As previously mentioned, regulators have told Bank of America and Citi they need to raise more capital, “insinuations” (Lewis’s drunken words, not ours) with which the firms take issue and plan to appeal. Not to give the banks any credit, but on some level, you have to feel for them, in light of what they’re dealing with:
During that process, executives have griped that examiners were demanding detailed information from every corner of the sprawling organization, consuming thousands of man-hours without briefing anyone on what the government was looking for, according to people familiar with the matter.
The regulators are asking “a million questions” and it’s “very unclear what they’re aiming at,” one senior executive said earlier this month. “We can’t discern a pattern.”
Some bank executives have said that even after meeting with Fed examiners on Friday, they still don’t understand details of the government’s methodology for conducting the tests.
On the one hand, perhaps the government is being purposely vague about what they’re looking for (“top secret mission” and somesuch). On the other, more likely hand, regulators have no idea what they’re trying to “ascertain”– which they refuse to admit, as any good corrupt cop would– and are just breaking into the place and shoving random employees into broom closets and asking questions that have nothing to do with anything like “Who’s your urinal cake distributor”** and then telling the interrogatee (the first second year analyst they happened to cross paths with upon entering the joint) to “Shut up, no, answer the question, I SAID SHUT UP.”
Also included in the “process” are unannounced building break-ins (unnecessary as they could’ve just used the front door), and sealings off of Ken Lewis’s office, which he’s forced to stand outside of, just beyond the yellow tape, while a bunch of guys rifle through his drawers, every so often going “Found it!” (an ah-ha! moment that has nothing to do with the stress test but just unbridled glee at having stumbled upon one of the many (half empty) bottles of Boone’s K to the L has stashed around the place).
*And it’s not like they can mouth off, since it’s the government.
**This actually isn’t a good example, as the various answers are way more telling than you’d think. That’s all I can say about that at this time.
London Bankers Look For Exits After Tax Raise (Bloomberg)
Apparently the recent push to 50-something-percent was just too much to take; it looks like our London brethren are looking for exits to decidedly less tax-involved areas.
Swine Flu Hits Ernst & Young In Times Square (WCBS)
We always knew the trouble would start* in accounting.
*Manhattan edition.
Deutsche Bank To Keep Ackermann (FT)
“The decision to prolong Mr Ackermann’s tenure at the bank until 2013 is a sharp reversal of the bank’s repeated indication that the Swiss-born banker was ready to step down when his current contract ends in May next year.
Clemens Börsig, chairman of Deutsche’s supervisory board, said the decision “secures leadership continuity” for Germany’s largest bank. The bank said the offer to Mr Ackermann was made at the unanimous request of the supervisory board, which met on Monday. Mr Ackermann had agreed to the request, the bank said.”
In related news, Deutsche turned in its numbers:
“Deutsche Bank posted a better-than-expected net profit of €1.19 billion ($1.55 billion) for the three months ended March 31, compared with a net loss of €131 million a year earlier. Analysts polled by Dow Jones Newswires had forecast, on average, a €764 million profit.
The latest results included charges of €1.5 billion, including €1 billion in mark-downs, bringing total crisis-related charges to €10.7 billion. Year-earlier results, the bank’s first quarterly net loss in five years, were hit by additional asset write-downs, lower revenue and a trading loss in a deteriorating market.
Revenue in the first quarter rose 57% to €7.2 billion from €4.6 billion.”
Italy Seizes Millions In Assets From Banks (NYT)
“With municipal bond investigations spreading to Europe from the United States, Italian authorities have seized about $300 million in assets of four global banks — JPMorgan Chase, Deutsche Bank, UBS and Depfa — whose officials have been accused of fraud.”
Wilbur Ross To Join PIPP Effort (WSJ)
Bill Gross just makes it look too magical to pass up, doesn’t he?
Gulfstream, Cessna Sales to Slide for 2 Years as CEOs Shun Jets (Bloomberg)
Damn you, Congress. Damn you to hell.
