PPIP Founders (WSJ)
Shocker: “A government program designed to rid banks of bad loans, part of a broader effort once viewed as central to tackling the financial crisis, is stalling and may soon be put on hold, according to people familiar with the matter.”
Citi, SEC In Talks To Settle Asset Probe (WSJ)
“Citigroup Inc. is in the early stages of negotiating with the Securities and Exchange Commission to settle an investigation into whether it misled investors by not properly disclosing the amount of troubled mortgage assets it held as the market began to implode in 2007, people familiar with the matter say.
The talks signal that the SEC could be moving toward resolving a number of civil probes that began in late 2007, when mortgage-related losses began mounting on the books of banks and Wall Street firms. A Citigroup spokesman said the firm’s policy isn’t to comment on such regulatory issues.”
Fortress Takes First Steps Into Retail Banking (FT)
“Fortress Investment Group, a listed private equity and hedge fund company with $26.5bn in assets, is nearing an agreement that would mark the first step in a push into US retail banking, according to people familiar with the transaction.
Under a deal that could be announced as early as Thursday, Fortress and other investors – including private equity firms Crestview Partners and Lightyear Capital – will inject $800m in fresh capital into a small Florida bank called First Southern.”
Bank Czar Likely (WSJ)
“The new bank regulatory agency could prove controversial because it would consolidate the Office of the Comptroller of the Currency and the Office of Thrift Supervision and strip supervisory powers from the Federal Reserve and the Federal Deposit Insurance Corp.
The Fed and the FDIC would gain other powers, though, as White House officials want the Fed to be able to oversee systemic risks in the economy. They also want the FDIC to have new powers to take large financial companies that aren’t banks into receivership.”
We’ll See A Target Vote Today (Reuters)
“In an increasingly heated proxy contest, Ackman is seeking enough shareholder votes to win five seats on the retailer’s board, while Target is running a slate of four incumbent directors.
Shareholders will also have to vote on the size of the board — Target wants to set it at 12, while Ackman claims it should be 13.”
Archive for May 2009
$$$ Einhorn’s next victim [Cityfile]
$$$ “Why the US will not get downgraded” [FT Alphaville]
$$$ The Cost Of Taking Time Off [The Atlantic]
Re: the cuts that went down earlier today at Barcap, a bit more color:
The Energy Group was affected, as well. One guy, headed in thinking he was having a talk about “transferring to London” was instead told, “Well, this is not the conversation you thought we were going to have.”
Steven Rattner, head of the U.S. Treasury Department’s automotive team, has a net worth of at least $188 million and held shares in an investment fund run by the majority owner of Chrysler LLC, according to his financial- disclosure statement.
Rattner, co-founder of Quadrangle Group LLC, also bet as much as $150,000 on General Motors Corp.’s senior secured loans using a credit-default swaps index that guarantees the secured debt of 100 companies, including GM, the filing shows.
Rattner Worth at Least $188 Million, Disclosures Show [Bloomberg]
Pequot Capital Management begins the several month-long wind-down.
Conspiracy Update: Related?
N.Y. Cuts Pension Ties to 10 Fund Managers, Report Says
Four of the 10 firms that it has severed ties with were listed, but not charged, in an indictment brought by Mr. Cuomo’s office against two top associates to Alan Hevesi, the former comptroller, The Daily News reported. Those four are Consulting Services Group, HFV Management, Olympia Capital Management and Pequot Capital Management, it said.
The Wall Street Journal has it: “Pequot Capital to close amid an ongoing SEC-DOJ probe into possible insider trading.”
“Public disclosures about the continuing investigation have cast a cloud over the firm and have become a source of personal distraction,” Mr. Samberg wrote in a letter that was sent to investors of his Pequot Capital Management Inc. late in the day on Wednesday. “With the situation increasingly untenable for the firm and for me, I have concluded that Pequot can no longer stay in business.”
Letter from Samberg, via the Journal:
May 27, 2009
To Our Clients and Friends:
I am writing to you, our loyal clients and friends, to let you know that I have reached the painful conclusion that it is necessary to wind down Pequot’s business.
In the coming months, we plan to liquidate the Core Funds and return cash to investors while spinning out Matawin under the leadership of Mike Corasaniti and Special Opportunities under the leadership of Rob Webster and Paul Mellinger.
Some nice suggestions from Donald Marron to end the tyranny of the TARP, but we despair that they shall ever come to pass.
Treasury should give up on negotiated sales and simply auction the warrants it received through its TARP investments. Auctioning the warrants will:
* Enhance the transparency of the process (since no one can accuse Treasury of playing favorites in the auction);
* Ensure that taxpayers get a fair return on their investment (since the warrants will be sold at their real market value);
* Allow banks, if they choose, to preserve needed capital (if investors purchase the warrants, banks won’t have to use up any of their scarce capital); and
* Free banks from the nuisance of government involvement (since banks get free of TARP even if private investors end up purchasing the warrants).
The reality is that the TARP has been far more useful to the Treasury and the Administration in general as a cudgel than as a stimulus and bank support program. Donald’s first and last points are, in fact, bugs, not features to a Treasury that, for example, negotiates the results of stress tests with its regulatees. Of course, it would be interesting if The Big Guy financed minimum pricing limits on the warrants.
