$$$ Fuld Resigns As Lehman’s Chairman [NYT]
$$$ “The U.S. is set to invest more than $7 billion into GMAC, part of a package that could total $14 billion and make the government majority owner.” [WSJ]
$$$ Fed faith grows from April’s wary optimism [FT]
$$$ I-banks, law firms hiring for structured finance [The Deal]
Archive for May 2009
Can you think of anyone less qualified to make assertions on pay, and economic recovery than Kenneth Lewis? Yes, Big Bird is a good answer, it’s true. In some ways we are quite surprised to see that Ken is making waves. The man is quite lucky still to be working so it is hard to imagine why he would rock the boat. And yet:
Bank of America Corp Chief Executive Kenneth Lewis, whose bank sold $13.47 billion of common stock this month, on Wednesday said the worst of the economic downturn has likely passed and that conditions will not worsen as much as feared.
“We are on the cusp of what will turn out to be a slow but sustainable economic recovery,” Lewis said at a conference in London. “There will continue to be a lot of pain … but I think the worst is most likely behind us.” He projected modest U.S. and European economic growth in the second half of 2009.
Lewis, whose bank bought Merrill Lynch & Co on January 1, also said corporate and investment banking pay practices must be “reformed,” with pay being tied to performance and banks being able to “claw back” pay from people who took on too much risk.
Oh, boy.
Economy bottoming, pay reform needed: BofA CEO [Reuters]
1 drink short of Bank of Amerillwide necessitating a stomach pump, but no matter. Better late than never, right-o, BAC shareholders? (And for all you naysayers out there– this has nothing to do with him getting flack over Countrywide and Merrill which, we’ll say it again, were brilliant acquisitions whose genius is yet to be revealed but will one day be understood, the same day you’ll eat your words!)
Bank of America Corp. Chief Executive Officer Kenneth Lewis expects more mergers among U.S. banks as the economy stabilizes, and said his bank won’t be among the participants.
“Merger activity will pick up for others,” Lewis said in a speech in London today. “At Bank of America, we’ve got enough on our hands right now.”
Lewis, who spent more than $120 billion on acquisitions since becoming CEO in 2001, is still trying to quell investor doubts about his most recent purchases, which led to his ouster as chairman last month. The Charlotte, North Carolina-based bank bought home lender Countrywide Financial Corp. last July and brokerage Merrill Lynch & Co. in January as the financial industry was teetering near collapse.
The recession and credit crunch left the U.S. banking system with too much capacity, making absorption of weaker banks by stronger ones inevitable, Lewis said. Consolidation stalled over the past year as “severe market stress and disruptions made pricing difficult,” he said.
Bank of America’s Lewis to Sit Out Consolidation Wave [Bloomberg]
And lots of ‘em, it seems! [via AdamsOptions]
Dennis Kneale: Macke let’s start with you…Patty Daum is talking about how the credit markets tonight are really thawing tonight…and her sources tell her it’s going to be helping the stock market. What do you think of that?
Jeff Macke: I have no idea Dennis…I’m going to talk to you like a child…if you understand what I’m saying, just say ‘yeah.’
DK: Okay, yeah.
JM: Yeah…see…you’re what happens when you’re trying to talk to car people at like half an hour ago…I dismissed these people as idiots YEARS AGO. And not that I finally try and engage them, they have no idea what I’m talking about.
DK: Okay…
It continues.
Apparently, the women who can’t even remember to bring her ID to court is a dangerous and crafty agent of intrigue prone to flight at any moment.
Laura Pendergest-Holt, the Stanford Financial Group Co. executive indicted for obstructing a U.S. regulator’s probe into an alleged $8 billion fraud, is a flight risk requiring electronic monitoring, U.S. prosecutors say.
Pendergest-Holt, chief investment officer for one of three R. Allen Stanford-led businesses sued by the U.S. Securities and Exchange Commission for misleading investors, pleaded innocent to the criminal charges on May 14. Freed on a $300,000 bond, she is wearing an electronic-monitoring ankle bracelet her lawyers say is unnecessary. Prosecutors disagree.
We’re sold.
Stanford’s Pendergest-Holt a Flight Risk, U.S. Prosecutors Say [Bloomberg]
It’s for charity, so we can’t make too much fun, but we can make a little. The RFK Center for Justice and Human Rights is holding its annual fund raiser and lots of celebrities have generously offered themselves for up for bidding on the auction block, sort of, though it kind of just sounds like you’re forking over money for the privilege of tagging along as they do whatever it is they’d do on any other day.* Like Ben Affleck, who invites you to come watch him get drunk at Fenway, or Jim Cramer, who’s offering a once in a lifetime opportunity to behold as he throws a chair. That’s right, for an estimated $5,000 (so far only $1,600 has been bid), you and three friends can attend a taping of Mad Money (tickets to which are typically free). JC not the CNBC personality who tickles your fancy? For at least six g’s you can accompany Charlie Gasparino as he chases down a story at San Pietro (pumping Jimmy Cayne for hot gossip in the men’s room likely to be included!) and for a minimum bid of ten-large, you could be telling your friends about the time you served as Dennis Kneale’s fluffer while he surfed for Asian porn between Power Lunch commercial breaks. Other actual items up for grabs include: a 20-minute phone conversation with Suze Orman (ask her to elaborate on this) and a tour of CNBC.
