Archive for May 2009

  • 30 May 2009 at 12:52 PM
  • MBAs

They’ve Got It Laminated On Little Cards So You Know This Is Serious

By

Picture 1438.png
Just wanted to pop in and tell you not to fear that tomorrow’s business leaders will get us into another sticky situation, ’cause Harvard MBA students, like the ones above, are now taking an oath promising not to do anything wrong, like some alums from their school.

The MBA Oath
FULL VERSION
Preamble
As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can build alone. Therefore I will seek a course that enhances the value my enterprise can create for society over the long term. I recognize my decisions can have far-reaching consequences that affect the well-being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face difficult choices.
Therefore, I promise:

Read more »

  • 29 May 2009 at 5:50 PM

Write-Offs: 05.29.09

By

$$$ Citi jets for sale! [Cityfile]
$$$ Confidential to Christopher Meek: We read you were upset with the write-up we did of your program. And that upsets us! We get that since 99% of the time we’re making fun of people, you probably assumed you were getting the same treatment, but you assumed incorrectly. In all seriousness we think you’re doing a very nice thing for the people of Stamford, and, believe it or not, the headline “Goldman Sachs trader to the rescue” was completely sincere. Email us if you don’t believe it. [Norwalk Advocate]
$$$ Little parody for your weekend. [Youtube]
$$$ After 93 Years, G.M. Shares Go Out on a Low Note [Dealbook]
$$$ Job of the Week: Bloomberg needs a senior loans analyst. That could be you. [DB Career Center]

  • 29 May 2009 at 5:15 PM

The Ending Left An Obvious Sequel Opening

By

sequell.pngWe think Credit Crisis II or Credit Crisis 2.0 has a much nicer ring to it than “W recovery” or some other charting nonsense. (We’re partial to the “M recovery”). Whatever we call it, we may get the chance to revisit old themes. Everything new is old and suchlike. Or so says Reuters:

The global financial crisis may morph into a second, equally virulent phase where borrowing costs rise again, hobbling an embryonic economic recovery, debilitating cash-strapped banks, and punishing investors all over again.
Early warnings signs of this scenario include surging government bond yields, a slumping U.S. dollar, and the fading of the bear market rally in U.S. stocks.

The reality is that the United States has quite a bit of housecleaning still to do. High beta stock rallies spur “green shoots” talk, but trad-weeds will grow anywhere for a time, but have no real staying power.
Rising U.S. bond yields may spark Credit Crisis II [Reuters]

  • 29 May 2009 at 4:06 PM

$51,634,606.22 + $4,260,850.63

By

Are we surprised that the only big insider trading case in quite a while is somewhere outside of the SEC’s jurisdiction? We seriously doubt whether there is a dearth of large insider trading cases in the United States, but they certainly seem to have fallen by the enforcement wayside. Instead, and it pains us to say this, the SEC seems to be too busy tagging the likes of Mark Cuban to get its shit together.

On January 14 last year Berndale seized control of the account of How Trading, the account Mr Waterhouse held with Berndale to trade options, because it had breached its agreed margin-call levels.
After gaining control of How Trading, Berndale used it to short-sell $51,634,606.22 of blue-chip Australian shares — primarily the major banks and BHP Billiton. On January 17 last year Berndale then used How Trading to short-sell a further $4,260,850.63 of Commonwealth Bank shares.
On January 18 — or January 17 in New York — Merrill Lynch announced a $US9.83 billion fourth-quarter loss, including a $US16.7 billion write-down associated with subprime mortgage losses. Sharemarkets and bank stocks around the world tumbled on the news. In the three trading days after the Merrill Lynch announcement, the S&P/ASX 200 Index fell more than 10.5 per cent.

$55 million insider trading allegation [The Age]

  • 29 May 2009 at 3:39 PM

Who’s In The Mood To Be Berated By Congress?

By

Picture 1436.pngHave Representative Michael Capuano accuse you of gang banging a bunch of girl scouts? Sit there while Rep. Elijah Cummings makes you feel like a bad person for treating your employees to $200,000 worth of facials? All the while knowing once you’re finally allowed to leave and get back to the office, Hank Greenberg will be hiding behind the door ready to jump out and shout about how none of this was his fault? Today is your lucky day! As previously mentioned, Ed Liddy announced last week that he’ll be getting the hell out of AIG just as soon as they can find a replacement for chairman and CEO (roles that are being separated to spread the love around) and apparently that day cannot come soon enough. Efforts are being ramped up to find two people willing to take on the sweet gigs, led by board member Dennis Dammerman and Big L himself who, wanting out of there a-sap, has said the process should take no more than a few months, tops. Lids told Reuters he expects the person picked as chair will be “someone familiar with the workings of government,” while the CEO post should go to a masochist willing to commit up to five years to the job. Who’s interested?

  • 29 May 2009 at 3:38 PM

With Sugar On Top?

By

gm-ten.jpgPleading, urging, begging, whatever. Call it what you will, this one isn’t going to drift by as “easily” as Chrysler. But then, the Chicago machine is just getting warmed up, isn’t it? Either way, we continue to be amused by the (1 – 0.65) reverse spin on the debt holder (dis)approval numbers.

Advisers to General Motors Corp bondholders representing $27 billion in the automaker’s debt urged investors on Friday to support a debt swap negotiated over the past week with the Obama administration.
Bondholders have until Saturday to register their support for the terms of a deal that would give them up to 25 percent of a reorganized GM. That offer is contingent on the U.S. Treasury determining that enough investors have signed on in support.
Investors representing at least 35 percent of GM’s bonds are expected to support the sweetened offer from the U.S. Treasury, which will be the automaker’s largest shareholder and creditor.
In a conference call open to GM bondholders, advisers to an ad hoc committee representing institutional investors urged other bondholders to offer their support for the deal.

