Daily Archives: March 11, 2009

As God is my witness, they’re not going to lick me. I’m going to live through this and when it’s all over, I’ll never be hungry again. No, nor any of my folk. If I have to lie, steal, cheat or kill. As God is my witness, I’ll never be hungry again.

(A reader just complained about this post being mean – I dug it up and think it’s still funny so here it is again – sorry, reader)

Earlier this week we reported that Kathy Fuld has stopped buying $30,000 of bedsheets a month from Greenwich Avenue’s own Lynnens. Now, courtesy of Page Six we can tell you equally startling news: Bob Jaffe, Bernie Madoff’s Palm Beach bagman, has stopped seeing his manicurist and is doing his nails himself.  So naturally, in view of these stirring tales of self-sacrifice by the financially afflicted, we wondered how the Noel family was bearing up. A quick trip up to 175 Round Hill Road revealed the answer: with the help of caddy boys from Round Hill Club, Monica and the Fabulous Five are standing firm – they’re fit and rarin’ to go. Here’s one of the daughters now, getting a mudpack and a manicure. Does she look worried?

Thank you, Adolfo. Don't forget Mom's oats.

Thank you, Adolfo. Don't forget Mom's oats.

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This is what happens when you blame hurricanes on global warming

Gallup says a record number (41%) of Americans think claims of global warming are exaggerated. Count me in!

UPDATE: But not the nation’s number one windsurfer; Kerry says delay in stopping global warming is a “suicide pact”.  I think your lycra shorts are riding up your crack, John.

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Riverside

A reader has complained that I ignore houses in Riverside (!) He’s a regular commentator so I know he reads this blog – I can’t imagine how he’s missed all I’ve written about Riverside. If anything, I write too often about houses here. I know that I wrote just recently about 26 Marks Rd, now priced way below what the seller paid for it and still looking for a buyer. As a creek neighbor of this one I’m naturally rooting for a high price but so far, no luck. Nice house,too with creek frontage and good views. Further down that same road on the corner of Marks and Riverside Avenue is a renovated Dutch Colonial (or Georgian – everything’s a Georgian these days) originally priced at a shed over three million, now in the high 2s. Good location, good house. 30 Owenoke, the Nokia-owned house, recently went to contract – its last asking price was something like $2.6, below what the seller paid for it a few years ago. There’s a nice house down on Wesskum Wood near the Owenoke intersection that was added on to, renovated and been on and off the market the past few years. It’s on again now and, although I forget the price, it didn’t strike me as unreasonable. Again, a good location and a good-looking house. I’ll dig up its price tomorrow.

If I haven’t mentioned a number of Riverside houses recently it’s probably because I thought they were too over-priced to mention without embarrassing their owners. There is one on Welwyn, which I did write about, that came on at $3.6 million (I think). Nice house but I thought that was high for this market yet it drew an acceptable offer the first weekend it was on. Those buyers didn’t last for reasons that had nothing to do with the price or the house, but it was a sign of life. I mentioned 264 Riverside Avenue (or a number close to that) purchased for $3.850 in August ’07 and back on for what they paid. I said then that I’d be curious to see whether they could get that price or whether the market had dropped. I’m still curious, because it’s still for sale.

And so on. Point being, I don’t ignore Riverside. We’re just not seeing much new inventory and, like the rest of the town, very little action in the old. Stay tuned.

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Bernie Hung Tough

Bloomberg reports that the Fed’s plea deal with Madoff when Bernie refused to plead to a conspiracy with his cohorts. That’s interesting: the guy stole from widows, orphans and Elie Wiesel, so who wouldn’t he screw? My guess is wife Ruth and the boys, which makes their protestations of innocence even more suspect than before, if that’s possible.

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New market prices

92 Hillcrest Rd

92 Hillcrest Rd

Old market price for this 1957 ranch on an acre: $1.495 million (2007 – didn’t sell).

New Market price, today: $895,000.

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Reality Checks

23 Baliwick

23 Baliwick

This contemporary sold for $1.850 million in September 2002. The buyers did some fixing up and relisted it for $3.150 million in March ’08. A year later, they’ve dropped its price to $2.495.

 

 

104 Husted Lane

104 Husted Lane

104 Husted Lane sold in a 2002 bidding war for $1.805 million on an asking price of $1.729. The owners did nothing to it for six years then placed it up for sale at $2.495 in August and today dropped it to $1.895.

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What’s the difference between Congress and the European Union?

