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$$$ UBS Chief Ermotti to Follow Gruebel in Shrinking Investment Banking Unit [Bloomberg]
$$$ Malcolm Gladwell is now a Bank of America employee, kind of. [MarketWatch]
$$$ Lululemon’s Ayn Rand bag irks some [Globe and Mail]
$$$ Occupy Wall Street Has A Real Office Now [Daily Intel] Continue reading »
Guest on MF Global Funds May Be Missing Because Someone Suffers From Test Anxiety: Continue reading »
Fitch released a report today saying “ohmygod banks Europe” and the market went down and maybe there’s a causal link, whatever.
The report mostly takes notice of US banks’ European exposures in general, and the mystery of net versus gross derivatives exposure in particular, in which one asks “if Bank A sells CDS on $100bn of Italian debt to Bank B, and buys CDS on $100bn of Italian debt from Bank C, then when things go pear-shaped is it on the hook for zero (because it has no ‘net exposure’) or $100bn (because Bank C goes belly-up) or somewhere in between (because of collateral, sub-1 correlations, etc.)?”
It’s an important question: net exposures are manageable, gross exposures are terrifying, and there are legitimate questions about whether in a stress case the netting could break down. Various people who are smarter than me have tried to triangulate around parts of the answer using public data.
I don’t know the answer and doubt I’ll find out, though my gut is that netting should kind of sort of mostly work (I find Graph 5B of this, and the definition of “bilateral netting,” oddly comforting). What troubles me today, though, is that Fitch has no clearer answer than I do. Continue reading »
The SEC tends to come in for a lot of good-natured joshing around here, and elsewhere, for amusing foibles like spending their days surfing porn, ignoring multibillion dollar Ponzi schemes when they’re told about them directly, and complaining bitterly when anyone suggests that their priorities might be misplaced. Also on some people’s complaint list is that the SEC tends to be heavy on lawyers and light on forensic accountants, economists, traders, quants, and just generally anyone who might have a glancing familiarity with things financial.
But credit where it’s due: the SEC has gotten a bit better at using market mechanisms to find the next big, or little, or whatever fraud. This week has seen a spate of stories about how the SEC, and the Feds generally, are using new and existing whistleblower programs to encourage people to come to them first if they have negative information to peddle. The headliner is Grant Wilson, who new-best-friend-of-the-SEC Harry Markopolos recruited to expose some currency trading unpleasantness at his former employer BoNY Mellon, but others seem to be in the SEC’s pipeline.
More intriguingly, though, the SEC is doing a great job at shutting down its competition. Continue reading »
The City of London Corporation, which oversees the U.K.’s main financial district, issued eviction notices to anti-capitalist protesters camped outside St. Paul’s Cathedral. The City authorities served a legal notice demanding the protesters move their tents and equipment away from the public highway within 24 hours, John Park, a corporation spokesman, said in an e-mail today. The move followed a decision yesterday to clear demonstrators from the area, he said. “We are getting reports about vulnerable people, cases of late-night drinking and other worrying trends, so it’s time to act,” the corporation’s policy chairman, Stuart Fraser, said in an e-mailed statement yesterday, “From now on, we will have to have any talks in parallel with court action — not instead.” If protesters do not comply with the eviction order, proceedings will be issued in the High Court, he said. [Bloomberg]
The bad news, as previously mentioned, is that Citi is firing a bunch of people. The good news, supposedly, is that if you’re looking for a gig, they’d love to take a meeting. Continue reading »
Cuts occurring circa now, tomorrow. Continue reading »
In the 2+ weeks since MF Global filed for bankruptcy protection, much has been written about Jon Corzine’s penchant for making wild bets, which worked out fine while he was at Goldman Sachs, where risk managers are empowered to stand up to employees putting the firm/bonus pool at risk, but not so much at MF-G, where he was a man on a mission. If JSC could turn back time…he’d still be JSC and he still would’ve had that little voice, down his plums, telling him to risk it all on Eurozone debt, which in turn would’ve caused various people to freak out, start a run on the bank and drive it into its current state of affairs. Separately though? This business with the customer funds that were desegregated from the firm’s own money and which are currently “missing,” despite several manhunts and “magical mystery tours” to find it? It didn’t have to be that way and maybe it wouldn’t have been if someone had been forced to dust off his series 24 books and review the section on “customer accounts,” before cramming into a test center and sitting for the exam alongside all the other scrubs, sweating through his sweater vest over getting at least 70% correct. Continue reading »
Purgatory For MF Global Customers (WSJ)
“My entire business has come to a halt,” said Mr. Gochberg, who can’t get to his cash. “I’m angry and I no longer have any confidence in our system.” More than two weeks after MF Global filed for Chapter 11, some 33,000 customers are stuck in a sort of purgatory, with no access to their cash until a trustee liquidating the securities firm says they can get it…A spokesman for the trustee said this week it is possible customers won’t get all their money back, due to the apparent shortfall at MF Global.
MF Global Trustee Moves To Return $520 Million In Client Cash (Reuters)
In a measure that will provide some relief to traders who have clamored to get access to their funds, James Giddens sought permission to return about $520 million to some 15,000 commodity customers even as the search continues for client money that regulators say MF Global may have misappropriated in its final days. The motion, which must still be approved by the court, came after intensifying pressure from commodity traders and the leading exchanges, who said that punishing customers who had liquidated their trading positions ahead of MF Global’s October 31 bankruptcy set a worrying precedent.
Italy’s Monti Names New Government (WSJ)
The ministers, including Mr. Monti—who will serve as prime minister and economy minister—will be formally sworn into office during a ceremony later Wednesday. Mr. Monti’s new ministers are drawn mainly from academia and the private sector. Corrado Passera, chief executive of Italian bank Intesa Sanpaolo SpA, will be industry minister. Mr. Monti said that post would be “at the center” of Italy’s efforts to revive growth.
Citigroup May Cut 3,000 Jobs As Pandit Trims Costs (Bloomberg)
The reduction, equal to about 1 percent of the staff, is an estimate and may change, according to the person, who wasn’t authorized to speak publicly about the cuts. Among the jobs eliminated may be 900 from the division that includes the bank’s trading and investment banking operations, the person said. Citigroup, ranked third by assets among U.S. lenders, employed about 267,000 people at the end of the third quarter. Continue reading »
$$$ Eurozone bonds hit by mass sell-off [FT]
$$$ Fannie and Freddie will waive warranties for mortgages refinanced under HARP [Reuters]
$$$ “The only people who were aware of them going into Zuccotti Park were at the very highest levels of the department” [NYT]
$$$ Yahoo is contemplating extreme measures to screw Dan Loeb [DealBook]
$$$ Europe cracks down on ratings agencies, short selling; still cool with manipulating asset risk weightings [WSJ, BI, Bloomberg]
$$$ Stocks go up when they’re mentioned on CNBC, positively or negatively [Infectious Greed] Continue reading »
Merkin_Capital on Think You Might Be Asked About A Horrible Crime With Which You Have But A Tenuous Link Over The Course Of A Job Interview? Penn State Is Here To Help: Continue reading »
