Of course, they were all paid for with stolen money but who cares, the point is, among the more than $80 million “in questionable personal and business expenses financed by the firm’s investors” was a recent $1 million Disney cruise for the whole staff and an firmwide trip to china.* Nice! According Robert Mosier, the court-appointed receiver in the PEMGroup Ponz case, Pang also tapped into investor funds for three planes ($35 million), a deposit on a fourth jet ($3.5 million), loans to himself ($6.9 million), loans to the PEMGroup ($16 million) and transfers to “Pang entities” ($9.8 million). In related news, Pang requested yesterday that his assets be unfrozen, arguing that the SEC acted “improperly,” and was motivated by criticism of its failure to identify the Madoff scam, which is probably true, and also probably not going to get him off.
*In addition to the times he flew a bunch of girls from work to Vegas, and on the way back, “had a briefcase stuffed with cash and…started throwing money to the girls, in stacks of $10,000,” as documented in the above photo.
Archive for May 2009
Follow along with Big Vik here.
- This thing caused a lot of individual stress along the way
- Finishing it is an important milestone
- This was a stress test to handle challenges, not end challenges
- If we stick to our strategy and execute like we’ve been executing we’re going to be fine
- Personally, I’m just happy it’s over…I know there a lot of people who feel that way…at least 300,000 of them (Ed. Hi-ooo).
- It demonstrates we’ve got the strength and the stability to handle whatever the economy throws out there
- You know what it shows? It shows we can go toe to toe with anyone out there. We knew we could but now the market knows it too.
- Our recent history didn’t put us in the best possible light
- We didn’t get the credit we deserve for cutting expenses
- This point is obvious but I’m still going to say it: we need to keep focussing on profitability
- You can now look at your clients with confidence
- It doesn’t matter whether we make or lose money over the next two or three quarters.
- We want to pay back the TARP money with gratitude, as quickly as possible.
- Compensation is not about TARP; they’re two completely different issues.
- Our core differentiator is our people and our talent
- I believe in competitive compensation and paying people for performance
- The government “really likes the company.”
- We’re going to be great. Just keep doing what you’re doing.
Vikram Pandit invites you to a Town Hall on Friday, May 8, at 7:30 am NY time. The Town Hall will take place in the auditorium of 388 Greenwich Street (entrance on the 27th floor). All employees in the NY area are encouraged to attend in person. We recommend you arrive at least 15-30 minutes early to ensure you get a seat. If you are in midtown or Long Island City, you can also view from the 399 Park or Two Court Square auditoriums.
The meeting will also be broadcast live via videoconference, to select internal business networks, and to a listen-only phone line.
1. For complete Town Hall videoconferencing viewing details, visit:
http://www.citigroup.net/cms/broadcast/
2. To listen to the call by phone:
U.S. Toll Free Number: 1-877-726-1737
International/Local Number: 1-706-643-2935
UK Toll Free: 0808 238 0643
Asia Pac Toll: +61 288 236760
Conference ID for all participants: 99009887
Please dial in 5-10 minutes prior to conference start time. Enter the Conference ID, followed by the pound (#) sign. Your line will be placed on hold with music until the conference starts.
3. To watch live by streaming desktop video:
Viewers at ICG locations/Institutional Branches in the following cities may view the video stream by clicking the link below:
RBS Shits In Pot, Hands To Investors (WSJ)
RBS managed to further truncate its sack, turning in a $1.29B for the last quarter. The company warned of rough times to come on market buoyancy, intimating returns would have been much worse had the market not been artificially inflated.
“The loss reflected £2.86 billion in write-downs on the value of assets, compared with £656 million in the same period a year earlier. These were somewhat offset by a strong performance from investment banking operations, which Chief Executive Stephen Hester said would be “foolhardy” to expect to be repeated in future quarters.
The first quarter loss at RBS, which is 70.3% owned by the U.K. government, compares to a profit of £245 million a year earlier. Revenue rose 26% to £9.7 billion from £7.72 billion a year earlier.”
