Daily Archives: April 15, 2010

New York Times: nothing to see here, move along, move along

Fear of terrorists is sixty years old, It didn’t happen then, so it won’t happen  now. I have my doubts but then, I didn’t go to Yale.

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Bourke’s Law

Walt’s Round Hill Road neighbor has filed his appeal. The reader who sent this along asks what’s so bad about a year in jail but, reading what the legal eagles quoted in the article say, Bourke has an excellent chance of beating this rap. And no one should spend five seconds in jail if he doesn’t have to.

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What? Another Greenwich scam?

Must be something about our address. (Hat tip, Teri Buhl)

The former Greenwich residents and proprietors of the now-defunct New York investment firm Crescent Fund are living in Tokyo, and owe US regulators around half a mill for their five-year penny stock scam. A scam that never would’ve gotten off the ground if it weren’t for Janette making the whole thing look kosher. (She was named CEO of the firm, while her husband, a former Lehman executive who’d previously spent a year in prison for a different penny stock scam, was named a “subcontractor.”) The couple is currently running a new maybe-scam called the Wakabayashi Fund, and if the authorities think they’re going to get jack from J&J, they’re sorely mistaken.

“They’ll have to beat it out of me,” said Jeffery Stone, a balding 46-year-old heavy-set man with a goatee. He said he had “no intention of ever paying” the U.S. regulators who secured a civil judgment against him and his wife in January 2009, referring to them with an expletive involving mothers. “We did nothing wrong,” said Stone, who oversees the operations of the Wakabayashi Fund out of the couple’s upscale Tokyo home. “We took profits and I would do it again, for crying out loud.”

As for their new venture, Stone had this to say:

He insists the Wakabayashi Fund is perfectly legitimate and not breaking any securities laws. And he resents people suggesting otherwise, or dredging up his past.

“We’re not underwriting securities. We’re not going out and handling private placements. We’re not out there pounding 1,000 shares up Uncle Joe’s ass,” said Stone, in his typically blunt way. “That’s not what we do.”

Sweethearts In Crime [Reuters]

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What a chump

So, after going without a watch for two years, I saw this Invecta on Amazon: waterproof to 900′ , $109 bucks. I gave in and bought it. But it weighs 15 lbs and the damn metal bracelet is sized for gorillas. I can buy a kit to drive out the pins and adjust it, take it to a jeweler and pay a third its purchase price to have the wrist band shortened or dig further in my tool chest and find a way to deal with this.

I’m going for door number three, but it’s an excellent lesson in not succumbing to Internet shopping lust.

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Pathological or just different?

The NY Times looks at individuals who choose to live alone. I was once asked by a therapist to envision my ideal home and I came up with an image of a cabin on a meadow in the mountains. “Anyone with you?” she asked and, after concentrating further, I replied, “maybe a dog”. So I sympathize with these guys.

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Someone grabbed a good one

10 West End Avenue

This house came on two years ago at $2.295 and eventually dropped to $1.350. It’s assessed at $1.703, so its last ask was a complete steal : half-acre lot, nicely renovated, what the hell do you want?  But I showed it to three clients, none of whom saw its potential.

Someone else  did, though, because it’s under contract today, no contingencies, and is closing next Tuesday.

I don’t fault my clients – a house has to work for them or why spend this kind of money? But jeeze, this one was a great deal.

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Bloomberg News: Schmuck insurance a sign that real estate is improving.

I don’t want to look like Pinch Sulzberger, the Donald says.

An example of a seller that should have used some protection is New York Times Co., Trump said. The newspaper publisher sold its headquarters building at 229 West 43rd Street for $175 million in 2004 to Tishman Speyer Properties LP. Africa Israel Investments Ltd., Israeli billionaire Lev Leviev’s real estate company, bought the 15-story tower three years later for $525 million. Abbe Serphos, a spokeswoman for Times Co., declined to comment.

“I used to call it a chump tax,” said Robert L. Freedman, chairman of New York property broker FirstService Williams. “If I sold too early in the cycle, I wanted some participation in the third party’s upside.”

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What the hell is this about?

Israel confiscates tourists’ iPads

Bar Tal also reserved some harsh words for people who thought they had the right to bring whatever technology they wanted into the country. “People who bought the device in America can’t force their needs on other people,” he said. “I don’t get involved in what individuals do at their own expense, but you can’t only be concerned about yourself.”

Weird.

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Why not indict the New York Times?

NSA worker charged with leaking classified materials to newspaper. These are the people who helped the Times shut down our financial monitoring of  terrorists and dummied up a false assurance that Iran had no potential for developing nukes, just as Bush was trying to apply pressure to that country. Treason charges are certainly in order, but I wonder why the Times isn’t included in the criminal investigation?

