The first day of the Occupy Darien demonstration got off to a slow start at a wet Tilley Park in Darien on Wednesday morning with about 10 protesters coming out for the event…Tommy Fox, a veteran of several Occupy Wall Street protests, came from New York to take part in the event. He blamed the low attendance on the wet weather and lack of coordination between event organizer Margaret Rague and occupiers in New York. He said he has been trying to spread the word, and that more people may show up Thursday. [The Daily Darien]
Archive for December 2011
Boy, those new Fed regulations, they are long. They have lots of things. Like stress tests, and liquidity buffers, and the thing where you can’t have credit exposure of more than 10% of your regulatory capital to one bank.* But the thing that they mostly have are capital requirements, which are kind of not that surprising, i.e. they seem to be Basel-esque including G-SIFI surcharges, which is terrible if you’re Jamie Dimon, but also wonderful if you’re Jamie Dimon.**
I’ve never really understood bank capital regulation, like, deep in my bones. You can risk-weight it. You not risk-weight it. You can do other things. I don’t know.
One thing you can’t do, though everyone does, including me sometimes, is say that banks have to “hold capital.” Clive Crook in Bloomberg today says a number of interesting things but most importantly he’s today’s person pointing out (emphasis added)
a popular fallacy: the idea that equity sits idle and unused on a bank’s balance sheet as a kind of overhead. In fact, equity is just another source of funds. The proceeds from a sale of equity can be lent out or applied to other purposes just as readily as proceeds from, say, taking a deposit.
That’s, like, important! The first part, the overhead thing, whatever. The second part, that “equity” and “capital” are words you say about funding, not assets, is a thing that you should know. If you don’t know it, go find it out. Crook goes on to say: Continue reading »
Remember, back in ’08, when Angelo Mozilo cried while telling a bunch of Countrywide shareholders that Bank of America, which had just bought the place, would “reap the benefits of what we have sowed“? Obviously that was was Moz-Speak for “you’re about to find out what it’s like to be forcibly sodomized for all eternity,” but at the time, some people wanted to give him the benefit of the doubt. Maybe he was leaving some neat stuff behind, like buried treasure or something. We now know that, actually, one of the things that the home lender had been “sowing” for a number of years was the basis of a Department of Justice investigation into the fact that the company made it a policy to dick over Hispanic and black people, one of the many gifts Brian Moynihan has been unwrapping since he took over. Continue reading »
Are you frustrated with Bank of America? Do you have one simple request, but have found it impossible to get through to anyone? Do you feel like no one’s listening? Maybe you’re an employee who wants to have a frank talk about bonuses, and if you can expect to get one this year. Maybe you’re a homeowner who doesn’t want to get wrongfully foreclosed on and have your beloved parrot stolen, again. Maybe you’re a shareholder who’s been begging for a dividend increase. Maybe you’re an ex-CEO named Ken who just wants a tiny little bit of office space out of which to run the party promoting business you recently started with your friend Ang Moz. Whatever your desire, consider taking a page from Ken Williams’ playabook. He tried going through the normal channels to get what he wanted and then cut the shit and got serious, by appealing to BofA’s serious love of snappy tunes. Continue reading »
[via MandyCNBC]
Earlier this week, it was reported that RBS would be taking the next couple months to decide which businesses it wants to “remain in” and which it doesn’t. Management was said to be considering “shutting or selling” its equities unit and, as these things go, laying off the 1,000 people it employs, as well as others who may find themselves working in a division the royalest bank isn’t so keen on anymore. As humans tend not to look on the bright side of potentially getting fired, the staff has been in a bit of a funk lately. Hearing the team needed some frowns turned upside down, Global Banking & Markets CEO John Hourican sent out a memo this morning attempting to do just that, by noting 1) that everything everyone’s read about layoffs and the closing of entire business units is true, but that all that was communicated, like, a couple months ago, so let’s not act like it’s coming as a shock 2) everyone in finance is making tough choices right now 3) obviously, though, we’ve had our teeth kicked in harder than most 4) contrary to popular belief, we’re not just putting your names in a hat and deciding who gets fired from there 5) Happy holidays. Do something nice for yourself, you deserve it. Continue reading »
ECB Lends Banks $645B, Exceeding Forecast (Bloomberg)
The European Central Bank will lend euro-area banks a record amount for three years in its latest attempt to keep credit flowing to the economy during the sovereign debt crisis. The Frankfurt-based ECB awarded 489 billion euros ($645 billion) in 1,134-day loans today, the most ever in a single operation and more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. The ECB said 523 banks asked for the funds, which will be lent at the average of its benchmark interest rate — currently 1 percent — over the period of the loans. They start tomorrow. “It was obviously an offer the banks could not refuse,” said Laurent Fransolet, head of fixed-income strategy at Barclays Capital in London. “It shows the ECB is not out of ammunition and it gives banks security on liquidity for a few years. On the other hand it means banks will rely on the ECB for longer.”
