- Monthly MetroCard
- iPhone 3GS
- Cialis Prescription
- Anything at all at “per se”
- Jeep Wrangler (even factoring in cash-for-clunkers subsidy)
- Oriental Avenue
Best reader entry before 5pm ET gets a (weak but amusing) prize.
Ruth Madoff Can’t Spend $100 Without Telling Trustee [Bloomberg]
Just when you thought it couldn’t get any worse, news that Chrysler is selling vehicles too quickly and the mobs of customers in showrooms are alarming even seasoned Chrysler sales professionals. Models of the Jeep Wranger (15/19 City/Highway MPG) are scarce, as are Town and Country Minivans (17/24 City/Highway MPG) as the Cash for Clunkers program floods the country’s highways with forward-looking, highly efficient, environmentally friendly vehicles, instead of old emitters of blue-white smoke and SUVs.
Not satisfied with the $4,500 credit from the government, Chrysler lopped on another $4,500 or so in incentives- the “double your cash” campaign- just in case, you understand. Obviously, this is all part of newly installed Chrysler Chief Executive Sergio Marchionne’s “strengthen pricing even at the expense of market share” plan announced last month.
Marchionne’s “increase production just in time to hit the twenty four month demand lull we just created” program is still in development, but is expected to be announced at the end of the summer driving season, right before the unveiling of the “repair the shattered resale value of Chrysler products” initiative. Both programs will precede the “I was totally high on painkillers when I signed those deal documents” phase.
Chrysler to Drop ‘Clunker’ Incentive [The Wall Street Journal]
Back in the “any port in a storm” days in February, RBS was foolish enough to commit to a legally binding lending quota in exchange for a few more wheels of government cheese. (One can only hope it was imported from France, but we doubt it.) RBS had to pay for the recently constructed largest trading floor in the known universe, after all. (Don’t be sad. The UBS building is there to keep it company.) So, some £25 billion was supposed to flow into the hands of RBS borrowers… and hasn’t.
With “the government” as a 70%+ owner of RBS (through the proxy of “United Kingdom Financial Investments,” the British version of the trusts holding shares in U.S. bailout recipients) RBS could effectively be a government ministry. The lending quotas were intended to present the illusion that RBS would be permitted to make commercially reasonable loans without interference from the UKFI. That, of course, is impossible.
Lending quotas, so popular with U.S. institutions as the “anti-redline spray” used to ward off the enforcement agencies, certain civic leaders and “community organizers” back in the ’90s (we understand that Deep Woods Pay-Off™ works well too) are, by definition, either too low, and therefore useless, or too high. In the latter case, the only way to comply is, obviously, to reduce underwriting standards. The soft illusion spun by the quota quickly evaporates in this case. There is nothing commercially reasonable about quotas, no matter how they are dressed up.
The great irony is that RBS is complaining that a number of business customers have paid back loans early, lowering their lending figures. Tragic, we know.
Still, even the scintillating intellect and pure management acumen of Alistair Darling is insufficient, it seems, to curb the current crisis without some force-fed debt from the captives. Accordingly, now is probably the perfect time to take your one page business plan for a global chain of authentic British cuisine restaurants on over to RBS.
RBS Is Missing Lending Target [BBC News]
It would be difficult to make the case that, over the last decade or so, financial institutions haven’t begun to resemble the sovereigns that purport to regulate them. Certainly, with the news that the spying scandal brewing at Deutsche Bank is wider than initially realized, it becomes more and more obvious that global financial institutions have begun, also, to act like sovereigns, particularly with respect to the creation and use of intelligence services. For what it’s worth, 2008 revenues at Goldman outpace the Gross National Product (much less the tax receipts) of Panama, Estonia and Iceland- and the odd alien visitor could be forgiven for thinking that this latter had outsourced its central bank function to any of three global banks. (Take your pick).
Sovereigns are playing right along, sending their agents to penetrate and gather intelligence on Swiss banks (Germany, we are looking at you) as if they were the Abwehr, and though it might look like the United States has concluded swaps with Schweizerische Nationalbank, those transactions might as well be directly with UBS and Credit Suisse. And who would argue that the United States Department of State is really negotiating primarily with the Swiss Government, rather than UBS, on the issue of naming U.S. depositors? Of course, the result here (no fine for You and Us) reminds one of treaty negotiations more than a regulatory probe. But, then, when two or three big banks have the power to make (or break) the country’s economy, what’s the difference?
