Nigeria Becomes Worlds Worst Stock Market (Bloomberg)
“Nigeria’s stock market, Africa’s best performer during the past decade, posted the biggest declines worldwide in the first quarter as bad loans to speculators pushed bank valuations to an all-time low.
The Nigerian Stock Exchange All Share Index fell 37 percent this year, the steepest quarterly decline in more than a decade and the worst of 89 benchmark indexes tracked by Bloomberg. Stocks in Africa’s largest oil-producing nation reached a five- year low last week, even as a rebound in crude spurred gains in commodity-exporting countries from Russia and Norway to Brazil.”
Judge freezes assets of Madoff sons, executives (Reuters)
Madoffs, Noels, Tremont Group, Maxam Capital.
Mark To Market Rules Further Complicating Life For Geithner (WSJ)
“A new accounting rule set to be approved this week will relax mark-to-market rules for banks sitting on billions of dollars in toxic assets, making it more attractive to keep the assets on their books. Yet those changes may undermine a larger U.S. Treasury plan to rid the banks of those same assets, bankers and accounting experts say.
The Financial Accounting Standards Board is proposing significant changes to its mark-to-market rules, allowing banks to set their own values for certain hard-to-value troubled mortgages, corporate loans and consumer loans. The new proposal, called FAS 157-e, is scheduled for a vote this Thursday.”
RIM Opens Online Software Store For BlackBerry (Reuters)
Will the apps be as rich as the iPhone’s?
“Research In Motion has launched an online store selling entertainment, games, news, and travel applications to its BlackBerry users.”
Mortimer To Leave Morgan Stanley (CNBC)
“Patrick Mortimer, head of Morgan Stanley’s
SEC Needs Your Help (FT)
Shapiro’s trying to find a way to leverage the normal-everyday-law-abiding citizens that work in finance to help with her fight against the evils of the world. My suggestion? Free blow. It’s obvious that at the point where you could become the primary dealer for the street, not only would everyone be your friend (well, they’d be pretending, so not much different than now), but if they stopped helping you could put the squeeze on ‘em.
New GM Chief Bends To U.S. Pressure (WSJ)
It was fairly obvious when President Obama pushed out Waggoner that they weren’t looking for independent thinking, but I don’t think anyone expected the new guy to be such a puppy.
“Mr. Henderson, 50 years old, also praised what he called the Obama administration’s strong voice of support for the company, saying it liberated GM to take restructuring action it had in the recent past thought impossible to pull off.
“They think that I can lead this company inside or outside of bankruptcy court,” he said. He said he expects the Obama administration’s auto task force to play an active role in forcing unions and bondholders to make major concessions.”
William Richards
Posts by William Richards
JP Morgan Takes The Lead In Rights Offers (Bloomberg)
JP Morgan is pretty much kicking the shit out of their nearest competitor in arranging rights this year – they’re sitting at $12.8B to Goldman’s $6.3B (UBS is tied for third with an Italian bank at $3.1B).
“There’s a massive shift in terms of market share among the investment banks,” said Patrick Lemmens, who helps manage about 10 billion euros ($13 billion) at Robeco Group in Rotterdam, including JPMorgan shares. “The also-rans will get substantially less market share, and JPMorgan has the advantage of being able to use its balance sheet better than others.”
MS Close To $6B For Real Estate Fund (Reuters)
“Morgan Stanley (MS.N) is close to raising $6 billion for a new global property fund, falling short of its earlier target of $10 billion, sources with direct knowledge of the plan said.
The Morgan Stanley Real Estate Fund VII Global, the latest in a series of its international property investment funds, originally targeted to raise $10 billion, Reuters reported in September.”
Google Launches VC Fund (WSJ)
“Google Inc. announced more details about its highly anticipated venture-capital fund, in which it plans to commit roughly $100 million over the next year, said people familiar with the matter.
In a blog post Monday night, the company announced William Maris, a former entrepreneur whom Google hired to start the fund, and Rich Miner, a former executive in its mobile unit, as managing partners with the fund. Their roles and the expected announcement were previously reported in The Wall Street Journal.”
Fortis Posts $37B Loss (NYT)
The former Belgian powerhouse reported a $37B loss for 2008, proving it can play with the big boys – now all they’re waiting on is a takeover by the French.
“The company and the Belgian government reached a revised deal on March 6 with BNP, under which the French bank would pay €2.9 billion in shares for 75 percent of Fortis Bank; that’s about €510 million more for shareholders than in the previous offer. The new deal also provides guarantees that the insurance unit will remain in business. BNP Paribas will become the largest euro zone bank in terms of deposits if the deal goes through.”
