Woops!
Archive for May 2009
Those are some of Citi’s answers to Part Two of the government’s stress test, the written portion, which the Big C apparently thought was “just a big joke.” Here are some other questions and answers from the examination administered last Saturday, as obtained by SNL.
* In the event of a nationwide run on the banks, how much in total cash assets does your bank have on hand to pay depositors?
Bank of America wrote: “not enough that’s for sure.”
Citi wrote: “Geithner sucks.”
GMAC wrote: “taxpayer bailout.”
* Given their historic under-representation in banking, women should be encouraged to enter the field as long as they are ______. (the correct answer was “as long as they are qualified.”)
Morgan Stanley wrote: “as long as they are doable.”
Bank of NY Mellon wrote: “immediate family members.”
Citi wrote: “Hey Geithner, we’ve got a job for your mother.”
Optimism in the face of facts seems to be the theme this week, and it’s only Monday. Don’t shed any tears. Growth is just around the corner. Right after our massive deficit becomes a bit more massive and the tens of billions of savings add up to offset hundreds of billions. What are you worried about?
The Obama administration projected that the U.S. economy will expand at a 3.5 percent annual rate by year-end, a rebound that would be almost twice as strong as private forecasters expect.
In the economic assumptions of its 2010 budget request, President Barack Obama’s economic team didn’t change its 2009 predictions for a 1.2 percent drop in gross domestic product this year, slower inflation, higher unemployment and lower market interest rates than a year ago.
White House Sees 3.5% Growth by Year-End, Exceeding Forecasts [Bloomberg]
Back in 2007 Stephen Dent hopped on SeekingArrangement.com to seek out an arrangement wherein as a “sugar daddy” he would pay a “sugar baby” for “companionship.” The testimonial at left from a man who offers “successful CEO” as his job title let Dent know the place was legit. He started chatting up some ladies, and after establishing a rapport, would make the bold move to take this thing offline. Dent being a prudent businessman, though, he took some precautions first. Here’s the form letter he’d send to prospective real-life companions:
“I can only meet during the weekdays around midday. In general I am not available at night or during the weekends. Furthermore, we would need to meet only when my wife is away. Since I don’t really travel, for the most part the meetings would have to be out here in the Greenwich-Stamford area.
Regarding your financial assistance, my initial thoughts are cash compensation in the range of $2,000 to $3,000 per meeting, assuming that we meet about twice a month, plus expenses. If there is anything of an impersonal nature (such as electronics items) that you would like me to purchase for you online and have shipped to your home, I’d be happy to do this. If you are interested in relocating, I will pay for your moving expenses and switch you over to a monthly allowance which would cover your expenses. If you have other financial needs, I’d be happy to discuss them. I am flexible on this whole subject, and am even willing to wire money directly to your checking account if needed.”
Imagine Dent’s surprise when he found out some of the companions he met online were taking him for a ride! After being fooled the first time (and the subsequent arrest of his lady-friend’s pimp/husband), a hardened Dent laid low for a while, but after a few months, he started getting that sugar baby itch again. He needed to scratch but rather than simply take a walk down to one of the seedier areas of Stamford, or use an alternative prostitution-lite site, such as SugarDaddy.com, Dent decided to return to the scene of the crime. Don’t worry, though, he changed his account and registered e-mail. He’s not stupid or anything. I mean, he did continue using the same screen-name but why should that matter? How else would his prostie friends know he was back in action?
…just months after Sipel’s sentencing, Dent was back on SeekingArrangement.com again, this time with a new account, but still corresponding with the same women. “He closed his previous account and began to use a different e-mail address but the same screen name to correspond with his women friends,” police documents state.
Dent’s Internet chats once again turned ugly when Dawn Jessop, 28, of Ohio, allegedly began blackmailing Dent in November 2008, threatening to release their correspondence and expose Dent to the community for his alleged role in “patronizing prostitutes,” according to police documents. Dent then wired two $25,000 payments to Jessop and her mother, and another $50,000 to her husband, Christopher Jessop. It was not until the FBI began to survey Dent’s arrangements to drop $50,000 in the Jessops’ account in January 2009 that Greenwich police were called to intervene, according to the warrant.
