Of course, the scamp doesn’t say how much longer (someone’s getting the hang of this), but surely we can make some educated guesses.
Archive for May 2009
David Reilly says yes. The Bloomberg columnist crunched some numbers and estimates that “only about 15 percent of directors have banking experience at the 10 largest U.S. commercial banks by assets” (and just over a third if you include backgrounds in investing, accounting, insurance, real estate and slinging crack-rock, which helps Goldman’s rate considerably). Apparently having people on the board who knew what was up could’ve helped us avoid the current situation we’ve got on our hands (though the presence of people like Bobby Rubin at Citi taint that theory slightly). Moving forward, we need to stack these things with guys who will understand when to ask Ken Lewis “No, seriously, WTF?” (just after he hastily overpays for a chain of biker bars without telling anyone) and rough him up accordingly (Reilly: “if you’re in the business of making sausage, it pays to have some butchers on hand”).
Banks Use Life Insurance To Fund Bonuses (WSJ)
“Banks are using a little-known tactic to help pay bonuses, deferred pay and pensions they owe executives: They’re holding life-insurance policies on hundreds of thousands of their workers, with themselves as the beneficiaries.
[...]
Bank of America Corp. has the most life insurance on employees: $17.3 billion at the end of the first quarter, according to bank filings. Wachovia Corp. has $12 billion, J.P. Morgan Chase & Co. has $11.1 billion and Wells Fargo & Co. has $5.7 billion. (Wells Fargo acquired Wachovia at the end of last year.)”
BAC Raises $13.7B In Share Sale (Reuters)
Bank of America is now about half way to its state goal of $33.9B, having raised $13.7B in this effort, and $7.3B from the dumping of China Construction Bank Corp holdings.
“”We’re pleased to have this portion of our capital plan completed,” Chief Financial Officer Joe Price said in a statement. “This strengthens and diversifies our capital structure.”
White House Calling For Death Of SEC (Bloomberg)
“The Obama administration may call for stripping the Securities and Exchange Commission of some of its powers under a regulatory reorganization that could be unveiled as soon as next week, people familiar with the matter said.
The proposal, still being drafted, is likely to give the Federal Reserve more authority to supervise financial firms deemed too big to fail. The Fed may inherit some SEC functions, with others going to other agencies, the people said. On the table: giving oversight of mutual funds to a bank regulator or a new agency to police consumer-finance products, two people said.”
Officials Weigh Having One Mortgage Regulator (WSJ)
“Senior Obama administration officials are discussing giving a federal agency authority to police mortgages and other consumer-oriented financial products as part of the government’s broader overhaul of financial regulation, people familiar with the matter said.
The entity would aim to address what many critics perceive is a blind spot in the existing regulatory structure, which spreads consumer protection across multiple agencies.”
The Low Down On The Lingerie League (CNBC)
“Well, honestly, as you guys all know, a lot of leagues have come and gone that have tried to directly compete in some way with the NFL. That’s not what we’re doing here. This is a fun Friday night out with you and your buddies or you and your girlfriends to watch lingerie football and be part of this Disneyland for football fans type setting that we’re putting together in all the host stadiums and arenas.”
$$$ John Paulson bets on property recovery with new fund [Telegraph]
$$$ VW and Porsche merger is back on track. [Dealbook]
$$$ Bank of America priced a secondary offering of 825 million new shares at $10 each, David Faber reported late Tuesday. [MarketWatch]
“This isn’t like your typical Nor’easter where a tree falls and your lights flicker,” said Michael Daly, founder of the buyers’ brokerage True North Realty Associates in North Haven, New York, and a Hamptons real estate blogger. “This is more like a Katrina,” he said, alluding to the historic 2005 Category 5 Hurricane. “It’s going to be a number of years before the market recovers.”
Hamptons Homes Drop Most Since Realtors Kept Records [Bloomberg]
In case you are actively considering laying down the $32 million Dick and Kathy Fuld are asking for but can’t get away from the desk to check it out, here’s a floor plan of the space, courtesy of Curbed. Interior shots found here, though they’re of the place before Fuld moved in two and half years ago and likely do not reflect his decorating tastes (which leans more toward mid-century pimp). As one Curbed commenter (take a shot at identifying the fellow CEO below) put it, “I would suck God only knows how many cocks, just to walk through that place and have a look around,” though you may not feel the same way.
Earlier: Sleep Where Dick Fuld Hath Slept
Some population restructuring is said to be going down at the House of Dougan this afternoon. So far affected: leveraged finance. No word on parting packages (yet), though Shake Shack on Brady would be nice but unlikely, as he’s having some money trubs at the moment.
Of course there is no way they would try to abuse the 363 sale process again since that trick is kind of old.
General Motors Corp’s plan for a bankruptcy filing involves a quick sale of the company’s healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.
The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source.
The remaining assets of GM would stay in bankruptcy protection to satisfy other outstanding claims.
WOOPS. Yes, sure enough, here it is again. Of course, part of the problem here is that much of GM’s debt is spread out down to even retail levels. Craming down Grandma UAW’s GM bonds is, ironically, going to be much less easy than screwing over a few hedge funds, both public relations wise and as a practical matter.
GM bankruptcy plan eyes quick sale to gov’t [Reuters]
The Observer reports that Richard and the wife, Kathy, are “marketing” (but not yet listing, in order to avoid bad press) their 640 Park Avenue co-op, which mostly served as a crash pad for the former Lehman Brothers CEO and his various lieutenants (the couple’s primary residence is in Greenwich). It’ll set you back $32 million, which is $11 million more than they paid for it less than two and half years ago, but that sounds like a bargain when you think of the star power that comes with, and the various nicknacks left behind by Erin Callan after LEH slumber parties, which you could probably flip on eBay and pocket some decent coin. You’ll also score: four bedrooms, a 25 foot-long dining room, five fireplaces, and the ghost of a dearly departed chocolate lab, who will haunt your dreams.
Fuld Wants $32 Million For Park Co-Op [Observer via Cityfile]
In the grand rush to make sure that corporate America pays the price for excessive borrowing and that lenders feel the confinement of that narrow space left between “redlining” and “reverse-redlining,” somehow attacking credit card issuers seems to have hit the legislative agenda.
Normally, it would be our tendency to grumble about such things, but in this case, we would be remiss if we didn’t offer at least lukewarm support. The reality is that fee structures and back office stuff as obscure as balance processing order is complex enough in the world of consumer credit that a little bit of regulation could be a very nice thing. And, of course, issuers are just going to buoy overall rates up to meet any losses in fees they incur due to new legislation anyhow, so we aren’t sure exactly what Congress thinks it is doing here (unless it is simply moving revenues over to the actual interest paid- which, at least for transparency isn’t a bad idea anyhow).
The Journal gives us a peek at what to expect:
Existing balances: Issuers cannot retroactively change the rate on an existing balance unless the account is 60 days delinquent.
Payments: A consumer payment above the minimum applies first to the balance with the highest rate.
Teaser rates: Issuers cannot raise rates for the first year after an account opened. Promotional rates must last at least six months.
Changing Credit: Highlights of the Senate Credit-Card Bill [The Wall Street Journal]
