CNBC’s David Faber is reporting that government shunned CIT is looking to head into the weekend $2b – $3b richer than they currently are. Mind you they will need a significant upgrade in the interest from PE firms and fixed income investors from their present status as Facebook friends to bailout heroes pretty quickly.
Archive for July 2009
If the Credit Suisse MBS deal is an indication of things to come, the rating agencies may have gone too far to defend their motto of “it could be structured by cows and we would rate it”. While it’s reassuring to see the wheels of the securitization market turning again, the rating agencies should take particular note that the CS did not seek a rating for any of the securities. Given the proven “value” of a AAA MBS rating, Moody’s and S&P may find themselves in the perilous position of discovering that clients are now doing their own analysis and no longer see the benefit of burning money to obtain a meaningless rating. That distinction should be left to TALF participants.
9:53 Ahead of the hearing, set to get underway at 10, make sure you’ve familiarized yourselves with the former Treasury Secretary’s prepared testimony. Summary: of course I threatened that hick. Why is this something that’s being debated? In fairness, I threaten basically everyone. I threatened the driver who transported me to this pointless exercise. Fuck was trying to take a round about route as though I don’t know the fastest way to get here.
10:00 Chairman Edolphus Towns reciting his opening statements as though he’s performing in a grammar school production of Twelve Angry Men.
10:02 Oh, someone signed up for Charlie Gasparino’s latest writing class at the Learning Annex: “Was this an old fashioned Brooklyn shake-down?”
10:05 Paulson actually looks a little nervous, which is troublesome, but it’s obviously a mind game. Also, rosacea?
10:07 Representative Issa is attempting, badly, to make a football analogy (“We here in Washington are Monday Morning Quarterbacks…next Sunday…gridiron…guns in nightclubs”). Tackle is not impressed.
10:06 Edolphus Towns thought it was pretty good. “Nice analogy.”
10:13 As Mark Haines notes, it’ll be a few minutes before the elected officials “finish bloviating.” While we wait, let’s take a peek at who’s thrown support at HP and his do it or die tactics. Charlie Gasparino is one. He doesn’t understand what the big D is here. This is how it gets done in the jungle. He’s just a little surprised and hurt that HP didn’t call him personally to send Lewis a message. He suggests that next time Bald needs to seal a deal brass knuckles style, to remember Chaz. CG’ll make sure it gets done quietly.
10:21 Bald’s prepared remarks. Since we know he’s going to say he did it, can we discuss this: what in god’s name is up with HP’s skin? Is that a third degree burn? WAS HE THE GUY ON THE RECEIVING END OF THE HOT COFFEE TOSS? On the one hand, I can’t see anyone messing with his shit, on the other, it’s well-known he has a tendency to cut people off in the parking lot on the regular, and probably had it coming.
10:33 This is Issa’s idea of cruelty? Giving us a history lesson about conversations that occurred during the Gulf War? Okay.
10:34 Issa: I like Margaret Thatcher’s way of doing it.
10:40 This is truly painful. As mentioned a hundred times before this could’ve been the greatest show on earth if Congress hadn’t blown it and invited all three to testify at the same time, but we still thought Paulson would’ve put in the best effort, given that KL was told he wasn’t allowed to drink beforehand. Instead, this is the most boring of the bunch. Think of all the other things HP could be doing with this time.
He could be fishing.
He could be laying tracks on his latest album.
He could be tapping ass.
10:52 Okay, this is promising. The hot young Representative from I’m not sure where seems to be eliciting some testiness from HP. Do it Hank. Unleash the Beast.
10:51 And nothing (though what’s up with the slumping down in the chair after each answer?).
10:53 Serious question: did Kanjorski have his brows dyed? They’re looking extra white.
10:54 Kanjorksi: Paulson, how bad was it going to be? Describe in detail. I need to know.
Paulson: I didn’t really spend much time thinking about it. I was trying to cut out of work early that day.
Kanjorski: No, tell us, what would it have been like if BAC walked away from the deal? Come up with an answer.
Paulson: Well, I don’t know, Ben told me about what it was like in the Great Depression and that seemed pretty not good.
