email: tips@dealbreaker.com
text: (646) 820-4847
call: (212) 334-1871
all tips are anonymous
From: Simons, Jane
Date: October 15, 2009 1:11:23 PM EDT
Subject: Cancellation: Ronald Perelman, Tarnopol Dean’s Lecture Series
Dear Wharton Community,
We know many of you have been looking forward to today’s Michael L. Tarnopol Dean’s Lecture, featuring Ronald O. Perelman, Chairman and Chief Executive Officer of MacAndrews & Forbes Holdings Inc. Unfortunately, due to inclement weather, Mr. Perelman is unable to make it into Philadelphia this afternoon.
At this rate, the ’86 Mets will be known more for fielding a team of future legal disasters than beating the Red Sox. Lenny Dykstra teammate Ron Darling is reportedly about $544k short of being considered square with various state and federal agencies. The three batters Darling needs to retire are the IRS for $446.5k owed, the State of New York for $12.5k and the State of California for $85k. But there may be at least a ray of hope for the right-hander. Assuming he hasn’t done so already, recent transactions in the increasingly liquid market for ’86 World Series rings suggest a solid $50k of debt could be wiped off the books pretty quickly.
If AIG wants to learn what constitutes acceptable compensation in this market, they should look to one of Ken Feinberg’s success stories so far, Lehman. While the cost of paying people to handle a firm with less than optimal growth prospects came in at a little over $400 million last year, the czar found less than an average GS bonus’s worth of egregious behavior among the 23 law firms, financial advisers, investment banks and consulting firms involved in the clean up.
So far, Mr. Feinberg’s committee has found relatively few problems with the fees charged in Lehman’s bankruptcy. According to a report it filed with the court, the committee found just $223,262 in “inappropriate fees” through January 2009. It also recommended guidelines for future billing: no car service before 8 p.m., working meals limited to $20 per person and explanations for billing more than 18 hours in a day
So the message is clear. If you want to find institutions that pay appropriately in the current economic environment, don’t look to the bailed out ones, look to the bankrupt ones.
Bradley Birkenfeld was sentenced in August to more than three years in prison for helping some people not pay their taxes during his time as a private banker at UBS. That’s fine, and he accepts that. What Birkenfeld does not accept, however, is a bull shit claim by the Internal Revenue Service that they don’t owe him any money for helping build a case against the Swiss bank, and what appears to be less than a veiled threat that they won’t have a check waiting for him when he gets out of the joint. His representation agrees.
Birkenfeld lawyer Dean Zerbe of Zerbe, Fingeret, Frank & Jadav said his client is entitled to a piece of the U.S. government’s $780 million settlement with UBS, and that he also has a claim to a portion of the money the IRS recovers from wealthy Americans who hid assets in offshore accounts — both at UBS and at other banks.
Zerbe also makes a seriously bold claim that while probably difficult to prove could make Birkenfeld’s case.
“He didn’t just give them a piece of the puzzle. He gave them the entire puzzle,” Mr. Zerbe said. “They didn’t know how to spell UBS until he showed up.”
It turns out there weren’t quite so many shovels ready to be put to good use after all. After changing the standard from job creation to job creation or salvation, the stimulus program’s first employment report card came out today and revealed that businesses receiving stimulus contracts created or saved 30,383 jobs. This sounds a bit low. It’s almost cause for concern. But we’ve got a group in DC committed to making sure the unemployment rate is within at least 2% of the level used in the federal budget. They will not stand for this.
In case there was any question as to whether or not Andrew Sorkin put the words into the Morgan Stanley CEO’s mouth, John Mack has confirmed to Bill Griffeth that yes, after telling the then New York Fed chair that he was a bit occupied working out a deal with the Japanese last September to save his firm and didn’t have time to talk, what he said Tim Geithner could do, instead of continuing to call back every 2 minutes, was “get fucked.” Mack’s secretary had the foresight not to pass the message on at the time, though, so TG didn’t get the memo (but it was probably assumed, and wouldn’t have been the first time). The almost-retired CEO said he’s guessing it’ll be a little awkward next time he sees the Secretary but at the same time it kind of feels good that it’s “out there,” you know? No more secrets.
The Godfather of the housing crisis, Alan Greenspan, believes the big banks that feasted on his policies are effectively out of control. So, what to do about the banks gone wild? How about hitting them where it hurts- right in the wallet?
“I don’t think merely raising the fees or capital on large institutions or taxing them is enough,” Greenspan said. “I think they’ll absorb that, they’ll work with that, and it’s totally inefficient and they’ll still be using the savings.”
Probably right. There are enough outlets for banks to pass on those costs they’d hardly notice. Greenspan is a pretty cerebral guy though. He must be able to find a clever way to solve the too-big-to-fail issue while paying close attention to the recent delicate stabilization of the big banks amidst an environment of populist outrage and politicians foaming at the mouth for the opportunity to teach banks a lesson they’ll never forget.
Count Vikula: “We are the world’s most global bank in a world that becomes more global every day.”
Track 2: “I feel good about our strategic clarity and aspirations.”
It’s not just JPM and GS beating expectations these days. With the IRS’s tax “amnesty” deadline hours away, head tax cop Doug Schulman gave his troops a pat on the back for a job already well done getting would be tax evaders to fess up. So far 7500 people have either been scared straight or lacked a passport required to play the tax amnesty arbitrage game elsewhere. Assuming all of those seeking forgiveness were UBS clients, that places the success rate at a robust 14% or so of the 52,000 accounts the government wanted the Swiss to hand over.
“We have seen a very strong response to the program and I am very pleased with the results,” Shulman said.
The IRS may be pleased that the hit rate on the scare campaign has eclipsed zero, but with people still trying to decide which is the more terrifying prospect, coming forward and placing their fate in the IRS’s hands or continuing to make a run for it, the risk/reward proposition seems to still be open to interpretation. If only there was another way. A way that would flush out tax evaders once and for all and eliminate the government’s need to spend countless millions adding tax offices and bounty hunters around the world.
“I know you guys are busy servicing the heck out of your clients.”
