You would think that a guy who once put someone in a chokehold during a boardroom meeting, told a trader who asked him a question he didn’t like, “I ought to break your legs for that,” got into physical altercations with other parents at his son’s hockey games, ate without utensils, and threatened to smash an iron through the face of everyone shorting his company and then bite of each and everyone of their fingers one by one would like being nicknamed “The Gorilla.” Good for inspiring fear, macho, proves he can grow facial hair, whatever. If we’re talking about Dick Fuld, however, who apparently started every morning by standing in front of the mirror, scrutinizing his resemblance to Cro-Magnon Man, spent an hour each afternoon with a physical therapist attempting to train his knuckles to not drag on the ground as he walked, and considered bringing in someone to help him speak in complete sentences (rather than grunts), you’d think wrong. Obviously this heretofore unknown image issue is broached by Charlie Gasparino, in his new book (out today!), The Goddamn Beatin’ That Bear Stearns (And Others) Took:
At a dinner following Lehman’s annual strategy seminar at the Marriott Hotel, investment banking chief Michael] Madden got ready to give his remarks and have a little fun at Fuld’s expense. “Everybody knows the guys who run our wonderful company,” Madden said to a round of snickers from the half-drunk crowd, pointing to Fuld and [investment banker Tom] Hill in the front row. “It’s Tom and Dick. Now, I haven’t been here that long, but everybody tells me these guys go everywhere together and they’re like twins. There’s only one problem,” he added with a smile, “they don’t look like twins. But I know how to fix that. Tom, can you come up here?”
Hill got up, walked nervously to the podium, and stood beside Madden, who whipped out a large, hairy mask or a gorilla and promptly placed it over Hill’s head.” The place went wild. Even Hill thought the joke was funny. But not Dick Fuld, who shot Madden one of his famous death stares and didn’t say another word to him for the entire evening and barely a word for the next year–when Madden, despite winning deals and establishing Lehman’s investment bank as an increasingly potent competitor on deals, was fired.
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PHILADELPHIA–The New York Yankees failed to end the World Series last night with a victory over the Philadelphia Phillies. For the superstitious among you, especially the Yankee fans, there’s an extraordinarily stupid “study” that says you should be extra fearful of a Phillies comeback in the series.
Since 1930, when the Yankees have taken home the Commissioner’s Trophy, the U.S. gross domestic product has grown an average of 5% in the following year. On those exceedingly rare occasions that the Phillies are the last team standing, things don’t go so well: In 1981, a year after the Phils’ first-ever championship after 97 years of futility, the economy grew a paltry 2.9% amidst sky-high interest rates and 7.5% unemployment. This year, the reigning champs have presided over what seems likely to be negative economic growth.
Here’s still more reason to root for the Bronx Bombers: The only other time these two teams have met in the Fall Classic, in 1950, the Yanks swept the Phils, leading to a prosperous 7.7% increase in GDP in 1951.
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UBS Swings To A Loss On Charges (WSJ)
Net loss of 564 million Swiss francs ($552.9 million), compared with a net profit of 283 million francs a year earlier. But the tax evaders are not defeated: Chief Executive Oswald Gruebel was cautiously optimistic about the bank’s prospects next year. “Having stabilized the bank’s financial condition and resized the business, I expect to see further progress in future quarters, particularly in 2010,” he said.
Berkshire Hathaway Inc. to Acquire Burlington Northern Santa Fe Corporation for $100 Per Share in Cash and Stock (BusinessWire)
It’s not just about having a well-maintained rail system and women with huge cans operating it: “Most important of all, however, it’s an all-in wager on the economic future of the United States,” said Mr. Buffett. “I love these bets.”
Bank of America’s Next Chief Executive May Be Based In New York (Bloomberg)
Now that they’ve taken “living in Charlotte” out of the job requirement, will someone take this gig?
Fed Tells Bank To Adopt Pay Rules Early (FT)
The Beard suggests everyone get in line NOW: “The Federal Reserve told big US banks on Monday that draft pay guidelines aimed at curbing excessive risk-taking will have to be followed in this year’s round of bonus payments, even though the rules do not officially come into force until 2010. In meetings at the regional offices of the Fed, regulators told chief executives of the nation’s 28 top banks that they had until February 1 to prepare a written analysis of how their compensation practices meet the guidelines, according to some of the attendees.”
Julian Robertson, Emil Henry Announce Formation of Infrastructure Private Equity Firm (Reuters)
Henry explained, “There are many small and medium-sized infrastructure businesses that are outside the focus of larger infrastructure investors and strategic buyers. With the credit market dislocation and diminished role of debt capital providers, we believe many of these businesses` growth prospects are constrained by their capital needs. We seek to fill that gap.”
RBS, Lloyds Get $51 Billion In Second Bailout (Bloomberg)
BREAKING NEWS: “There is now a very fine line between RBS being nationalized,” said Danny Gabay, director of Fathom Consulting in London and a former Bank of England economist.
Its beaches don’t compare with those of Bermuda or the Cayman Islands. You can’t ski there. But the most boring state in the union is best damned tax shelter on earth.
The First State is finally first at something else, according to the Tax Justice Network. It’s the best place for non-Americans to hide from their taxmen, earning the august moniker, “most secretive financial jurisdiction.”
The equally insignificant Grand Duchy of Luxembourg placed in tax-haven sweepstakes, with odds-on favorite Switzerland finishing a distant third. The Cayman Islands and the U.K. followed the Swiss.
