After putting it on the market back in April 2008, the preferred Paulson has finally sold his Southampton vacation home, for $9.9 million (JP bought the place for $12.75 million in 2006). He was originally looking to pocket $19.5 million, but was forced to reduce the asking price for the 7,000 square foot pad (featuring 7 bedrooms and 7.5 bathrooms) to $16.9 million last August, $13.9 million last October. [NYP via Cityfile]
Earlier: John Paulson Having Trubs With Housing Market
Archive for June 2009
You’ve got to hand it to the guys at Austin-based Amherst Holdings, they’ve got some serious moxy. Over the past year, Amherst sold credit protection to JPM on some Lehman-issued subprime MBS and later encouraged the servicer, Aurora Loan Services, to buy the outstanding loans. This made the CDS it sold to JPM completely worthless (BAC and RBS also bought protection on the bonds, but through other counterparties). Far from admitting any impropriety, Amherst contends that it was simply in the right place at the right time.
Amherst says it didn’t do anything improper, but took advantage of an opportunity when it emerged. A lawyer reviewed and blessed the strategy for the firm, according to people familiar with the matter.
Privately held Amherst says it acted in good faith trying to limit losses for clients, who had sold credit-default swaps on the securities. “We wouldn’t jeopardize our business and reputation by entering into an opportunistic trade knowing what the outcome would be,” said Amherst’s chief executive, Sean Dobson.
Layoffs are said to have gone down over at BAC’s investment bank earlier, with group COO’s bearing the brunt of the cuts. Ken Lewis feels your pain, and sorry he wasn’t there to say good-bye.
Thought we’d forget to mention it, what with all the excitement on the Hill? Think again! As giddy as we’ve been over hearing whether or not Bernanke/Paulson put Lewis in meat locker “as a preview” of what life would be like if he failed to listen to every damn word they had to say, it in no way compares to our kvelling over the significance of this day in history. That’s right, ladies– it’s Stevie-boy’s birthday!
Prior to the recent golden era of program trading and hedge funds, value investing played a major role in the markets. In today’s environment, stocks are largely at the mercy of large but nimble players who have the size and speed to slap stocks around in a matter of minutes or hours. The phenomenon of nontraditional forces determining prices is not restricted to stocks.
For those who missed it earlier.
10:30: Everybody say, “Hi Ken.” Hi Ken.
The acquisition of Merrill Lynch apparently created “what looks to be the preeminent investment bank and brokerage firm the world.”
Sidebar: In light of the fact that Bernanke seems to be emerging as the enforcer of the operation, this kill Lewis with kindness/just straight up kill him bit is most excellent:
One thing Bank of America wanted at that time: more certainty about the government’s willingness to help. The bank sought to arrange a conversation between Messrs. Lewis and Bernanke on New Year’s Eve.
According to notes Mr. Lewis took during that conversation, Mr. Bernanke said: “We will not leave you in the lurch.” The Fed chairman told Mr. Lewis that Bank of America was “a strong company that has acted very appropriately throughout very difficult circumstances.” The notes are among the documents in the possession of the congressional committee.
Mr. Bernanke ended the call by wishing Mr. Lewis a Happy New Year.
10:41: You see, uh, I wasn’t scared of the threat, per se, (I’ve been in plenty of bar fights and figured I could take ‘em), but I was afraid of what the existence of the threat meant. Like, if Paulnanke was making a threat, you had to assume the situation for the US of A was really bad.
Chairman Edolphus: I have no idea what you just said.
Lewis: Me neither. Please don’t ask me to say it again. Draw your own conclusions.
Rep. Kucinich: I’m going to ask you questions, and if I have to, I’m going to interrupt and be a dick, k?
Lewis: K.
Rep Issa: When you called them and were like, I’ve been drinking and was thinking, maybe I’ll pull the MAC, were you doing it because of a duty to shareholders.
Lewis: Hell yes it was! I love BAC shareholders. I’d take a bullet for them. Can everyone please note that? I just want to keep my job.
Rep. Issa: On a scale of 1 to 10, in terms of pressure, one being Paulson as a used car salesman, seeing you walking up onto the lot and figuring, “I can take this hick,” sidling up to you and going, “What do we have to do to get you in this lemon today” and ten being you, waking up with a horse head in your bed, how did Paulnanke act?
Lewis: Can you give me an example of what 4 would be like?
Rep. Kucinich: Did you ask the government for a letter on the deal?
Lewis: I don’t remember.
Rep. Kucinich: You’re under oath. You’re saying you don’t remember.
Lewis: Yeah. Can’t recall.
Rep. Kucinich: Paulson and Bernanke are outside this room, listening in. Do you still not remember?