Bank Scandal Widens [The Wall Street Journal]
Turn it off. Kidding, though that’d probably work. Barry Ritholtz was recently asked what he’d do to fix “financial television.” As there seems to be one network in particular need of help, he’s addressed what the good people over in Englewood Cliffs can do to make themselves more watchable. A few pointers from BR:
1. Stop Yelling. Stop interrupting. Stop Talking Over Each Other: This is not Jerry Springer, its serious business. People’s retirement and investments are at stake. Please treat it that way.
5. Lose the Octobox. Fire whoever came up with the Decabox. ‘Nuff said.
7. Fact Check: An awful lot of things on air get stated with authority and confidence. Much of them are little more than junk or pop myths. Why is it that the more dubious a proposition is, the greater the confidence the speaker seems to muster? Consider fact checking as much of the statements that are made on air as possible, and making frequent corrections.
14. Stop the Bull/Bear Debate: This is a vast over-simplification of the market, and often does not serve the audience well. There are nuances and variables that get lost when you reduce everything to black and white.
15. Partisanship: Leave your personal politics at home. Viewers don’t care what most of you think.
We’re definitely in agreement with all of the above, though obviously the suggestions might be a tough sell, as they’re pretty much telling CNBC to not be “so CNBC.” Like point one– would you know it was CNBC if people weren’t yelling at each other, cutting each other off, or speaking in a pitch only dogs can hear? This is who they are, and if you were to ask network execs/talking heads, what do you think is your best attribute, they’d probably say, “our top notch ability to interrupt each other/our guests.” The biggest problem here is that CNBC actually thinks its viewers enjoy this shit, and are somehow fooled into believing it’s financial drama, which is why the the Call of the Wild segment was created.
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It’s what the laymen might refer to as: ass-kissing. Or what the less dignified among us might refer to as: salad-tossing. Whatever you want to call it, Frank-y Boy ain’t falling for it. So you can wine him, dine him, send roses to his office by the dozen every hour on the hour and he’s still not going to just let you pay your senior executives whatever you fancy, or flit off on corporate retreats picked up by the taxpayer, or throw away all the regulation he wants to lay on your asses.
You can tell him how good he looks today, or how “slimming” that pinstripe suit is ’til you’re blue in the face. You can tell him how smart he is and how lucky we are to have such a brilliant guy like himself in charge during such dark days. You can get Vosges on the horn and literally turn his House office into a revolving door bacon bars, or grind them down and hook him up to an IV of the most delicious salty/sweet and he still won’t– actually, no, that would do it, though it’ll presumably cost you. For anyone (JPMorgan) searching in vain for BF’s g-spot, that was a free one. Aaron Elstein reports:
Just about everyone in banking wants to be Barney Frank’s friend nowadays.
Last week, 600 people, including executives from Goldman Sachs and J.P. Morgan Chase, filled the cavernous National Building Museum in Washington, D.C., for a $5,000-per-table tribute to the chairman of the House Financial Services Committee. He is marshaling legislation that promises to make Wall Street a more regulated and less prosperous place for years to come, and to hear it from some of the bankers at the event, they couldn’t be happier that a tough-talking, capital-L Liberal Democrat from Massachusetts is leading the charge to rewrite their futures.
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Okay, but seriously: how can they do this to us?
HSBC Holdings Plc’s U.S. securities division will no longer extend structured financing to hedge-fund investors to leverage their investments, a person familiar with the company’s plans said.
Most of you have probably noticed by this point that Rebecca Jarvis is sitting in Erin Burnett’s seat on Squawk Box this morning. Mark Haines opened the show by saying only that his main squeeze was off, but did not get into more detail, either because she left coldly in the middle of the night* without leaving a note, or because he needed the camera to cut away while he dealt with the tears. No matter. She’s been located. Burnett is moonlighting over on the Today Show where she’s had her hands full conducting interviews on a wide-range of topics including Susan Boyle and Jon & Kate. For those of you worried that she’ll get rusty when it comes to talking cash money, do not fear. Erin also spoke with the South Dakota rancher who won a $232 million Powerball jackpot. As for you, Mark, dry those eyes. While we did sense a little chemistry between EB and Matt Lauer, it was likely just for show (she’s a professional afterall). You know she’d never leave you for good.
