expected to keep his job under the agreement.

Citigroup said it will offer to convert as much as $27.5 billion in preferred stock not held by the federal government to common stock, with the U.S. agreeing to match up to $25 billion of the conversions.

The size of the government's new stake will hinge on how many preferred shares private investors agree to convert into common stock. Assuming the maximum amount of conversions is made, existing common shareholders would see their holdings diluted by nearly 75%, with the government becoming the largest holder at 36%."

Stanford CIO Taken Down By Obstruction Charges (WSJ)
It's off to the pokey (or whatever they call chick-prison) for Laura Pendergest-Holt, Stanford's CIO. We wish her the best, and offer this advice:

1. Punch whoever is sitting across from you in the transport van. You have to let everyone know you mean business from day one.

2. Shivs are weak. Whenever possible, opt for gasoline and a match. (Don't use all the gasoline for violence, you can drink it too.)

3. Nobody did what they're in for.

4. Take plenty of Mackerel with you.


"A Federal Bureau of Investigation affidavit filed in U.S. District Court in Dallas alleges Laura Pendergest-Holt, Stanford's chief investment officer, misled Securities and Exchange Commission investigators who took her testimony in the probe of alleged fraud at Stanford International Bank, Mr. Stanford's Antigua-based offshore bank."

Career Advice From Our Friends At CNBC (CNBC)
As we continue our series on education and figuring out what the fuck is next, we land at CNBC to explore how to change a job. I'm not going to lie, I didn't read the whole thing: My left eye actually started bleeding, and my ears started ringing. If you should chose to actually read the article, you'll find such hidden treasures as "eyes wide shut" and "I'm a pragmatist so I believe in having a solidly laid plan". That said, I've broken down (the gist) of the piece for you:

* There appear to be a lot of people wanting to quit their jobs because they believe in some utopian fairy tale sense of happiness where rainbows fly sprout from unicorn asses.
* Those people should go to community college to get the necessary education to change their careers.
* Save some money because this is a bad decision and you're going to be poor (possibly homeless). Note: I'm not sure the man in the picture at the top of the page isn't living out of that box.
* Starting your own business is scary.
* You can hire a career counselor to advise you on what you should be doing with your life (I suppose we're assuming the Community College doesn't offer career advice?)
* And finally, make contacts (3 a day) and ask those people if they're happy with their jobs.

Cuomo's Back In The Press (Reuters)
Best tagline for a Cuomo mug/shirt wins the heartfelt adoration of the staff, and possibly some loot (as yet to be determined).

"Executive compensation is a burning issue in the financial industry and challenges to pay are being led by New York Attorney General Andrew Cuomo, whose office deposed former Merrill CEO John Thain on Tuesday for a second time over $3.6 billion in bonuses.

"I answered all the questions to the best of my knowledge and hopefully brought some clarity," Lewis told reporters after he gave a deposition in Manhattan to Cuomo's lawyers on Thursday that lasted about four hours."

The Auto Supplier Bailout (Bloomberg)
"The Obama administration is looking for a way to prop up struggling auto-parts suppliers, possibly through a lending facility to centralize aid to hundreds of companies, a person familiar with the matter said.

Finding a mechanism to offer assistance is pivotal, because there are so many partsmakers it would be difficult for the Treasury to administer loans directly, said the person, who asked not to be identified because the planning is private."

Lehman Loss Just The Start For Money Fund (NYT)
"The Reserve Primary Fund, the giant money market fund that was pushed into a tailspin by the collapse of Lehman Brothers in September, estimated on Thursday that legal fees and damage claims stemming from that crisis would ultimately cost its investors more than Lehman did.

The fund's $64 billion portfolio held about $785 million in Lehman notes when the investment bank filed for bankruptcy on Sept. 15. Hit by a wave of redemptions, the fund jolted a nervous market on Sept. 16 by "breaking the buck," reporting a share price of 97 cents to investors who had long expected an unwavering share price of a dollar."

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