It’s Not Just An American Thing (WSJ)
The French, not to be outdone by their American counterparts, are seeking to limit executive pay and kill stock option disbursement until the end of 2010. The article cites the need to quell French public anger over pay, but the French people bitch incessantly about any and everything, so I can’t imagine that’s the only thing that was at play here. Or maybe it was.
“To avoid further flare-ups, Finance Minister Christine Lagarde urged Medef, the country’s largest business group, to set up a “committee of wise men” to help companies adjust managers’ pay when they cut jobs. But, in a letter to Medef, Ms. Lagarde didn’t specify what the government might consider appropriate pay for managers at such companies.”
Global Banks To Write Down $17B More (Reuters)
“J.P. Morgan Securities forecast global wholesale and investment banks to incur additional pretax writedowns of $17 billion for the rest of 2009 to reach mark-to-market valuations of structured credit assets.
The brokerage said it saw the highest need for further pretax writedowns at Deutsche bank (DBKGn.DE) ($4.9 billion) and Barclays Plc (BARC.L) ($3 billion).”
Contracts Now Seen As Being Rewritable (NYT)
“The depth of the recession and the use of taxpayer dollars to bail out companies have made it politically acceptable for overseers to tinker with employment agreements.
So federal and local governments are looking for ways to pare payouts, endangering the promises made before the financial storm to people like Wall Street traders, automobile workers and garbage collectors.”
Study Has Banks Admitting Pay Structure Was A Contributing Factor (WSJ)
“Banks almost unanimously agree that their compensation packages contributed to the global financial crisis but still are struggling to correct some of the flaws in their pay structures, according to a survey of financial institutions due for publication Monday.
The survey, conducted by U.K. management consultancy Oliver Wyman, was commissioned by the Institute of International Finance, a global association of banks and other financial companies based in Washington, D.C. It found 98% of responding banks “believe the compensation structures were a factor underlying the crisis.”"
Thoughts On Ratigan Leaving (MarketWatch)
People think Dylan Ratigan is the Che Guevara of business news.
Geithner Says Some Banks Need ‘Large Amounts’ Of Assistance (Bloomberg)
The article has a couple of strong points, most notably that there’s an open admission that if this plan changes (or there’s a hint at change, or someone looks at it wrong) it’s going to fuck any chance of success.
“”We still don’t have the transparency and oversight,” McCain said on “Meet the Press.” He said his biggest concern is that the cost of stemming the financial crisis will worsen annual deficits projected to exceed $1 trillion for many years.
“What I am most worried about is laying the debt on future generations of Americans,” he said.”
Blackstone Tells SEC To Get Bent (Bloomberg)
The SEC asked both Fortress and Blackstone to disclose their performance in their financial reports; Fortress agreed, Blackstone declined. You have to wonder what the long term agenda is going to be for the reporting agencies: there’s going to be a marked change to the regulatory landscape, of that we’re certain – but where and how the power fall have yet to be seen.
“In the prospectus for its initial public offering, Blackstone said it intends to be a “different kind of public company” whose managers take a long-term perspective. The firm won’t provide earnings forecasts because the performance of its businesses may vary in “significant and unexpected ways” from quarter to quarter, according to the filing.”
China Looks For Global Currency (Reuters)
This is fun:
“Beijing’s ultimate goal is to replace the globally dominant dollar with a beefed-up Special Drawing Right, the International Monetary Fund’s in-house unit of account, which would become a “super-sovereign reserve currency.”
[...]
However, with 5,000 years of history behind it, Beijing is ready for a long game. Zhou knew his trial balloon would immediately be shot down, save for backing from Russia. Hence his acknowledgement that creating a new international monetary order would require “extraordinary political vision and courage”.
Translation: Beijing realizes that a currency does not lose its global domination overnight. Even after the United States overtook Britain in economic size in the late 19th century, it took two world wars that drained Britain’s Treasury and its military might before the dollar supplanted sterling. The American grandmaster will not surrender his title lightly.”
President To Have Finance Party (Bloomberg)
President Obama is inviting roughly the entire banking world to Washington today to get their input on rebuilding the economy and the new PPIP initiative – I think hopes are high that he can come out at the end of the day with the confirmation that some of the major banks will in fact be taking part in this (well, and further, think it’s a good idea).