Stress Tests May Cut Loans Available To Public (WSJ)
Oh, if not for the unintended:
“Experts warn that the tests could have a serious unintended consequence: Loans could be harder to come by for consumers and businesses. That’s because the government’s intense focus on thicker capital cushions might prompt banks to hoard cash and further curtail lending, said Jim Eckenrode, banking research executive at TowerGroup, a financial consulting firm. He said banks will have less room to offer consumers low interest rates, while corporate customers may have a tougher time getting financing for commercial real-estate and property development.”
Toyota Posts $4.4B Loss (NYT)
The almost-made-in-America Japanese super-brand lost around $4.4B last year, their first annual loss since 1950. Sadly, this means nothing for the UAW; there’s nothing here for them to seize.
“The loss capped a bittersweet year for Toyota, which eclipsed General Motors as the world’s biggest automaker by unit sales in 2008 — a position Detroit-based G.M. held for 77 years only to be hit by a crisis of its own.”
ECB Cuts Rates (FT)
The European Central Bank cut its main interest rate by a quarter percentage point to 1 per cent, the lowest yet, and announced plans to buy €60bn of covered bonds, which are backed by mortgage or public sector loans.
Separately, the Bank of England said it would pump a further £50bn (€56bn) into the UK economy through its programme of “quantitative easing.”
Jobs Numbers! (Bloomberg)
Consensus: -630k to 8.9%, Range: -810k to -580k
$$$ Bank of America’s Director Hunt Starts [WSJ]
$$$ How Private Equity Could Rev Up the U.S. Economy [Business Week]
$$$ Data Point of the Day [anal_yst]
- YES: Jamie Dimon just bitched out the announcer while he was reading the whole forward looking statement thing. (“Can we just skip all that and get to the call? Thanks.”)
- CFO Mike Cavanagh in the house
- Rockin’ out with our glocks out. As you might’ve heard, the government says we don’t need shit.
- We feel like it was a conservative stress test…pretty stringent…reasonable
- The fact that we have such a strong position and earnings power makes us feel good
- We feel good about the future of the place
- Jamie has nothing to say
- Guy Moszkowski has a question about “the credit card stuff.” As presented rather than managed basis, does that change the bottom line? A: No.
- John McDonald: With the rules of repaying TARP clarified, can you talk more on that, Jamie?
- JD: The best we know right now is there will be a process for those who want to repay, which we will be involved in.
- Moshe Orenbuch: John and Guy asked my questions.
And we’re done here.
While I do Vikram, commenter Investorcluzo gets to have all the fun with a sauced up Ken Lewis.
- 6:02 pm we’re live!
- play along: http://webcastingplayer.corporate-ir.net/player/playerHOST.aspx?c=71595&EventId=2214128&StreamId=1310434&IndexId=&TIK={5ef39b08-9b04-4adf-beb2-1827606489c9}&RGS=3
- page 3 of the slide clearly states: “estimates provided herein by the Federal Reserve or Bank of America are not to be considered forecasts of expected losses or revenues” – this is just a test, only a test (in case you forgot)…
- presentation is 18 pages of sheer wonderment…
- Kenny-boy: we have to have a plan in 4 weeks. the bogey is large, but we have significant opportunities. we do not expect to convert tarp. oops, a little fumble getting this next point out. ken was humbled by the message to remove him from chairman (cue the drunk tears in 3, 2, 1…).
- Walter Massey, new chairman, announces the board set up a new committee (so they could get paid more $$$) to review capital yadda, yadda…changes do not mean a change in strategy “our model is not broken.”
- Back to Boone’s Boy: “we are well positioned…need to put our heads down”
- Joe Price in the house: The Fed changed the rules on us – they want common equity to be a part of the equation. regulators said we needed $33.9 bn of additional tier 1 common (not $34 b1tches).
