The U.S. v. U.K. battle continues. Remember all that talk about how the taxpayer might actually see a profit from all these bailout efforts? You know, when the Treasury or the Fed or whatever sold all this stuff back to dumb moneyinvestors with a long-term perspective at prices higher than they paid? Well, The Bank of England is a bit ahead of us there.
The Bank of England revealed yesterday that it had racked up record profits of almost £1 billion in the year to February as its fee-earning activities burgeoned amid the global financial and economic turmoil.
During a crisis that has brought some of the mightiest forces in global banking to their knees — and some to collapse and oblivion — the Bank emerged as having thrived while famed commercial institutions foundered.
Figures released yesterday in the Bank’s annual report showed that in the 12 months to February 28 it raked in profits before tax of £995 million. This marks a more than fivefold rise from £197 million in 2008 and is the biggest figure since its establishment in 1694.
This little note after the main article made our day, however:
The proportion of banknotes found to be counterfeit has more than doubled in a year, the result of three “major criminal gangs” pumping fake notes into the economy, the Bank of England said.
As if there isn’t enough inflation going on….
Bank of England makes £1bn profit from bailouts after riding to rescue of high street lenders [The Times Online]
Break out the Boone’s, ladies– it’s party time in Charlotte. Remember those BAC shares Ken Lewis bought in January? The Bank of Amerillwide chief made a nice $2.5 million paper profit (or 500,000 bottles of Strawberry Hill) on the 400,000 votes of confidence, according to Bloomberg, which the newswire helpfully points out is “more than his $1.5 million salary in 2008, when Lewis got no bonus for running Bank of America.” Twelve other top managers also did okay for themselves on 640,000 shares bought for as little as $3.78, having made over $4 million among them.
Not faring as well was former Countrywide chief-cum-Bank of America make-up artist Angelo Mozilo, who lost money intended to go toward legal fees playing the slots.
From having Paulson shove the money down his throat all the to trying to pay it back, this thing has been worse than the time our favorite Boy Toy CEO stuck Little Dimon in a pencil sharpener “on a lark.” You can bet your asses there will be PTSD night terrors.
It’s not that we don’t like J. Erza Merkin, but one wondered why, given appearances, he remained “in charge” thus far. Alas, no more.
Financier and money manager J. Ezra Merkin agreed to New York Attorney General Andrew Cuomo’s demands to step down as manager of his hedge funds and place them into receivership, according to a person familiar with the matter.
Mr. Merkin, who funneled $2.4 billion from universities and nonprofit organizations into Bernard Madoff’s firm, was charged last month on allegations he “betrayed hundreds of investors” by repeatedly lying to them about how he invested their money.
There is little doubt that the Madoff affair drew the waters back to a great extent and, to borrow a turn of phrase, exposed a number of skinny dippers in the water of finance. In this connection it is no accident that New York State is struggling with its own “promoters scandal” and film distribution underwriting embarrassment at present. We suspect, given this, that Merkin is but the tip of the iceberg. More fun and games to come, no doubt. Probably less amusing names though.
Cuomo Removes Merkin as Manager of Funds [The Wall Street Journal]
(We were very tempted to shorten this to “Cuomo Removes Merkin,” but we decided that would be a bit much).
Mind Katalan’s pearls of wisdom and one day you too could be talkin’ rentals without taking your sunglasses off. If you play your cards right.
“I’m looking for something three-bedrooms, swimming pool, modern, for $50,000 to $75,000 for the season,” said David Katalan, who used to work as a trader at Merrill Lynch but is currently unemployed. He and a companion, a publicist who declined to give her name, were buying scoops of cappuccino crunch at the Ice Cream Club of Sag Harbor. Mr. Katalan said he was making lowball offers on houses listed for $90,000 to $100,000 for the season.
“How do I still have money to rent a house?” he said before he was asked, without removing his reflective aviator sunglasses. “I didn’t spend like crazy over the last 12 years. I saved.” His summer will not be about spending $2,000 for bottle service at a club. “It’s going to be low-key,” Mr. Katalan said. “Barbecues.”
Blowing every last cent of your non-existent bonus on the rails you’ll be blowing off a buxom prostie’s tits later tonight (or possibly at lunch)? Have we got the opportunity for you! A bunch of producers want to get you and your friends (or colleagues) in front of a camera, living like it’s 2006. Here’s the pitch:
We’re just looking for people that are still partying every weeknight in the city and then out at the clubs in the Hamptons on the weekends. It would ideally be aired once a week over the course of the summer, so maybe 10-12 episodes. It’s completely cliché, cheesy, and has been done, but we’re kind of aiming to mock ourselves a little bit on this one.
Interested? Get in touch.
Dubai isn’t having the best day. Debt piles up. Their reliance on foreign workers, both of the white and blue collar variety, is just fine, until those workers begin to discover that the Western enclave in the middle of the Middle East lacks anything resembling a Western legal system. Now, more disturbing tidings:
In a surprise move, the Dubai government Monday removed Nasser Al Shaikh from his position as director general of the emirate’s finance department, raising questions about the stewardship of its economic restructuring.
No reasons were given for the decision, which comes just months after he was appointed as a key official in Dubai’s efforts to restructure its economy to cope with the global financial crisis.