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Charlie Gasparino’s self-described “definitive book on the financial crisis,” Up In Smoke, comes out tomorrow. Sadly, one of the main subjects of CG’s most recent contribution to literature, Jimmy Cayne, will not be available to make an appearance at the party tomorrow evening, which is deeply upsetting to those of us who were hoping to get high in a bathroom stall with the former Bear Stearns CEO. And of course it’s upsetting to Chaz, who is well-aware that just one Jimmy Cayne would beat all of the star power Andrew Ross Sorkin had assembled at his soiree last week. Which is why JC knew he had to break it to Gaspo easy. Calling the country reporter this afternoon, after what one can only assume was a seriously successful hotboxing sesh, Cayne, I shit you not, had this to say:
Charlie, I wanted to call and tell you that I’m sorry I can’t make the book party. I really wanted to but I’m going to be out of town. I want to wish you the best of luck with the new book, and tell you that you are the greatest reporter in the history of reporting, hands down.
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Eliot Spitzer recently had lunch with a reporter from the Financial Times to discuss, among things, his writing gig with Slate, how he rarely eats pasta for lunch, and why he’s gone soft on Hank Greenberg (“maybe it’s maturity or distance from the case”). Towards the end of the meal, the topic turns to paying someone to do stuff for you, and the noted hooker-fucker had this to say:
At one point we are comparing notes on skiing, and I make a pitch for how nice it was to have a catered chalet with what I refer to as a “houseboy or housegirl” to cook all the meals.
“Housegirls I can’t do,” he says bluntly.
He doesn’t elaborate on that point, and because he was being vague, forces us to interpret what he actually meant. Was Spitzer saying:
* That he prefers to have his meals prepared by a man?
* That when he was made to promise he’d never fuck a hooker again, he had to throw in the help, too?
* ED
* He was just making a joke, a little reference to that sitch he got himself into in li’l while back with the prostie. He wasn’t being serious– of course he “does” housegirls.
* Your call
Lunch With The FT: Eliot Spitzer [FT via Daily Intel]
Since the SEC called Ponzi scheme on Allen Stanford’s ass, things have no been going so well for the Houston-based “billionaire.” He was “deprived” of being listed as the 405th wealthiest person in the world by Forbes, which caused many tearful nights. He was forced to fly commercial for the first time, in almost two decades, which was harrowing. He got the shit kicked out of him in a prisonyard brawl, which was humiliating. And he coughed up blood in the middle of a courtroom, in a failed attempt to get an upgrade in his accomodations behind bars. Through it all though, there was one thing he could cling to, one thing that kept him warm at night. One thing that staved off the demons. And that was the knowledge that despite being an accused criminal who wasn’t recognized by Forbes for his (likely) illegal-obtained riches, he was in good company with guys like Elton John. Now, he doesn’t even have that.
It’s no longer “Sir” Allen Stanford. The panel that approves candidates for knighthood in the Caribbean nation of Antigua and Barbuda has voted to rescind the honor granted to Texas financier R. Allen Stanford in 2006.
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You can trade anywhere these days. So why not demand a bribe?
Fresh from their success sinking the CMDX, the CDS clearinghouse founded by the Chicago Mercantile Exchange and Citadel Investment Group, the Wall Street oligarchs are now insisting upon tribute from the New York Stock Exchange.
The Big Board is selling a “significant stake” in its U.S. futures exchange, NYSE Liffe U.S., hoping to drum up business after seeing its revenue and profit plummet in the third quarter. It’s worked before: NYSE Euronext sold off a stake of its NYSE Amex Options platform last year, quickly boosting its market share. And while Citadel and the CME tried–and failed–to go it alone, the Intercontinental Exchange built a dominant CDS clearinghouse with the backing of nine banks.
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Dr. Doom and the man responsible for Wall Street 2, Oliver Stone, celebrate something, the day after Halloween. [Gawker]
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The following post is by a hedge fund manager friend of DB who shall remain nameless. He runs the emerging markets desk at his firm.
Brazil has been one of the most confidence-inspiring credit stories in Emerging Markets. At the end of September, Moody’s awarded the country an investment grade rating. But while most of the market showers praise on the tightest-of-the-Latin-majors credit spreads, the 6 Bs of ratings, and dollar-crushing currency, a certain class of creditors is shouting about an imminent default. Their shouts are going largely unheeded, and they are learning a hard lesson about sovereign lending to Emerging Markets. In EM, there is no solidarity among creditors.
The controversy relates to a class of debts called precatorios. These are instruments representing judicial claims against government entities – the federal government, states, and municipalities. While this might sound like a small and obscure corner of government finance, litigating against the government has become something of a Brazilian national pastime. Hopeful plaintiffs don’t lack for grounds of complaint. The inflation stabilization plans of the 1980s imposed very complicated monetary correction formulae on all manner of wages, pensions, and prices, sparking disputes that continue to this day. Price controls on ethanol, also from that happy decade, have likewise spawned generation-spanning suits. At the same time, Brazilian jurisprudence has an incredibly expansive notion of direitos adquiridos – “acquired rights” – that cannot be messed with. Think of it as the insanely broad conception of fault that you find in American malpractice law, applied to the field of takings. Any meaningful reform creates losers; in Brazil they are only losers (from a new law or policy) as long as it takes to sue the government, at which point they become winners (of a lawsuit). In fact, government legal losses have consistently enough generated large liabilities for the government that most analysts’ fiscal projections still include a line for “skeletons” – the term of art for old claims that get adjudicated against the government.
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