Kanjorski: No, I need more details. What would the world have looked like the next day?
Paulson: Two hundred degrees in the sunlight, minus two hundred in the shade. Canyons of razor-sharp rock. Unpredictable gravitational conditions. Unexpected eruptions, things like that.
Kanjorksi: Okay, so the scariest environment imaginable. Thanks, that’s all you gotta say. Scariest environment imaginable.
11:05 Okay, see, when things come up like the issue of whether or not Ken Lewis was told not to disclose the Merrill losses, IF LEWIS WERE AT THE TABLE, we could’ve gotten an answer. Or, if not an answer, a blank stare and a “Hey, look over there!” while a smashed KL attempts to run out of the room before being apprehended by security.
11:10 Oh christ, god love Ken Lewis. That conversation they had on December 21? When KL told Andrew Cuomo he’d called Paulson, who he reached on a bike ride, and HP told him to do exactly as he was told or get fired? Big P wasn’t on no damn bike. He was skiing. This moment brought to you by Boone’s Farm. (Let’s also take a moment to appreciate the Representative who, still thinking HP had been on a bike but unaware that the convo took place over the phone and not in person, noted that Lewis “must’ve been pretty fast to catch up with you,” and giving us the image of K to the L chasing after Paulson, getting a cramp, having to slow down, giving the “1 minute” signal, etc.)
11:13 Congress doesn’t understand why no one can ever seem to recall the details of certain events while under oath. Paulson can’t speak for others, but from his end, he’s has so many conversations with Bernanke he truly cannot keep track. Tête-à-têtes in the elevator of the Fed. Drunk dials over the phone. Pillow talk on the floor of their little pied-à-terre.
11:25 Paulson categorically did not promise Lewis he could keep his job if he did exactly as he was told. HP only told Lewis he’d get fired if he made one wrong move, just one. Do you guys even know how intimidation works? Today’s proceedings make me think not.
JPMorgan Reports Second-Quarter 2009 Net Income of $2.7 Billion (JPM)
“JPM today reported second-quarter 2009 net income of $2.7 billion, an increase of 36% compared with net income of $2.0 billion in the second quarter of 2008. Earnings per share were $0.28, compared with $0.53 in the second quarter of 2008. Current-quarter earnings per share reflected a one-time, non-cash reduction in net income applicable to common stockholders of $1.1 billion, or $0.27 per share, resulting from repayment of TARP preferred capital.” Full press release here.
U.S. Regulators to BofA: Obey or Else (WSJ)
Under threat of management being fired, Bank of America has been ordered to do exactly as the government says. This time not by Hank Paulson! BAC was told in April it must, among other things, “overhaul its board and address perceived problems with risk and liquidity management,” with deadlines for getting it all done fast approaching, or Ken Lewis is out of a job.
Harvard Law Tells Students: Don’t Panic Over Jobs (Bloomberg)
“If you are looking in D.C., consider Baltimore or Richmond…If you’re looking in Chicago, try Milwaukee and St. Louis, too…if you’re looking in New York, try Long Island…if you’re looking in LA try East Compton.”
Obama Bill Seeks To Shine Light On Hedge Funds (NYT)
The plan aims to “counteract any incentive for the largest firms gambling with their size,” Michael Barr, U.S. Treasury assistant secretary for financial institutions said.
Plan to unveil City high-flyers’ pay (FT)
“The pay and bonuses of hundreds of high-flying City traders and dealmakers will have to be publicly disclosed under a Treasury-backed plan to curb excessive and risky remuneration.”
Getting Trumped (NYP)
Pretty upsetting news: Donald Trump’s attempt to get a judge to take his libel case wherein Hairpiece accused an author who said his net worth was between $150 million and $250 million and not the $5 billion to $6 billion Trump claims was thrown out in court.