A statement on the official Emirates News Agency said Al Shaikh was replaced by a royal decree from Dubai’s ruler by Abdul Rahman Saleh Al Saleh. Al Shaikh will assume a minor role as assistant director in the office of foreign affairs in Dubai.
Has anyone else noticed that the vast majority of skylines of Dubai one sees are artist renderings?
Dubai Removes Finance Director Al Shaikh [The Wall Street Journal]
The NYT Magazine printed a piece over the weekend called “Too Much Credit,” penned by hedge funder Ben Heller, who runs the emerging markets desk at his firm. Heller wrote about the frustration he would inspire in salesmen trying to pitch him to make loans and investments in developing countries, by asking “pointed questions,” and sometimes– OMFG– passing on deals. One guy was particularly pissed off that Heller turned down a gas project in Indonesia after it came out that it was “controlled by a shady family that defaulted on lenders a few years before, sticking them with losses of 90 cents on the dollar.”
As the credit bubble grew, and more bankers started taking Heller’s rejections personally, he stopped saying no fucking way from the get-go, listened to every ridic pitch, and actually said yes to a few he later regretted the morning after (“Anybody out there care for a small Argentine oil field? I’ve been assured that the angry gang of Mapuche activists blockading it will be gone soon.”)
Then, last year, when things got really bad, Heller’s firm decided it had to take off the beer goggles (kidding: it is a serious, prudent firm that never drinks on the job) and drastically cut back on EM loans (much like…a lot of places). And passing on the deals they might’ve in better times given a drunken bang (ultimately leading to PCD– post-coital depression) felt good! Sayeth BH:
The constraint on new investment paradoxically restored my freedom. “No!” I declared.
“Just … no?”
“Should I elaborate?” I asked. I told him that it was the dumbest idea I’d heard in a long while, and that I’d sooner pile up hundred-dollar bills to make a bonfire than invest.
I hung up abruptly, and I began to feel a long-forgotten rush. The rush of calling foolishness by its true name. The pleasure of meting out chastisement to presumption. The satisfaction of knowing that my no meant a death blow for this bad idea, because there wasn’t an uncritical yes waiting next door. I am capital’s gatekeeper, and you shall not pass!
Nice! Standards and whatnot. Obviously, though, we wanted more horror stories, so we emailed Ben and asked him to tell us about some other deals that had been de-nied (as recently as…yesterday).
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MS, JPM, and GS Looking To Repay TARP (Bloomberg)
The big three are looking to return the loot, and have filed to do so with proper authorities (they’re seeking the permission of the Federal Reserve, which is not only necessary but important). The combined hand back would total about $45B, which should leave taxpayers elated.
“The refunds would be the first by the biggest banks that participated in the program. As of May 15, 14 of the smaller banks that received capital under the program had already repaid it, according to data compiled by Bloomberg.”
US Home Starts Up In April (Reuters)
Home starts should hit 520,000 in April, up from 510,000 in March.
“Although starts may have found a bottom, a strong rebound in construction is unlikely,” Moody’s Economy.com wrote in its weekly outlook. “The glut of homes is so large that a typical early-cycle rebound in homebuilding looks far out of reach.”
Google Uses Algorithm To Prevent “Brain Drain” (WSJ)
“The Internet search giant recently began crunching data from employee reviews and promotion and pay histories in a mathematical formula Google says can identify which of its 20,000 employees are most likely to quit.
Google officials are reluctant to share details of the formula, which is still being tested. The inputs include information from surveys and peer reviews, and Google says the algorithm already has identified employees who felt underused, a key complaint among those who contemplate leaving.”
BlackRock Draws Attention On Advising US (NYT)
“It makes sense for the government to turn to financial experts for help, but BlackRock has become so ubiquitous that some lawmakers, federal auditors and watchdog groups are now asking if the firm does too much, and if its roles as government adviser, giant federal contractor and private money manager will inevitably collide.”
Local Banks Face Big Losses (WSJ)
Commercial real-estate loans could generate losses of $100 billion by the end of next year at more than 900 small and midsize U.S. banks if the economy’s woes deepen, according to an analysis by The Wall Street Journal.
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Michael Lewis has a billion word review of out (actual count: around 4,700) on Alice Schroeder’s Warren Buffett biography, Snowball. As is our wont, we’ve taken the liberty of excerpting the most juvenile parts, which we think dovetail together nicely, and give larger meaning to the whole.
He confines himself to the diet of an eight-year-old, refusing to eat anything much beyond spaghetti, hamburgers, and grilled cheese sandwiches. Schroeder describes a bizarre scene in which Katherine Graham escorted Buffett to dinner at the Manhattan apartment of Sony Chairman Akio Morita. Japanese chefs served plate after plate that Buffett left completely untouched. “By the end of fifteen courses, he still had not eaten a bite,” writes Schroeder. “The Moritas could not have been more polite, which added to his humiliation. He was desperate to escape back to Kay’s apartment, where popcorn and peanuts and strawberry ice cream awaited him. ‘It was the worst,’ he says about the meal he did not eat. ‘I’ve had others like it but it was by far the worst. I will never eat Japanese food again.’”
Through it all, Buffett maintained his desire to present to the outside world a life simple and ordinary. He only ever made one public statement on his polygamous family arrangements (“[I]f you knew the people involved, you’d see that it suited all of us quite well”), though he added to Schroeder that “they both need to give, and I’m a great receiver, so it works for them.”
The Master Of Money [TNR via AWL]
