Earlier this month, Bank of America announced that it’d be laying off 30,000 employees, as part of a program designed to help the firm make/not lose money called Project New BAC. It’s not that Brian Moynihan et al wanted to let these people go, but thanks to decisions by his predecessors including but not limited to funding Ken Lewis’s Boone’s of the Month Club and paying $4.1 billion to find out what it feels like to be violated by Angelo Mozilo, it’d become more than a little necessary. Lest there be any confusion, the 13 members of BAC’s industrials group who were axed this afternoon did not fall under the “because we have to” but rather the “because we feel like it” category on Bri-Moy’s master spreadsheet. Sayeth Bloomberg: Read more »
Archive for September 2011
In fairness, no one straight up asked him “is Full Tilt a global Ponzi scheme,” as opposed to “a legitimate poker company.” Read more »
LightSquared is a wireless venture that seeks to create “convenient connectivity for all.” But, as the careful listeners among us know full well, it stands to do much more. In short, it will make or break backer Harbinger Capital. Success will mean billions for manager Phil Falcone and his investors. Failure will mean Wilbur Falcone going back to where it all began, peddling ZJ’s on the 5:54 Metro North to Greenwich.
As one can expect when one is doing ground-breaking, visionary-esque work, LightSquared has encountered some opposition. The yachting community worries the interference will cause them to get lost at sea. The National Oceanic and Atmospheric Administration says it “may degrade precision services that track hurricanes, guide farmers and help build flood defenses.” Mars is similarly pissed.
The most recent hostility came last week from various parties claiming that the White House pressured certain officials to change their testimony before Congress to favor LightSquared, in order to help the network’s plans to move forward. Now, any and all donations the company’s CEO and Falcone have made to Democratic organizations are being scrutinized. Earlier this morning, Phil told Fox Business that allegations of influence via money sicken him (“People think we’ve made contributions to grease the wheels, that is so wrong, it’s disgusting,”) and this afternoon, took the time to explain the impetus for one donation in particular. Apparently all roads lead back to a woman with many fans round these parts. The First Lady of the hedge fund industry. Her Excellence: Lisa Maria Falcone. Read more »
- Oooh correlation is one oooh.
- The SEC has proposed rules that would ban banks from “betting against” securitizations that they create for one year after marketing them, a sort of anti-Abacus rule.
- The SEC is also investigating whether people traded on inside information ahead of the S&P’s downgrade of the U.S. Amusingly:
It isn’t clear if securities regulators also are looking at trading of U.S. Treasurys. Inside information might not have been a blessing with these securities. Investors who bet against U.S. government debt suffered losses immediately after S&P’s downgrade because rattled stock investors retreated into Treasurys as a safe haven. Such losses wouldn’t be a defense against accusations of insider trading, lawyers said.
- Raj Rajaratnam may be going to jail for a million billion years for talking to some people about some stuff and then buying and selling some stocks. The Times is seeing him off with this bizarre quote:
The question is whether such a sentence — longer than the average federal prison term for murder — is appropriate. “Given the magnitude of the crimes, it’s hard to feel any pity for him,” said Harlan J. Protass, a defense lawyer …
These things seem puzzling – with the puzzle being, what do we want out of our capital markets?
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SEC Probes Trades Ahead Of S&P Cut To US Rating (WSJ)
The SEC could face an uphill battle proving that anyone profited from the downgrade by using inside information. While the SEC has asked Finra officials to scrutinize trading in securities that track major indexes like the S&P 500 and Russell 2000, there are lots of other reasons why investors have bet against the stock market recently, including Europe’s woes and the struggling economy.
Roubini: Greece Should Default And Quit The Euro (CNBC)
“Via nominal and real depreciation, the exit path will restore growth right away, avoiding a decade-long depression,” said Roubini who warns that contagion for countries such as Italy and Spain is already a reality, and requires liquidity support from the European Central Bank or the European Financial Stability Fund. “Like a broken marriage that requires a break-up, it is better to have rules that make separation less costly to both sides” said Roubini.
Obama Tax Plan Swaps Conciliation For Confrontation (Bloomberg)
Both sides have pulled back from compromise offers Obama and Boehner made during unsuccessful negotiations in July seeking a broad deficit-reduction agreement. In announcing his proposal, Obama stressed the benefit cuts the middle class would sustain unless Republicans permit tax increases on the wealthy, saying he wouldn’t allow “any plan that puts all the burden for closing our deficit on ordinary Americans.” “This is not class warfare; it’s math,” Obama said at the White House yesterday. “The money’s going to have to come from someplace.”
UBS Loss Reveals Gaps (WSJ)
One avenue of the bank’s inquiry, entering its seventh day, is examining whether the trader had knowledge of rules regarding how exchange-traded funds are settled in Europe, according to people familiar with the matter. A gap in trade reporting likely contributed to a breakdown in a paper or electronic trail that typically would reconcile cash and trading flows at UBS, people familiar with the situation said.
Charlie Sheen Offered $25 Million Settlement (MSNBC)
Warner Bros. is gearing up to pay Sheen roughly $25 million to get him to drop his wrongful-termination suit against the studio and “Men” cocreator Chuck Lorre. That sure sounds better than having one’s body explode “like a balloon full of meat,” like the fate that befell Sheen’s killed-off character on tonight’s season premiere of “Two and a Half Men.” Read more »
$$$ Obama Presses for New Taxes on Wealthy (WSJ)
$$$ Netflix Strategy Prompts Backlash (NYT)
$$$ Fed Ponders Jobs, Inflation Targets (WSJ)
$$$ Merkel’s Authority Is on the Wane (Der Spiegel)
Think you don’t need to perform your own quarterly audits of your husband’s business to check for any discrepancies? Think again. Choose not to take regular looks at your meal ticket’s book and you could go from dining on the finest shellfish money can buy (“Some of those black-tie events were so fucking boring. We went to one at Blackstone? Their holiday party? I was like, I can’t believe I spent so much time getting ready for this”), chairing charities (that include pole-dancing fundraisers), residing in a $7.5 million townhouse on the Upper East Side (screening room and pool, natch), receiving all the trinkets you could ever desire (“She got whatever she wanted: diamonds—at least a quarter-million dollars’ worth, according to the U.S. Attorney’s office—designer clothes, even a new pair of boobs”) living, blissfully, prenuptial agreement free, and thinking you’d never have to go back to working the late shift at Scores… Read more »
Paul Volcker has made himself surprisingly relevant recently as an enemy of both (1) inflation/whatever Paul Krugman might be up to and (2) proprietary trading/whatever Kweku Adoboli might be up to. As for the second category, on Friday I guessed that I was not alone in being confused by the Volcker rule, which would ban “proprietary” trading by big banks while still allowing not-”proprietary” (“flow”? “customer facilitation”? “market making”?) trading. So I was pleased to learn today that the regulators designing the Volcker rule seem to be equally confused:
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