Video: Chris Whalen – more on MBS FraudGate, Pension Fund suits, Securities Law and the markets need to restructure these TBTF banks
The risks are high, and Mr Market is asleep, methinks that Uncle Sam has given the TBTF the all clear, leaving taxpayers holding the bag, again.
Courtesy of Market-Ticker:
“This is cancer – this isn’t a sudden crisis that is going to erupt out of the ground.”
“We’re going to wait until well-into this, and then we’re going to do the right thing – which is restructuring.”
“MBS…. are calling their lawyers. Trustees may or may not have the note.”
“There are a lot of investors out there who don’t know what they own… they may own unsecured loans….. trustees that were supposed to do things under state law (and didn’t)… even Fannie and Freddie have issues with this.”
“…. this is not minutia; this is the letter of the law.”
“The dealer has to deliver to the trustee the notes (under NY State Law)”
He’s baack! John Thain takes reins at CIT Group…
Happier Days
Hardly seems fair does it? Ken Lewis loses his spot at BofA, gets civil complaints filed against him by Cuomo, gets grilled by CongressCritters as attorneys drool on their TVs hoping for a magical shareholder class action suit, and Thain walks into a new CEO suite with hardly a scratch.
Vagaries of the dice toss or a deal with Beelzebub? Maybe it’s just that Ken is from Charlotte and John is from The Street? Must be his ‘Goldman’ parachute, heh. FD-MiM are Merrill/BofA shareholders….Our multitude of posts on the BofA Merrill merger and post merger brouhaha here..
Mashup by BluTaiger
John Thain has been chosen to run lender CIT, after a year in which he was ousted from Merrill Lynch and the business lender teetered on the brink. Thain will start as chairman and chief executive immediately, CIT said late yesterday, replacing interim head Peter Tobin.
Thain, 54, led Merrill for a year, when he was shoved out in January 2009 after the company was bought by Bank of America in a controversial merger. The former president of Goldman Sachs and the New York Stock Exchange has been out of work since. CIT, a major business lender that expanded into subprime mortgages and student loans during the boom, filed for bankruptcy last year after the government refused to give it a second infusion of rescue funds.
It emerged from bankruptcy in December, after managing to unload more than $10 billion in debt. “Much has been accomplished in recent months to position CIT for renewed success,” Thain said. CIT executives face compensation restrictions because it received funds from the Troubled Asset Relief Program. According to reports, Thain will receive $500,000 in salary and $5.5 million worth of restricted CIT shares. He could also earn another $1.5 million in restricted shares.
That’s a pittance compared to what he was making at Merrill Lynch. When he joined, the bank agreed to a $44 million compensation package…
You know who should pay the shareholder suits? STANLEY O’NEIL, he destroyed Merrill IMO….
Update: CNBC reports Lewis to step down by end of year; Cuomo/BofA Smackdown: It’s On! (again)
Update 09/30: Charlie Gasparino is reporting that Ken Lewis has been pushed out (the stmt says he stepped down but I call BS)!! This is HUGE! WOTS was he had TOTAL BACKING OF THE BOARD! Recall BofA is centred in Charlotte, NC far from the Wall St shenanigans but Lewis got sucked into the ‘eeeevil banker’ canard PLUS the added bonus of ‘hide the bonuses’ with Thain. I for one would never want Andy Cuomo on my trail if I had a blessed thing to hide!
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(Reminder FD- MiM are shareholders in both BofA and were MER shareholders as well pre merger)
Bank of America’s CEO Ken Lewis, the embattled head of the nation’s biggest bank, told the board he plans to step down by the end of the year.
Lewis wasn’t asked to step down and the decision was not the result of any regulatory action, sources told CNBC. No successor has been named yet….
Original post after the break:
Breaking: BofA to pay $33m penalty in settlement…SEC charges BofA with making material false stmts on Merrill deal…CIT Group shares halted for news pending….
Update 5: BofA Spokesman: Ken Lewis ABSOLUTELY has the full support of the Board…
Happier Days...
Update 4: BofA to pay $33 million penalty as part of settlement. Gee as a shareholder can I get part of that? Suuuure, after all WE are the wronged parties.. AS IF!
BofA is settling the charges, “without admitting or denying guilt”. Well now TAXPAYERS will wind up SOL when shareholders sue…after all we will not allow their capital ratios to fall….Pfft.
Developing via CNBC
Breaking II: Now SEC is charging BofA with making materially false, misleading statements in connection with the Merrill merger….oh boy….
We are shareholders. We have covered this extensively see our posts on Thain/Lewis here and here and here and here
This is NOT about the failure to use the Material Adverse Change clause to escape the merger, this is the bonus issue Cuomo was on top of…
From Mary Thompson CNBC:
SEC: BofA agreed to pay up to $5.8B in Merill bonuses, contrary to statements in the merger agreement…
Oh Andrew Cuomo must have gotten them in the depositions of Thain and Lewis, oh boy….
Hope to Good Lord it is news of a buyout or capital infusion of some magnitude and not a bankruptcy….
Our previous post on CIT Group here
Okay CIT Group just raised the purchase price on the tender offer.. no biggie.