- Price: regulators are not giving credit for deleveraging of the balance sheets of MER and BAC
- Okay, let’s compare 1Q vs Fed model: loss rates would need to double and remain to reach fed projection on residential mortgages; on the commercial portfolio 1.68% vs 3.67% for the feds (I guess they read Barron’s on Sunday)
- Damn Joe, slow down, I can’t follow all this slight of hand…
- Page 11: target $17 bn increase in common – converting NON-Gov’t pfd; ATM program – get ready for undercover dilution
- exchange offer for institutionally held pfd and convertable pfd. expect to price at a discount – may include a dutch auction.
- asset sales (as previously rumored).
- leaves a $7bn hole from “actual performance” over the next 6 months.
- Here we go: “finally, we could convert our government pfd stock” oh, but we’re not going to do that, so I’m not going to elaborate…
- Meredith Whitney up first (holla!): what up jp? true up or roll forward for pre-provision net? regulators excluded securities gains that we may have included, but they didn’t add back net interest income that we would have made
- what kind of disclosure will we get going forward? issuances are reportable items (review SEC regs much?).
Sent: Thursday, May 07, 2009 4:40 PM
To: WELLS CAPITAL MANAGEMENT
Subject: Stress Test News Release & Message from John Stumpf
A message to all team members from President, CEO John Stumpf
We’re well-capitalized, expect to fulfill $13.7 billion capital
requirement through earnings, other internally-generated sources and
announced common equity offering
http://teamworks.homestead.wellsfargo.com/content/corpcomm/archives/09may/tn090507.pdf
As you can see by the news release we issued this afternoon we’re
pleased that the Federal Reserve has confirmed that Wells Fargo has
enough total capital even in a severe economic stress case.
I want to summarize for you how we intend to increase common equity by
$13.7 billion as the government requires in its “stress test” plan for
Wells Fargo. Then, I’ll review the tremendous opportunity we all have
to collaborate together as One Wells Fargo to satisfy all our
customers’ financial needs and help them succeed financially.
“We’re strong, secure, well-capitalized, growing market share”
It’s important for all of us to remember this: we’re strong, secure,
well capitalized, growing market share and we’re building capital
every day through retained earnings, and expense initiatives related
to the Wachovia merger. We expect our strong earnings performance,
including strong revenue growth, the $6 billion secondary market
common equity offering, the benefits of lower expenses, the dividend
reduction, and issuing company stock to our benefit plans will
continue to add to our strong capital base and meet all regulatory
capital requirements. We’re more firmly anchored in our Vision &
Values than ever before.
- Vikram in the hizzous!
- He’s “glad the results have been announced”
- The markets needed transparency and only a process like this can create transparency
- The test was apparently a “rigorous and thorough process.” You don’t even want to know the places they looked.
- Where do we go from here?
1. It’s good to have the cushion to withstand economic stress, but we must remain focussed.
2. Very confident separating the Citi Corp and Citi Holdings businesses was the right step to take
3. We want to repay TARP as quickly as possibly. BUT, to be clear, we don’t view repaying of TARP as a license to go back to our old business practices.
- We have an enviable global network almost impossible to replicate, even if you tried, though not sure why you would
- CFO Ned Kelly takes the mic
- This was a milestone
- The results should put the whole “capital strength issue behind us”
- Geithner can S a fucking D, cause “we didn’t get enough credit for expense reductions”
- Guy Moszkowski has a question about conversions, which I miss
- And that’s it. Obviously question of the night– WHERE THE HELL IS MEREDITH WHITNEY?
And for what? Pillow talk with Lloyd Blankfein? Anyway, deputy chair Denis M. Hughes will take over for Friedman* in the interim, but we might as well nominated a permanent replacement now. Have at it.
Update: Jim Cramer (did you know he once worked at Goldman Sachs?) welcomes this news. Triumph of ethics and all that jazz. He adds that the whole Goldman Government thing wouldn’t always look so fishy if guys from other firms would go into public service, “which is what they tell you to do on the first day at Goldman Sachs.”
*Trivia: father of 25th Hour writer David Benioff, father in law of Amanda Peet