Lewis: I don’t remember! I was blacked out for the better half of this decade!
I don’t get why this is funny but Rep. Kanjorksi asks what the ten companies in Fortune 500 are that BAC doesn’t have business relations with, to giggles from Lewis and himself. Was this a sex joke?
For the millionth time, Lewis (supposedly) wasn’t scared of losing his job or spleen, what made him shit his pants was how serious the situation must have been if Paulnanke were even going there. Got it? He wasn’t scared of them. Once you’ve insulted the girlfriend of a 400 pound trucker named Bubba and had your ass hauled out to back alley behind the local watering hole, and had multiple bottles broken over your face, you’re not scared of gettin’ roughed up by a coupla Ivy League pusses.
Lewis has remained relatively calm up until, but Rep. Cummings is up meaning here comes the stutter.
11:25: Rep. Cummings: You’re lying! Fuck you! No! Shut up! They threatened you, you were scared, who wouldn’t be scared of Paulson? I’d be scared of Paulson and look at me? I could fuck everyone in this room up. Stop playing nice. Start gettin’ real!
A collection of words that don’t necessarily mean anything: “maybe you need to be inconsistent and tell us how you felt.”
11:28: Rep. Malibu Ken also doesn’t buy Paulnanke didn’t threaten Lewis. The problem here, as everyone not in Washington can see, is that Congress is speaking and K to the L is speaking and they’re all saying the same thing but everyone in the room didn’t realize that when you feel resistance from your eardrum, you have to stop pushing the q-tip, not push it harder, and now we’re all being punished as a a result. The threat happened, people! Paulnanke made it. It was put out there. What Lewis is trying to argue (for the camera, and the boys back home) is that the threat didn’t scare him, it just made him see how dire the situation was. He gets threatened all the time, it’s NBD.
Rep. Issa apparently gets this!
Sidebar: can Maxine please excuse herself from the compensation hearing and bust in a side door? 1) because we need to spice this up a bit 2) because while this seemingly has nothing to do with Goldman Sachs, we have it on good authority Maxie has got in her head that Paulson and Bernanke made the threats at the behest of Lloyd Blankfein 3) because today’s proceedings needs more exchanges like this:
There is little doubt one of the main motivations for paying back the TARP was to allow firms the flexibility to pay their top people commensurate with their pre-crash expectations and avoid further defections. But will the bonus and spending floodgates really reopen this year in light of a still shaky economic reality? How many of the 10 firms who are now free of the TARP shackles are going to bet that there is no way whatsoever they will need a helping hand from the government if the economy goes back in the toilet? Those that do better be right.
Banks Trade TARP for Bonuses, Debauchery, Jets [Bloomberg]
In Barney’s defense, he’s probably feeling a little upset about not being a part of today’s Lewis Lashing. Let this be a message to you all: do not even entertain the thought of messing with Mark because he will fuck you up.
Every single one of you should have an internal countdown ticking away already but as a reminder: T minus 30 minutes ’til Ken Lewis takes the hot seat re: Paulson and Bernanke telling him to put Merrill’s losses in the lock box ’til after the deal went through. We’ll be liveblogging the flogging, obviously, but ahead of the big show, can we just talk about how insanely giddy we are for this thing? Remember how psyched we were for the hedge fund hearing? That’s nothing compared this, for a few reasons including but not limited to the fact that Ken Lewis is going to be all by himself up there (save for Angelo Mozilo’s voice in his ear, coaching him through this from a van parked down the street), hearing taped conversations in which Bernanke told Paulson, “No more meetin’s, no more discussions, no more tricks,” and the possibility that Lewis, if he decided to go with a breakfast of shots, will excuse himself to throw up. And speaking of breakfast: what sort of brain food do we imagine K to the L downed before going into battle?
Jim Simons Delays Retirement Plans (WSJ)
Talks with officials of the China Investment Corp about a multi-billion dollar stake in Renaissance and plans to retire have been put on hold. Spokesman Jonathan Gasthalter declined discuss what factors may have changed. Also, “two veteran Renaissance insiders, speech-recognition experts Peter Brown and Robert Mercer, are considered likely successors to lead the firm,” whenever Simons, who quit his two-pack a day habit this year, decides to start taking it easy. The Journal took about 30 years off his head cut, and made him look like Biff’s long lost brother, which is nice.
JPMorgan to Acquire Rest of Highbridge Capital (Dealbook)
Had a majority stake since 2004.
US Pushes A Troubled Citi To Heal Itself (NYT)
“The question now is when, or perhaps even if, Citigroup will be able to free itself from Washington.” Shall we take odds?
California nears financial “meltdown” as revenues tumble (Reuters)
California’s government risks a financial “meltdown” within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state’s controller said on Wednesday.
