Those affected should take heart knowing it’ll all be worth it in the end. Read more »
Archive for February 2012
Today we introduce you to the all-stars of my MBA program and yours. We seek only the top tier of characters that can singularly steal the show (and maybe $1.2 billion dollars in segregated customer funds on the side).
The Questions Guy - The guy that everyone loves to hate. In any setting — be it the classroom, company-sponsored information session, or networking circle — The Questions Guy always has something to say. And while it technically always ends with a question mark, we understand the sentence to have the primary purpose of demonstrating some deeper knowledge of the material at hand. Sometimes these “questions” are insightful; however most times, we blame him for wasting classroom time, stealing our thunder, or dumbing everyone down with his trifling. We envy the fact that he’s clearly getting his money’s worth of his tuition … and ours.
The Open Mouth Learner - Formerly some kind of nonprofit hero, the Open Mouth Learner’s jaw dropped with his first exposure to supply/demand curves, and he has remained captivated ever since. He brings up his non-traditional background at every opportunity, even if totally irrelevant to the conversation at hand. Professionally, he drops the phrase “non-traditional background” assertively in introductions, in order to ask questions in finance networking circles. At school, he drops the phrase defensively, in order to shirk the number-crunching parts of group assignments. The Open Mouth Learner is quietly both ashamed and proud of the fact that he has gotten through life this far without ever learning fractions. Read more »
Applicable if your last name is Moynihan, first name Brian, who will also be receiving no cash bonus for last year. BofA is apparently making an “example” of Moyns as party of the bank’s attempt to get the message out that “If the company doesn’t do well, our CEO isn’t going to do as well.” [Bloomberg]
If you’re into Greece you’ve probably already read all about it and if you’re not I can’t make you. But in brief: Greece is fixed and we will NEVER HEAR ABOUT ANY PROBLEMS EVER AGAIN. In less brief:
(1) Some folks stayed up all night and produced a statement.
(2) Greece’s private creditors will be offered the long-anticipated opportunity to voluntarily exchange their old bonds for new bonds, which will for the most part be the same as the old bonds except for minor differences including but not limited to a greatly extended maturity (to 2042), a 53.5% reduced face amount, and a 3.6% blended interest rate.
(3) If they don’t voluntarily exchange, which they will because – hilariously – they’ve already taken accounting writedowns (and also because I guess it’s better than a disorderly default), private holders will get CAC’ed, which may or may not be as bad as it sounds, but in any case at least CDS will pay out, unless it doesn’t.
(4) Also the public sector will do various helpful, confusing things.
(5) In exchange for this, Greece will enact horrible austerity, and because no one believes that Greece will actually do that, there will be escrow accounts and what Reuters ominously calls “permanent surveillance by an increased European presence on the ground.”
(6) Everyone is pretty sure we’ll be doing this again in six months and, look, just fair warning, I will not be writing about it then, because feh.
We haven’t had a serious international bankruptcy, which this pretty much is, since I started paying attention to the financial markets, two months ago, so I mostly think about insolvency from a US bankruptcy law perspective. One thing that happens in bankruptcy is that, like, really really roughly speaking, the creditors stop being creditors and become the owners. This isn’t always the case but the basic playbook of US bankruptcy law is: Read more »
Remember the Paulson & Co Sino-Forest investment? Turned out to be one of the fund’s less than stellar ideas? Will get you an hour in the office hole for mentioning it? Most people affected by the trade have so far been willing to let it slide, perhaps preferring to focus their energies on bigger beefs with JP (such as why only the Platinum Level P&C Members got a check to cover their 2012 losses), and probably also chalking it up to Paulson having an unfortunate brain freeze for the majority of last year. Hugh F. Culverhouse, not so much. The former investor, who filed suit against the hedge fund today, senses something more nefarious at play, the basis for his reasoning being that he doubts Paulson could be that stupid. Read more »
The U.S. Court of Appeals for the Second Circuit will hear oral arguments at 10 a.m. Tuesday in a lawsuit filed by the ex-wife of SAC Capital Advisors founder Steven A. Cohen. Patricia Cohen alleges he hid assets during their divorce proceedings. A lower court dismissed the case in March 2011. [WSJ]
Greece Wins Second Bailout as Europe Picks Aid Over Default (Bloomberg)
Finance ministers awarded 130 billion euros ($173 billion) in aid, engineered a central-bank profits transfer and coaxed investors into providing more debt relief in an exchange meant to tide Greece past a March bond repayment. Stocks fell and the euro fluctuated as investors speculated the deal won’t fix Greece’s long-term challenges. Bondholders’ response to the swap, Greece’s tolerance of more austerity and a gantlet of parliamentary approvals in northern European countries gripped by an anti-bailout mindset loom as risks to the latest salvage operation. “Everybody understood that this was the moment of truth,” Belgian Finance Minister Steven Vanackere told reporters early today after 13 1/2 hours of talks in Brussels.
