Archive for October 2011

Opening Bell: 10.12.11

By Dealbreaker

Wall Street Sees ‘No Exit’ From Financial Woes (Bloomberg)
“I don’t think it’s a time to make money — this is a time to rig for survival,” said Charles Stevenson, 64, president of hedge fund Navigator Group Inc. and head of the co-op board at 740 Park Ave. The building, home to Blackstone Group LP Chairman Stephen Schwarzman and CIT Group Inc. Chief Executive Officer John Thain, was among those picketed by protesters yesterday. “The future is not going to be like a past we knew,” he said. “There’s no exit from this morass.” [...] “I wouldn’t shed too many tears for Wall Street,” Neil Barofsky, 41, the former special inspector general for the Troubled Asset Relief Program who is now teaching a class on the financial crisis at New York University School of Law, wrote in an e-mail. “The systemic advantage that the too-big-to-fail banks enjoyed in the lead-up to the financial crisis may be diminished in the near term, but the structure is still essentially the same and will almost certainly help catapult them to record profits and bonuses once the good times return.” Wilbur Ross, 73, said Wall Street’s “inherent ingenuity” shouldn’t be discounted and that “the history of the investment community shows that it will find ways to profiteer.”

Chanos, Gross Understand Wall Street Protest (Bloomberg)
Chanos said New Yorkers don’t appreciate the impact government bank bailouts have had on other U.S. citizens. Gross said that wage earners are fighting back after three decades of class warfare against them. “Class warfare by the 99%? Of course, they’re fighting back after 30 years of being shot at,” Gross said on Twitter…John Paulson criticized the movement. His townhouse was among those targeted by marchers who left a fake tax-refund check made out for $5 billion on his doorstep, which was barricaded by police.

Informant Surfaces In BNY Mellon Probe (WSJ)
For a decade, Grant Wilson toiled on a small trading desk at Bank of New York Mellon Corp. in Pittsburgh, buying and selling currencies for the bank’s biggest clients. Mr. Wilson also had another job: For the last two of those years he was a secret whistleblower, assisting currency-trading investigations of BNY Mellon, according to people familiar with the matter. His input culminated with the filing last week of separate civil lawsuits by the Justice Department in federal court and New York attorney general in state court alleging that BNY Mellon systematically overcharged investors on billions of dollars of currency trades, defrauding or misleading them for a decade.

AIG Offers Reputation Insurance (WSJ)
Chartis, the property-casualty subsidiary of the New York insurer, is offering a new type of coverage to help companies offset the cost of bringing in outside experts when a public-relations crisis hits. Dubbed ReputationGuard, the insurance will pay for policyholders to seek the counsel of two crisis-communications firms, Burson-Marsteller and Porter Novelli, even before a possible crisis becomes public.

Gingrich: Fire Bernanke and Geithner (AP)
Asked if Wall Street financiers should go to jail for the economic problems, Gingrich says political leaders in Washington are more responsible for the downturn and cited Bernanke and Geithner for firing.

Rick Perry Mixes Up Dates Of American Revolution (ABC)
“Our Founding Fathers never meant for Washington, D.C. to be the fount of all wisdom. As a matter of fact they were very much afraid if that because they’d just had this experience with this far-away government that had centralized thought process and planning and what have you, and then it was actually the reason that we fought the revolution in the 16th century was to get away from that kind of onerous crown if you will,” Perry said.” Continue reading »

Write-Offs: 10.11.11

By Dealbreaker

$$$ Slovakia votes against expanded EFSF (FT)

$$$ Economist Nouriel Roubini’s Firm Is For Sale (CNBC)

$$$ BlackBerry problems hit four continents (Reuters)

$$$ Sprint CEO Under Fire for ‘Ugly’ Analyst Day (Bloomberg)

$$$ Banks fail to trim bonuses in pay packages (FT)

$$$ The Hottest People at Occupy Wall Street (NYO)
Continue reading »

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  • 11 Oct 2011 at 6:34 PM

Wall Street Protests North: Boston Police Officers Imply They’ll Take A Bullet For City’s Shrubs

By Bess Levin

Should it come to that. Continue reading »

  • 11 Oct 2011 at 5:47 PM

Jim Chanos Suggests New Yorkers Wake Up

By Bess Levin

Jim Chanos, founder of New York- based hedge fund Kynikos Associates, said New Yorkers don’t appreciate the impact the government bank bailouts have had on other U.S. citizens. “New York is so finance-centric that people here underappreciate the reaction of the rest of the country,” Chanos said today in an interview in New York. “People are angry, they feel the game is rigged, that they didn’t get their fair shake.” Chanos, 53, who was born in Milwaukee, said the “disjointed” nature of the Occupy Wall Street demonstration, which started last month in New York’s financial district and spread to cities such as Washington and Seattle, shouldn’t be underestimated because protests in the sixties started in a similar way. [Bloomberg]

