Opening Bell: 02.09.10

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UBS Posts First Profit In More Than A Year (Bloomberg)
UBS earned 1.21 billion francs in the fourth quarter, its first profit since the third quarter of 2008, helped by lower costs tied to the company's debt and a tax credit. The bank is paying 2.9 billion francs in bonuses for 2009, up 34 percent from the previous year. Chief Executive Officer Oswald Gruebel said in a statement that the return to profitability "will increase clients' confidence in UBS."
Time For Bonus Round At Banks (Charlotte Observer)
At Foreign Cars Italia of Charlotte, where cars run from about $100,000 to $1 million or more, bank bonus season used to provide a boost every February. But Gary Furnas, a sales consultant at the dealership, said he hasn't been involved with a sale to a bank employee since November 2008. That customer, a Bank of America employee, bought a black Ferrari, but then kept it on the lot for two months because he worried that it was too flashy. It wasn't a matter of money - "he could have bought four or five of them if he wanted," Furnas said. In the end, the customer asked the dealership to resell the car, and he opted for a less showy Maserati instead. "He said he was getting too much grief from his co-workers, that he couldn't be seen driving it around his neighborhood or in the bank parking lot," Furnas said.
S.E.C. Enforcers Focus on Avoiding Madoff Repeat (NYT)
In the headquarters of the SEC, Mr. Madoff's name is rarely spoken. More than seven months after he was sentenced to prison for orchestrating a global Ponzi scheme, shaken employees are still struggling to come to grips with how they failed to catch him before it was too late.
Nassim Taleb: Warren Buffett May Just Be Lucky (CNBC)
"I don't want to spend too much time on Buffett. George Soros has 2 million times more statistical evidence that his results are not chance than Buffett does. Soros is vastly more robust. I am not saying Buffett doesn't have skill--I'm just saying we don't have enough evidence to say Buffett isn't doing it by chance."
Wall Street's Race To The Bottom, By Elizabeth Warren (WSJ)
Banking is based on trust. The banks get our paychecks and hold our savings; they know where we spend our money and they keep it private. If we don't trust them, the whole system breaks down. Yet for years, Wall Street CEOs have thrown away customer trust like so much worthless trash.
UBS bankers' 2009 cash bonuses up a third on year (Reuters)
UBS will pay about 2.9 billion Swiss francs ($2.7 billion) in cash bonuses for 2009, up about a third from depressed payouts a year earlier.
Goldman's Response To The New York Times, By Lucas Van Praag (Huffington Post)
NYT assertion: "Goldman's demands for billions of dollars from the insurer helped put it in a precarious financial position by bleeding much-needed cash."
The facts: Relative to the size of AIG's overall business, Goldman Sachs was a small counterparty. We don't believe our marks were "aggressive," they reflected market prices at the time. We requested the collateral we were entitled to under the terms of our agreements. The idea that AIG collapsed because of our marks is not credible. In any event, the story later asserts that, by the spring of 2008, AIG's dispute with Goldman Sachs was just one of its many woes.


NYT assertion: "Goldman Sachs stood to gain from the housing market's implosion because in late 2006, the firm had begun to make huge trades that would pay off if the mortgage market soured."
The facts: This statement is misleading and mischaracterizes how we positioned ourselves at the start of 2007. Goldman Sachs, like most other financial firms, was long the mortgage market at the end of 2006. In order to bring our exposure closer to flat, we began hedging our mortgage holdings in the first quarter of 2007. Those hedges certainly limited our exposure to the declining housing market, but we also recorded substantial writedowns on our residential mortgage holdings. Moreover, in most of the trades with AIG described in the article, Goldman Sachs was hedged by an offsetting position and did not have a short directional bet on the mortgage market.

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