Congressmen have not demanded $7,500 espresso machines on their Air Force jets, so far as I know. Although Air Nancy uses everything it can lay its hands on to service the people’s leader, from 737s to Gulfstreams so who knows how those planes are equipped?

The story here is not so much the abuse of privilege by politicians but the sense of entitlement these people acquire once in power. Dodd thinks he deserves sweetheart mortgage deals because, damn it, he’s in charge of banks! Nancy Pelosi demands a Gulfstream to divert from San Francisco – Washington to New Jersey so that she and her aides can attend a conference at Princeton, Barney Frank uses taxpayer dollars to attend homosexual rights conventions in Spain. Joe Biden reserves a senate seat for his son, European bureaucrats order up espresso machines (and limos and jets and  etc.) and every single one of these people think he deserves it. It’s his right!

You can’t stop this – it’s part of human nature. What we can do is deny so much power to government officials to begin with.

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Sales statistics

Reader XXYZZY asked about the sales statistics I posted labeled as “February” sales. In fact, those are for the year – we’ve seen only 12 single family homes sell since January 1st.

The market is not entirely dead – we do have 23 single family homes under contracts entered into this year (5 of those already sold were also January contracts), so one every 2 1/2 days?Not as robust as 18 a day in the good times, but there’s a dim spark of life. Nothing much over $7 million (if that – waiting to see published selling price) has moved, nor do I think it will soon.

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Waterfront power plant playground turned down by P&Z

Jobs for our kids!

Jobs for our kids!

Citing concerns over overhead power lines and toxic residues the Greenwich P&Z turned down the town’s plan for converting the old New Haven RR power plant site into an oceanfront park and ship breaking yard last night. Cos Cob resident Frank Farriker was outraged: “This was the perfect opportunity to provide a living for Cos Cob kids,” Farricker fumed. “They could have played soccer on the rubber toxin field and then done a little night work, scrapping ships. I did hear some whining from some nervous mommies but Hell, the little darlin’s would glow in the dark from exposure to those power lines so they’d be easy to find. No worries. And so what are they going to do now? They can’t all work at Dunkin Donuts, for Crissake, and snowplowing’s a seasonal thing.”

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WSJ: Foreclosed Homes Haunt Builders

The Journal’s article covers large, tract home builders, not the one-at-a-time builders we see here in Greenwich, but the economic principle still applies: How are you going to keep them down on the farm after they’ve seen Paree?

As the normally hot spring selling season begins, two houses in the Inland Empire region of Southern California sum up the big problem facing many of the nation’s largest home builders.

One of the houses, a four bedroom built in 2006 that was seized by a lender in a foreclosure action, is listed for sale at $229,900. Meanwhile, in the same housing development, D.R. Horton Inc. is trying to sell a new house that looks nearly identical for $299,000, or 23% more.

Or consider Pulte HomesInc.’s predicament in Henderson, Nev., near Las Vegas. The builder is trying to sell a new, four-bedroom house for $214,990, while a home owner is trying to dump a similar house, which Pulte built two years ago, for $149,999. That price is less than the owner’s mortgage under a “short sale” approved by the lender.

In many markets, “we are no longer competing with other builders. We are competing with foreclosures,” said Steve Ruffner, president of the Southern California division of KB Home.

Foreclosure sales are almost not an issue in Greenwich, yet, and those that do come up for sale are in such sorry condition that they can’t really be considered competition for a new home. But from conversations with bankers and my own on-going negotiations, I believe we’re about to see a wave of brand new houses come on the market for pennies on the dollar as builders are forced out of business and their lenders seek to recoup what they can from loans gone bad. A builder with deep resources can probably hang on while these cheap sales work their way through the system like the apocryphal goat through the python but how long will that take? I’d guess two years and if that delay cause still more builders to throw in the towel, the depressive effect on prices will be prolonged. You won’t be able to sell your $7.95 million house until the identically -sized one asking $3 million moves off the scene. Or I don’t think you will.

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Houses of interest

17 Ronald Lane

17 Ronald Lane

This was an attractive house some years ago when it sold (direct) for $590,000. The new owners put in a new kitchen and baths, redid the floors and all that and put it back up for sale in April ’07 for $1.395, which turned out to be too much. It’s back today at $995 and while that may still not be the right price in today’s market, it’s a pretty good one, for an updated house, with pool, on a quiet dead end street. Worth watching and even bidding on if you’re in the under million bracket.

