Today in Monday Morning Hilarity: we’re to believe that second tier, first year analysts at Citi are getting $42k. Could this possibly be true? Is Vikram just saying “fuck it, I dare them to fire me?” (in which case we feel an deep kinship with Pandito at this time). Are they banking Geithner not having the pair to actually do something about it, or the fact that they’ll be out of business in less than a year anyway (I kid but seriously: anything could happen)? Or is this less likely than Prince Alwaleed sending everyone a pony and button down to match?
Archive for June 2009
Life in Russia must be a lot better than the consensus belief. Faced with an economy expected to contract close to 8% this year and comically reliant on high commodity prices, the government decided that now was a good time to throw 400,000 people out of a job in the name of clean living. Back in 2006, then president Vladimir Putin started on a campaign to clean up Russia’s gambling industry. On July 1st, every casino in the country is being shut down, thereby eliminating close to half a million jobs.
Having dismissed the notion that the overly leveraged US consumer is going to lead the world out of the economic abyss, many have shifted their attention to the BRIC countries. If the world is seriously pinning their hopes (in part) on a government currently contemplating bailing out large banks rotting from bad loans by taking board seats and willing to voluntarily place hundreds of thousands of people into unemployment, the BIC countries better pick up the pace.
Ahead of the 10AM moment of truth, make your best guess now, Price Is Right style. Closest without going over will receive your choice of either a) a DealBreaker mug or b) a headshot signed by Charlie Gasparino. For reference, prosecutors want 150, Team Bernie wants 12.
Oh, just so you know:
In a letter to the court, Ira Sorkin, Madoff’s attorney, made an initial recommendation of a 12-year prison term, one year short of what Sorkin asserts to be Madoff’s life expectancy. What the letter does not point out — but what Judge Chin surely knows — is that a sentence of 12 years would actually only add up to about 9 years in federal prison. Here’s the math: Madoff has served over 3 months already, and under the federal Bureau of Prisons rules, he gets a 15% reduction for good time, which could deduct about 21 more months from the sentence. Finally, under the recently enacted Second Chance Act, he could even serve the last year of his term in home confinement if a pilot program becomes the norm — leaving about 9 years in federal prison.
Update: Judge Chin has put it out there that the federal probation department is recommending 50 years, without commenting whether or not he feels that’d be a reasonable sentence or if they ought to GTFO.
Madoff can expect de facto life term at sentencing (Reuters)
Sentencing at 10AM today, where prosecutors are hoping for 150 years, while Ponzi Boy and his lawyer are still holding out for what they have deemed an extremely reasonable 12. In kind of a crock move, Judge Denny Chin is allowing Bernie to wear his own clothes, when you know a jumpsuit would be so much more dramatic. In related news, Lady MacMadoff has been forced to live off a lump sum of $2.3 million.
UBS could pay up to $4.6 billion to settle U.S. tax case (MarketWatch)
The Swiss just want to put this behind us and get back to what they do best as quickly as possible.
A Unified Bank Regulator Is A Good Start, By Jamie Dimon (WSJ)
“We should avoid the temptation to have multiple regulators just for the sake of having them. Three or four different regulators all looking at (and fighting over) the same issue is not a wise use of taxpayer money. Companies can’t operate that way. Neither should the government.”
Madoff Victims Turn On Each Other (NYT)
“It’s been your typical reality-show kind of fighting,” said Jen Meerow Berniker, 32, a second-generation Madoff customer whose retiree parents lost their life savings through a feeder fund. “It’s every man for himself right now.”
Warren Buffett lunch sells for $1.68 million on eBay (Reuters)
Down 20% from last year’s winning bid of $2.11 million.
Decision on bond for Stanford to be reviewed (Houston Chronicle)
Supposedly we’ll find out this morning if Sir Stan will stay locked up until his trial or freed on $500,000 bond (his attorney says he’s not a flight risk, natch). Either way we can all agree that Sticky Wicket was robbed on account of someone stealing today’s limelight.
Bank of New York Mellon Faces More Write-Downs (Dealbook)
“Yes, we will book further write-downs, but we will be able to handle them. The securitized mortgages on our books amount to $3 to $4 billion, which corresponds to only 2 percent of our balance sheet,” said CEO Robert Kelly.
