Yesterday we pointed out that the freeze-up in auction-rate securities could lower demand for equities as many individual investors found their investment assets essentially locked into these suddenly illiquid bonds. But it's not just the clients of brokerages who are facing a cash squeeze—the brokers and executives at investment banks are facing the squeeze as well
After the major accounting firms ruled that auction-rate securities were not cash-equivalents, many corporate investors began to reduce the use of these instruments for cash management purposes. But executives at banks such as Citi, Merrill Lynch and Goldman Sachs continued to use the auction-rate securities. For many, the extra two-dozen or so basis points they could earn by holding the securities rather than a true cash-equivalent made them irresistible. For the men and women who manage money and put together complex financial transactions for a living, achieving maximum returns in every part of their portfolio is often a point of pride.
Now that many of the auctions have begun to fail, they find themselves without access to their assets. Ironically, this pain for the professionals may wind up helping their clients. If the auction failures continue, executives on Wall Street may pressure the banks to take action to revive the market. It's one thing if the clients cannot buy fuel for their yachts. It's quite another if the broker cannot.
Bill Gross Is Not The Only One Who Feels Fat
Are your pants getting a little tight? Have you become convinced mirrors have a personal vendetta against you? Are you too distracted by the rolls spilling over your pants to trade? Do you find yourself veering off course in your letters to investors to talk about your love handles? Is it only a matter of time before you lose your firm billions and/or take down the entire market because your fingers are so big they span four keys each on the keyboard? Do you want to do something about it but are repulsed by the idea of healthy eating and exercise and also know yourself well enough to realize that there is no way you're going to be able to stay strong if everyone around you is eating delicious fried food at lunch and sooner or later you, a usually pretty mild-mannered guy, will be leaping across a row of Bloomberg terminals and threatening to kill a coworker (and meaning it) unless he hands over Ho Ho now? Then round up your tubbiest colleagues and tell them they're in for a real treat. Eric Helms, who founded the four-year-old Cooler Cleanse company with the actress Salma Hayek, says office cleansers now make up 30 percent of his business, and in the last year he has hired three customer-service employees just to handle the details of them. He said there has been a “huge increase in popularity” of cleansing with co-workers in the last year, which he credits to juice diets being more mainstream. “Everyone knows someone who’s done one, and they realize they’re a lot easier to do with colleagues during the workweek,” he said. “People want to indulge” — not sip celery — “on weekends.” Recent six-juice-a-day-dieters include employees at Merrill Lynch and the Carlyle Group, she said. In May, Citigroup began offering BluePrintCleanse in some of its Manhattan cafeterias, a spokeswoman said...About two-thirds of cleanse clients over all are women, but corporate cleanses “commonly skew toward men, especially traders, investment bankers and lawyers,” said Jina Wye, director of sales and marketing for BluePrintCleanse, founded in 2007 by two former Hudson Hotel bartenders looking to swap their poisons. (Mr. Helms said 90 percent of his male customers are part of groups.) Ms. Wye said: “These Type-A men have an all-or-none perspective. If they’re going to commit, they do it whole hog.” Most popular among male en masse cleansers: the Excavation cleanse, described on the Web site as “the most intense.” And if you want to really crank things up a notch, consider gauging interest in a group colonic to top things off. Cleansing From Cubicle To Cubicle [NYT] Related: I’m afraid I might tell her to buy a gun and just shoot me before the fat and the cellulite strike again.
John Thain, Finance Titan Who Introduced $35,000 Commodes To Wall Street, Will Retire In March
What's next? We have some theories.
Ted Cruz's Wall Street Hypocrisy Now Valued In The Seven Figures
Like his neck and jawline, it's hard to tell where Ted Cruz's relationship with Goldman Sachs begins and ends.