The Jessops currently face charges of first-degree larceny by extortion and first-degree conspiracy to commit larceny. Dawn Jessop was released on bond last week but her husband is being held on $300,000 bond at the Bridgeport Correctional Center.
According to police documents, Dent was also blackmailed for $9,000 by a third woman, but no charges have been filed in that case.
For the many of you reading who identify with Dent’s situation but have been too scared to come forward, either because you’re nervous about legal proceedings, or embarrassment, or how your hedge fund’s clients might judge the situation– do not fear. Big D is being treated as a victim, and “the decision not to investigate Dent also partly rested on the fact that police did not want to deter other victims of extortion from coming forward.” There’s nothing to be afraid of. We’re good listeners and want to hear your stories.
You just knew something wasn’t right with Sir Allen Stanford. Too loud. Too bold. Too self-promoting. Totally out of the mold for the quiet, offshore banking empire he was supposed to be heading. How would it be that anyone so loud would fail to attract the notice of the Regulatori for so many years? Well, if the Regulatori had reason to ignore him, as one of their own. If, say, Stanford were an informant for the DEA, and other narcodollar sniffing parties.
His status as a confidential informant could have secured Stanford a degree of protection from financial regulators such as the US Securities and Exchange Commission (SEC) and may explain why a SEC investigation into his dealings in 2006 was quietly dropped following a request by another American government agency.
A source close to the DEA told Panorama: “We were convinced that Stanford’s bank attracted millions of narco-dollars but it was very difficult to get the evidence to nail him. The word is that Stanford has been a confidential informer for the DEA since at least 1999.”
Be as loud as you want Sir Allen.
Stanford ‘was informant for US anti-drug agents’ [The Independent]
Given that “Too Big To Fail” has become the catchphrase of the financial crisis, is it any surprise that antitrust has become a particular fascination of enforcement? Of course not.
The U.S. government plans to reverse its antitrust policy and put more pressure on companies eyeing bigger market share through their dominance, the New York Times reported on its website.
Christine Varney, head of the U.S. Justice Department’s antitrust division, will announce the policy reversal in a speech on Monday at the Center for American Progress, the paper said, citing people who she consulted about the policy shift.
The changed policy will be a reversal from that of the Bush administration, during which not a single case against a dominant firm was lodged for violating the antimonopoly law, the paper said.
One of the assumptions that underlies the post-crisis world is that a wave of consolidation would be one of the end games that cleans up the broken eggs left behind. It will be interesting to see how the rubber of the new anti-merger philosophy meets the road.
U.S. to make antitrust policy tougher: report [Reuters]
Some Banks Won Concessions On Tests (WSJ)
“The Fed ultimately accepted some of the banks’ pleas, but rejected others. Shortly before the test results were unveiled Thursday, the capital shortfalls at some banks shrank, in some cases dramatically, according to people familiar with the matter.”
Bank of America was originally more than $50 billion; Wells Fargo was $17.3 billion; Citigroup was $35 billion.
AIG Restructure Could Take A While (Reuters)
To think AIG could pay back its commitments to the United States with any speed would be an exercise in intellectual futility; in fact, the government (arguably) has done everything it can to ensure that it never gets paid back. The $180B is gone, girls, and when the historians come around looking for answers, just remember you lit the company on fire for some $165MM.
“The April 23 memo described an initiative code-named ‘Project Destiny’, which involved a 45-day review of AIG’s businesses that is supposed to lead to the multi-year restructuring plan, the paper said.”
Ackman To Make Case For Target Board Change (WSJ)
“Hedge-fund mogul Bill Ackman has called a meeting in Manhattan Monday to introduce his slate of five dissident directors — including himself — that he is asking shareholders to elect May 28.
