And we wonder why insurance firms needed a bailout in the first place?
Hartford Financial Services Group Inc., the insurer that took a $3.4 billion U.S. bailout, was ordered by a Florida regulator to return $48.2 million to clients after profits on some policies exceeded state rules.
“Hartford must provide refunds or renewal credits within 60 days from the date of this order,” the Florida Office of Insurance Regulation, headed by Commissioner Kevin McCarty, said today in a statement. The ruling applies to workers’ compensation policies from 2004 to 2006.
Hartford Ordered to Refund $48 Million After Too Much Profit [Bloomberg]
Shortly after WFC picked up the ball Citi dropped and scooped up Wachovia, shareholder Irving Ehrenhaus sued both banks on the grounds Wells didn’t offer a fair price for the quickly collapsing bank. Other Wachovia shareholders undoubtedly thought they would have a shot at a better deal through the suit. Based on the amount of time and effort spent in this battle, you’d think news of a settlement would be good news for Team WB. But shareholders are now up in arms again after learning the terms of settlement would award Ehrenhaus’ lawyers with about $2 million while they would be treated to a slightly lesser amount.
In that proposal, which Judge Diaz will consider Aug. 20, shareholders of the former Wachovia would not receive any monetary compensation. But Wells Fargo would pay $1.975 million to Ehrenhaus’ lawyers, led by a New York firm called Wolf Popper, “for their efforts in achieving the benefits of the settlement.” …The proposed settlement also says that other former Wachovia shareholders would be barred from filing any future lawsuits related to the deal
Lady Justice isn’t blind. She’s just doubled over in laughter at this one.
The shrewd negotiators at GM have another ROI data point to digest and be proud of. In defense of the $17.9 million success fee earned for successfully allowing the US government to handle the drive through restructuring, Evercore senior MD William Repko itemized all of the busy work his firm went through which failed to find a private buyer for GM.
Twelve Evercore employees toiled for a year through 4,000 spreadsheets, 1,700 PowerPoint presentations (sadly no breakdown on the number with animation which probably would have counted double), and then there were the emails. Repko pointed to the 11,700 GM-related emails he sent or received in addition to the more than 23,500 emails Evercore MD J. Stephen Worth handled as proof that the fees were not “staggering” and “excessive” as alleged by the trustee.
Although the transaction did not result directly from an extensive marketing effort or auction of the debtors, Evercore undertook significant efforts in evaluating other potential transactions. In particular, broad and systemic efforts were undertaken by Evercore over the preceding year to identify or eliminate alternatives and to facilitate the government-sponsored purchase of the debtors’ assets.
One item not reported was the number of hours Evercore spent counting emails, spreadsheets, and presentations instead of trying to find a suitor for GM.
The mystery began on July 24, when the 15 crew members of the Arctic Sea said they were tied up and beaten by a group of up to 10 men who boarded the ship off the Swedish island of Oland. The masked men identified themselves as police officers — but Swedish police said they hadn’t been searching ships in that area.
Swedish police investigator Ingemar Isaksson said the crew then claimed that the men left the ship 12 hours later in a high-speed inflatable boat.
“We were very puzzled when we first heard about this,” Isaksson said then. “I have never heard of anything like this in Swedish waters.”
Ship Passes Through Channel and Then Disappears [The New York Times]
“Have Feinberg sign your report card and bring it back to me, understand?”
Feinberg, the Obama administration’s “special master” on executive payEnvy Czar, is due to receive compensation proposals by tomorrow from Citigroup Inc., American International Group Inc., Chrysler LLC, Chrysler Financial Corp., Bank of America, GMAC Inc. and General Motors Corp. The companies must tell him how they plan to pay the 25 top-earning employees. Feinberg will rule on the plans within 60 days after they’re completed.
Governments worldwide are examining the pay of bankers blamed for fueling the worst financial crisis since the Great Depression. The U.K.’s financial regulator today told British banks to comply with new rules to limit bonus payments. Swiss lawmakers today rejected a plan to limit pay at UBS AG after the bank posted a record loss.
Given the success of Toxic Bonuses, we wouldn’t be surprised to see a lot of plans include these sorts of tools, and a lot of bankers getting even richer than cash bonus plans ever would have made them.
Feinberg’s Pay Decisions Be Wall Street Template [Bloomberg]
One sort of expects the phrases “smuggling” “drug cartel” “corruption” to include the word “Mexico” as well. Until now the addition of “oil smuggling” wasn’t really the sort of thing you expected. Until now.
The U.S. government is investigating whether several U.S. companies took part in a cross-border scheme to siphon oil products from Mexico’s state oil company and smuggle them across the border.
