Mr. Kokonas added that during recent visits to Babbo and Del Posto, he noticed many customers were from out of town, as opposed to regulars from Wall Street. “He could probably p— off every bank in the world and still be fine,” Mr. Kokonas said. “Maybe Goldman will cancel their Christmas party at Del Posto, but that’s about it.” Goldman and other Wall Street banks declined to comment. But some bankers say Mr. Batali’s comments may have an upside. Said one Goldman banker: “If fewer bankers go to Babbo, maybe I can finally get a reservation.” [WSJ]
Archive for November 2011
As you may have heard, Bridgewater Associates is a hedge fund committed to probing the depths of any situation until it finds the truth. And, when one makes it his or her business to go after the truth, one must be persistent, and not take no for an answer. For example, at other funds, recruiters would probably not care to find out why any given individual chose not to work them, especially if said person had never even gone through the interview process in the first place, whereas Bridgewater simply rejects your rejection and demands a detailed list of valid reasons why you’ve chosen not to even consider what life could be like with BDubs. Last August, we learned of a Dartmouth student who was paid $100 to “explain why she did not want to work for them” and today, a Yale senior** relates being crammed into a hotel room to do the same. Continue reading »
There’s a certain intellectual beauty in the notion that big banks, or investment banks, or whatever you want to call Goldman Sachs and Morgan Stanley, should mark their whole balance sheet to market each day and report any changes in value through their income. In a business that basically consists of taking lots of shareholder and lender money and turning it into ever so slightly more money, the only thing that you should be judged on is the current market-implied value of that difference. Sometimes this can create results that are both aesthetically interesting and intuitively absurd, but the intellectual question – how much does the expected present value of your assets exceed the expected present value of your liabilities, and how did that difference change this quarter? – is one that it is noble to try to answer.
Also, if you ignore it, terrible shit happens.
So it’s a little sad to learn that the only real proponents of rigorous mark-to-market among the giant publicly traded financial institutions, GS and MS, are contemplating abandoning it:
The two firms are discussing whether to reduce their use of mark-to-market accounting, in which companies immediately take profits or losses as asset values fluctuate, according to people familiar with the situation. Such swings routinely affect the bottom line at Goldman and Morgan Stanley, including in the third quarter.
Sad, but you knew this day would come. The temptation to juice earnings – or rather, to manage earnings to a smooth path of consistent quarterly growth – is just too strong for any bank to resist.
Except that, obviously, it makes no sense to use historical-cost accounting for a securities trading business – and of course GS and MS have no intention of doing so (and it wouldn’t be allowed) – so their earnings will continue to be erratic. In fact, the Journal reports, GS and MS are focusing on one asset class where accounting rules let them use historical cost accounting – and where mark-to-market swings don’t actually much affect the bottom line:
Continue reading »
$$$ French and Germans explore idea of smaller euro zone (Reuters)
$$$ Jefferson County, Alabama, Votes to Declare Biggest Municipal Bankruptcy (Bloomberg)
$$$ Millionaires list favourite fund managers (Reuters)
$$$ “We do not admit the allegations,” Karp said, to laughter in the standing-room-only courtroom. “But if it’s any consolation, we don’t deny them.” (Bloomberg)
$$$ “Is working for a bank inherently evil? Probably not.” (DealBook)
Continue reading »
Earlier today, Forbes writer Jeff Bercovici reported that last night at the Time magazine Person of the Year debate, restaurateur Mario Batali likened the banking industry to “Stalin or Hitler,” Joe and Adolf, respectively. The collective members of the banking industry did not take this well. They banned expensed lunches at all of Batali’s eateries, took to Bloomberg’s restaurant review pages to express their outrage and vowed not to line his pockets with another dime, while also taking shots at Mario’s signature and beloved orange Crocs. Moments ago, Batali choose to take to the airwaves with a response to the backlash. While he would have received credit for kicking things up a notch with an ice cold “You won’t be missed” or “Apologies…for failing to mention another luminary you remind me of, the late, great Benito Mussolini,” he choose to go with this: Continue reading »
Bloomberg Users Would Prefer To Dine On Dog Hair, Human Body Parts, Cheesesteaks Than Set Foot In A Batali Restaurant
By Bess LevinNot sure, but it sounds like some people are still upset about the genocidal maniac comparisons?
Bank of New York Mellon is back in the news for offering a special promotion to its valued FX customers: if you act now, instead of screwing you with the worst possible price for your FX trades, they will not do that. OWS is working!
The thing about that is … well, wait, let’s start with something more important: I don’t really think that Gretchen Morgenson understands anything about derivatives. That would be ridiculous. Good to have that off my chest.
What I meant to say yesterday was not that she did, or that anything she’s said about derivatives was technically correct. It was that getting all excited about how she mislabeled a repo a swap misses the point. If a repo and a swap have substantially the same cash flows and achieve substantially the same economic effect – here, letting MF Global leverage a position by separating funding from credit risk – then there’s nothing substantive about calling one thing a “repo” and another a “swap.”
BoNY Mellon, though, shows that what you call a thing actually can matter. Thinking that everything is a derivative may lead to confusion and anger if you’re, say, Gretchen. Because Derivatives Are Bad. But, if you’re me, thinking that everything is a derivative might make you a little bit more sympathetic to BoNY. Because I don’t think that what they were doing was – or was only – screwing their customers by secretly giving them the worst price of the day. I think that they were “long a floating-strike, intra-day option on their FX transaction.” Continue reading »
Hey look, we’re down 384 points. Think we can crack four figures? Continue reading »
From: [redacted at Tullett Prebon]
To: Dealbreaker
Subject: Mario Batali
Sayeth the restaurateur: “I would have to say that who has had the largest effect on the whole planet without us really paying attention across the board and everywhere is the entire banking industry and their disregard for the people that are supposed to be working for them [sic]….So the ways the bankers have kind of toppled the way money is distributed and taken most of it into their hands is as good as Stalin or Hitler and the evil guys…[T]heir evil has had a huge effect on the world.”
Update: According Batali, he was “misquoted,” and Forbes which stands by its story and says everything “is on tape,” should be ashamed of itself. Continue reading »
Comment Of The Day: 11.09.11
By DealbreakerInfinite Guest on Mario Batali Bites The Hand That Keeps Him In Orange Crocs: Continue reading »
Tags: Comment of the Day