“”For the economy to recover, for the stimulus to work, Main Street and Wall Street have to work hand in hand,” said Rob Nichols, a former Treasury official and now president of the Financial Services Forum in Washington.”
Barclays Unlikely to Need More Capital (WSJ)
Congrats on that.
Morgan Stanley Recovers Ground In M&A Rankings (Reuters)
“Morgan Stanley ranked first in the closely watched M&A rankings, or league tables, of investment banks in the first quarter, according to preliminary data from Thomson Reuters, reversing its fortunes after it missed out last year’s biggest deal — the $113 billion spin-off of Philip Morris International
JPMorgan Chase & Co (JPM.N) and Citi held onto their second and third spots respectively.”
(Goldman was fourth).
Ackman’s Ongoing Target Struggles (Reuters)
“In a letter dated Thursday and filed with the U.S. Securities & Exchange Commission, Ackman wrote to Target Chairman and Chief Executive and Gregg Steinhafel to say he disagreed with the size of the board.
We “have found no disclosure to the effect that the size of the Target Board has been changed from 13,” he wrote. Ackman noted that although former Chairman Bob Ulrich had recently resigned, the board “does not automatically shrink as a result of a resignation; rather, a vacancy is created.”
Ackman said if the company does not nominate a fifth director to fill a 13-member board, the issue should be jointly submitted for binding arbitration.”
Washington’s Inside Man At AIG (WSJ)
“AIG has paid lawyer James Cole and his firm, Bryan Cave LLP, about $20 million to oversee business practices at the insurer, according to people familiar with the matter. His reports on the company’s progress, periodically delivered to federal regulators since 2005, aren’t public.
Mr. Cole was installed inside AIG as a monitor, or independent consultant, as part of a $126 million settlement struck in November 2004 between AIG and the Justice Department and Securities and Exchange Commission.”
Czech PM Says AC/DC Was Behind “Road To Hell” Comment (Reuters)
Can’t make this shit up:
“Ousted Czech Prime Minister Mirek Topolanek says he was inspired by the rock group AC/DC when he mocked U.S. President Barack Obama’s economic stimulus plans as a “road to hell.”
Topolanek criticized Washington’s anti-crisis spending in a speech to the European Parliament on Wednesday.
“AC/DC played here (in Prague) last week. And their cult song ‘Highway to Hell’ might have led me in that very improvised speech to use the phrase ‘road to hell’,” Topolanek was quoted by daily Lidovy Noviny as saying on Friday.”
Geithner Pushes For Oversight (WSJ)
At the Congressional hearing today we’re going to hear Geithner’s best on systemic risks to economy, and changes necessary to prevent them going forward (there’s good reasons for not making brash decisions when emotions are high, you end up with things like the Patriot Act). There’s talk of changes to the rules of risk management in Banks, though we’re not entirely sure what that might look like; the only thing concrete that we’ve seen from the Administration thus far is that they want the ability to seize or take over any institution that’s imminent collapse could cause damage to the economy. Good stuff.
“One area where the U.S. is departing from its European allies is the Obama administration’s approach to hedge funds, private-equity firms and venture-capital funds. Mr. Geithner is expected to ask Congress to require all of these firms over a certain size to register with the Securities and Exchange Commission and disclose certain information so government officials can determine whether their size or complexity puts the broader economy at risk.”
AIG Managers In Paris Resign, Billions Could Default (WSJ)
“The executives at Paris-based Banque AIG, Mauro Gabriele and James Shephard, have resigned in recent days but have agreed to stay on for a transition, according to people familiar with the matter. In the wake of their resignations, AIG must replace them to the satisfaction of French banking regulators.
If they don’t, French regulators may appoint their own designee to manage the bank — an outcome that could trigger defaults under the bank’s derivative contracts. The private contracts say that a regulator’s appointment of a manager constitutes a change in control, according to a person familiar with the matter; the provision is often included in derivative contracts where parties want to preserve a way out if something about their counterparties changes.”
EU Leader Condemns US “Road To Hell” (FT)
I’m sure it wasn’t meant like that, probably a cultural difference. Something lost in translation, or maybe, I dunno – he’s been drinking?
“”The US Treasury secretary talks about permanent action and we, at our spring council, were quite alarmed at that . . . The US is repeating mistakes from the 1930s, such as wide-ranging stimuluses, protectionist tendencies and appeals, the Buy American campaign, and so on,” he told a European parliament session in Strasbourg. “All these steps, their combination and their permanency, are the road to hell.”"