Update: CIT Group files bankruptcy; No Government aid for CIT….Thursday Market Mover: Paulson on the Hill…
Update: 11/2/09: Bad, sad news, CIT Group went belly-up this weekend despite the 2B taxpayer infusion and the Carl Icahn offer. Bad news for small business. But it is an attempt to dump the debt and live on, so maybe it will live to fight another day.
CIT Group Inc. filed for bankruptcy protection Sunday, in a final attempt to restructure and keep the doors open at the century-old commercial lender.
Now, the lender to nearly a million small and midsize businesses must maintain its customer base as it tries to rehabilitate under Chapter 11 protection. Most financial firms sell off assets or liquidate in bankruptcy amid fears that customers will draw down credit lines and spark a run on the bank.
But CIT garnered support from about 90% of voting debt holders for a prepackaged reorganization plan that could allow the lender to speed through Chapter 11 and emerge with a new business model by year’s end. Under the plan, bondholders will exchange their debt for new debt that matures later, as well as nearly all the equity in a reorganized CIT.
The bankruptcy stay would eliminate some $10 billion in debt from the lender’s balance sheet, the company said. CIT has been weighed down by more than $30 billion in bond debt.
A $2.3 billion taxpayer bailout extended to CIT late last year under the Bush administration will be wiped out in the bankruptcy. Common shareholders will be wiped out, too.
The plan is among the first attempts to restructure a financial firm in bankruptcy court and have it emerge relatively intact. The board approved CIT’s decision to seek Chapter 11 protection in a meeting Sunday. “The board appreciated that this is a [historic] sort of filing,” said a person close to the lender. “It is clearly unprecedented.”…
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Charlie Gasparino is reporting on CNBC’s Kudlow that Sheila (Bair of FDIC) brought the hammer down and drew the line in the sand saying NO MORE BAILOUTS…shxt it would have to be on small business that the money train dried up eh?
Well, we love Sheila here at MiM (we wanted her or Jamie Dimon of JPMC for Treasury)and Timmeh was saying from Saudia Arabia that he was confident they would find a way to do the bailout, so we enjoy it when his toes are stepped on, bitter and petty that’s us today fer shure, BWAAAAHAAAA.
Hope Sheila’s foot met Timmeh’s axx on this one, FDIC should have the too big to fail wipeout authority IMO not the Fed and for Gawds sake not the Treasury….
CNBC on imminent CIT bankruptcy following FDIC and Treasury decision not to bailout…
… CIT Group, a major lender to small- and mid-sized U.S. businesses, said on Wednesday that talks with the government to bail out the company had ended, a development that could make bankruptcy likely.
…”Discussions with government agencies have ceased,” the New York-based company said in a statement. “There is no appreciable likelihood of additional government support being provided over the near term.”
The announcement came after last-ditch talks in which Treasury Department had been concerned about a worsening liquidity crunch at CIT over the last few days, and that government aid would not put the lender on a path to recovery….
Tomorrow BIG NEWS will be HANK PAULSON testifying on Capitol Hill about the Merrill BofA shenanigans, should be lots of fun. Hanks is the man who handed free market capitalism over to the government and then retired with hundreds of thousands of Golden Slacks shares…..Hank Hank Hank, when he sees whatis happening now how does he feel? He opened this door and TOTUS swagga’d through it….
Our MANY posts on Hank, Timmeh, AIG, Merrill, BofA, CITIBANK, Sheila, are too numerous to link…
Smashing Pumpins fan made video with footage of Tours in France, courtesy of buissonland
Video Update: Countrywide’s Angelo Mozilo sued by SEC for insider trading and investor fraud…
Update 2: SEC Press Conference from Bloomberg:
Update: BofA refutes FT report, says not raising capital: Market Mover Monday: red-headed stepchildren of Stress Tests try to raise capital and save themselves from Government….goin’ down…
Update: 8:57am EST: CNBC Becky Quick live now talking to Buffett reporting BofA issued statement denying FT report that they are raising 10b in capital…..the fact that the banks are fighting it out with Team TOTUS bean-counters IN THE MEDIA is frightening..yeah I sold in May baby and I would go away could I afford a vacation in this economy, HA!!!
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Here they come, walking down the street, they get the funniest looks from the Treasury agents they meet..
Hey Hey they’re the Zombies, people say their capital’s down…
yada yada…they managed to get everyone but JPMC under their thumb here, they nabbed Wells Fargo and PNC too….
Bank of America is working on plans to raise more than $10 billion in fresh capital, even as it and Citigroup launch last-ditch attempts to convince the U.S. government they do not need to bolster their balance sheets, the Financial Times reported.
Citing people close to the situation, the paper said that Citi, Bank of America and at least two other lenders will on Monday attempt to convince the U.S. Treasury and Federal Reserve that the findings of “stress tests” into their financial health were too pessimistic.
Bank of America, which has had $45 billion in government aid, was found to need well in excess of $10 billion, the Financial Times reported on its website on Sunday, citing sources.
Regional lenders Wells Fargo and PNC Financial were also among the banks that would need to raise more capital unless they could persuade the authorities their findings were wrong, the paper reported, citing people close to the situation.
*Monkees courtesy of OrangeTabbyCat3
Moderate in the Middle 