As you know, Ken Lewis is set to have a little chat with Andrew Cuomo today, re: Merrill bonuses. And while we know precious little about how it’ll all go down, save for the inside info that John Thain left some used gum for KL on the seat after his meeting yesterday, and the hope that Lewis will respond to every one of Andy’s questions with the same line he used with Waters (“I don’t understand what you’re talking about“), we can take a sec to come to a consensus on one thing. What sort of brain food the Bank of Amerillwide CEO will eat for breakfast before going into battle. So.
*Went down to the hotel bar last night to ease his nerves and who should he find drinking alone but Andy Cuomo. It’s awk at first, sure, but before long they’re agreeing over how silly “this whole bonus thing is,” introducing themselves as business associates from out of town to unsuspecting women at the bar and cracking jokes at Thain’s expense. (Cuomo: “No, no seriously, you shoulda seen him today, cracking under the pressure, the fruit.”)
Collective sigh of relief, people: after many sleepless nights filled with worry over the fate of Vikram Pandit, it appears as though everyone’s favorite jolly elfin’ CEO will remain safely ensconced in the Tickle a Vickle booth at 399 Park Ave. The Post claims today that “no one expects a shake-up in Citi’s executive suite to be a condition of the government raising its stake in the bank and all efforts are being made to avoid even the slightest appearance the feds are nationalizing.” And while we take offense to the insinuation that the only reason Pandito’s not getting canned is because he’s being used as a pawn in their little mind game, and not ’cause they realize full well that they’ll be hard-pressed to find a replacement that comes with both V to the P’s business acumen and belly built for rubbing, we’ll take what we can get. (And have it on good authority that Ken Lewis, upon hearing of this added layer of job security pursuant to the ‘n’ word, will be changing his tune re: confidence in the future of BAC.)
RBS Unveils $34B Loss (Reuters)
“Royal Bank of Scotland reported the biggest loss in British history on Thursday and said the government’s stake could rise as high as 95 percent after it stumped up billions to insure the bank’s risky assets.
RBS also unveiled plans to cut 2.5 billion pounds ($3.56 billion) in costs as part of a restructuring plan which will see it exit or reduce its presence in 36 of the 54 countries it operates, which could see 20,000 job cuts.”
UBS appoints ex-Credit Suisse head as CEO (Reuters)
Marcel Rohner out, Oswald Gruebel in.
Citi Closing On Deal With US Government (WSJ)
It looks like this deal for 40% ownership could go down today. Thoughts? Concerns? Secret island where we can all go if shit gets bad?
“Citigroup Inc. is closing in on an agreement to boost the federal government’s stake in the company to as much as 40%, according to people familiar with the situation. A deal could be announced as soon as Thursday.”
A Look At The Stress Test (WSJ)
The plan calls for banks being able to operate under 10%+ unemployment and as much as 25%+ decline in housing prices, and if they can’t, they either have to raise private funds or take the Government cheddar. I can appreciate the Administration wanting to secure banking, for you know, the people, but forcing banks to take money at 10% is fundamentally fucked up.
“Economists said most of the nation’s largest banks will likely have to raise capital under the economic assumptions that regulators plan to use. The stress test assumes an unemployment rate averaging 8.9% in 2009 and 10.3% in 2010. Because that is an average for a whole year, the test envisions the jobless rate reaching higher than those levels on a monthly basis during these stretches. It was 7.6% in January”
Government To Step It Up In Student Loans (NYT)
There’s two parts to this (relative to us). Firstly, if student loans had been able to fail we would be faced with a mass of students looking for jobs in what’s arguably the worst economy in like 2/3 years. Secondly, more bankers are going back to school (for whatever reason) here recently, and given the combination of severance packages and greed I’m pretty confident some of you are going to be looking to explore the “free money for now” route.
Geithner Blames Bankers For Loss Of Confidence (CNBC)
No, and that’s fair – we blame the Government (in part).
Liddy Pleads For Forgiveness As AIG Unravels (Bloomberg)
It’s cool Liddy. No worries. No one in finance really expected you to pay that shit back anyway, the terms were ridiculous. And yes, we understood given the circumstances you weren’t really in a position to negotiate. Do this, if you’re going to go out: do it with a bang. I mean pro’s for everyone, all over the place. Fill the office. Distribute coke with snow blowers. GO TEAM!
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If you dozed off for just a second, you missed it.
Federal Reserve Chairman Ben S. Bernanke said accounting standard-setters need to figure out how the mark-to-market rule blamed for worsening the global financial crisis should be followed when assets aren’t readily traded.
The rule, which requires companies to write down assets every quarter to reflect market value, is “a good principle in general” and shouldn’t be suspended entirely, Bernanke told the House Financial Services Committee today. “Accounting authorities have a great deal of work to do to try to figure out how to deal with some of these assets, which are not traded in liquid markets,” he said.
Yes, indeed. If numbers aren’t looking like what we want, we’ll just make up some numbers and call it all good. Perfect!
