In case you were wondering.
Archive for May 2009
Kate Kelly’s much anticipated book on the last 72 hours of Bear Stearns, Street Fighters, just arrived at the DBHQ and while there’s nary a whisper of our favorite anecdote from those last few days (wherein Bear executives called Jim Chanos Thursday night while he was out to dinner and asked the Kynikos founder/prime brokerage client if he could do them a favor and go on CNBC to vouch for the fact that things were all good in the hood*), it seems like it’ll be a good read when we get around to it. Having only skimmed the index so far, we’ve noticed that in addition to no mentions of Jesus, there are exactly zero name checks of SAC Capital, other than a passing reference to that Vanity Fair article** (which alleged Stevie-B and Ken Griffin “wanted [Bear] to go down, and go down hard,” and that after they supposedly spread the rumor that ultimately killed BSC they “celebrated Bear’s collapse at a breakfast that following Sunday and planned a similar assault on Lehman the next week.”) only to be shot down as unsubstantiated BS– as it relates SAC. But! Several pages are devoted to Citadel, both for its intent to score some of that hot Bear Stearns ass via acquisition and also for the rumors it was shorting the firm. This has surely caused outrage and cries of “Has the whole world gone mad? Does no one fear us? We could take down a venerable institution or house of hemp in two hours flat if we so chose to, believe you me,” up in Stamford, and envious glares in the general direction of Chicago. Which is apparently the only firm fund you don’t wanna fuck with. Unlike those lovable, huggable balls of love up North. They wouldn’t hurt a fly.
*Which Chanos wisely declined, despite what must’ve been hilarious promises that BSC would owe him “big time.”
** Our thoughts on which have been expressed here.
And not above paying for it. You can be fairly certain, if Goldman has decided to settle that it is only the first stage of the big subprime wind-up. Securitization is that much closer to being illegal. Hurray.
The Goldman Sachs Group agreed to pay up to $60 million to settle Massachusetts’ complaints about the investment bank’s role in the subprime mortgage business, state officials said Monday.
The agreement includes up to $50 million for holders of the mortgages — which were made at often high rates to people with poor credit — and a $10 million payment to the state, a spokeswoman for state Attorney General Martha Coakley said.
The settlement follows an investigation into how Wall Street banks originated mortgages and then packaged them into bonds. It is the first such accord with a bank to focus on securitization of subprime mortgages, spokeswoman Amie Breton said.
Wall Street packaged assets into bonds. The horror. The horror.
Goldman Settles Subprime Complaint in Massachusetts [The New York Times]
I mean…it’d kind of stand to reason, wouldn’t it? Cause the one at left is dangerously close to having his weekly spa sessions cut off, if his owner, former Bear Stearns trader Gary Reback, doesn’t get his god damn money. Reback claims JPM/Bear owes him a $2 million bonus and $1.1 million in severance, for the job he did (and lost two months after the merger) trading complex collateralized mortgage obligations. According to JPM spokesman Brian Marchiony, the bank is “confident that Mr. Reback is not owed any money.” And as for the naysayers who apparently don’t care about keeping Reback in the lifestyle he’s become accustomed to and has thus far maintained (think we’d miss that watch tan? Please. Someone’s been hitting the links), because he was supposedly a factor in the sucker going down, Big G has this to say, via his lawyer:
“Gary had nothing to do with losses,” Sack said. “He traded different products completely outside the subprime-mortgage mess. They offered him a severance and now they’re reneging — it’s shocking, bad faith behavior.”
In quasi-related news, it’d be nice if some CEO or hedge fund manger could man up and and pose with his gay dog sometime in the near future, at which time we can officially call this thing a trend. Thanks.
Under the guise of discussing the woes faced by Playboy. Like we’re falling for that one. The spank rag is apparently considering printing fewer issues, and raising its cover price, on account of being faced with the issue of no one paying for porn– especially when it’s not live action– anymore. Bill Griffiths, claiming he has no idea how much a copy will set you back these days (right) casually wonders, “when was the last time anyone bought an issue of Playboy?” failing to disclose that the real reason he’d like to know is that your answers will determine whether or not the network goes with the previously planned “Bitches o’ CNBC” as a glossy or springs for the production costs to put this thing out on DVD. Do them a solid and answer honestly how you most frequently consume porn. Either way, you’re about to see a whole lot more Charlie Gasparino.