Mr. Ackman says his candidates will bring new ideas to the discount retailer and relevant expertise to a board he describes as slow to make critical decisions. “We’re not talking about revolution, but evolution,” he said in an interview. “We think we can make the company better.”"
HSBC Cautious Despite Signs Of Recovery (FT)
“Here’s the deal”, added HSBC, “we kind of got wrecked out there last year. That aside, there’s a lot of numbers, and they’re all moving; we can’t get a solid feel for what’s next. Fucking numbers are everywhere. Also, I mean, the mortgages; who saw that shit coming?”
Barclays Gets New Interest In iShares (Reuters)
“A Barclays spokesman said there had been “tremendous” interest in iShares from “both strategic and private equity” since April 9, when Barclays agreed to sell the asset management firm to private equity company CVC for 3 billion pounds ($4.4 billion) but kept the right to hunt for a better deal until June 18.”
Bank Of America To Sell Shares In Chinese Bank (WSJ)
“Wall Street firms are scrambling to find buyers for a chunk of Bank of America Corp.’s 16.7% stake in China Construction Bank Corp., according to people familiar with the talks.
But at least one potential buyer approached — Singapore state-owned investment firm Temasek Holdings Pte. Ltd. — considers the prospects for a deal slim because of price, said another person familiar with the matter.
Bank of America is free to sell one-third of the stake following an expired lock-up period Thursday. The one-third stake is valued at close to US$9 billion based on where CCB shares were trading earlier Monday, though sale prices for large stakes are usually at somewhat lower prices.”
Using International Trade To Launder Money (Miami Herald)
“Zdanowicz explained how it would be easy to launder $1 million in cash quickly and move it out of the country: “I’d buy 200 Rolex watches in Miami [at about $5,000 each] and export them to my partner in Colombia, charging $5 each on the invoice. My partner there pays me $1,000 for the shipment, sells the watches at the market rate in Colombia and we’ve laundered $1 million.”
CBNC Wants You To Know: It’s Still A Bear Market (CNBC)
We don’t want you optimists out there getting too much of that ‘happy’ shit going; this is still a downturn, it’s just the upside of a downturn. Adjust attitudes accordingly.
“…because the last thing Tim Geithner needs is someone else treating him like a fire hydrant.” (1:01)
$$$ “The director of the White House Military Office, Louis Caldera, has resigned, an administration official said Friday, two weeks after he authorized an Air Force One flyover of the Statue of Liberty.” Caldera’s resignation letter. [NYT, WSJ]
$$$ Bernie and Ruth to start new Ponz scam online [Cityfile]
$$$ Madoff Trustee Starts ‘Hardship Program’ for Victims [Dealbook]
$$$ Job of the Week: Morgan Stanley needs an IB-VP. That could be you. [DB Career Center]
$$$ Tremont founder Sandra Manzke tells her Madoff sob story. [PBS]
What can we say? We gave it our best shot. Next time!
Performance for Tiger Global Ltd.
April 2009: -12.9%
YTD: -8.1%
Also.
Turnabout is fair play. Remember when we laughed at the Japanese for the real-estate deals they took a bath on at the top of the market? Those birds have, it seems, come home to roost as a number of American firms shed Japanese real-estate at distressed prices. To wit:
American International Group Inc. is close to selling its Tokyo headquarters building to Nippon Life Insurance Co., Japan’s largest life insurer, for about $1 billion, a person familiar with the situation said.
An agreement for the 15-story tower in central Tokyo’s Marunouchi district may be announced as early as next week, the person said. Negotiations are continuing, said the person, who declined to be identified because the talks are private.
The property is in the most expensive office district in Japan, next to the Imperial Palace, making a potential sale a benchmark for commercial real estate prices. AIG, based in New York, is selling property and businesses after being bailed out four times by the U.S. government. The company has tapped about $45.5 billion from a U.S. credit line as of last week.
Ouch. That hurts.
AIG Said to Be Near $1 Billion Sale of Tokyo Tower to Nippon [Bloomberg]