The Celebrity Auction of the Century [Cityfile]
*Which is nice, but if someone’s donating a few large to charity, we want to see these people dance.
Our relationship with risk-taking is a schizophrenic one. Bold actions taken, even foolishly, yield bright accolades for winners, enduring damnation for losers. Qui audet adipiscitur, after all. Phrased another way: One may dare, but one must win.
On reflection, David Redmond probably shouldn’t have gone back to the office after a fateful boozy lunch last year that lasted three and a half hours.
The commodities trader arrived back at his desk at Morgan Stanley in London at 4.41pm on 6 February and through the fug proceeded to gamble $10m (£5.1m) in a frantic series of trades. It very nearly went down as the most expensive lunch in history. In the sober light of the following day, he managed to trade his way out of the position without telling anyone and avoided making any losses. But it wasn’t enough to save his neck.
The Financial Services Authority today banned Redmond from working in the City for at least two years for concealing his trading position from bosses and leaving the bank exposed to significant risk. Margaret Cole, the director of enforcement at the City watchdog, said his actions had “showed a lack of honesty and integrity”.
Who among us doubts that, had Redmond come out +20% on the positions, his name would endure in the office forever, emblazoned on brass plaque under the hermetically sealed, bulletproof-plexi case holding the actual glass he drank from that faithful afternoon?
FSA bans Morgan Stanley’s oiled trader [Guardian Online]
The problem with one trick ponies is that they get old quickly. It appears that the present administration’s one trick pony is short-term gains at the expense of long-term credibility. So, we should barely be surprised when, true to form, precisely the investors needed to get the PPIP program off the ground are savaged from the bully pulpit and bullied by a natty puppet.
Hedge fund manager George Schultze says he may avoid lending to any more unionized companies after being burned by President Barack Obama in Chrysler LLC’s bankruptcy.
Obama put Chrysler under court protection on April 30 after lenders balked at a proposal giving them about 29 cents on the dollar for their $6.9 billion in debt. The investors said the president’s plan favored a union retiree medical fund whose claims ranked behind them for repayment. It was offered a 55 percent equity stake in the automaker.
Pacific Investment Management Co., Barclays Capital and Fridson Investment Advisors have joined Schultze Asset Management LLC in saying lenders may be unwilling to back unionized companies with underfunded pension and medical obligations, such as airlines and auto-industry suppliers, because Chrysler’s creditors failed to block Obama’s move. The reluctance may put additional pressure on borrowers seeking capital in the worst financial crisis since the Great Depression.
“Lenders will have to figure out how to price this risk,” Schultze, 39, said in a telephone interview from his office in Purchase, New York. “The obvious one is: Don’t lend to a company with big legacy liabilities or demand a much higher rate of interest because you may be leapfrogged in a bankruptcy.”
Since we have debunked Capitalism, we are sure that would never happen.
Fund Managers Burned by Obama Now Say They Are Wary [Bloomberg]
When it comes to coeds. In Universum USA’s annual survey of college students’ top picks for employers they’d like to work for, JPMorgan beat Goldman Sachs for the first time since the survey began 14 years ago, coming in at 19 and 21, respectively, a coup the pollsters attribute to JPM having “a very dedicated CEO who’s been quite visible.” Since these kids have had one, maybe two internships at these companies during undergrad, and were asked to name five of their dream jobs, this thing is really based on which CEO comes off as the best Beirut partner (as it should be). And speaking of drinking, Bank of America clocked in at the 31st most desired place to work, which must please Ken Lewis greatly. Other notable results (and how they did last year):
- Morgan Stanley: 40 (25)
- Federal Reserve Bank: 45 (49)
- Wells Fargo: 62 (78)
- Deutsche Bank: 73 (59)
- Citi: 94 (43)
Undergrads Shuffle List of Dream Employers [BW via Dealbook]
I was talking to a lobbyist for Burger King the other day who assured me this entire fast food thing was overblown paranoia, there was absolutely nothing wrong with the environment, and I should consider nonsense like “Super Size Me” slanderous prattle. He then jumped into his Lincoln Navigator (the springs of which creaked loudly while straining to support his imperial asstonage) and proceeded to run over a family of chipmunks while screeching out of the parking lot in front of a blue-white cloud of exhaust. Oh, and The Safecracker had this to say:
U.S. Treasury Secretary Timothy Geithner Wednesday updated lawmakers on the Obama administration’s efforts to rescue financial markets, saying that recently-conducted stress tests have gone a long way to boost confidence in the financial system.
In prepared testimony to the Senate Banking Committee, he said the 19 large, stress-tested banks have raised more than $56 billion in funds to date, including $34 billion common equity capital. (Read the full remarks.)
“Of the $56 billion, about $48 billion has been planned or executed by banks” that government regulators found to have a capital shortfall, Mr. Geithner told the Senate panel, adding that banks without a shortfall have already started signaling their plans to repay government aid.
Geithner Says Stress Tests Helpful [The Wall Street Journal]
Or if she is, she’s not expressing that remorse to ABC cameramen staked outside the prison where she visited Big Bern this week. Lady McMadoff offered “No response” to the question of whether or not she wants to apologize to Ponzi-Boy’s victims, or if she knew what was going down on the 17th floor of the Lipstick Building, though she does offer a “fuck you” just before getting in a cab (likely paid for with ill-gotten gains!), which is something.
