Opening Bell: 11.24.08


Citi Gets Guarantees On $306B In Assets (Bloomberg)
This marks Citi as the one of the (if not the) single largest corporate recipient of federal aid in US history, with $45B ($25B first round, $20B second) in pure injections and a tiered backstop of $306B. Highlights: Pandit stays, Cuomo gets his platform for salary caps, it's the standard preferred purchase on the $20B.
The big question going forward is going to be one of sustained solvency; whether you're on the side that says Pandit inherited this mess or the side that says he caused it (or at least is responsible for the magnitude of it) you have to admit that this is a hole of incalculable proportions.
Per Infectious Greed the tiers on the $306B look like this:
Citi will carve out $300-billion in troubled assets, which will remain on its balance sheet
* The first $37-$40-billion in losses on those assets will go to Citi
* The next $5-billion in losses will hit Treasury
* The next $10-billion in losses will go to the FDIC
* Any more losses will go to the Fed
Also: the FEDs summary of terms. [FED via IG]
Blackstone Trims Asia Fund (Reuters)
The target size for the new Blackstone fund was drawn back to $200MM from $1B, because of a new trend in finance called "mass redemptions" - it turns out people want their money back when they see shit is going south. Everyone has balls on the upside, but it takes a special kind of brass to hold the downside, people.
"The "event-driven" Blackstone fund is headed by Aaron Nieman, who joined from S.A.C. Capital Management LLC earlier this year, the paper said."
Futures Are Up (Bloomberg)
We're seeing strength in the futures, as peer effect and socialism breathe optimism into overnight trading.
RBS Exec Apologizes For Losses (BBC)
"Royal Bank of Scotland (RBS) chairman, Sir Tom McKillop, has said he is "profoundly sorry" for the bank's financial difficulties."
After seeing its first yearly loss in 300 years, RBS is considering picking up Vickram Pandit - the move would apparently help cement the chances that RBS qualified for US Government assistance - and maybe even in the 100's of Billions of Dollars range.
Fed Pledges Top $7.4 Trillion to Ease Frozen Credit (Bloomberg)
As the headline intimates, Bloomberg ha the amount of money injected into the system at $7.4T - though only a portion of that is a direct infusion of capital. While the methods Bloomberg uses to calculate the $7.4T number aren't spelled out - what I'm absolutely positive of is that if the flyover kids get wind of this, and can figure out what a trillion dollars is, there's going to be a lot of complaining.
UBS Patrons Come Forward In Tax Scheme (WSJ)
Under the voluntary disclosure program the IRS let's you come forward, admit you tried to screw them, and pay our taxes and penalties - all without jail time. This, in my opinion is about as just as things can get - we try to screw them, they try to screw us - in the middle we find some kind of agreement.
What's amusing about this whole ordeal is the sheer volume of the numbers involved: one bank facilitated 20,000 US citizens in tax evasion. As far as conspiracies to defraud go: that's absolutely, phenomenally massive.

--William Richards


Opening Bell: 09.14.12

Trial to Begin for Former UBS Trader Accused of Hiding Huge Loss (Dealbook) UBS will face the harsh glare of the spotlight again on Friday, as opening arguments begin in the trial of a former trader accused of hiding a multibillion-dollar loss at the investment bank. Kweku M. Adoboli, 32, the former trader, faces charges of false accounting and fraud in connection with a $2.3 billion loss at the bank. He has pleaded not guilty. “As uncomfortable as the entire trial will be for UBS, it will show us what the consequences are when misconduct occurs or when individuals do not take their responsibilities seriously,” the bank’s chief executive, Sergio P. Ermotti, said in an internal memo made public by the firm. JPMorgan Erases Stock Drop Fueled by London Trading Loss (Bloomberg) JPMorgan, the lender that plunged as much as 24 percent in the month after disclosing a multibillion-dollar trading loss, has erased that decline. The bank’s stock climbed 3.7 percent to $41.40 yesterday in New York, eclipsing the $40.74 closing price of May 10, when Chief Executive Officer Jamie Dimon announced what was then a trading loss of about $2 billion at the chief investment office in London. The loss this year now stands at $5.8 billion. Dutch and Germans Give European Union Reasons to Cheer (NYT) On Wednesday, the German Constitutional Court found a way to declare that the permanent bailout fund, the European Stability Mechanism, is legal, clearing the way to use it in time to recapitalize troubled banks as well as governments. And the Dutch voted for mainstream parties in a parliamentary election, choosing not to be enticed by parties wanting to leave the euro. Combined with the European Central Bank’s decision to restart its bond-buying program in return for more budget discipline, immediately lowering interest rates on Italian and Spanish bonds, European leaders could begin to feel that perhaps the worst is over in the euro crisis, at least for now. “With the Dutch shying away from anti-European parties the same day the German Constitutional Court rules in favor of the E.S.M., Sept. 12 seems to have been a good day for the euro,” Dimitry Fleming of ING Groep NV said in an analysis via e-mail. Not all is well, of course. Greece remains a mess, and will probably need even more money. A decision keeps being postponed about when, and whether, to grant Athens another big portion of loan money it needs to stay afloat. Deutsche Bank urges rivals to share IT (FT) Deutsche Bank is seeking to convince rival investment banks to share markets and trading software in an effort collectively to lower costs for the financial industry. Sharing software would be an unusual step for investment banks, which have historically closely guarded their technology, much of which is still built in-house at great expense. But Deutsche Bank’s efforts underscore the intense pressure banks are under to cut costs as lower markets activity and new rules eat into their profit margins...Sharing market software, Deutsche says, will save it and other big global banks some of the billions of dollars and euros that they would otherwise have spent building or improving on individual technology systems. Woman Tells Police She 'Accidentally' Stabbed Boyfriend (AZC) Margarita H. Zaragoza told police she and her boyfriend were arguing over alcohol that he poured down the sink when she "accidentally" stabbed him with a steak knife, according to the document. Zaragoza said her boyfriend came up behind her to talk to her while she was washing a knife in the sink, according to police, and that she accidentally stabbed him in the arm when she turned to talked to him. The victim told police his girlfriend became angry after he poured her alcohol down the sink because she is pregnant and isn't supposed to be drinking, the document said. The victim said Zaragoza grabbed a knife while he was getting rid of the alcohol and stabbed him twice in the arm, according to the document. Roger Altman: The US Economy May Surprise (CNBC) Looking out a few years, the Evercore founder said, “We’re going to have a bigger snap-back in housing than people think. The U.S. has undergone a breathtaking revolution in oil and gas production and the growth impact of that is underrated.” Altman also pointed to a bounce-back in lending and strong industrial competitiveness as reasons to be optimistic about the economy longer term. Fed Acts To Fix Job Market (WSJ) "If the outlook for the labor market does not improve substantially, the [Fed] will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ other policy tools as appropriate until such improvement is achieved in a context of price stability," the Fed said in its postmeeting statement. Berkshire Climbs To Four-Year High On Fed's Action (Bloomberg) So that's nice. Mets fan who rushed Citi Field after Johan Santana's no-hitter slapped with $5,000 fine and 100 hours of community service (NYDN) Rafael Diaz, 32, was hit with the penalties after he pleaded guilty Thursday to interfering with a sporting event. “The defendant’s antics have resulted in a criminal record, the paying of thousands of dollars in fines and civil penalties, and – perhaps the worse punishment for any true Mets fan – precludes him from ever again visiting Citi Field,” Queens District Attorney Richard Brown said. Diaz, of Massapequa, L.I., who joined the celebration on the pitcher's mound June 1, was ordered to hand over $4,000 in civil penalties to the Mets and $1,000 to the city.