Madoff Victims Tell Their Story (BBC)
$$$ Ruth, Andy and Mark Madoff will not be attending Bernie’s sentencing on Monday. Meanwhile, a guard who observed Ponzi Boy over the last few months says he didn’t seem sorry, which is probably an accurate assessment. [ABCNews]
$$$ Treasury Announces Warrant Repurchase and Disposition Process for the Capital Purchase Program [Treasury]
$$$ “We actually left Spitzer up a lot longer because he disgraced himself and was such a point of interest.” [P6]
$$$ Is Goldman Sachs The Root Of All Evil? [The Atlantic]
$$$ Meet Warren Buffett’s $2.1 million lunch date [CNN Money]
$$$ Job of the Week: A “global hedge fund” is needs a “head of financial engineering.” That could be you. [DB Career Center]
For those of you running for cover to b-school for the next two years, you may see some familiar faces from Sunday afternoons from time to time. To stem the tide of financially ruinous behavior of its players, the NFL is sending players to classes at leading business schools. With 78% of ex-players going bankrupt within two years of retirement, the NFL wants its players to get financial advice from somebody other than the Fast Money crew (or Lenny Dykstra).
For Pro Athletes, Business School Is No Game [BusinessWeek]
Charlie Gasparino reports that Bank of America’s board has begun looking for possible Lewis replacements, with the intent of ousting KL at some point between “now and three years from now.” We haven’t yet spoken to him about the news, but we’re going to assume Lewis has no problem with this, as he guesstimated in May he’d be leaving within the same timeframe.
As the TARP legislation was being thrown together and rubber stamped last September, Captain Morgan had a lot more to smile about. Buried in the midst of the tax breaks that were extended last fall was a seemingly innocuous one relating to a federal excise tax on rum. In 2008, Diageo Plc (which owns Captain Morgan) agreed to billions in tax breaks from the governor of the USVI in exchange for moving its rum production from Puerto Rico to St. Croix. Now, through that agreement and the TARP extension of a rebate on part of the excise tax, Diageo stands to gain about $2.7 billion in benefits over the next 30 years. No doubt somewhere on the desk of Max Baucus (who recommended the tax breaks) there’s a cocktail napkin that reads ‘The Captain was here’.
Bailout of U.S. Banks Gives British Rum a $2.7 Billion Benefit [Bloomberg]
“I Also Really Enjoy Kangaroo Racing But Guess What? I Can’t Take Off The Month Of July Because There’s An Important Race Upstate”
By Bess Levin
So, apparently the employees at some order clearing and execution firm have been slacking a bit of late, to the extent that their boss felt it necessary to fire off a 50,000 word email that starts off pretty normal and then goes to a place where kangaroos, Curb Your Enthusiasm, Korean holidays, kindergarten graduations and sipping champagne after the JPMorgan Corporate Challenge (totally inappropes!) converge. Use it yourself if you’re looking to be that (unhinged) guy. To those searching for work, it sounds like a few people are about to get fired, so consider shooting Sam a res.
From: Samuel F. Lek
To: Lek Securities Employees
Subject: Current State of Affairs
Our staff’s commitment is not as good as it was in the past. Some people are doing a great job, but for this firm to work, everyone has to contribute 110%. We must remember that the customer is king and that our customers deserve to be treated accordingly. We don’t have the capital or the recourses [sic] of some of the larger firms, so we need to sell ourselves by providing our customers with the best service, innovation, and a commitment to understanding their needs. Almost all of us can do better. It would be a good idea to do what I did over the weekend: Take some time to figure out what you can do to become more effective, and waste no time trying to reason why you are already doing a great job and why this memo really doesn’t apply to you, because it does. We cannot afford to slack off. These are hard times. There are a lot of talented unemployed people out there. I am sure that many of them also at some point took their jobs for granted.
I was in Mexico on Friday, and I heard that people had a blast watching “Curb Your Enthusiasm.” I also heard that there was a $90,000 error. Don’t waste any time trying to explain that the two are not related. In my mind, they are related by definition, and trust me: The person or the people responsible for that error are going to pay for it.
This is the cover for the summer issue of a magazine called “PRESTIGE New York.” It gets better.
It turns out there is a financial services firm that Dick Bove is willing to cut his estimates on. While BAC gets two thumbs up and Citi’s share price looks set to quadruple to $12, lowly Goldman Sachs had their EPS target cut from $15.71/share to $14.95 by the contrarian woodland one.