UPDATE: Seems it was a reporter with the Baltimore Sun. I’d still hang the NYT’s editorial board, just on general principle.

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Here’s a surprise

Modified mortgage default rates soar.

The number of homeowners who defaulted on their mortgages even after securing cheaper terms through the government’s modification program nearly doubled in March, continuing a trend that could undermine the entire program.

Real estate is not coming back to 2007 levels anytime soon, so homeowners are just hanging on, living rent free, until they have to move. All of our money being spent to subsidize their new, mortgage-free lifestyle accomplishes nothing except to keep better-qualified buyers from owning a home. Time to flush the stables and start anew.

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Teri Buhl

What was really behind O’Neal’s billion dollar write-downs at Merrill Lynch

By Teri Buhl

Today, Fortune’s William Cohan gets  former CEO Stan O’Neal to spill about some internal quarrels he had with his board about selling Merrill Lynch, in a move that almost make it look like he wasn’t the only fall guy to screw Merrill shareholders.

O’Neal, who was ousted in October 2007 after mega billion dollars CDO write-downs hit Merrill’s books, tellsFortune that he really did try hard to sell the troubled bank to Ken Lewis while the stock price was still high and the world didn’t quite know about his $45 billion mortgage time bomb. He’d even started talks with Bank of America CEO Ken Lewis asking for $100 a share in September 2007 when the stock was trading below that, but influential board member Alberto Cribiore, a wall street dealmaker  he’d help get on the board, wouldn’t let him sell the bank. Why because he thought Lewis was ‘an asshole’. According to Fortune, O’Neal also said Cribiore thought they could work their way out of the looming CDO write-down problem and didn’t need to sell when they were weak. A year later Merrill sold to BofA for a heck of lot less than the number Stan had been aiming for and the $MER shareholders were left wondering if they’d been saved or royally screwed.

Cohen points out that O’Neal failed to influence his executives and board members during his reign and communicate the real seriousness of their problems in the bank’s mortgage related assets. The question still unanswered is did he really know what those problems where and why not?

Cohen writes: “When O’Neal got back to New York from Martha’s Vineyard in September 2007, he spoke to Cribiore about his growing concerns. “This is a serious and deep problem,” O’Neal says he told Cribiore. “Well, just take as big a write-off as you can imagine,” Cribiore told him. “The problem, Alberto, is I don’t know how deep the hole is,” O’Neal remembers explaining. “I can’t sit here and tell you that if I decide to take a $5 billion or $10 billion write-down, I can’t tell that that’s the right number. I can’t tell you if there’s $15 billion or $20 billion more, and the reason I can’t tell you that is because I don’t know how the market will evolve, and there is no market today for these securities. Whatever value we come up with is highly theoretical.” O’Neal felt uncomfortable telling Merrill’s employees and shareholders that a big write-off would solve the problem when he wasn’t sure it would.”

You see this wasn’t the only time O’Neal had been challenged by the banks executives. According to a senior member on Merrill’s CFO team who talked to this reporter on the condition of anonymity, Jeff Edwards, the bank’s CFO, had some serious issues with the number on the losses O’Neal was telling investors. In the beginning of October, Merrill shocked the street and announced they’d be taking a $5bn write down on mortgage assets. And then a few weeks later O’Neal came out and told The Street they reexamined their positions and that it’s actually going to be over 50% more that they need to write-down. Well according to the Merrill executive I spoke with, Edwards told O’Neal that he wasn’t marking these CDO assets right and the real loss to the firm would be much higher. The two got in a verbal confrontation, O’Neal didn’t want to announce more write-downs so soon and Edwards threatened to quit that week if O’Neal didn’t revise them. And that’s why we suddenly saw a very different number announced, which was for $7.9 billion on their CDO and subprime portfolio.  Ouch!

When the write-down adjustment was announced the New York Times wrote “The additional write-down, coming so soon after the company’s $5 billion charge, may raise more questions about the leadership of O’Neal, and the ability of his top executives to assess the firm’s risk exposure.”

But in reality it looks more and more like O’Neal knew the risk exposure he just couldn’t stand up and admit it. And even if he’d tried to stand up to his board it looks like Cribiore, the influential board leader, was too entrenched in his own agenda to do the right thing with it.

