Wells Fargo Advertisement Tells Huddled Masses To Get Bent (Reuters)
There’s something fundamentally embarrassing about having to watch your industry recoil in terror like a puppy in a Chinese market every time someone finds something to rail about: after a while your eyes just get glazed over and you stop paying attention. Wells managed to not only find their balls on this one, but shared their testicular fortitude with the world in the form of an ad that chastises (politely) the general public and press for quick judgment on something they know very little about: how this banking shit works.
UBS Not Killing Investment Bank Completely (Bloomberg)
The Swiss tax specialists wanted to take a minute to remind you all that they’re not bowing out of the Investment Banking business, yet. That will be all.
Goldman Chief Calls For Stricter Accounting Controls (FT)
“Lloyd Blankfein, Goldman Sachs’ chief executive, has called for banks to adopt more stringent accounting practices, accept tougher regulation and give greater power to risk managers, in a trenchant analysis of the causes of the financial crisis and how they might be remedied.
In an article for Monday’s Financial Times, as the Obama administration prepares to rewrite the rule book governing the US banking industry, Mr Blankfein outlines seven areas of misdemeanour – ranging from “complexity [getting] the better of us” to the “outsourcing of risk management” to ratings agencies.”
The Treasury Pushes Announcement (Reuters)
Our favorite Alexander Hamilton wannabes have decided to push the announcement of the-next-big-deal to Tuesday at 11.
Government Looking At Ways To Circumvent Contract, Collect Money Ahead Of Private Enterprises (Bloomberg)
The government is all but admitting to seeking bankruptcy for automakers on this one, and they way in which their doing is really rather ominous for banks.
“General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.
U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.
If federal officials fail to get a consensual agreement to change their place in line for repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called “debtor in possession” or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP.”
Barclays Beats Forecasts, Cuts Bonuses (Reuters)
“Barclays … said bonus payments across the bank would almost halve for 2008 as it reported a 14 percent drop in annual profit and said it faces a tough year ahead.
Its profit beat expectations, however, and the bank’s shares jumped over 7 percent in early trading on Monday.”
Archive for February 2009
$$$ Banks haggle over small print in €8bn bailout plan [Independent.ie]
$$$ Delphi Value May Be Too Low to Pay Bankruptcy Lenders [Bloomberg]
$$$ Madoff’s Private Equity Clients [DealJournal]
Well, you knew she had to say something, we’re just not sure this is it:
The new head of the Securities and Exchange Commission took steps on Friday to reinvigorate the agency’s policing of Wall Street, two days after a congressional hearing chastised SEC investigators for failing to uncover Bernard Madoff’s alleged $50 billion fraud.
“I like to tell the staff we are going to act like our hair is on fire,” SEC Chairman Mary Schapiro told reporters after an appearance at a conference.
And here I was, convinced that the burning smell of hair was a brain tumor.
SEC chief says agency to act like “hair is on fire” [Reuters]
We actually take great pride in being “inconsistent with the Merrill Lynch Principles”
Having grown somewhat bored of the “Obama Economic Superfriends Application Process Lacks Best Practices Diligence Guidelines” story for a while, but still unable to resist secretly reading Bloomberg stories on the topic, we came across a curious quote from Senator Charles Grassley. Specifically:
…executives at firms that seek government help need to take responsibility for “driving their corporations into the ground” and adopt a “Japanese ethic.”
“One of the things you do is, you either go out and commit suicide, or you go before the American public and you take a very deep bow and you say, ‘It’s all my fault and I’m sorry and I’m going to straighten it out.’ Or you might resign.”
Leaving aside for a moment a discussion of the effects a bushido code might have if adopted on Wall Street (but, by all means, please feel free to address this in comments), it is hard to argue that a few well placed acts of seppuku (and the cascading acts of oibara) wouldn’t have rather… interesting results on The Street.
Mixed emotions, dear readers. Like Larry Wildman going off a cliff… in my new Maserati.
A “Don’t Short Me, Bro” mug for the commenter coming up with the best “Death Poem” and name of kaishakunin for your favorite disgraced Wall Street luminary. Go.
Grassley Says Obama Team’s Vetting of Nominees ‘Too Rushed’ [Bloomberg]
The FSA has released a report on short selling and, to our way of thinking, the renewed interest (did it ever fade?) in regulatory intervention is worrying. From the report:
Clearly, the most radical option for constraining short selling would be to impose a complete or partial ban.This section considers the various prohibition options and their associated costs and benefits; a prohibition would only be justified where we are satisfied that there are net benefits.
Of course, several less intrusive options for “potential constraints” are discussed. Time will tell if these are merely window dressing.
FSAShortStudyFeb09.pdf
We have no idea what the cause might be. Friday? Boredom? Unemployment? Whatever the case, the tips are pouring in to the Bess Levin hot tips hotline(tm). Ironic that this should happen on the afternoon when Bess is on assignment. The latest:
Harvard Management Co will be laying off 25% of its staff.
Sad tidings from the hedge fund return unit at Dealbreaker (often first, but in this case shamelessly lifted from Bloomberg):
William Ackman’s hedge fund that invests solely in Target Corp. fell 40.1 percent in January, bringing the loss since inception to 89.5 percent, according to a letter sent to investors.
We love the WA. We are so sad. (Call us, Bill. Seriously).
Ackman’s Pershing Square Target Fund Falls 40.1% in January [Bloomberg]
Normally, this wouldn’t bother me. Perhaps it is because it is Friday. Perhaps it is because I had to watch the Ken Lewis interview. Perhaps it is the chemical burns I have after shaking hands with Robert Rubin the other day. Whatever the case, this threatens to send me screaming into the darkness today:
What possible utility is there in a seven-way split screen? Was some Video Engineers Full Employment Act passed while I wasn’t looking?
Alea points out that 5 year CDS spreads on Treasuries are alarming. (82 basis points). Discuss.
Indeed, we can’t resist any banker interview split-screen with Obama. Who, we wonder, is going to get the audio feed?
The story so far:
- No one should be pleased with the salary cap. (Surprise surprise).
- No one has brought up nationalization for us yet. (Uh huh).
- Overpaid for Merrill? Well, no… not really. *Clears Throat*
- On strong arming by the government to close the Merrill deal: They said “We strongly advice you that it is not in your best interest or the country’s best interest to walk away from this deal.”
- How do you justify the Merrill bonus move: I wasn’t personally aware of the details, we were aware that there was a bonus plan, but, given the pending litigation, that’s where my commentary ends.
- “We execute better than anyone.” (Ahem).
This interview is impressively soft. No follow-ups of notice.
- Why did you fire John Thain? “I almost feel like that’s ancient history…” (That’s it? I suppose that’s to be expected).
- No regrets over acquiring Merrill? Not long-term. As soon as we can shed this TARP saddle, we will be in great shape.
- More money from the government? Categorically, no.
What fluff. Wow. “What’s the most important thing you can do to improve your business…”
Bleah.
Obama, thankfully (yes, I said that) has intervened and cut off Lewis. Phew. That was getting embarrassing.