Regulators have told Bank of America Corp. and Citigroup Inc. that the banks may need to raise more capital based on early results of the government’s so-called stress tests of lenders, according to people familiar with the situation.
The capital shortfall amounts to billions of dollars at Bank of America, based in Charlotte, N.C., people familiar with the bank said.
Executives at both banks are objecting to the preliminary findings, which emerged from the government’s scrutiny of 19 large financial institutions. The two banks are planning to respond with detailed rebuttals, these people said, with Bank of America’s appeal expected by Tuesday.
We are given to understand that BAC will be objecting on the grounds of “shrinkage” (Lewis was in the pool), which gave us an inaccurate representation of things, and Citi’s yet to come up with something. Do Vikram Pandit a solid and offer a good excuse now. He’ll pick the best one from comments in the morning.
Fed Pushes Citi, BofA to Increase Capital [WSJ]
Face it. There is no escape and you banks are so unpopular now that any hope you had at generating sympathy is gone gone gone. We want to know your customers. We want to know when you knew them. We want to know how you met them. We want to know who they know that you know. Brace yourself. This might be a bit uncomfortable.
The U.S. Internal Revenue Service (IRS) is preparing to pursue other foreign banks for allegedly facilitating tax evasion by wealthy Americans following its high-profile case against Switzerland’s UBS, an IRS official said on Monday.
UBS, Switzerland’s largest bank, in February acknowledged that it helped U.S. clients conceal assets from the U.S. government. It agreed to pay a $780 million fine and identify some of its American clients.
Meanwhile, don’t think we don’t see you, UBS, over there in the corner trying to get the United States to just drop the whole thing and let you gently set your clients adrift before Switzerland signs a new tax treaty with the United States to address the problem going forward (i.e. after you’ve moved the biggest clients to offshore subsidiary asset managers).
IRS says set to pursue “other banks” on tax evasion [Reuters]
During a panel at the Milken Institute’s Global Conference in Beverly Hills this afternoon, our favorite midwestern hedge fund manager let down his guard and finally let us in. Apparently considering the event a safe place to let it all out, Griffin shared his hopes (turning in a 750% return for ’09)* and fears with the audience, which include but are in no way limited to a li’l fella named T. Geith and spiders.
“The role of government in the United States, one of the great free markets in the world, has become frightening,” Griffin said today during a panel discussion at the Milken Institute Global Conference in Beverly Hills, California.
“We cannot fuel constructive policy by pandering to anger,” Griffin said at today’s conference. “This is a disaster that everyone in our economy participated in creating. I’m not trying to take Wall Street and the banking system off the hook, but we need to find a way to move past this crisis.”
Citadel’s Griffin Calls Role of U.S. Government ‘Frightening’ [Bloomberg]
*He didn’t actually verbalize this desire but I’m feeling very close to him right now and am confident it’s on the list.
Here at Dealbreaker we are well aware of the fact that there exists a small but passionate group of financial services hacks in the audience just dying to give acting a try, but have yet to do so because of a crippling fear of the prospect of a complete and total career change. Because we’re always working for you, we’ve done some digging and found the perfect crossover gig in which to dip your toes. While Madoff didn’t enlist the services of actors for his scheme (that we know of), lots of smaller scams, like Houston-based JaxTrece, are relying on individuals who can both act and talk shop. That could be you!
Curiously, in early October, Ramon sent an e-mail to an Austin actors group: She was seeking a male actor in his 50s or 60s with a New York accent to make an appearance at what she said was a Houston fundraising event. Another document filed in a lawsuit and said to have been found in Ramon’s computer describes Scrabanek’s back story down to his children’s names and his residence (the Time Warner building in New York City), and details his attitude: “typical Jewish New York . . . doesn’t really care about anyone but yourself, snotty and stuck up.”
Some now wonder whether the man they met was actually an actor earning $500 an hour to play a part in what the Justice Department says was an investment scam that defrauded investors of millions of dollars.