But we wonder if the real story here isn’t this:

For the government to be repaid in full, GM would have to have an enterprise value of $69 billion based on its expected 72.5 percent stake in the company, Siegert said.

Really, the jobs we are “saving” are getting obscenely expensive. What happened to a “bridge loan” and the rough backhand pimp-slap that Treasury and company were supposed to deliver to a GM that was not viable by the deadline?

  • 29 May 2009 at 2:39 PM

What In God’s Name Is The Point Of Being Treasury Secretary If You Can’t Do Something About This?

By

Picture 1434.pngPaulson never would’ve let this go down on his watch.

Dartmouth College, which was stripped of its triple-A rating this week, is one of the first victims. Both Standard & Poor’s Ratings Services and Moody’s Investors Service cited investment losses by the Hanover, N.H., school’s endowment and significant debt issuance in their decisions to knock Dartmouth’s rating down a notch.

For those of you holding your breaths, breathe easy:

Borrowing money doesn’t necessarily affect a school’s credit rating. This week, for instance, Moody’s affirmed Harvard’s triple-A status and stable outlook. The ratings firm said despite Harvard’s investment declines, which university officials project at 30% for the current fiscal year, it can still count on significant, if reduced, donations and has the ability to boost revenue by admitting more students.

As for the rest of you, better luck next time, and perhaps think about using your heads and trotting out some tasty freshman treats next time the ratings guys show up to perform on-site diligence.

Read more »

  • 29 May 2009 at 2:36 PM

The Bloomberg Report

By

Tyler Durden over at Zero Hedge points out the (not so) subtle campaign by Bloomberg to bash the TALF. Heads I win. Tails they lose. Thanks TALF!
Collection of anti-TALF banners after the jump.
Bloomberg’s Vendetta With Geithner/TALF Continues [Zero Hedge]

Read more »

  • 29 May 2009 at 1:45 PM

The Trouble With Appraisal Reform

By

cuomofrank.gifThe story of appraisal hasn’t gotten much play in the housing crisis narrative, and this is a significant oversight. Several reports on IndyMac highlighted issues with appraisal, but for whatever reason none of them ignited into anything throwing of heat. Teri Buhl, familiar to Dealbreaker readers from Housing Wire, however, has been minding the store here.

Despite calls for reform, Countrywide is still showing signs of committing the same predatory lending sins under new owner Bank of America. As Congress rushes the lending reforms through the House this month, banks are still fighting to keep control of how they run the mortgage business, and keep collecting lucrative fees in every step of the lending process.
Exhibit A is a $2.8 billion class action lawsuit filed on March 7th against a BofA subsidiary called Countrywide-KB Home Loans and its wholly owned appraisal firm Landsafe, Inc. The suit accuses the two subsidiaries of an appraisal inflation scheme affecting over 14,000 borrowers, and is a product of a yearlong investigation examining home buyers in California, Arizona, and Nevada. Leading the charge were the Laborers’ International Union of America (LIUNA) and Seattle-based law firm Hagen Berman. The law firm is presently litigating over three class action cases against Countrywide.

Cuomo is, of course, all over this new twist, pushing matters all the way into the GSEs, which he insists knowingly bought loans tainted with fraudulent appraisals. With borrowers penning “liar loans,” banks like IndyMac actively fabricating income details for applicants, ratings agencies applying AAA stamps to anyone with what appeared to be a default correlation model, GSEs knowingly buying “sexed up” appraisals (allegedly) and securitization drawing monoline protection without the assets to back losses, you have to wonder, what part of the mortgage process was not actually tainted by fraud?
Buhl points us to an excellent diagram on the tentacle-laden topography that is the appraisal relationship map. Catch it after the jump.
Exclusive: Banks’ Appraisal Conflicts Could Continue Under New HVCC Rules [The Mortgage Lender]

Read more »

  • 29 May 2009 at 1:36 PM

Soho House’s War On Bankers Continues

By

A couple months back Soho House started giving financial service industry hacks the cold shoulder, refusing to renew the memberships of several Wall Street “types,” under the guise of getting back to its “creative roots.” To that end, they recently enacted a new dress code that bans suits (with “blue shirt, black pants” obviously coming up next) obviously in an attempt to keep people like you out:

What not to Wear
At Soho House, we’ve always believed that a relaxed atmosphere is a critical part of our identity. Taking that belief a step further, we’re asking members not to wear jackets and ties to the Roof this summer. We’d like to extend that mood on the 6th Floor, too. Obviously we recognize the style and allure of a well-tailored suit, but we’ve always wanted the House to feel like a home away from home rather than an extension of the office, so please do keep that in mind.

  • 29 May 2009 at 12:58 PM

Tontine: So Incredibly Back In The Game

By

Last year: not so good for Jeff Gendell, who shuttered his firm’s flagship funds (Tontine Capital Partners and Tontine Partners) after losing 76.8 percent and 67 percent, respectively, through October and September. This year? Coming up roses, my friends (though we don’t have recent numbers for Tontine Financial Partners and Tontine-25, yet, and that statement could be way off base).

The Greenwich, Conn.-based firm has raised $11 million for its new Tontine Total Return Fund, as well as $1.6 million for an offshore version of the new vehicle, according to a Securities and Exchange Commission filing. Gendell launched the fund in February, three months after telling investors he would shutter the firm’s flagship hedge funds. The new fund does not use leverage.

Earlier: Tontine’s Very Special Offer
Tontine Raises $12 Million For New Fund [FINalternatives]
Update:
Picture 1437.png