$$$ Madoff’s Fundraiser Jaffe Emerges From Cave [Cityfile]
$$$ Thoughts from Chairman Ben [NYT]
$$$ Could Mitt Romney Fix GM? [Dealbook]
$$$ Mozilo lawyer: SEC allegations are “baseless”
$$$ Bank of America forces out risk chief after bailout [Reuters]
Archive for June 2009
UBS apparently sent out a memo last Friday eliminating the majority of its trash cans. Previously, they had mini-wastebaskets at each desk and now only one can per floor. And speaking of cans– an unhappy employee notes the Swiss have “downgraded to single ply TP.”
We weren’t kidding, bitches! According to FT Alphaville, clearly giving you people far too much credit than is due, a comment lefty by “sugardaddy” this morning caused the Sterling to “jackknife…falling from 1.64 to the dollar to a low of 1.61 and moving above 0.87 to the euro.”
Press release (and excerpts from the Tan Man’s emails):
SEC Charges Former Countrywide Executives With Fraud
Former CEO Angelo Mozilo Additionally Charged With Insider Trading
FOR IMMEDIATE RELEASE
Washington, D.C., June 4, 2009 — The Securities and Exchange Commission today charged former Countrywide Financial CEO Angelo Mozilo and two other former executives with securities fraud for deliberately misleading investors about the significant credit risks being taken in efforts to build and maintain the company’s market share. Mozilo was additionally charged with insider trading for selling his Countrywide stock based on non-public information for nearly $140 million in profits.
HFY, my darlings. HFY (hell fuck yeah). Ken Lewis has reportedly been asked by the House Oversight Committee to testify about the so-called “threat” he received from the government last year, which KL claimed prevented him from sharing with BAC shareholders that MER was set to report an imperial asston of losses for the fourth quarter, information that would’ve been more useful to them before the deal went through, rather than after.
Let’s back the truck up for a sec: the Journal reported in April that during his February sit-down with Andrew Cuomo, Lewis told Andy he was “urged to keep quiet while the two sides negotiated government funding to help BofA absorb Merrill and its huge losses,” and that later in his testimony, Lewis described a conversation with Paulson, in consultation with Bernanke, in which the Treasury secretary made it clear that Mr. Lewis’s own job was at stake (which, hilariously, happened over the phone while Bald was out on a bike ride). Then Steve Liesman rode in to defend Bernanke’s honor, saying a government official told him Bernanke never ever told Lewis not to disclose the losses prior to the deal going through. Later that day, Cuomo came out and was all “Paulson did the dirty work, but it was at the behest of Bernanke. And by the close of business, Paulson had issued a statement saying hell to the yes I threatened the guy, but Bernanke had nothing to do with it.
UBS simply cannot buy a break these days. After weathering tens of billions in writedowns and losses and the US government’s attempt to crack open its bank account list, the bank now has another problem on its hands. Securities regulators from New Hampshire have filed a civil complaint against the Swiss bank for misleading investors who purchased principal protected notes and subsequently suffered massive losses once the underwriter, Lehman Brothers, went belly up.
“The safety of these products was exaggerated,” Jeff Spill, deputy director of securities regulation for enforcement, said in the statement. “UBS presented these notes as simple, safe investments when in fact they are highly volatile and are subject to shifting market conditions.”
You can just hear Mary Schapiro sharpening her blade.
UBS Sold Unsuitable Lehman Securities, New Hampshire Alleges [Bloomberg]
David Faber reports that the SEC will charge the Tan Man “imminently.” Coupla his cronies at Countrywide (David Sambol, Eric Sieracki) will be getting the royal treatment as well, but obviously we only care about Orange. Note that these are civil fraud charges, which are not
expected to be accompanied by criminal indictments. More from the Fabe:
Mozilo sold hundreds of millions in Countrywide’s stock in late 2006 and 2007, and stands accused by the SEC of remaining publicly upbeat about this company’s prospectus during that period, while he knew things were not good in Counrywide’s business. How the SEC intends to prove that is unclear, but Mozilo’s change to a 10-B 5-1 plan under which he systematically sold stock may be used as evidence of his culpability. Mozilo allegedly established one 10-B 5-1 plan in October of ’06 and another in December of ’06 and then revised the October plan in February of ’07 so that he could increase his sale of Countrywide stock.
Earlier: WSJ: SEC Staff Recommending Filing Civil Fraud Charges On Angelo Mozilo’s Ass
Wilbraham & Monson Academy, a boarding school in Massachusetts, [and alma mater of Dick Fuld] will officially unveil a classroom that simulates a stock-market trading floor. “Students can use state-of-the-art financial-markets software to learn to research, analyze, and decipher patterns in the context of a financial trading environment,” the school said. “Class discussions will complement the analysis, focusing on issues such as business ethics, economic development, and the interconnected global financial system.”
A lack of financial literacy played a large part in creating the problems that drove the U.S. economy into the recession. “In light of the problems that have arisen in the subprime mortgage market, we are reminded of how critically important it is for individuals to become financially literate at an early age so that they are better prepared to make decisions and navigate an increasingly complex financial marketplace,” Federal Reserve Chairman Ben Bernanke said in a speech last year.
High School Trading Floor Offers Finance Lab to Students [WSJ via The Deal]
The Daily News reports that a bunch of lucky homeless people have been put up in luxury condos that couldn’t attract buyers in this market. CNBC’s Scott Cohn noted earlier that foreclosed homes in Florida will be used as temporary housing for those displaced by hurricanes. And all that got us thinking– what should we do with Lenny Dykstra’s house?
We haven’t seen the video of the MSNBC interview when Sorkin had some less than flattering things to say about the unions, but his words of contrition should tug on the heart strings of union employees everywhere.
I did not mean to suggest that there are literally no successful companies that employ union workers. Of course there are! Your readers have provided a good list (though I might quibble with some of the names.)
I made the unscripted comment with my financial columnist hat on in the context of the problems at GM. That’s what the discussion was about on the program. And when you look at some of the once great iconic American industries that have faltered — automobiles, airlines, steel, apparel, etc — there is a fair question worth asking about whether those industries were helped or hurt by their unions. But let’s leave that debate for another day
Update: ARS’s exact words which led to the heartfelt fake apology
We’re not sure if New York Fed President Bill Dudley was trying to be sarcastic or just completely out of his mind when he tried to reassure participants at a SIFMA summit that the Fed’s risk of loss from the TALF program was remote due, in part, to the fact TALF assets are required to be AAA. Has he learned nothing from the past couple of years about the rating agencies’ ability to accurately measure the risks in ABS land? No doubt Dudley’s description of agency models as “reasonably robust” calmed everybody’s nerves and set the stage for a banner summer when “legacy” CMBS are added to the program. Of course at the current rate of recent vintage AAA CMBS downgrades by S&P, there may be none eligible when they become part of the program in July and the Fed will then rely on those reasonably robust AA rated securities.
Dudley Says New Investors Sought for TALF Program [Bloomberg]