Banks May Flock to ‘Free Money’ as ECB Awards 3-Year Loans (Bloomberg)
“This is basically free money,” said Jens-Oliver Niklasch, a strategist at Landesbank Baden-Wuerttemberg in Stuttgart. “The conditions are unbeatable. Everybody who can will try to get a piece of this cake.”
Moody’s Warns of Euro Crisis Threat to UK’s Rating (Reuters)
Britain’s top-notch debt rating is under threat from the crisis in the euro zone, and further shocks to the country’s economy could derail government efforts to balance the budget, ratings agency Moody’s said on Tuesday. Britain’s scope to absorb further fiscal shocks while retaining its stable outlook and triple-A rating have deteriorated over the past year due to weak growth, and the country faces “formidable and rising challenges,” Moody’s said. “Since the last annual report, the amount of headroom for Britain has declined,” Moody’s analyst Sarah Carlson told Reuters after the publication of the ratings agency’s end-of-year assessment of Britain’s ability to repay its debts.
Doubts Arise In Euro’s Birthplace (WSJ)
Now, as financial anguish in the euro zone reveals flaws in the monetary union, the crisis is exposing deep divisions not only among Europe’s national leaders but even within the consensus-minded and long-supportive Netherlands. A unified pro-euro position projected for years by the Dutch political and economic establishment has begun to crack. “We could look at the euro as a failed project,” said Hans Hoogervorst, a former Dutch finance minister and current chairman of the International Accounting Standards Board, on Dutch television last week. The Netherlands’ current finance minister said much the same a few days earlier. The Central Planning Bureau, the Dutch equivalent of the U.S. Congressional Budget Office, last month said the creation of a monetary union had been about politics, and its economic gains have been “minimal.”
Fortress CEO to Take Leave in Wake of SEC Suit (Reuters)
Fortress Investment Group said on Wednesday that its chief executive, Daniel Mudd, is taking a leave of absence after financial regulators charged that he committed securities fraud during his time as CEO at Fannie Mae…Fortress said that the matter related to Mudd’s previous employment and was not impacting it or its business operations.