Tim Geithner was seen to nod vigorously from the Green Room where he watched today’s testimony, until an aide whispered to him that Ben wasn’t talking about tax returns.
Bernanke Says Mark-to-Market Accounting Rule Should Be Improved [Bloomberg]
Ken Lewis had something big to say about Bank of Amerillwide today but rather than put it in one of his famous memos, his disseminated the word via Bloomberg TV, presumably because he didn’t want an e-record of having ever said it. Also, because bourbon to Boone’s he was drunk and that can make typing difficult.
Bank of America Corp. Chief Executive Officer Kenneth Lewis said Merrill Lynch & Co. and Countrywide Financial Corp., the two acquisitions that some analysts say helped push down the bank’s share price, have been “stars” so far this year.
Lewis, speaking today in a Bloomberg Television interview from his Charlotte, North Carolina headquarters, said Merrill will be “a thing of beauty” over the long term. Merrill, the New York-based securities firm, lost $15.8 billion in the fourth quarter.
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You can’t swing a former BSD these days without hearing about how “the markets” got their “hopes up” about what was going to come out of the government and once the Treasury/White House/Fed opened its collective trap the apparently overly sensitive “markets” got their rainbow and pony hopes dashed to the wind and boo hoo, watch as we cry about it. Today one crucial aspect of the gov’s plan has been revealed, and with T-15 minutes to go til the close, let’s see if it lived up to all your dreams, or if you’ve been once again disappointed and are going to proceed to act out and throw a temper tantrum over it. Details of the big reveal after the jump.
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You know, we had our ticket ready to go, especially after we saw the big lines in Antigua. We figured we had to hurry. We had the sunblock and the bulletproof vest packed. Unfortunately, it looks like our preparations were all for nothing.
Now that we think about it, how is Allen Stanford going to flee to Venezuela when he’s (potentially) screwed them out of $2.5 billion? That wasn’t so sharp, Sir Allen.
Venezuela is unlikely to help investors faced with the loss of billions of dollars deposited at the discredited Stanford International Bank, Finance Minister Ali Rodriguez said on Wednesday.
The OPEC nation’s bank regulators say Venezuelans may have invested up to $2.5 billion in high-yield certificates of deposit at the Antigua-based unit of a global financial network owned by Texan billionaire Allen Stanford.
Venezuela says no plans to help Stanford investors [Reuters]
You (et al) had to stick your nose(s) in the Northern Trust trough, didn’t you, you meddling bastard(s)? Now you’ve gone and scared Morgan Stanley off, a firm which, you should be reminded, canceled Christmas this year. And now, because it’s apparently a crime to kick back and whack a few, this. I hope you realize John Mack’s going to have to bring in a boatload of Sicilian pastry desserts to make this up to the team.
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Now I realize that it seems difficult to follow the complex financial machinations that we are performing to pretend we aren’t nationalizing anyone’s bank but I do wish you’d listen Ken, it’s perfectly simple, if you’re not giving your bondholders a hair cut, you don’t have to put your executive’s bonuses down on the lower peg, you just collect the treasury bills before you do your Congressional hearing prep after a taxpayer approved lunch at McDonalds when you’ve written your resignation letter before the shareholders meeting, move your own bonus down a peg, greet the auditors and report to Mr. Geithner before lunch that you’ve got your preferred shares dividend payment and of course your conversion to common documents.
The Treasury Department on Wednesday launched a new program that would provide capital injections into the nation’s 19 largest banks based on a “stress test.” According to the “stress test” approach, government regulators are looking at each financial institution’s balance sheets and capital needs over the next two years and evaluating how much capital the company will need over that period. Based on that analysis the government would let institutions exchange taxpayer-funded preferred shares for common shares when losses that were forecast by the stress test actually occur.
Treasury: New bank infusion can convert to common equity [Marketwatch]
The revolving door to the give-away party has started to turn, beginning with Chrysler which, after smashing through the floor of their own “worst case scenario” is back looking for $5 billion or so. Just to tide them over, you understand.
Three top Chrysler LLC executives are to meet today with President Barack Obama’s automotive task force to discuss the automaker’s request for an additional $5 billion in federal aid, people familiar with the matter said.
Chief Executive Officer Robert Nardelli, Vice Chairman Tom LaSorda and Chief Financial Officer Ron Kolka will meet with the task force, the people said. Chrysler, which received $4 billion in federal loans, said Feb. 17 it needs the extra funds to avoid an “orderly wind down” of the company. The third-largest U.S. automaker said it lost $8 billion last year.
Really, at this point, should we be trying to avoid an “orderly wind down?”
The 10-member panel, led by Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers, has the power to force a bankruptcy filing by Chrysler or General Motors Corp. Chrysler and Detroit-based GM have received $17.4 billion in U.S. aid and are requesting as much as $21.6 billion more in low-cost federal loans.
Chrysler’s Nardelli Meets With Auto Task Force Today [Bloomberg]
Or is it our best interest? I always get those two confused.
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