The probe is part of a broader two-year joint U.S.-Mexican investigation into a network of Mexican oil smugglers supported by the Gulf drug cartel, one of Mexico’s most powerful and brutal criminal organizations.
What really interests us, however, is how many U.S. based drug smuggling operations may have violated the Foreign Corrupt Practices Act while dealing with crooked executives at Petroleos Mexicanos.
U.S. Firms Probed in Mexico Oil Scam [The Wall Street Journal]
Looks like it is.
In an amended 13D filing, Bill Ackman’s hedge fund Pershing Square Capital Management is now showing a 4.4% ownership stake in Target (TGT). This is down from their previous 7.8% ownership stake in the company. Pershing Square reduced their overall position through a combination of transactions including the sale of options and purchase of common stock. Originally, Ackman’s 7.8% stake was comprised of 3.3% in common stock and 4.5% in stock-settled call options. Now, Ackman’s reduced 4.4% stake is comprised of 3.5% worth of stock and 0.9% worth of options. They are now showing an aggregate amount of shares beneficially owned of 32,994,586.
This was our favorite come from behind tale. If Ackman drops it much further it will be a sad day indeed at the Dealbreaker offices.
(We love you, Bill! Call us!)
Bill Ackman’s Pershing Square Reduces Target (TGT) Position [Market Folly]
A short bit of pondering on the (now settled) UBS case:
“It will take a little time for agreements to be signed in final form,” Gibson told Gold today in a telephone conference call.
Tax lawyers said they expect UBS to disclose thousands of accounts after giving the Internal Revenue Service data on 250 clients on Feb. 18. UBS, based in Zurich, agreed then to pay $780 million to defer prosecution for aiding tax evasion. (Emphasis ours)
It isn’t often that you hear the reality of this sort of extortion spelled out so clearly. Amazingly, this time it was on Bloomberg. We thought this sort of rank regulatory revenue enhancement during times of fiscal crisis was limited to things like reducing the Yellow-To-Red timing for photo-equipped stop lights by a half a second. Boy were we wrong.
UBS Tax Lawsuit Settled by U.S., Swiss Governments [Bloomberg]
Sallie Krawcheck has been good to her word so far about keeping the Merrill culture in place at BAC. She wants everyone to know that despite all of the senior level departures and Congressional scrutiny of the shotgun marriage, ML is still a proud institution that people should aspire to work for. Just how committed is she to this campaign? Committed enough that you can still hear Bob McCann, Greg Fleming, and John Thain himself extol the virtues of Mother Merrill on the recruiting video.
As a part of our “All Beard Wednesday” programme, we would like to call your attention to a Reuters piece so bold as to compare the Fed Chairman to Clark Kent and Superman.
True, the piece badly mixes metaphors, implying Superman was some kind of “swashbuckler,” and lamenting that Bernanke might lose some of “his swashbuckling spirit.”
The Fed has every reason to be politically intimidated. Relations between lawmakers and the Fed are close to an all-time low.
Much congressional ire has been focused on the Fed’s role in bank bailouts. There has been nervousness over its expanded balance sheet, which more than doubled during the crisis to around 14 percent of GDP.
For some Republican Senators such as Jim DeMint, the Fed’s purchase of U.S. Treasuries has been aiding and abetting “reckless” spending by Obama. DeMint is not alone in believing that credit easing is a covert means of devaluing the dollar. In the House an increasing number seem willing to listen to obsessively anti-Fed Congressman Ron Paul.
It is not surprising that correspondents for foreign outlets might be desirous of a more activist and powerful Fed. They, after all, seem less blinded by the trappings of power and can therefore, see what a pack of knee-biting wild dogs Congress is, and how completely they will destroy the United States if permitted to tinker with the structure of the Fed- much less continue to meddle with the economy.
Bernanke: Back to Clark Kent [Reuters]
We are pretty sure his mom used to reassure him that he was a late bloomer (there was that blown spelling bee, after all), so the grins all around accompanying the news that he is widely and wildly supported by “other economists” and likely to see an invite to keep the spot, is a nice touch for The Beard.
Economists are nearly unanimous that Ben Bernanke should be reappointed to another term as Federal Reserve chairman, and they said there is a 71% chance that President Barack Obama will ask him to stay on, according to a survey.
Meanwhile, the majority of the economists The Wall Street Journal surveyed during the past few days said the recession that began in December 2007 is now over. Battling the downturn defined most of Mr. Bernanke’s term, which began in early 2006 and expires in January, and economists say his handling of the crisis has earned him four more years as Fed chief.
It does sort of make you wonder though, will Bernanke accept the invitation to stick around?
Economists Call for Bernanke to Stay, Say Recession Is Over [The Wall Street Journal]