[Donald Marron via Alea]
Yes, your boss might verbally abuse and berate you in front of the team for one down month. She might shove her stiletto up your ass for daring to disagree with her outlook on Vikram Pandit’s hairline. He might throw an empty bottle of whatever’s on his desk at your head for even hinting that buying another investment bank might not be the best way to ingratiate himself to shareholders. He may smash every monitor within arm’s length when unprecedented market volatility doesn’t land in his favor, such that walking into his office without shoes would be extremely dangerous. But he most likely doesn’t pull this shtick.*
The CEO of the nation’s largest linen company went berserk and brutally beat his housemaid in his posh Upper East Side apartment — leaving her with swelling on the brain, officials said. George Bardwil, 57, who runs Bardwil Home, was charged with second degree assault in Sunday’s savage attack that left the maid unconscious in a pool of blood. The maid – who was only on her second day on the job – told police that when she arrived for work that afternoon, Bardwil opened the door and began pummeling her. After repeatedly striking her on the head and face, Bardwil then dragged her across the floor to the living room where she blacked out.
[...]
Bardwil initially told police he found the maid lying on the floor when he came out of the shower and called for help…But he later admitted that he struck the woman because she had stolen money from him. “She saw where I kept an envelope with $5,500 in it. I know she took it. When she wouldn’t admit it, I hit her three times in the head with my closed fist,” he said.
Linen CEO Beat His Maid [NYP via Cityfile]
*Or does he? In which case, give us a call. We’re good listeners!
Another day, another pro-athlete added to the Morgan Stanley roster as part of an elaborate scheme John Mack’s been cooking up, the details of which are yet to be revealed. Today it’s New York Jets wide receiver Wayne Chrebet, as a financial adviser (previously, it was Carolinas wide receiver Steve Smith, as an intern; tomorrow, OJ, as a compliance officer).
Chrebet is joining the Moldaver Group, a wealth-management team with six investment professionals at its Red Bank office, New York-based Morgan Stanley said in a statement today. He has been at Morgan Stanley about six months and recently completed all his tests and training to become a financial adviser. Chrebet holds an undergraduate degree in criminal justice from Hofstra University.
“Ever since I made my first dollar I made it a point of learning about the market, learning where my investments are,” Chrebet said. “I’ve always helped out the younger guys through my career and some of the other players who weren’t as knowledgeable and took pride in that…It’s a great second career for me.”
Nice! Heartwarming and all that. Of course, probably difficult to take for the guys who were making it their first careers until the hatchet man came a’ calling, and don’t have the luxury of taking the position Chrebet left vacant with the Jets, but what can you do. This, however, is troubling:
“Obviously you don’t hear 70,000 people cheering for you when you are doing this, but it’s exciting,” Chrebet said in a phone interview. “I love it.”
Don’t hear 70,000 people cheering for you when you’re doing this? On behalf of, let’s just go with Jim Simons, who has a stadium’s worth of SUNY Stony Brook students he bussed in do a little dance every time he makes a buck, we say, speak for yourself. As for the rest of you– dream big.
It is an often forgotten fact that the United States is among the minority as a country that taxes citizens on their world-wide income. It is not self-evident that U.S. based corporations should pay tax on foreign income. This is certainly not some kind of global consensus, after all. So it is a tad annoying to listen to the bleating that seems to accompany articles about firms seeking to minimize taxation via offshore structures. Bear in mind, the vast majority of these structures are legal. The phrase “closing a tax loophole” is badly abused in this respect. We could as easily point out that your deductions for interest payments are “loopholes” that need to be “closed.” Likewise, we might insist that the loophole that fails to tax the last 55% of your income be closed.
Be this as it may, the whining from Caribbean nations that has resulted is grating:
Caribbean nations say they will be the economic victims of U.S. President Barack Obama’s proposals to collect more taxes on the offshore transactions of U.S. individuals and corporations.
Caribbean countries have spent decades building up a financial industry to serve companies and individuals from the U.S. and Europe, touting low tax rates, a friendly regulatory environment and proximity to the U.S. financial markets.
Caribbean nations are also the economic victims of drug enforcement efforts though, aren’t they?
Caribbean Nations Squawk At US Plans To Crack Down On Tax Havens [Dow Jones]
We are not Cuban fans. This should come as no surprise to long-time Dealbreaker readers. Be this as it may, we cannot, without comment, let pass the noise that is the SEC’s case against Cuban for “insider trading.” In fact, we might go so far as to say that the prosecution of Cuban is demonstrative of everything that is wrong with the SEC.
The SEC’s complaint fails to show that Cuban was barred from selling shares of Mamma.com Inc. in 2004 and seeks to expand the definition of insider trading, Ralph Ferrara, one of Cuban’s attorneys, told US District Judge Sidney A. Fitzwater in Dallas yesterday.
It seems almost expected that the “up only” philosophy of the markets would victimize the likes of Cuban. He’s everything the SEC hates. Outspoken. Possessed of a following. Short.
Cuban Asks For Dismissal [The New York Post]
Cuts are said to be going down at BarCap circa now, affecting both legacy Lehman and Barclettes. So far hit: LevFin. No word on severance (yet).