To Attract Potential Investors, Mets Add Perks To The Deal (NYT)
But for those perhaps uncertain over whether to part with their millions, the owners have listed some less obvious perks that would come with a share of the Queens ball club. Access to Mr. Met, the team mascot, although the degree of access is not entirely spelled out. It definitely means you, as a part-owner, can schmooze with Mr. Met at Citi Field. It’s less clear whether you could get him to come to your child’s birthday party without a fee. A formal business card, complete with the prominent designation: “Owner.” And if you are a wealthy doctor, commodities trader or real estate mogul who wants to try to swat the ball over the newly pulled-in outfield fences at Citi Field on a Mets day off, you are entitled to attend what appears to be an exclusive kind of fantasy camp: “Owners’ workout day.” These benefits of ownership are laid out in a term sheet given by the Mets’ owners to prospective partners. The document, drawn up by the club’s investment banker and obtained by The New York Times, runs to three pages. Continue reading »
$$$ Fed Proposes New Capital Rules for Banks [NYT]
$$$ Strong take-up of ECB loans expected [FT]
$$$ Ex-NFL Player Willie Gault Charged in Stock Scam [WSJ]
$$$ David Einhorn on GMCR: “Simply saying that you take allegations with misconduct seriously does not mean that you actually take the allegations of misconduct seriously.” [Reuters]
$$$ NBC Reporter Was Charged With DUI, Supposedly After A Party At The Home Of Jerry Sandusky’s Lawyer [Deadspin]
$$$ Here are dogs dyed as tigers and pandas [Daily Mail]
Continue reading »
As you may have heard, several weeks ago a fed up Harvard Crimson staff ran an impassioned editorial urging Occupy Wall Street protesters on campus to leave Goldman Sachs, and those hoping to gain employment with the firm, alone. The last straw had been a group of Occupy Harvard supporters who “attempted to disrupt a Goldman Sachs recruiting event,” which represented a step too far. The newspaper took occupiers to task for “presenting a facile and trivializing interpretation of the root causes of the economic catastrophe and debases our national conversation on the issue,” for failing to comprehend that Goldman Sachs is going to hire employees regardless– and, god damn, it, they ought to be Harvard students–, and for just generally embarrassing themselves by “pitching a simplistic conception of the financial crisis and targeting fellow students [which] is not the way to have a successful movement.” Moving forward, the Crimsonians cautioned, “Occupy ought to refrain from such ill-conceived protests in the future.”
But it was already too late. Goldman canceled an event in Cambridge, supposedly due to the proximity to reading period, though more likely to send a message– that it would entertain the idea of hiring Harvard graduates when it was made to feel welcome. At the time, we urged those dreaming of a job with Lloyd and Co to woo them and woo them hard. Compliments, flowers, red carpet, the works. An editorial extolling, say, the virtues of Abacus and their rippling abs. Stuff like that. Maybe not stuff like this: Continue reading »
Two things that I have thought before and occasionally committed to these pages are:
(1) conflicts of interest at investment banks are actually sort of interesting and potentially value creative and not to be dismissed with knee-jerk “ooh conflicts evil,” and
(2) it just cannot be that hard to execute basic common stock capital markets transactions (but they pay well).
Now point (2) has always struck me as a bit shaky because of point (1). The absolute classic nexus for banking conflicts of interest is the big capital markets transaction, by which I mean mainly the big IPO, because this is the place where two sets of important clients square off against each other in a more or less zero-sum way. You can find win/win solutions on lockups or share structures or whatever, but ultimately you have investor clients who want to pay $X per share and an issuer client who wants to get paid $Y per share and Y>X and your job is more or less to make Y=X. Your business is making that trade happen with valuation models and technical arguments and wheedling and persuasion and steak dinners and threats and implicit promises of better deals in the future and whatever other tools you have available to you. This is complicated. Some of those tools are not tools you’re supposed to have.
A good capital markets bank makes the best possible use of the tools that it legally can use to get lots of deals done that everyone feels good about. It’s not rocket science necessarily, and it sometimes ends up being pretty easy, but at least sometimes it requires quite a bit of finesse and skill.
A deal that not that many people feel good about is the IPO of Zynga, led by Morgan Stanley and Goldman Sachs, which fell below its IPO price on day one and hasn’t looked back. So, sad for Zynga, or at least for its buyers. Even sadder: Continue reading »
“We coined this investigation ‘Perfect Hedge’ because if you’re armed with that insider’s information, you can initiate the perfect hedge,” FBI agent David Chaves said in an interview of the largest hedge fund investigation ever. “You’re always protected — the upside and the down side.” [Bloomberg]