8 Beechcroft
8 Beechcroft

This one will be interesting to watch. This house, built in 1999, was listed for $4.595 million in 2004 and sold for a million less, $3.6 million. Dumb price that first time, eh? In any event, the new owners have spruced it up, renovated and added a bit of new space and have now put it up for sale at $4.895, just about what it didn’t sell for before. Will the improvements outweigh what’s happened to the market in the past couple of years? Stay tuned and find out.

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Four D.U.I.s and still teaching?

I have heard from readers that a teacher and coach at Greenwich High School was just arrested for the fourth time for drunken driving. A meeting was convened at the school where the teacher addressed the issue and, I suppose, promised to mend his ways. I find it interesting that the people I’m hearing from are concerned with the man’s moral stature and role model as a coach, and not with his ability to teach effectively. I suggest that someone who has four DUIs has a serious problem with alcohol, not morals. As a parent, I’d worry more about what he’s (not) doing in the classroom – like teaching – than what he’s like on the field. I suppose the town’s contract with its teachers won’t let it discipline this man but he sounds like he needs help, desperately. If he has friends over on Hillside Road, maybe they can provide some.

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Back to shutting down wiffleball fields!

Thomas Gallagher, the Riverside lawyer who tried unsuccessfully to repeal the First Amendment and have Connecticut govern churches is reported as undismayed by his -what he calls temporary- defeat. He’ll reintroduce it next session, he vows and until then will keep busy pursuing his first passion, harassing children. Gallagher first gained local fame when he discovered that children were playing wiffleball on an unsanctioned field and sued to shut them down. He has since spent his time hunting down unlicensed lemonade stands and pulling wings off flies.

 Asked if he had ever heard of the First Amendment, attorney Gallagher was stumped for a moment, then snapped his fingers and said, “it’s the right to get a law degree and make life miserable for anyone who does something that annoys you, right? Yeah sure, that’s why I went to law school in the first place – I know that one!”

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Russian Castle approved for Simmons Lane – one P&Z member secretly rejoices

 

Artist's Rendering

Artist's Rendering

Concluding that there was nothing in Greenwich zoning regulations to prohibit it, the town’s Planning & Zoning Commission last night approved that Russian oligarchs plan to erect a 697,000 square foot cottage on Simmons Lane. Although neighbors objected to the size of the Russian Billionaire Valery Kogan’s plans, one member of the P&Z was sanguine.

“Well sure, it’s a little large,” said a P&Z member who spoke anonymously so that he could remain anonymous, “but look on the bright side – this guy’s bound to piss off Putin sooner or later – probably sooner. When he does, it’s the poison-tipped umbrella trick for him, or maybe some goons will show up and bundle him off to Siberia. Whatever, the place will be ours and we’re going to be able to satisfy our low-income housing mandate from the state in one fell swoop. Let those assholes in Hartford complain about our poor when we have six hundred of them living in a mansion right in the mid-country. With 400 baths! We won’t hear from those officious, meddlesome idiots for years.”

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Bloomberg discovers that Greenwich spec houses are in trouble

(Sigh) – spend an hour on the phone with a reporter and see it condensed to one snippet and one misidentification. Of well. Here’s the story.

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Dance with the Devil

Banks trying to give back federal money – bailout smacks of “social engineering”.  Well, duh!

[NYT} WASHINGTON — The list of demands keeps getting longer.

Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote onexecutive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens.

As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds.

The conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, some experts say, but others say the conditions go beyond protecting taxpayers and border on social engineering.

Some bankers say the conditions have become so onerous that they want to return the bailout money. The list includes small banks like the TCF Financial Corporation of Wayzata, Minn., and Iberia Bank of Lafayette, La., as well as giants like Goldman Sachsand Wells Fargo.

They say they plan to return the money as quickly as possible or as soon as regulators set up a process to accept the refunds. On Tuesday, Signature Bank of New York announced that because of new executive pay restrictions in the economic stimulus package, it notified the Treasury that it intended to return the $120 million it had received from the government only three months ago.

Other institutions like Johnson Bank of Racine, Wis., initially expressed interest in seeking bailout funds but have now changed their minds. Bank executives told The Milwaukee Journal Sentinel that one reason they rejected the government money was to avoid any disruption in the bank’s role in the local community, including supporting the zoo or opera company if they chose to.

One of the biggest concerns of the banks is that the program lets Congress and the administration pile on new conditions at any time.

The demands to modify mortgages or forestall evictions are especially onerous, some bank executives and experts say, because they could prompt some institutions to take steps that could lead to greater losses.