  • 11 Oct 2011 at 4:32 PM

Keep Antagonizing John Paulson And Maybe He Takes His Ball And Goes Offshore

By Bess Levin

As you may have heard, after occupying downtown Manhattan for the last 25 days, those protesting Wall Street (etc) announced that they’d be making a trip up North, with stops at the Upper East Side homes of, among others, Jamie Dimon and John Paulson. Before they made an appearance at the Paulson and Co founder’s house, JP issued the following statement/suggestion:

“The top 1% of New Yorkers pay over 40% of all income taxes, providing huge benefits to everyone in our city and state. Paulson & Co. and its employees have paid hundreds of millions of dollars in New York City and New York State taxes in recent years and have created over 100 high paying jobs in New York City since its formation. New York currently has the highest income taxes of any state in the country and thousands of businesses have fled New York to states with no income taxes such as Florida, Texas and Nevada, or moved offshore.

Instead of vilifying our most successful businesses, we should be supporting them and encouraging them to remain in New York City and continue to grow.”

Apparently organizers of the march were not swayed and after choosing not to take the advice, made their planned stop at Paulson’s townhouse, where they left him a (slightly mixed) message of their own. Continue reading »

  • 11 Oct 2011 at 3:21 PM

Obama Reelection Campaign Looking To Hire A Few Good Quants

By Bess Levin

If you know anyone who’s interested. Continue reading »

  • 11 Oct 2011 at 3:14 PM

Wall Street Protestors Now Have Another Reason Not To Pull Out

By Bess Levin

As you may have heard, in addition to protesting the 1 percent, those gathering in downtown Manhattan (and points elsewhere) to Occupy Wall Street in the figurative sense have also found time to occupy each others’ orifices. Should anyone prefer not to be left with any long term conditions resulting from their sexual interludes but also not want to line the pockets of Trojan (parent-company Church & Dwight), today brings good news! Continue reading »

  • 11 Oct 2011 at 1:07 PM
  • Banks

Regulator Pissed Off That Banks Are Providing Client Service

By Matt Levine

A thing that most people kind of know about the business of investment banks is that it’s not that hard. You have to be able to do basic math and communicate with humans, but most of what front-line bankers and salespeople do is not rocket science. It’s also not that differentiated. Everyone looks at comps and DCFs to write fairness opinions. Everyone markets IPOs by calling big investors and saying “this is a good company,” and then tries to get the highest price. Any new product that a bank invents is reverse-engineered and offered everywhere within a week. There’s no investment banking iPhone.

So how do you convince clients to pay you for services? Well, you can offer services more cheaply than your competition. That is unpleasant. Or you can try to convince clients that your business is awesomely complicated and you provide awesomely differentiated service. That is why IPO pitch books are 80 pages long.

But most of what you do is just make people like you and find you useful. That’s why you play golf. Continue reading »

Paulson And Co Investors Standing By Their Man

By Bess Levin


John Paulson, the billionaire hedge- fund manager having the worst year of his career, has received less than 10 percent in redemption requests for his Recovery and Credit Opportunities funds for year’s end, according to two people familiar with the firm. Withdrawal orders for those two funds, which together managed about $15 billion as of July 31, were due at the end of September and may give some indication of what total redemptions could be across all of Paulson’s funds, the worst-performing of which has tumbled 47 percent this year…“We’re going to give Paulson the benefit of the doubt,” said Trip Kuehne, founder of Double Eagle Capital Management LP, a Dallas-based firm that has invested with Paulson since 2005. “I believe in him and his firm and don’t plan to pull my money.” [Bloomberg]

Confidential To Harbinger Capital Investors: Phil Has Been Working His Ass Off To Find People With An Investment Time Horizon Of Infinity. A Little Gratitude Would Be Nice.

By Bess Levin

Pop quiz: you’re a hedge fund manager named Phil Falcone. Your relationship with your investors has been on the downhill since you loaned yourself $113 million from a gated fund in order to pay personal taxes you didn’t set aside enough cash to cover. You apologized after the fact but apparently that wasn’t good enough, because they’d already moved on to freaking out over your decision to tie up much of their capital in a side project building walkie-talkies that might not pan out on account of the growing opinion that it might kill a few people. A bunch of them asked for their money back and although you weren’t really in a place to be offering any cash refunds, in July, you came up with what you thought was a pretty genius alternative plan to offer them, in place of actual money, illiquid LightSquared equity. Great idea, right? You thought so, too, but noooooo, they didn’t like that.

At this juncture, most money managers would’ve said, you don’t like that? Well door number two is the option to go fuck yourself. But not you. Even with everything you’ve got going on, from your pissy investors to getting killed on the walkie-talkies, to the boss riding you, to a prima donna named Wilbur who doesn’t let a day go by without not only letting you know he’s got options but flaunting them in your face, you went back to the drawing board. And there, you came up with something even better. Continue reading »

  • 11 Oct 2011 at 10:22 AM

Hooters Calendar Girls’ Channel Checks Indicate No Recession Imminent

By Bess Levin

They’re cautiously optimistic. Continue reading »