Stress Test Results [PDF]
Archive for May 2009
This was expected but nice to confirm: these fuckers are all basically holding their calls at the same time. Obviously it comes down to Bank of America or Citi. On the one hand, I’m thinking you gotta go with C, ’cause it feels like we have less info on them than BAC. On the other, Ken Lewis will probably be full of more (drunken) horse shit, and you know we’re always up for that. And not that there’ll be much to report, but it’d be cool to hear Dimon tell the crowd, “looks like we’re still rockin out with our glocks out.” AMEX, no offense, is obviously out.
Wells Fargo @ 5:30pm
Call Number: (888) 744-3655
Conference ID: 99183364
Web Link: http://event.meetingstream.com/r.htm?e=146294&s=1&k=2A197319E09D5432D029195030655CD5
Presentation: https://www.wellsfargo.com/invest_relations/equity_offering
Meaning we can cross John Stumpf off this list?
Update: Morgan Stanley to offer $2 billion in common stock and sell $3 billion of debt not backed by the FDIC.
So, what do you make of the sudden collapse of 30 year Treasuries?
Open forum on the topic in comments.
30-Year Treasury Bond Collapses [Alea]
With vicious debt on the rise and a population in the grips of populist entitlement fervor, you could have guesses that those seeking to collect on consumer credit were eventually going to have to lift up the for a little while. Eventually is now.
New York Attorney General Andrew M. Cuomo has begun a national investigation into the debt- settlement industry, which he said preys upon consumers facing high credit-card debt.
Cuomo has subpoenaed 14 companies and one law firm to learn about their fee structures and how many people have benefited from their services, according to a statement by his office. Some companies have falsely advertised that they can reduce credit-card debt by as much as 75 percent through negotiations with creditors, according to the statement.
The debt-settlement plans usually assume that consumers will save money over one to three years, and those savings will be used to pay the company’s fees and any negotiated settlement, according to the statement. Most consumers can’t meet the savings requirements because of precarious finances, it said.
We are all for keeping debt collectors on a short leash. Things can get nasty quickly. Be this as it may, we wonder about sentences like this:
Some companies have falsely advertised that they can reduce credit-card debt by as much as 75 percent through negotiations with creditors, according to the statement.
Surely, somewhere, one of the clients (Grandma Davis?) of these comany’s has managed to reduce debt for one of their customers by 75%.
Sloppy reporting? Overaggressive prosecutions? Both? Neither?
Cuomo Starts National Debt-Settlement Industry Probe [Bloomberg]
Over the next month or so, there may be some openings for the role of CEO at our nation’s banks. If Ken Lewis, Vikram Pandit and friends are to get canned, many would like to know who the Christ would be willing to take their places. While we’d rather not be restricted to thinking up candidates from inside the box, given that there are slew of people whose names would go great with “Bank of America Chief,” among them Stan O’Neal, Gary Busey, Cliff Asness and either of the two Coreys, others are taking the opportunity to put female-only names in the hopper. For those of you familiar with their work, do we see it happening for any of these would-be lady CEOs?
1) Heidi Miller will be the first person on most recruitment lists for large financial services company CEOs. She is currently the head of the JPMorgan’s huge securities and treasury management operations. Before her current job she was CFO of Bank One. She is on the boards of Merck and General Mills. Her boss, Jamie Dimon, is at an age where he is likely to run JP Morgan for another decade. She will be a bank CEO by the end of the year.
We loves us some State Street. Thumbing your nose at the Capitalatchiks and their bogus “stress tests” is the quickest way to get on our good side in this day an age. Of course, it won’t last. “Improving capital” is going to come to everyone at one point or another, even if its only after the effect of having all your competition sitting on piles of cheap government cheesecapital sinks in. Pay no mind to the Frank behind the curtain when you take it though. That is a microphone in his pocket (it is a direct feed into CSPAN and the Congressional Record’s stenographer) and he’s happy to see you. Better start lending to the highest risk voters, and better start now.
State Street Corp. does not need to boost its capital levels as a result of the government’s recently concluded stress tests, according to people familiar with the matter.
A report in Wednesday’s Wall Street Journal said the bank was among those that needed to improve its capital.
As a result of the government’s two-and-a-half-month examination of the U.S.’s 19 largest financial institutions, a number of banks need take no action. In addition to State Street, they include J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and American Express Co.
State Street Doesn’t Need to Boost Capital [The Wall Street Journal]
“Story is that a major European Pension fund has indicated that it wants its money back from Blue Mountain. Given this is their largest investor at $400 million+, it is obviously not good.”
