lies and the lying liars who tell them

  • 04 Oct 2007 at 1:03 PM
  • Banks

Is Wall Street’s Newfangled Honesty Just A Fancy Way Of Lying?

jamescayne.jpgIn the last week, Citigroup, Deutsche Bank, and UBS announced that they wrote down $1.4 billion, $3.11 billion and $3.4 billion in the third quarter, respectively. In the land of reality, where sane human beings live, these numbers would be considered bad news. Rational people would perhaps take the opportunity to tell the banks, “Hey, you fucked up,” as a way of motivating them to do better. Instead, not only were the banks not given the smack in the face they so desperately need, but they were praised for being honest. “You screwed up big time, but we’re just so happy you’re telling us the truth for once!” has been the gist of it. Obviously those in charge of the truth-telling mission jumped on the back-patting bandwagon, and praised themselves, too. “It was about transparency,” said DB Chief Executive Josef Ackermann. “We did it, and several others — UBS, Citibank — did it as well. It was important to re-establish people’s trust in the products and in the markets.”
The best part is that, as the conspiracy theorists at the Journal point out, this whole coming clean shtick is more or less an elaborate lie. The banks have provided “clarity,” in so far as they admitted to BILLIONS in losses, but the clarity is only packaging in which to ship a box full of lies that will later help the people who “can’t tell a lie” tell more lies. And if you think about it, that’s just good business:

“If you’re a smart CEO, you’re going to write off everything and then some, maybe even to below-market prices, because you’re going to be hidden in the woodshed with everybody else,” says Daniel Genter, chief executive and chief investment officer of RNC Genter Capital Management, a Los Angeles-based investment firm that manages about $3 billion in bonds and stocks, mostly for high-net-worth individuals. “They’ll make it look a lot worse than it is, but that’s the smart move, because you’ve got little to lose and you might get some of it back in a quarter or two.”

But maybe we’re just being cynical assholes? Deutsche Bank promises that it “continues to apply accounting and valuation principles consistently with prior periods” and a UBS spokesman told the Journal that the bank’s writedowns are “appropriate and follow established accounting principles and industry standards.” Citigroup has “taken impairments in the third quarter based on a rigorous process applying appropriate accounting principles.” Goldman, which hasn’t even written anything down but is just so bursting with honesty that it had to tell someone about it, was in “constant contact over the summer with the Securities and Exchange Commission to discuss the way it was pricing tough-to-value securities.”
All this chest-bumping for telling the truth really gets in our craw because, to be honest (heh), we could care less about these mystical abilities in the sport of candor. Great—you’ve succeeded at being honest (though not really). How about now, you sharpen your skills at not losing billions upon billions of fucking dollars, which, not sure if anyone ever made this clear, is actually your main goal. Do that and your reward will be that you can tell as many lies as you want. Like this one: “Bear Stearns Seeing the Start Of a Rebound,” Executives Say. Yeah, that felt good.
Banks’ Candor Makes Street Suspicious [WSJ]

Zachary Michaelson Speaks

Zachary Michaelson.jpgAleksey-Lite, whose employment at Fortress Investment Group is up for debate (sources at the firm claim he doesn’t work there, Michaelson says they’re bluffing) told the Post today, “As I’m sure you know, blogs are full of rumors. . . . It’s all just untrue.”
As we’re sure you know, we imagine the ellipses in that quote displace the moment in the conversation when Michaelson asked the Post reporter “can you hang on a sec?” put his hand over the receiver and screamed “I’m in the middle of something!” to the burgeoning line of patrons outside his Mr. Softee truck.
After the jump, a flow chart for how Michaelson should address press inquiries regarding Fortress in the future:

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  • 06 Jul 2007 at 11:46 AM
  • Dow Jones

Rupert Murdoch Does Not Own Dow Jones…Yet!

Still bitter over the Post’s coup that was the Keith Richard’s cover/headline, “I Snorted My Father,” British tabloids took the genius strategy of inventing the news this morning when it claimed that News Corp had bought Dow Jones. No stranger to taking liberties with facts (News Corp, as you well know, owns the paragon of journalistic integrity, thePost), the injured party issued a statement that “the story isn’t true.” Dow Jones shares gained 55 cents to $58.40 at 9:31 a.m. in NYSE composite trading and Lindsay Lohan smoked pot in the Port Authority with two trannies last night—pics inside!
Dow Jones, Bancrofts Are Still in Talks With Murdoch [Bloomberg]

Yesterday we passed on the 411 that Ivy Asset Management, after suffering a reported $1 billion in redemptions due to its poorly placed investments in that infamous “multi-strategy” hedge fund in Greenwich, would not be passing out its annual gifts of cash, pony rides and jumbo-sized gumball machines otherwise known as “bonuses” to deserving employees. A hedge fund newsletter also posted an item on the story, as did Institutional Investor. Today, Abernathy MacGregor, which represents Ivy, got a wee bit huffy about the reporting of such news, and contacted the financial newsletter demanding a correction/retraction/first-born child to make up for the transgression. The hedge fund newsletter asked, quite reasonably, we think, “Well, IS Ivy giving out bonuses?” to which the Flack responded, “Um, I guess.”**
** Note: being able to manage a simple declarative sentence, regardless of whether it is true, ought to be a prerequisite for PR employment, should it not? Also: she guesses? Is the “hedge fund bonus” a potentially subjective reality that can simultaneously exist while possibly not existing? A sort of fiscal Schrodinger’s cat? We’re not sure.

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