All US Airways All The Time!
”As part of an ongoing cost reduction effort we have been scaling back on our use of corporate aircraft including selling three aircraft we own and the Merrill Lynch helicopter,” Bank of America spokesman Scott Silvestri said.
Bank of America is the owner of nine planes, including four Gulfstreams, FAA records show. The company acquired brokerage Merrill Lynch & Co. in January.
Chief Executive Ken Lewis is required to use company aircraft for personal trips. In 2007, his personal use of company jets totaled $127,643, according to a March 2008 filing with the Securities and Exchange Commission.
Separately, Charlie Gasparino reports that Ken Lewis will be stripped of his love shack in the Time Warner Center.
BofA to Sell 3 Corporate Jets, Merrill Helicopter [AP]
Attention SAC Capital employees working out of 72 Cummings Point Road today. Stop what you’re doing and go line up in single file order on the floor because you are moments away from a very special treat. That’s right– celebratory rides on the Zamboni, which was brought over from Greenwich just for you. What’s there to celebrate, you ask? Ping is back, baby! No, kidding. But it’s still pretty (though not as) good. After finishing the year down 18.7 percent, SAC Capital International returned a relatively stellar 3.70 percent in January. And it doesn’t stop there. The Big Guy is so proud that, provided this is the beginning of great things to come, he’s considering converting the whole building into a rink, and making this rides-for-performance thing a regular feature (the flip side being that the Z, which will double as the BG’s desk, will shoot out pucks at random at high speeds to keep everyone on their toes, and losing portfolios be forced to scrub it with clean after down months).
He twice failed to show up (by order of subpoena) for questioning but CNBC now reports that so-called “Madoff point man” Robert Jaffee has decided to comply with Massachusetts regulators. Hopefully he’ll stay in character, and refuse to answer anything while acting all old man crotchety.
As you likely know, Bloomberg reported earlier that Erin Callan is taking a “personal leave of absence” from her job at Credit Suisse. A reader noted that Callan had something of a “nervous breakdown” this morning, and while we hope that isn’t true, a little digging inside CS suggests it might be. If you’ve heard anything else, let us know.
This is a match we want tickets to. Pitting the Dollar Dominatrix against Obama and the Economic Superfriends promises to be the battle of the decade. In the right corner, “the top talent will drain out like nothing you’ve heard since Perot’s ‘Giant Sucking Sound.’” In the left corner, the $500,000 cap “because taxpayers are not going to fund greed.” Ready? FIGHT!
“No one goes into Wall Street to save the world,” Whitney said today in an interview on Bloomberg Television. “Compensation is the motivating factor.”
Wall Street pay is getting scrutiny after New York banks and securities firm paid $18.4 billion in bonuses for 2008 while the six biggest New York-based financial companies lost a combined $42.4 billion and got $90 billion in government bailout funds. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said yesterday that “pay got a little exuberant.”
Whitney Calls Pay Wall Street’s ‘Motivating Factor’ [Bloomberg]
When I write mea culpas, which doesn’t happen often, I hate for them to be overshadowed. You know how it is. I want people to pay attention to the fact that I am saying sorry, but everyone will be focused on the special deal I’ve put on the table, wherein investors can elect to pay a performance fee on any gains made after 1/02/09 (even if we haven’t hit the high watermark), which is pretty generous, considering we closed down near 30 percent. Anywho, that’s why I put all that jazz in a separate letter, the news of which HFA broke today. Full deal after the jump
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Wow. It’s going to be hard to pull out of the mudpit left by the artillery barrage Markopolos just adjusted onto their heads, but the SEC is going to try, damnit.
Written statements (which are almost universally useless) are read into the record.
These consist of:
Four descriptions of what the SEC does. (None compelling)
- One description of the location of the SEC offices in Washington.
- One hint that the SEC party line is going to be that the “Investment Adviser” part of the
- Madoff organization was regulated separately and therefore any regular oversight was bound to miss the massive Ponzi scheme.
It seems to us like this organization is toast.