*All CNBC co-hosts are required by contract to bunk together.
I know it sounds bad, but that’s only because it might actually be that bad. Beth Jacobson, a former loan officer at Wells Fargo, sat down with the Times this weekend to get into the nitty gritty of her craft. Generally speaking, Jacobson described her work as ten years of riding “stagecoach from hell…systematically singling out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages.” Okay, but specifically, how did she and her colleagues do it? I’m glad you asked.
“We just went right after them,” said Ms. Jacobson, who is white and said she was once the bank’s top-producing subprime loan officer nationally. “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”
Interesting! Sort of fucked up, sure, but before we start name-calling, let’s hear more about the process.
In 2001, former loan officer Tony Paschal states in his affidavit, Wells Fargo created a unit in the mid-Atlantic region to push expensive refinancing loans on black customers, particularly those living in Baltimore, southeast Washington and Prince George’s County, Md.
“They referred to subprime loans made in minority communities as ghetto loans and minority customers as ‘those people have bad credit’, ‘those people don’t pay their bills’ and ‘mud people,’ ” Mr. Paschal said in his affidavit.
He said a bank office in Silver Spring, Md., had an “affinity group marketing” section, which hired blacks to call on African-American churches. “The company put ‘bounties’ on minority borrowers,” Mr. Paschal said. “By this I mean that loan officers received cash incentives to aggressively market subprime loans in minority communities.”
Emphasis ours, but only because we wanted to make it easier for Wells to respond to the allegations. Here’s the statement offered to the Times:
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Meet-cutes! With Andy Madoff breaking down and crying on the kitchen floor and describing daddy’s life work as a betrayal of “biblical proportions,” Bernie’s most likely not going to be named father of the year any time soon, or even get a #1 Dad mug come June 21. But he probably can expect some sort of nice note from these two ladies:
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The White House is reportedly planning on requiring firms that double-dipped on bailout funds (Citi, Bank of America, AIG, General Motors, GMAC) to handover any executive pay proposals to Compensation Cop Kenneth Feinberg, who will either allow them to proceed, or shut them down. But lest you get the impression that the love will not be spread around, please note that a set of compensation commandments are in the works, with the expectation that they’ll be observed by everyone. C, BAC, et al will of course be receiving the most hands on attention from Feinberg and his friends at the Treasury when it comes to how they pay their people, but banks like Goldman and JPMorgan, who awkwardly thought they’d be home free once T. Geith cashed their checks, are in for a surprise.
For those of you wondering what, pray tell, the rules entail, should you want to pay your people any time soon– sit tight. We don’t have anything yet. Everything’s fairly (completely) vague right now. No actual Do’s or Don’ts made it into the Times report, either because they’ve yet to be finalized, or because the Treasury thought it’d be fun to make you sweat it out. I don’t think anyone over there is that crafty, though, so it’s probably door number one.
The Obama administration plans to require banks and corporations that have received two rounds of federal bailouts to submit any major executive pay changes for approval by a new federal official who will monitor compensation, according to two government officials.
The proposal is part of a broad set of regulations on executive compensation expected to be announced by the administration as early as this week. Some of the rules are required by legislation enacted in the wake of the worst financial crisis since the Great Depression, and they would apply only to companies that received taxpayer money.
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$$$ “Fans of scapegoating can applaud the SEC’s assault on Angelo Mozilo, the former CEO of Countrywide Funding. My guess is that Mozilo, like many mortgage industry executives, was conflicted during the late stages of the housing bubble. On the one hand, they knew that lowering lending standards was imprudent. On the other hand, the loans were performing too well to justify reversing course.” [The Atlantic]
$$$ Happy Birthdays Pete Peterson and Suze Orman [Cityfile]
$$$ IMF: “Where Does The Public Sector End And The Private Sector Begin?” [ZH]
$$$ AIG Said to Pick Onex Group as Preferred ILFC Bidder [Bloomberg]
$$$ Job of the Week: Morgan Stanley needs an executive director. That could be you! [DB Career Center]