We Can Do This The Easy Way Or The Hard Way: Which Banks Are Willing To Work Hard For The Money?
By Equity Private
Given that I’m bored as all fuck here, I have a little proposal to pass the time. Ahead of the release of the official stress test results at 5PM today, I want us all to sit down and come up with a working list of CEOs who we think would agree to the following proposal by the US government. In exchange for the scratch they supposedly need, no strings attached, who, on live TV, with Charlie Gasparino as an announcer, would submit to A2M by Tim “Ole 3 Legs” Geithner? Vikram– given. Lewis, if we get him sufficiently sauced up, will do just about anything, capital or not. But what about John Mack? He’s probably got principles. Or does he? And Wells Fargo chief John Stumpf? No way no how or sign him up? And how would the Blessing o’ Buffett factor into the decision? On the one hand, the Oracle could just write WFC a check, sparing Stumpf the humiliation. On the other, this is the type of shit he hasn’t seen since his days in the whorehouse, and would likely put a smile on his face. So that’s something to think about. Anyway. Here’s a list of candidates to get you started:
Remember the good ole’ days? You know, back when it was believable fantasy that Chrysler and General Motors would be fine if only they could get several billion dollars to patch things up for the several months it was going to take until unit sales got back up to 2007 levels? Back when the cash sent to GM and Chrysler was a “loan” that might be paid back? Times have changed. Even GM’s own CFO admits that about the only hope for GM at this point is the total socialization of the automobile market in the United States. Can you remember a time in recent memory when this paragraph from GM’s CFO would have been greeted with anything but howling laughter?
Young said there were sales bright spots in such markets as China, Germany and Brazil, where governments implemented programs to stimulate demand. Results in those countries support GM’s argument in favor of U.S. incentives to promote auto purchases, he said.
So not only do we have to pay you to stay alive, we have to pay customers to buy your product? We pay customers to push revenue to pay ourselves back with and increase the number of cars on the road at a time when consuming oil is one of the nation’s cardinal sins. Mind you, this plan is actually delivered with a straight face.
Well, there is always the forward, out of the box thinking that gives us brilliant epiphanies like the GM-Segway PUMA partnership. (Crashtesting should be interesting to watch here). That ought to bolster revenues!
As for bondholders? Those evil fat cats with the arrogance to expect bankruptcy law to have meaning? Prepare to be demonized: The Treasury isn’t planning to give bondholders more than 10% of equity in any case. Bondholders value their stake at 58% which would frustrate the government’s plan to control the company post-bankruptcy. This makes GM’s bankruptcy, which seems a near certainty now, likely to be the massive, megabudget Hollywood blockbuster remake of that little independent picture “Chrysler,” that was filmed by the no-name director with some stolen film stock, a few friends and $15,000 in a Mexican border town. Remember, GM’s debt is all over the place, not concentrated 70% with four TARP wards.
General Motors Corp. said its first- quarter net loss widened to $5.98 billion as sales plunged by almost half, ratcheting up the prospect of a bankruptcy filing by a U.S.-imposed June 1 deadline.
The net loss of $9.78 a share swelled from $3.3 billion, or $5.74, a year earlier, Detroit-based GM said today. Revenue tumbled 47 percent to $22.4 billion, while cash consumption almost doubled from the previous quarter.
The results add to the pressure on GM as it races to cut costs and debt to avoid bankruptcy. With bondholders resisting a plan ordered by the Obama administration to exchange $27 billion in debt for a minority stake in a reorganized GM, the 100-year- old automaker may end up in court.
But don’t worry. According to GM, GM is ready to go “in and out” of bankruptcy “quickly.”
That’s a relief.
GM Loss Widens to $5.98 Billion as Bankruptcy Deadline Nears [Bloomberg]
If you thought that the initial rulings on a 363 sale at Chrysler were going to be the end of it, you probably weren’t paying attention. Right or wrong, several of these lenders are quite simply pissed off. We, of course, will be watching developments carefully.
Plans for a quick sale of Chrysler to a new company majority-owned by a union-aligned trust is “patently illegal” and will be fought in bankruptcy court, one of the holders of the automaker’s secured debt said on Thursday.
“We don’t succumb to pressure and don’t agree to unfair and illegal payment schemes,” said George J. Schultze, the managing member of Schultze Asset Management. “We’re not conflicted by TARP money or active stress tests.”
Three funds associated with the asset manager hold the automaker’s secured debt and are part of the nine-member Chrysler Non-TARP Lenders group fighting the restructuring proposal. TARP is the U.S. Treasury’s $700 billion Troubled Asset Relief Program.
