Invincible Wall Street - It Was an Act of God

After the traditional brokers' refrain, 'don't blame us, we're just the brokers - our clients did the risk taking', it appears that Goldman CEO Lloyd Blankfein was smacked down for suggesting that the problems were akin to an act of god.

“when Lloyd C. Blankfein, chief executive of the storied Wall Street firm Goldman Sachs, likened the financial crisis to the fluke of four hurricanes hitting the East Coast in a single year, Angelides shot back that the crisis was not caused by ‘acts of God.’ ‘These were acts of men and women,’ Angelides said. ‘These were controllable.’ ”

Blankfein's invincible compensation for the year is yet to be announced.

Separately, Hank Paulson is checking in (cashing in?) with his story, On the Brink:

"Banks were going down like flies," Mr Paulson told the FT.

[+/-] Show Full Post...

[+/-] Hide Full Post...

Invincible Wall Street - Another Dash-for-Cash

It's not just Wall Street, but if you still had any illusions that Greenspan's enlightened self-interest stuff rules the day, read this.

It's not just Merrill Lynch executives who made an alleged, last-minute, dash-for-cash. The storyboard:

Chief credit officer of mid-size bank advises board not to pay a bonus/salary demand of then CEO, a request made just before TARP monies flow in and the first quarterly losses come down.

In one of last acts, CEO summons said credit officer, fires him, while having people "sweep" his blackberry and computer.

Today, we know about this only because there is a lawsuit ...

This is how the lousy ethical situation at the top perpetuates itself. Only those who 'go along' continue.

The evidence of it is everywhere, if you just keep your eyes open.

[+/-] Show Full Post...

[+/-] Hide Full Post...

Invincible Wall Street

NOT FIT FOR YOUR EARS

Truthiness is not a bell to ring.

Even after the 90s, it's still going on. The Spitzer-Wall Street settlement monies will stop being paid, coincidentally, this year, I believe.

Anyway, Mike Mayo is out, grumbling. Richard Bernstein is out, maybe grumbling.

Pushed or pulled?

[+/-] Show Full Post...

[+/-] Hide Full Post...

Can we talk about it now

I'm never one for fantasizing about a "new era" on Wall Street or something the FT called a new era of 'accountable capitalism' (good grief, no); but maybe, just maybe, the level of disclosure is up, when you see something as plain and starkly written as this:

Add to that the reality that private equity firms generally don’t make their money by choosing good investments. They make it on an amazing Technicolor array of fees: management fees, deal completion fees, consulting fees, performance fees, special events fees, fees of every kind and stripe. Chalk it up to yet another racket of the bubble years.

I have to say that there are probably a few good private equity firms, a few who know certain industries and can really execute better than talent served on plates from over-paid search-firms.

The expansion of the field, however, naturally could have been expected to lower standards ...

INVINCIBLE WALL STREET

Anyway, the most important is that Wall Street still rules the world:

"Little noticed in the recent bail-out package is the favorable tax treatment private equity firms will receive when repurchasing their distressed debt." [see comment section]

[+/-] Show Full Post...

[+/-] Hide Full Post...

Invincible Wall Street

More in our series, "Invincible Wall Street" (for the record).

Let us enjoy our cake, we're the good guys?:

JPMorgan Chase is considering spending $138 million to buy new corporate jets and a hangar to house them, ABC News reported Monday. ...The banking giant, one of the few firms to hold steady so far in the financial turmoil, plans to spend nearly $120 million for two Gulfstream 650 planes and an $18 million renovation for a hangar at Westchester Airport outside New York City, according to ABC News.

“When I hear the constant vilification of corporate America, I personally don’t understand it,” Mr. Dimon said recently. “I would ask a lot of our folks in government to stop doing it because I think it’s hurting our country.”

Why do overpaid search firms, or whatever, always turn up the same cast of characters?:

Bernie Sanders, the senator from Vermont who is independent in spirit as well as party label, has placed a hold on President Obama's nomination of Gary Gensler to head the Commodity Futures Trading Commission.

...and another Phoenix:

One of the enduring mysteries of American life is how it is, exactly, that so many people guilty of serious breaches of the public trust manage to maintain respectability in virtue of having committed this breaches while working for Republican presidents. Here’s Fred Malek guest-hosting on CNBC and loading Rep Paul Ryan’s “give more money to rich people” alternative budget. Who’s Fred Malek? Read this Colbert King article for the full details. But to make a long story short, though Malek is most infamous for the fact that on Richard Nixon’s behest he compiled a list of Jews working at the Bureau of Justice Statistics

[+/-] Show Full Post...

[+/-] Hide Full Post...

Invincible Wall Street

Another for our series, "Invincible Wall Street":

Jan. 27 (Bloomberg) -- American International Group Inc., the insurer saved from collapse by government money after losses on credit-default swaps, offered about $450 million in retention pay to employees of the unit that sold the derivatives, according to two people familiar with the situation.

About 400 workers at the financial products unit may get the money in two installments

It costs that much to manage an existing book of business? Really?

[+/-] Show Full Post...

[+/-] Hide Full Post...

Invincible Wall Street, Part II

THERE IS NO BOOKEND FOR THIS TALE, JUST NEW CHAPTERS

• Citibank will pay $7 billion to settle the massive auction-rate securities debacle.
  
  
• Fidelitys' crew will settle Wall Street's version of pay-to-play (or plug-'n-play or whatever).
  
  
• Last, a fraud scheme so vast that the SEC called it "epic" and Ponzi himself would have either blushed or have had his proudest moment to date. Made possible by complete faith in a little audit group in the middle of nowhere and belied by returns so statistically improbable that Mendel would have grinned.
  

Madoff’s auditor, Friehling & Horowitz, operated from a 13-by-18-foot office in Rockland County, New York. Vos had an investigator stake out the office [!!! I missed that in due-diligence class]. A call to the New City, New York, office of Friehling & Horowitz after business hours wasn’t returned. (Bloomberg)

Update: CNBC is asking about fraudulent conveyance. I doubt there is such a thing for a fraud itself, right? That's like asking, "Was the fraud conducted fairly?" Who knows, though. It's just crazy enough to be possible...

Update2: split-strike is a fancy, modified buy-write strategy. They promise "daily liquidity".

Update3: Oh, what a list of investors. Every no-name auditor in the industry can expect the phone to be ringing off the hook in the next week.

Update4: Askia says that OEX options market couldn't handle $13 billion ... is that true? It does appear to be. Today's open interest of 188188 appears to suggest a size of just under $8 billion, far in excess of whatever the daily volume would be...

[+/-] Show Full Post...

[+/-] Hide Full Post...

Invincible Wall Street

PUBLISH OR PERISH?

Remember Arther Andersen, the great accounting firm, built up by years of hard work in a competitive environment? Member of the "Big Seven" and then the "Big Five"?

Well, once they lost public trust, Andersen was brutally punished, as their clients had to leave them.

So why are the ratings agencies, Moody's, S&P, and Fitch all ... doing business as usual?

Sure, the Justice department got involved because AA's Dallas office was exceptionally naughty (in comparison to other auditing fiascoes), but is the business of public accounting - are the goals of public accounting - really that much different than rating agencies?

At least with GAAP, there is a FASB and a public agency, like the SEC, who are subject to public pressure and provide a visible process.

Well, Bloomberg filed a FOIA request on the Fed, but what about the ratings agencies? At a minimum, they should publish their CDO model, their current and historical model assumptions, and their estimation methodology/data to the public, right?

[+/-] Show Full Post...

[+/-] Hide Full Post...