PIMCO Calls For Fed To Double Balance Sheet (Reuters)
I’ll leave it to you: Genius or Mad Man?
“Bond giant Pacific Investment Management Co said the Federal Reserve needs to double its balance sheet up to $6 trillion to replace the amount of wealth destroyed in the United States, an executive said on Thursday.
Liabilities on the Fed’s balance sheet should rise to between $5 trillion and $6 trillion later this year amid the financial crisis that roiled global markets, said Brian Baker, chief executive Pimco Asia Ltd.
“Right now, the Fed has spent about $3 trillion. We believe there has to be further stimulus policies put in place,” Baker told Reuters.”
Barclays Officers Land In Hot Seat (WSJ)
So, here’s what’s up: the kids over at Barclays have been doing their best to keep the bank from Government control (kind of not easy in Britain), but it doesn’t look like they’re going to be successful. Meanwhile, not only have they put themselves up for re-election early for the board seats, but they’ve been trying to sell all kinds of shit. Oh, and also, if they try to raise capital they turn control of the bank over to investors from the Middle East:
“Along the way, Messrs. Varley and Agius have made some calls that are now putting them in a tough spot. Last fall, in an effort to avoid government ownership, the bank raised £7 billion from investors from Qatar and Abu Dhabi, who received securities similar to preferred shares paying 14% annual interest.
The deal includes a clause that could give the Middle Eastern investors control of the bank if Barclays issues shares to raise fresh capital before June 30. Many shareholders still are angry that they initially didn’t get the same terms, according to a person familiar with the matter.”
Governments Unwilling To Prosecute Pirates (Bloomberg)
While it’s clear they could prosecute them, they’re not – it’s just too much of a pain in the ass, apparently. So this is really more like a pirate catch and release program, pirate fishing?
Hedge Fund Bridgewater Mulls U.S Toxic Asset Plan (Reuters)
“In a letter to clients, Bridgewater Associates: “From a macro perspective, this is a big transfer of money from the government to the banks (who are getting the higher prices for their assets) and to the buyers (who are probably going to get a heck of a deal because of the non-recourse loan and the easy access to leverage).
“If the government was operating in an economic way, it would not do this deal — it would deal with the banks’ finances separately and sell this insurance (i.e. the implied put arising from the non-recourse loan) for what it’s worth,” Bridgewater said in the letter.
“But, politics being what they are, this route is probably motivating this non-economic behavior. We are eager to see how it is received on the Hill,” it said.”
This would be awesome, if Geithner, Bernanke, Obama et al were subject to Bridgewater’s 360 review, wherein subordinates are supposed to tell their bosses what they’re doing wrong.
Hedge Fund Employee Pay May Drop 25% (Bloomberg)
With 70% of the single manager funds down, the industry will have to look at pay cuts across the board.
“Chief executive officers earned an average of $2 million last year, while chief investment officers made $1.4 million, according to Alpha’s survey. Senior portfolio managers took home $1.1 million and senior traders were paid $790,000.”
And of course there’s this.
U.S. Plan Seeking Expanded Power in Seizing Firms (NYT)
“It is precisely because of the lack of this authority that the A.I.G. situation has gotten worse,” Mr. Obama said, predicting that “there is going to be strong support from the American people and from Congress to provide that authority.”
Boehner says Geithner nonbank plan a power grab (Reuters)
“This is an unprecedented grab of power, and before that occurs, there ought to be a real debate about whether we should give that authority to the Treasury Secretary,” Boehner, an Ohio Republican, told reporters.
Senator Dodd’s Wife Worked As An Outside “Director” For A Bermuda-based Company Affiliated With AIG (NYP)
Presented without comment.
Dear AIG, I Quit (NYT)
Sent Tuesday by Jake DeSantis, an executive vice president of AIG’s financial products unit, to Ed Liddy.
“DEAR Mr. Liddy,
It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:
AIG’s Bonus Unit Now in IRS’s Sights (WSJ)
“”Some of the same banks that got government-funded payouts to settle contracts with American International Group Inc. also turned to the insurer for help cutting their income taxes in the U.S. and Europe, according to court records and people familiar with the business.
The Internal Revenue Service is challenging some of the tax deals structured by AIG Financial Products Corp., the same unit of the New York company that has caused political ire over $165 million in employee bonuses.
The company paid $61 million last year in disputed taxes stemming from the deals but sued the U.S. government last month in federal court in New York, seeking a refund, according to filings in the case.”