- Recess Ends -
Chairman: Ok, the SEC better not be laying down any limitations on what we can hear from SEC employees. There seems to be a misunderstand as to who created whom and who is responsible to whom under the Constitution.
Wow. Apparently of one of the SEC witnesses tried to claim he was exempt and the Chairman of the Committee is NOT amused. A call was placed to the grand poobah at the SEC and the witness was delivered, threatened subpoenas not issued. Just… wow.
They aren’t just incompetent with respect to investigating fraud, they are optics challenged.
What a fiasco.
Chairman: Apparently, if there is a snowstorm in Washington, the SEC cannot help. When are you going to be able to testify about this issue?
Witness: I don’t know.
EP here: I find when trying to liveblog the SEC testimony, I have two choices-
1. Quote verbatim.
2. Sit with a puzzled look on my face, and a squint trying to read the lips of the witness in addition to listening desperately trying to understand what language she is talking in and why I am having a hard time finding any meaningful signal in the midst of the sea of financial enforcement white-noise.
If we wanted any answer at all as to why Madoff skated past these people, that is it. It’s not that they are incompetent, it is that they exude a deadly cloud of negative competence that sucks any progress, organization, or intelligence right out from everything it touches- and it is apparently pressurized so when issued it expands to engulf the entire room.
Prediction #1: There are 4 more Madoffs out there, of lesser but still staggering size.
Prediction #2: The showing of the SEC is so poor here that the successor organization will be so doggedly aggressive that in ten years time we will be having a replay of the IRS abuse investigations that were all the rage in the ’80s.
Fireworks from the Committee: You just took the preamble of your mission statement and broke it up into five segments. With all your agents and resources, one guy with a few friends and some helpers. You couldn’t find your backside with two hands with the lights off. You have totally, totally failed in your mission. Don’t you get it? You forfeited your right to investigate by not doing it, and now you are trying to tell us that because other people are looking into it you can’t talk about it? Like hell you won’t. So what the hell went on? That’s a question.
Witness: Let me start with enforcement….
Committee: You keep say alleged, alleged, this guy confessed on national television you might have noticed. If anyone made the case better than Mr, Markopolos that you people are totally inept, it is you. Now, Mr. Vollmer, you are the one who tried to avoid testifying, are you citing Executive Branch privilege?
Vollmer (Deputy General Counsel): I would like to answer your question
Chairman: It’s a yes or no question.
Vollmer: No it is not.
Committee: It’s a yes or no question. Are you asserting privilege or not?
Vollmer: Well, sort of. In part.
Committee: So is that the position of the executive?
Vollmer: Hum, haw, hum haw.
And here’s what they’re doing about it!
Goldman Sachs Group Inc., which took $10 billion from the U.S. Treasury in October, would like to pay back the money from the so-called Troubled Asset Relief Program, or TARP, said David Viniar, the firm’s chief financial officer.
“It would send a very good signal” if the firm could repay the money [which apparently comes with BS string attached to it], he said. The firm would only do so if it got “the blessing” of the Treasury and Federal Reserve, he said at a Credit Suisse conference in Naples, Florida today.
I’m sure lately it probably feels like you can’t swing your BSD without knocking into someone loudly proclaiming that “Wall Street as we know it is over.” But take comfort, ladies. As long as Goldman Sachs is around, it appears as though ain’t going to happen (at least as it relates to the Masters of the Universe bending the rules in their favor in order to continue taking home garbage bags full of money at bonus time, and really, what doesn’t?).
Goldman Sachs Would Like To Pay Back TARP Money, Viniar Says [Bloomberg]
It’s Harry versus the SEC this morning, and there aren’t a lot of pulled punches.
Harry: I think the losses in Europe will be bigger. The European losses are often on unreported income and won’t likely be part of the history of the scam.
Harry: It took just a couple weeks for me to lose confidence in the New York Office of the SEC.
Harry: “In Wall Street there is a code of silence and when you live in a glass house you do not throw stones.”
Oh boy.