CNBC’s interviewing people on the street who think it’s a “Fairy Godmother” which is hilar, but let’s get serious and figure out who the anonymous donor is that’s gifted at least 13 women-run universities with nearly $70 million. Erin Callan doesn’t have the cash on hand, and while he considers himself a ladies man, and would love a free pass to walk into any freshman dorm and start hocking his product to nubile coeds, Jimmy Cayne smoked all his charitable donations over spring break. So, who is it? George Soros? Female and fag* aficionado Jim Simons? You tell us.
*Cigarettes, people. Cigarettes.
The Dow is toying around with 8000, and that just presents too much of a “Guess the Dow” temptation to resist.
Closest to the close without going under (reverse Price is Right rules, you know) wins. Bets are closed 10 minutes before the bell. In the event of a tie, the earlier entry wins. You know the drill.
Go!
Somewhere in the financial journalism rulebook there is a clause that forbids a disaster story to be written unless canned goods in the form of Campbell Soup Co. (CPB) and Gold are both spiking to back-up the “panic theory.” But despite the devastation of Swine Flu (you couldn’t come up with a more nefarious sounding plague except, perhaps, if you resorted to “The Black Death,” or somesuch- I mean seriously, who is going to be scared by “bird flu” or “avian flu.” Who cares if Big Bird is running a fever anyhow?) and now a 6.0 magnitude earthquake 19 miles south-southeast of Tixtla, Guerrero (strong enough to shake the capital) and the tragedy of vicious gang warfare along the border, Gold and Campbell Soup Co. aren’t doing anything at all exciting. Even Olin (OLN), fine purveyor of quality ammunition, is languishing today. It’s like “it’s different this time” or something.
Gold Futures Pull Back in New York [TheStreet.com]
Mexico hit by 6.0 magnitude earthquake: USGS [Reuters]
As Bank of America Corp. officially puts its brand on former Countrywide Financial Corp. offices today, the Charlotte bank is also unveiling new initiatives aimed at improving mortgage lending for consumers.
The changeover follows the Charlotte bank’s July 1 acquisition of Countrywide, which had become a symbol of the nation’s mortgage meltdown as it neared collapse early last year. The lender came with a damaged name, troubled loans and a phalanx of lawsuits, but Bank of America prized Countrywide for its dominant market share and well-honed technology and sales force.
Bank of America is retiring the Countrywide brand on 500 retail offices around the country and replacing it with the new Bank of America Home Loans name. Signs in California and North Carolina are changing first, with the rest switching by August.
Countrywide Brand Is Fading Away [Charlotte Observer]
As previously mentioned, last week’s annual Citi investor meeting was lacking in one very important item– snacks. Much ink has been spilled over the fact that the Big C failed to offer shareholders the standard coffee and (citi logo-frosted) cookies they’ve come to enjoy in years past, supposedly in a cost-cutting effort. But cutting the sugar and caffeine only saves so much (and even less when the sweets are being made not by a caterer but by Vikram himself), and costs much more when you factor in pissed of fractional owners, who were expecting the free goods.
In an obvious attempt to drop a hint, the Charlotte Observer today mentions the importance of laying food and drink on the table, two days before Bank of America’s shareholder meeting and with plenty of time to make arrangements. Now more than ever, if he’d like to keep his job (and it’s not entirely clear he does), Ken Lewis needs to make people happy. It goes without saying that investors like Jonathan Finger need to be stuffed with pastries but we’re thinking Lewis needs to go further than your standard coffee and cookies spread. First off, he should be dressed up as a waitress, and, instead of up on the stage, removed from the people, down in the trenches, asking questions like, “Can I get you some pie, sugar?” If he hasn’t already, he should start brewing enough moonshine to cover at least a few thousand, and he should also be coming up with special stuff to do in order to show shareholders how much he truly cares. Offering himself up for clownfacing,* yes, but what else? Let him know here.
*It’d be cathartic for a lot of people, I think.