Geithner Bond Returns Beat Rubin, Trail Paulson (Bloomberg)
Since Geithner assumed office in January 2009, returns on Treasuries have exceeded bonds of other countries by 0.3 percentage point on an annualized rate, according to Bank of America Merrill Lynch index data. That’s less than Paulson’s 7.5 percentage points. Under Rubin, returns on Treasuries lagged behind foreign issues by 1.6 points.
A Banker Who Unwinds by Photographing Prostitutes (CityRoom)
As a foreign exchange trader for Citigroup, Chris Arnade, 46, makes a good income, and lives with his wife and three children in a spacious apartment he owns in Brooklyn Heights. But during much of his spare time, he can be found driving the family minivan around Hunts Point in the Bronx, photographing prostitutes and documenting their lives. Mr. Arnade says he hopes his photos and descriptions provide a platform for some of the most marginalized New Yorkers to tell their stories.
Fed Writes Sweeping Rules From Behind Closed Doors (WSJ)
Fed officials contend they allow plenty of sunlight into their regulatory deliberations, but open meetings, which tend to be scripted and are sometimes perfunctory, don’t always add value to the process. Ever-growing demands on governors’ time has made it harder to coordinate schedules to allow for frequent meetings than in past decades, they add.
UBS Turning Whistleblower in Libor Probe (Bloomberg)
UBS’s decision to become first- confessor as regulators probe the alleged manipulation of interest rates will ratchet up the risks for other banks that set the benchmark for $360 trillion of securities worldwide. The bank is seeking to insulate itself from the biggest possible fines from the investigation by turning itself in to regulators before its competitors to gain leniency, lawyers said. The plan still leaves the Zurich-based lender vulnerable to lawsuits from clients and raises the potential antitrust penalties for its competitors.
Board of Wynn Resorts Forcibly Buys Out Founder (WSJ)
In a dramatic weekend showdown, the Wynn board, meeting in Las Vegas, accused Mr. Okada of making improper payments to gambling regulators in the Philippines. The board’s move came after an internal investigation conducted by a former FBI director found him to be “unsuitable” based on the company’s internal regulations.
Strauss-Kahn Held by Police in Prostitution Probe (Reuters)
Former IMF chief Dominique Strauss-Kahn was taken in for questioning on Tuesday by police investigating an alleged prostitution ring run out of the northern French city of Lille. Strauss-Kahn can be held for up to 48 hours and may then be placed under formal investigation for benefitting from misappropriated company funds. Investigators are trying to find out whether French executives used corporate expense accounts to fund sex parties with prostitutes. Read more »
$$$ Surprise! Harbinger Investors Sue Over LightSquared [WSJ]
$$$ Goldman Sachs P.R. Chief’s Accidental Exit Interview [DealBook]
$$$ BofA CEO Takes Pay Cut [WSJ]
$$$ Lehman creditors push for testimony from Geithner [Reuters]
$$$ Surely you’d like to be a Senior Compensation Analyst, Executive Compensation at AIG (really!) [eFinancialCareers]
$$$ Maine caucus results were lost in a spam folder [Politico via DI]
$$$ We’re off for the holiday– enjoy the long weekend and see you Tuesday!
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