Is there a secret blacklist of fraudsters that the Wall Street code-of-silence keeps secret? Is there a list of these malefactors? (A more blatant attempt to justify subpoena power I have not lately seen).
Harry: Yep.
The secret cabal of fraud protectors. Wow.
Isn’t handing over documents wearing gloves [to avoid leaving fingerprints] a bit paranoid:
Harry: When Madoff attracts Russian mob money and drug cartel money, and with such a large fraud, I didn’t expect to be long for this world if my name got out.
Harry: Disband the SEC, zero out their budget and invest in the state regulators that, pitbull like, do more with less than the SEC.
What could be done to reform the SEC?
Harry: Put in experienced professionals. Give them Bloomberg. (They currently share one terminal per regional office).
What about auditing? What about rotating auditors?
Harry: SEC Auditors are not trained in human intelligence gathering. They come in, sit down, and are fed controlled pieces of paper. They need to be talking to everyone and interacting.
Should we (Lincoln Act like) give bounties for financial whistle blowers?
Harry: You bet.
Harry: We’ve had “zero enforcement” for the last 8 years.
Harry: I gave the SEC a drawing, a roadmap, pictures and a flashlight and they still couldn’t find anything.
Is Mr. Madoff confined right now?
Harry: Yes, he’s under Penthouse arrest.
We need thousands more like you out there.
Harry: Thank you.
You were dealing with a ruthless person, in bed with other ruthless people. These kind of characters are sure to make you concerned for your life. The American people need to know who you are! You aren’t a person off the street. You have credentials, baby! Won’t you please share some of your credentials with the public?
Harry: CFA, CFE, MSF, BA, CIO, Major in the Army, Reservist, in Special Operations….
(Not bad!)
Harry: The regulators need to earn their paycheck and the SEC needs to be swept with a very wide broom.
Who do you want to play you in the movie?
Harry: As long as it is a Red Sox fan.
Harry: Fairfield Sentry was getting $280 million a year in fees from Madoff.
Is it better to be corrupt (FINRA) or incompetent (SEC)?
Harry: FINRA gets an A+ for corruption and the SEC gets an A+ for incompetence.
Are you sure there is a Russian mob and organized crime connection?
Harry: We knew because of the offshore funds. The only reason to be offshore is to hide dirty money. Madoff’s success made it almost a sure bet there was dirty money in there.
This is the quote of the day:
Harry: To all the Russian mobsters and drug cartels out there, I am one of the good guys. I was looking out for your accounts. Just keep that in mind.
Sorry, I was wrong, this is:
Harry: If you flew the entire SEC staff to Boston, and sat them down in Fenway Park for the day, they wouldn’t be able to find first base.
As mentioned in our Opening Bell (we love the safe-cracking picture of Geithner, can you tell?) Harry Markopolos fired both barrels into the SEC with this week’s testimony on the (alleged) fraud by Bernie Madoff and (alleged) pals. With his verbal testimony, he issued over 300 pages of written testimony which the Journal has so kindly attached to their article on the subject.
So, in addition to our continuing coverage of the hearings (in progress now!) we thought we’d review the written stuff. We just knew it was going to be good once we saw:
Year 2005:
Email Exchange to Meaghan “Sniffles” Ka-Cheung (11/4/05).
(Ok, so we made up the nickname).
One thing that emerges is the varied and deep level of due diligence that Markopolos describes, careful to share credit with his “There Is No I In Team” team. (For the record, we would like to point out that while there is no “I” in “Team” there is an “M” and an “E”). As it happens, however, there is quite a bit of grandstanding in the testimony as well. A thick streak of arrogance (well deserved in our opinion, but still arrogance) shows through.
My army special operations background trained me to build intelligence networks, collect intelligence reports from field operatives, devise lists of additional questions to fill in the blanks….
Ok, so you have to admit, he is kind of a stud.
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Cuts are said to be going down in Deutsche Bank CIB today, affecting associates and VPs. Supposedly some groups will be losing “over forty percent of their mid-level bankers.” We’ll keep you posted.