[snip]

But a growing chorus of industry experts are warning that asking weak banks to carry out the government’s economic and social policies could increase the drain on the public purse. These experts say that the financial assistance, while helpful in the short run, could force weak banks to engage in lending practices that will lose even more money, and that the government inevitably will become more heavily involved in dictating how banks do business.

UPDATE: The WSJ reports that investment bankers are leaving that industry, too.

The past week alone has seen the announcement of several high-profile departures: Jean Manas, head of Americas M&A for Deutsche Bank; Deutsche Bank media banker Fehmi Zeko; Goldman Sachs Group partner Joseph Ravitch; and UBSmanaging director Jeff Sine. They follow a parade of other senior bankers who have recently left big firms, including Robert Scully at Morgan Stanley, former UBS Vice Chairman Robert Gillespie, and George Ackert, the former head of Merrill Lynch’s transportation group.

In London, the exodus of talent has been no less acute than in New York. At Bank of America, for example, where bankers are grappling with both the financial downturn and a tumultuous takeover of Merrill Lynch, a raft of senior Merrill bankers have jumped ship. Many of them, including Mark Aedy, the recently named head of corporate and investment banking for Europe who was close to such blue-chip Merrill investment-banking clients as miner BHP Billiton, have left without another job lined up.

[snip]

In the past, many of these bankers would have been locked in place with stock options, accumulated after years of toiling from junior analyst to managing director. History is now of little concern as many firms are remade or wiped out by mergers, and stock options are mostly worthless. The market’s collapse has also laid bare tensions between traders who generated most of the firms’ outsize profits — and losses — over the past five years and the advisers who weren’t risking firm capital.

“I still believe in the investment-banking business, but it has become a bit of a boat anchor, in that there doesn’t seem to be a difference between an advisory banker who generates fees without capital and a [proprietary] trader whose job is like going to the casino every day,” said one senior banker who is still constrained by agreements with his former firm.

 

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Bernie’s off to the big sleep, feds turn their attention to Ruth, Walt and the gang

Ruth Madoff is probably in line for a criminal indictment, according to The Daily Beast, while Walter Noel may get off with just a civil suit brought by the SEC.

But watch out for money laundering charges in Britain, Walt.

A source close to the Madoff defense team agreed that Madoff’s main concern was to preserve as much assets as possible for his wife and children and to keep them from legal entanglements. “The US attorney’s office is still trying to resolve what is tainted or clean money, what real property in the US is appropriate for the Madofffs to keep,” the source said.

That may prove difficult. Sources say new information has surfaced that suggests several members of Madoff’s inner circle transferred assets to their wives, transactions thought to be laundered through an English bank.

Ruth Madoff, who was considered “innocent at first,” according to this source, is believed to have received at least $70 million from her husband and is now therefore an object of the investigation. That is one reason why she recently decided to retain her own lawyer, leaving Ira Sorkin, who has represented both of the Madoffs since December, when the Ponzi scheme was revealed.

Investigators are focusing their attention on three groups of possible co-conspirators. “There should be at least 20 indictments, between the three groups, if the feds are doing their jobs,” said one highly placed lawyer involved in the case. “Some will be conspiracy, the ones who were deep into it with Madoff, and others will be civil cases sent to the SEC for prosecution.”

(Lawyers and prosecutors who spoke to The Daily Beast for this article declined to go on the record, citing their legal involvement in the case.)

In the first group are employees of Madoff’s firm who concocted false trades and sent out phony statements to thousands of unsuspecting clients.

The second group is comprised of principals in feeder funds such as Cohmad Securities Corp. and Fairfield Greenwich Group, which funneled investor dollars to Madoff and received large fees for steering this business. If they were aware of Madoff’s fraud, they could face criminal charges; if they were not, they could be hit with civil charges for a lack of due diligence.

“It’s a question of state of mind,” said a lawyer for a Madoff employee. “If the feeder fund principals like Walter Noel of Fairfield Greenwich or Robert Jaffee of Cohmad didn’t ask Madoff any questions, if they simply turned the money over to a Madoff account without doing the work they were supposed to do to make sure their clients were well-protected, they would be guilty of fiduciary violations, which is a civil matter. But if they knew about the Ponzi scheme, if they had the intention to deceive, that is a felony.”

One attorney close to the defense team of Walter Noel, who is reported to have offshore bank accounts, says the belief is that Noel could be indicted in England on money laundering charges.

UPDATE: The Wall Street Journal reports on the status of investigations of Madoff’s in-house conspirators, including Ruth and brother Peter. Nothing earth shattering there, yet.

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