Geithner Finds Government Strength In Oddest of Places (NYT)
To the quote:
“He said it was a “terrible, tragic thing” that the government did not have better tools, such as the power to take over major firms, when the credit crisis accelerated last fall. “Our system basically failed its most fundamental test,” Mr. Geithner told the conference, which was sponsored by The Wall Street Journal. “It was too fragile.”"
I offer that the government’s inability to take over major firms, regardless of the crisis at hand, is precisely what affords our system its strength.
Stiglitz Critical Of Geithner’s PPIP (Reuters)
This is bound to be the academic topic of the year, so it makes sense that we’d have a Nobel-prize winning economist leading the pack. To point: Stiglitz is concerned for the American taxpayer, calling the plan “robbery” (graceful, Stigz) – apparently not a fan of the government propping up 90% of the cash for the recovery efforts.
“The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said.”
Deutsche and Credit Suisse Of To Strong Start (Bloomberg)
In what’s quickly becoming “See, we’re still okay” press releases, I’m sure you’re all overcome with joy to learn DB and CS are still breathing, and really doing pretty well this quarter.
Welcome Back To The 80′s (Bloomberg)
“Wall Street bond trading is heading back to the 1980s, when private partnerships and independent firms dominated the market.”
“Smaller firms are emerging from the wreckage of the world’s largest financial companies, which are conserving capital following more than $1.2 trillion of writedowns and credit losses since the start of 2007. They’re luring traders with a shot at $500,000 commissions for two days’ work as banks that accepted federal bailouts retrench and slash bonuses.
If Goldman Returns Aid, Will Others? (NYT)
Sorkin: “So here’s something else to ponder: Goldman Sachs is planning to give back its TARP money soon. Very soon, actually — ideally within the next month, according to people involved in the process. That’s a much quicker timetable than the end-of-year goal previously set out by Lloyd C. Blankfein, Goldman Sachs’s chief executive. As taxpayers, we should be thrilled that Goldman is going to quickly pay back the $10 billion it was given last October, right?”
Update, 10AM: Bernstein, Rosenberg Plan to Leave Bank of America (Bloomberg)
Richard Bernstein, chief investment strategist, and David Rosenberg, the chief North American economist, plan to leave Bank of America Corp. within two months, a company spokeswoman said.
Bernstein, 50, will start his own money management company after leaving on April 15, and Rosenberg, a native of Canada who plans to leave on May 11, will join Gluskin Sheff & Associates in Toronto, said a person familiar with the decisions. Bank of America spokeswoman Susan McCabe confirmed the departures.
Geithner Looks To Announce New Plan Today (Bloomberg)
The new hybrid public/private plan is set to be announced today – the target is somewhere between $500B and $1T of assets. At this point I think it would be completely unreasonable for the government to ask any of the shops to trust them; if the plan is to work I think the best they could offer would be incentives to purchase (instead of direct/backed capital).
That said, there’s always an idiot in the crowd. I’m worried about the long term affects of bad managers stepping up to the plate on this one, though – if their interaction with the government goes bad (and or they draw public ire) this could lead to further regulation of the hedge fund industry “in the name of the public good.”
My Plan for Bad Bank Assets, By Timothy Geithner (WSJ)
“We cannot solve this crisis without making it possible for investors to take risks. While this crisis was caused by banks taking too much risk, the danger now is that they will take too little. In working with Congress to put in place strong conditions to prevent misuse of taxpayer assistance, we need to be very careful not to discourage those investments the economy needs to recover from recession. The rule of law gives responsible entrepreneurs and investors the confidence to invest and create jobs in our nation. Our nation’s commitment to pursue economic policies that promote confidence and stability dates back to the very first secretary of the Treasury, Alexander Hamilton, who first made it clear that when our government gives its word we mean it.”
US Attorney mistakes 419 letter for a submission from a Madoff victim (Boing Boing)
Yes.
AIG Faces Long Term Credibility Issues (Bloomberg)
You can’t so thoroughly stomp the shit out of a company and expect it to spin off and sell its subsidiaries (or a product of any sort) – the actions of the past couple of weeks have all but guaranteed AIG will never be able to pay back the enormous sum of money it owes.
“Mouat said he is seeking to convince commercial clients that the unit providing property and liability coverage that he oversees in Southeast Asia is separate from the problems at AIG. The firm’s business in the region is “still exceptionally profitable” after revenue of $1.3 billion in 2008, he said.”
Also, they’re taking the AIG name off the building:
- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