Don’t worry, it’s a good thing! According to Lloyd Blankfein, if you haven’t yet been fired, you’re safe, mostly likely, though no promises (unprecedented market volatility and all that jazz, plus the possibility that Hank Paulson will return to the nest and require the trading floor and its inhabitants be bulldozed for his new office/playpen where he’ll string up Ken Lewis by his balls each morning). The li’l fella told shareholders at the annual investor meeting Friday, “We have no plans on the horizon for downsizing, but we’ll respond to the environment,” he said. “We don’t feel the pressure to downsize now.” [via Clusterstock]
[via The Hill]
The words “hell fuck yeah” don’t actually exit TARP Congressional Oversight Panel chair Elizabeth Warren’s mouth but it sounds like she’s thinking it!
Melissa Francis: What restrictions would you want to put on the hedge funds and PIMCO and everyone else that applied to be a manager? Would you want to restrict their compensation structure?
Warren: You know I’m going to go back to a more basic principle if you want to take taxpayer dollars then you cannot pretend it’s business as usual. You are now involved in a giant government program in which we are spending taxpayer dollars to try and support a market that is clearly stumbling. Our job is to be outside that program, our job is to be cranky and to ask for accountability for every bit of it. I’m going to leave it in that structure.
Francis: So it’s not off the table. You might talk about limiting Bill Gross’s pay?
Warren: I think these are entirely appropriate questions.
As previously discussed, when AIG filed its 10Q last week, the firm noted that it wasn’t over-leveraging or stupidity that had adversely affected its business, but mean words. So it would stand to reason that the insurer would believe the key to getting back in it to win it would be as simple as some inspirational subject lines such as “Seize The Future, Motherfuckers.” We mentioned it this morning in Opening Bell but this thing, from vice-chairman Paula Reynolds, needs some closer attention. Seriously, let it sink in.
She wishes! Oh, you don’t know how badly she wishes. Anyway, while we we wait for the more intimate details of the plan, AIG told us this morning that Project Destiny is simply a working name and that senior executives are actively seeking something with “more get up and go.” All we’ve got so far is Project Take No Prisoners and Project Burn This Mother Fucker Down. Surely you can do better– though the latter would probably go pretty far if coupled with a daily pump-up viewing of this:
He also “hopes” that *someone* will surprise him a Boone’s of the month club membership but that doesn’t mean it’s gonna happen. Lewis said during a conference call this morning that he’s keeping his fingers crossed that it’s “it’s months, not years” before he’s freed of the shackles of the government’s blood money, which investors tell him every day to “get rid of as soon as possible.” Pausing to take a swing of Strawberry Hill and note, “this is really good,” K to the L added, “But we just have to see how the capital markets operate and then how the economy does. Because the whole intent of this exercise has been to make sure that banks have the proper amount of capital so that they can, in fact, lend money in this environment. So the pay back will be dependent on not only our view of things, but also the regulators view of things.”
Lewis said on Friday that he will walk out of the BAC building for good sometime “in the next three years.” Meaning he could very well pack up his shit (a number two pencil and a half-empty match book from the first bar he threw up in after being named CEO) and leave today or tomorrow or next Wednesday. Does he leave before the money’s paid back?
The timing seems unusual, what with Dubai’s burdensome debt load (think whole number multiples of GDP) the collapse of construction, abysmal human rights conditions for workers (stolen passports, indentured servitude) and increasingly obvious issues with the Dubai judicial system. Dubai poses as a western-friendly jurisdiction, but it is anything but when expats fall to the wrong side of the fence. This in an economy that is slave to foreign investment, tourism and external expertise. Into this gauntlet, rides KKR:
Kohlberg Kravis Roberts & Co.’s newly formed KKR MENA Ltd. has been granted a license by the Dubai Financial Services Authority to operate from the Dubai International Financial Centre.
KKR MENA is being run by Makram Azar, who is no stranger to the region. During his 18 years at Lehman Brothers Inc., Azar led the media, consumer and retail investment banking businesses in Europe and the Middle East, then was promoted to global head of sovereign wealth funds and chairman of media investment banking for Europe and the Middle East, based in Dubai. He joined KKR last September.
Best of luck, guys.
KKR sets up in Dubai [The Deal]
