Opening Bell: 01.26.09

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BofA had role in Merrill bonuses (FT)
It appears the attempt to scapegoat Thain over the bonus debacle has failed miserably, and if anything come back to bite the bank in their collective asses. FT has it that not only did the bank know about the bonuses, but that they consulted on when and how the payouts should be approached, moving the structure from 60/40 cash/stock to 70/30 which is in like with BAC's payout structure.
It looks like the southern-based-bank skipped the classes on how to set up a fall guy; I can promise you one of the initial steps is "don't leave a paper trail proving you actually did all the work you're getting him to take the fall for." It's actually up there in importance with "wear a black mask when robbing a bank" and "never give the cops your real drivers license when faking your death post plane crash."
Barclays: "We're Okay. No Really, We're Great." (Bloomberg)
Though there are those that would disagree, Barclays may find its way to being the one solvent major British bank. While it's true the bank has written down $11B, they're now saying they exceed capital requirements by £17B and that they're going to report record revenue.
Icahn Continued Battle With Steel Partners (Reuters)
The story goes like this: Steel Partners gated redemptions last fall, which trapped a metric ton of Icahn's cash. Icahn calls them, asks for his cash back politely; they said they'd get back to him - something about putting together a plan by February. Then, last week, Steel Partners announced they were planning on going public - which is when Icahn went shit-pot crazy and started screaming about Steel Parteners pulling a bait and switch.
You have to ask yourself what you would do in a situation like this: Sue? A Press Release/Positioning Statement? Write a letter and put it out on the wires (PRNewswire) calling for the other investors at Steel Partners to give you a call at his office so they can co-ordinate how to go forward?
Icahn went for the lawsuitand the press release, and the world's a better place.


Nationalization Revisited, Briefly (NYT)
"Nancy Pelosi, alluded to internal debate when she was asked whether nationalization, or partial nationalization, of the largest banks was a good idea.
"Well, whatever you want to call it," said Ms. Pelosi, Democrat of California. "If we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization.
"I'm not talking about total ownership," she quickly cautioned -- stopping herself by posing a question: "Would we have ever thought we would see the day when we'd be using that terminology? 'Nationalization of the banks?' "
Hong Kong Brokerage To Pay Back Lehman Investments (BBC)
It looks like the Securities and Futures commission in Hong Kong has stepped in and advised a Brokerage firm that they're to pay back around $11MM in Lehman Products to investors who claim they weren't adequately warned of the risks.
ING To Make Cuts, Replace Chief (Bloomberg)
ING is cutting 7000 (5.4%) including their CEO in a move that hums of desperate after their second consecutive quarterly loss.
"ING rose the most in seven weeks in Amsterdam trading after saying it will transfer the risk on 80 percent of its 27.7 billion euros ($35.9 billion) in Alt-A mortgage securities to the Dutch government, limiting further writedowns. The company, which traces its roots to 1743, received a 10-billion-euro lifeline from the Dutch government last year, the first company to draw on a 20-billion-euro fund set aside to prop up financial firms."
Yale Endowment Manager Calls For Moderation (FT)
Money Shots:
"You can't make sensible investment decisions with fund of funds or consultants. Madoff is just a great example of the dangers of making an investment and not understanding where the money is going."
"This bad, predatory behaviour [sic] - unilaterally changing marks, asking for more collateral, etc - it seems the financial crisis stripped off this veneer and caused them all to behave in more venal ways."
"Look at investment banks and how they price swap transactions. Instead of being symmetric and using the same discount rate when selling and buying, they will say that on the cash flows you owe us, we're going to use a low discount rate, and on the cash flows we owe you, we're going to use a high discount rate."
Pfizer to Buy Wyeth for $68 Billion, Posts 90% Fall in Net (WSJ)
Pfizer will pay Wyeth shareholders $50.19 per share, paying $33 a share in cash and 0.985 a share in Pfizer stock.

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