Why are we bailing out these buffoons?

Citicorp Special Opportunity hedge fund will return 3 cents on the dollar to investors . I suppose they wanted to give real meaning to the term, “special opportunity”.

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7 responses to “Why are we bailing out these buffoons?

  1. CEA

    Greenwich’s own Tontine Partners (run by Jeff Gendell) was down 91.5%. And he was charging 1% and 20% of profits, toO!

    Tontine Partners, L.P.
    YTD: -91.5%

    Tontine 25 Fund, L.P.
    YTD: -63.6%

    • christopherfountain

      So what’s to complain about? I didn’t have to pay that 20% – I’m ahead of the game, no?

  2. CEA

    …just that the supposed “best and brightest” often fail.

    Fortunately, we’re not bailing out C’s hedge fund investors. Though, C itself basically operated as one big hedge fund, taking on mortgage and other debt risk, and levering up to do so. THAT, we are bailing out.

    • christopherfountain

      Yeah, I know that the hedge fund folks are on their own but it’s your second point I was thinking about. Some truly bad people seem to have been doing bad things (see my latest post) and the ones at the top seem to be holding onto their jobs or receiving generous buyout payments, courtesy of us taxpayers. I don’t like it!

  3. CEA

    Chris, I think Ken Lewis and John Thain have a lot to answer for. John – for foisting ailing, toxic asset-ridden Merrill on B of A for $25 a share, and Ken for not doing proper due diligence (this seems to be a repetitive theme) and being all worked up about doing a deal, and blowing off Fuld, to think clearly.

    Vikram Pandit came on well after the dreck was on the books. Bob Rubin – the “I’m not an operational director” who collected $150 million – got C into a lot of trouble by encouraging more risk-taking. Between him, Chuck Prince’s arrogant managerial incompetence, and Sandy Weill’s bug-eyed pursuit of “financial supermarket” – they doomed this bank.

    But let’s face it: C has been bailed out at least 3 times before. Enough for “too big to fail”. They can’t be trusted. If someone burned your house down 3 times, do you give him a blowtorch for Christmas?

  4. anonymous

    Agree…let Darwinian selection prevail…

    No investor needs to place money w/any hedgie…..those hedgies w/demonstrated records of interesting, risk-adjusted returns (net of fees) can charge whatever mkt will pay…basic free mkt pricing of talent, right???

    Similarly, no one is forced to be a shareholder of any co…..can vote w/own dollars re: which mgmt team and business model one believes will make money for shareholders, net of compensation and private planes, etc (expenses which more than pay for themselves in any well-managed business)