Fortune’s ‘Merrill Lynch’s $50 billion feud’: http://money.cnn.com/2010/04/15/news/companies/merrill_lynch.fortune/index.htm

Editors Note: Teri Buhl is an investigative news reporter who has written for Trader Monthly, New York Post, HousingWire, Dealbreaker, Greenwich Time, and  Fortune.com

A previous reported stated Nelson Chai was the CFO in Oct 2007 that was corrected to Mr. Edwards.


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The Indian connection

Goldman Sachs director next in line for the Galleon scandal.

Prosecutors are examining whether a Goldman Sachs Group Inc. board member gave inside information about the Wall Street firm to Galleon hedge-fund founder Raj Rajaratnam during the height of the financial crisis, people close to the situation told The Wall Street Journal.

As part of that focus, the government is examining whether Rajat Gupta—a current Goldman director, former head of McKinsey & Co. and close associate of Mr. Rajaratnam’s—shared inside information about Goldman, the people close to the situation say.

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Short the Euro

Greece is going down, Portugal is next, and then Germany pulls the plug.

UPDATE: Greece seeks immediate talks with IMF. The bailout begins, but there’s no saving this foundering ship.

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This seems a bit harsh

Greenwich Time: GHS softball team losers pitchers duel.

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Too funny – Greenwich Time is looking for (another) financial blogger

And what an attractive job it seems to be!

Financial Services Reporter

Hearst Connecticut Media Group is seeking a financial services reporter to blog, break stories, investigate and lead coverage of the high-end financial services industry and community in Fairfield County, Connecticut. Blogging and writing for our online products will constitute about 70 percent of the job.

The beat will include hedge funds, investment banks, private equity, insurance, and financial instruments and commodities trading. A major focus will be on the people involved in the industry and those affected by it.

The successful candidate will be an excellent people person, able to develop sources and establish a constant flow of information from a traditionally closed-mouth community. He or she must have strong familiarity with the industry and a high comfort level in reporting on complex financial and economic matters, interacting with C-level executives and high-net-worth individuals, and translating it all into compelling copy for our newspaper and online readers.

Excellent story-crafting skills are a must, as is experience with online reporting through blogs, Twitter and Facebook, etc., as well as traditional news Web sites. Video skills are a plus.

Requirements include boundless enthusiasm for the beat, a bachelor’s degree, outstanding business clips in his or her portfolio, and the ability to juggle multiple print and online assignments and deadlines.

The position will be based in Greenwich and report to Business Editor Jim Zebora in Stamford. Anyone interested should contact Jim at 203-964-2420 or jim.zebora@scni.com.

Gee, it seems to me they had all these skills, and more, in Teri Buhl, yet she lasted just three months on the job. Mr. Zebora should, in fairness to job applicants, add a few more requirements to that skill set, including ass-kissing and fear of and respect for the rich, powerful or influential in Greenwich. Maybe you can make it one of those unpaid intern jobs for teenagers, Jim – they’ll need the experience and the resulting cynicism.

(H/T, Pulled Up in OG)

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Volcanic ash closes English airspace, world cut off

Bummer for those of you headed for London today.

But I’m intrigued: when Krakatoa exploded in 1883 it created “the year without summer”  as its ash circled around the globe and stayed suspended in air. There are lots of volcanoes around today that could similarly blow their tops. A year would be a long time for world-wide plane travel to be shut down, no? Should we be buying stock in cruise ship companies?

UPDATE/Correction: Inagua notes that I have conflated two different volcanic eruptions, Tambora in 1816 and Krakatoa in 1883. Point regarding the possible disruption of air travel stands, but I should get my history right.

UPDATE II: This one bitty volcano seems to have shut down air travel to a good portion of western Europe.

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Beware of Greeks bearing debt

No one wants it. Not in China and now, not in the U.S. So the bond sale that was supposed to bail the country out of its difficulties will probably be cancelled, leaving the EU as the last hope. This should get interesting.

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An unflattering portrait of Dick Blumenthal the candidate

He’s as bad in public as we’d hoped.

Mr. Blumenthal flopped in his first televised debate against an obscure primary opponent, and he is ruling out any possibility of a rematch.

He appears almost incapable of offering concise answers to even the most predictable questions, like why he is running for the Senate.

And his reliance on prosecutorial parlance and legal arcana has raised unflattering comparisons to another attorney general in a Senate race who seemed a sure winner only to lose in spectacular fashion. Some Democrats are calling him “Martha Coakley in pants,” referring to the candidate who lost the Massachusetts Senate election in January.

“He’s getting into very much unscripted territory, which is not something he’s used to,” said Peter G. Kelly, a Hartford lawyer and Democratic elder statesman who once was the party’s national finance chairman.

Mr. Kelly said years of one-sided news conferences had left the attorney general unaccustomed to challenge.

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