Citi Close To Secret Deal With Regulator (FT)
The proposed agreement requires, among other things, that Citi be Citi, but just a better, less fuck-up-y Citi. Ways it could do this: strengthen board and governance, improve asset quality, better manage expenses and provide more information to regulators on its capital and liquidity. Not really sure why this has to be done in “secret,” but SheBair and Vikram are known to love speaking in code and pretending they’re starring in a Russian spy movie so, whatevs.
$$$ CIT: No Support By US In Near Term [WSJ]
$$$ Poker World Series Pays Off for Bear Stearns Official [Bloomberg]
$$$ 11 accused of insider trading [DealBook]
$$$ Victims of shark attacks want the predators saved, knowing how useful they can be in the transportation of coke. “We’re seriously scarred . . . and some of us are missing limbs, and we have every right to hate sharks,” Salamone said, sketching out the group’ spiel for senators today. “I think the message is: If we can see the value in saving sharks, everyone should.” [WaPo]
You almost don’t need a Swiss bank when there’s an almost 1-in-5 chance the millions the tax man is looking to collect from you are going to be lost in the IRS’s systems. Due to a breakdown in the agency’s abaci and carrier pigeons, 18% of the cases of individuals who owed at least $1 million as of the end of 2007 (for a total of $1.2 billion in uncollected taxes) were still floating around in cyberspace.
IRS Fails to Collect $1.2 Billion From Those Owing $1 Million [Bloomberg]
If you weren’t a lucky direct recipient of an IOU from investment grade rated California, secondary trading of the newest illiquid asset is set to kick off. After the SEC put an end to Craigslist-based price discovery and forced participants to look to brokers to wheel and deal in Arnold promise paper, illiquid trading platform SecondMarket is expected to start legitimate IOU trading in the coming days. If attempts to plug the $26 billion hole fail and the state continues to pump out IOUs, two things are certain- it will be a good couple of months for SecondMarket and airplay of Stand for California will go through the roof.
A friend downtown tells us the House of Goldman appears to be in the midst of an evacuation, with “security types directing people to the side of the building, but only 2 police cruisers…no sirens or anything.” No idea what’s up, though it’s not necessarily a panic situation. It could just be that they needed to make room for the money, which is being brought in tonight in twenty dollar denominations for everyone to strip down and roll around in for ten minutes tomorrow morning, just to get a taste of what life could be like come bonus time if they keep it up (if they don’t keep it up they’ll be rolling around in the sweat of a noted Italian-American reporter, accrued from a day-long shoot of his self-funded exercise video, taped, without permission, on the GS trading floor). Presumably there’s nothing to see here, but if you know what’s going on, Maxine, get in touch. In related news, this lady says Goldman owes us all money and if they’re not going to hand it over we’re just gonna have to go get it ourselves.
Update: Still unclear what’s happening, though apparently “it looks like a drill,” not specifically having anything to do with fire but more like a what-to-do in the very likely event M. Waters storms the building before Labor Day, when guards are down and they’re least suspecting it.
Guarantee this will be gone shortly so let’s see some fast fingers.
Supposedly Mitch Cox, a senior vice-president in global wealth management at Bank of America, who reportedly left the firm today, is headed for UBS, as are the 6 other senior employees who peaced out of Ken Lewis’s kingdom.
[via The Hill]
Representative Issa went on Fox Business today to discuss Hank Paulson’s hearing tomorrow regarding threatening Ken Lewis over the Bank of America/Merrill deal, whether doing so was ‘appropriate’ or not and so on and so forth. The ranking member of the Oversight and Government Reform committee said that, based on leaked testimony from Paulson, in which the former Treasury Secretary says fuck hell yeah we threatened Ken Lewis, but it was totally appropriate, Issa and his fellow congressmen and ladies will have no choice but to go hard on the guy. Considering that even when they like a person who categorically did nothing wrong, Team Congressional Crazy yells, berates, cuts off, and just generally gets lays an insane amount of self-righteousness on the ass of whoever’s in front of them, what could we possibly expect is in store for HP? Maxine’s not even on this committee but perhaps she’ll be brought in specially for the event? And is currently tied up in a House supply closet chewing on a piece of leather in anticipation of the big show? Obviously it’s going to have to be something good, since, I don’t know if Issa and Co know this, they’re dealing with the god damn Hammer, from whom they’ll have no protection once the hearing adjourns. Not scared? Talk to Ken Lewis. If he’s feeling strong enough to speak about it yet.
