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….
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
Update: Paulson to Lewis on BofA Merrill Merger, An Offer He Couldn’t Refuse?
Update: In Depth View via Bloomberg:
Vodpod videos no longer available.
Our previous posts on the Clash of these Bank, Trading and Finance Titans here
Disclaimer: MiM are Merrill/BofA shareholders, our view is pretty damn biased as a result..
Was Timmeh in the room and in the loop? He was head of NY Fed then, betcha he was in the loop…..
Andrew Cuomo has his teeth in and he has that bulldog lockjaw thing happenin’ as he gets ready to run in 2010, Cuomo v Giuliani would be sweet!
Ken Lewis is SOL, shareholders are rightfully pixxed as all get out if he let Hank bully him into waiving withdrawing form the merger under MAC provisions. Material Adverse Change, which is what the MER losses were at that point according to Lewis’ testimony to Cuomo
…BUT even if he stood up to Hank and pushed ahead and went to court in DE, Hank is right in what he told Lewis anyway, DE is a tough fight on MAC, and it would have likely turned out BofA could NOT withdraw under MAC as with proper DUE DILIGENCE they should have KNOWN these losses were coming…either way Lewis is Fired CEO Walking…
Moderate in the Middle 