- Goldman to be paid $1bn if CIT fails
- Goldman purchase puts CDS in focus
- Bair Says Secured Creditors Should Help Pay for Bank Failure
- U.S. Lost Credibility by Saying Banks Were Healthy, Audit Says
- Roubini Says Stocks Have Risen ‘Too Much, Too Soon, Too Fast’
- HSBC chief fears a second downturn
- Saudi prince urges U.S. to sell Citigroup stake: report
- BofA to Select Emergency CEO
- Lewis departure sparks BofA internal clash
- Merrill Bringing Down Lewis Gives Bank 30% Profits
- Three More Funds To Invest $1.9B In US Toxic Asset Program
- Lehman Creditors to Get Payout Plan
- Reserve Makes a Liquidation Payout
- HSBC Agrees to Sell New York Office Building for $330 Million
- September Sales May Foreshadow Holidays
- CIT Board Seeking Members May Spell End for Peek, Experts Say
- Delphi to escape Chapter 11
Goldman to be paid $1bn if CIT fails – Financial Times
Goldman Sachs stands to receive a payment of $1bn – while US taxpayers would lose $2.3bn – if embattled commercial lender CIT files for Chapter 11 bankruptcy protection, people familiar with the matter said.
The payment stems from the structure of a $3bn rescue finance package that Goldman extended to CIT on June 6 2008, about five months before the Treasury bought $2.3bn in CIT preferred shares to prop it up at the height of the crisis. The potential loss for taxpayers would be the biggest to crystalise so far from the government’s capital injection plan for banks…
Goldman purchase puts CDS in focus – Financial Times
The relationship between Goldman Sachs and ailing commercial lender CIT provides further evidence that the credit default swap market can put a company in jeopardy.
Credit default swaps have become an increasingly contentious issue in debt restructurings such as the one that CIT is now trying to complete. Many creditors who hold such insurance make more if a company files for Chapter 11 bankruptcy protection than they make on their debt if the company succeeds in restructuring its debt outside of bankruptcy……
Bair Says Secured Creditors Should Help Pay for Bank Failure – Bloomberg
Federal Deposit Insurance Corp. Chairman Sheila Bair said regulators should consider making secured creditors carry more of the cost of bank failures.
“This could involve potentially limiting their claims to no more than, say, 80 percent of their secured credits,” Bair said in a speech to a banking conference in Istanbul yesterday. “This would ensure that market participants always have some skin in the game, and it would be very strong medicine indeed.”…..
U.S. Lost Credibility by Saying Banks Were Healthy, Audit Says - Bloomberg
The Treasury Department “lost credibility” when it said its first capital injections from the $700 billion financial rescue were for healthy banks, the inspector general for the Troubled Asset Relief Program said.
In a report issued today, the inspector, Neil Barofsky, said then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke had concerns about the finances of several of the nine banks in which the government invested $125 billion last October. Two of those lenders, Bank of America Corp. and Citigroup Inc., were later given more aid…..
Roubini Says Stocks Have Risen ‘Too Much, Too Soon, Too Fast’ – Bloomberg
New York University Professor Nouriel Roubini, who predicted the financial crisis, said stock and commodity markets may drop in coming months as the gradual pace of the economic recovery disappoints investors.
“Markets have gone up too much, too soon, too fast,” Roubini said in an interview in Istanbul on Oct. 3. “I see the risk of a correction, especially when the markets now realize that the recovery is not rapid and V-shaped, but more like U- shaped. That might be in the fourth quarter or the first quarter of next year.”….
HSBC chief fears a second downturn – Financial Times
Michael Geoghegan, chief executive of HSBC, is so convinced there will be a second downturn in the coming months that he plans to delay any rush to expand the bank.
“Is this a V recovery or a W?” Mr Geoghegan asked in an interview with the FT. “[I think] it’s the latter. [If I’m right], we have to be very careful we don’t grow the balance sheet so far before the recovery has come only to write it back into the impairment line later on. I’m cautious about growing too fas…
Saudi prince urges U.S. to sell Citigroup stake: report – Reuters
Prince Alwaleed bin Talal, a big investor in Citigroup, urged the U.S. government to sell its stake in the bank as soon as this year to boost investor confidence, Emerging Markets magazine reported.
“The earlier the U.S. government exits its investments in those companies, the better,” as long as the withdrawal is not done in a way that hurts the prices of U.S. banking stocks, the Saudi billionaire was quoted as saying in an interview published on Sunday…..
BofA to Select Emergency CEO – Wall Street Journal
Bank of America Corp. directors plan this week to settle on an emergency CEO pick in case legal turmoil forces Kenneth D. Lewis to step down before year end, according to a person familiar with the situation.
Work on the contingency plan began before Mr. Lewis announced his retirement as chief executive officer of the Charlotte, N.C., bank, effective Dec. 31, this person said. The discussions accelerated last month after a federal judge rejected a proposed Bank of America settlement with the Securities and Exchange Commission and reports that New York Attorney General Andrew Cuomo might file civil securities-fraud charges against Mr. Lewis…..
Lewis departure sparks BofA internal clash – FInancial Times
The surprise announcement on Wednesday by Ken Lewis that he would step down as chief executive of Bank of America at the year-end has triggered an internal battle among factions, each with its own candidate for the top job.
The primary factions are from Charlotte, North Carolina, where BofA is headquartered and where it has deep roots, and Boston, which had been the headquarters of Fleet Financial Group, the bank acquired by BofA in 2004…..
Merrill Bringing Down Lewis Gives Bank 30% Profits – Bloomberg
Merrill Lynch & Co., which helped bring down Kenneth D. Lewis, may end up saving his bank.
The decision by the 62-year-old Bank of America Corp. chief executive officer to purchase Merrill in January for $29 billion already is generating more than 25 percent of the bank’s profits — along with charges by government officials that he misled investors about the extent of losses and bonuses…..
Three More Funds To Invest $1.9B In US Toxic Asset Program – Wall Street Journal
The U.S. Treasury Department Monday plans to announce that three more investment funds will invest almost two billion dollars into a federal government program to purchase soured real-estate related assets.
The three additional firms are BlackRock, Inc. (BLK); Wellington Management Company, LLP.; and AllianceBernstein LP (AB) and its sub-advisors Greenfield Partners LLC and Rialto Capital Management LLC…..
Lehman Creditors to Get Payout Plan – Wall Street Journal
Lehman Brothers Holdings Inc.’s hedge-fund creditors in London, with as much as $16 billion tied up in the securities firm’s bankruptcy, will be asked on Monday to join in an unusual effort to break a yearlong logjam.
The administrator for Lehman’s operations in London plans to seek permission to remove the claims from U.K. courts and dole out assets directly to creditors, if enough hedge funds are willing to go along with the move…..
Reserve Makes a Liquidation Payout – Wall Street Journal
Reserve Primary Fund, whose troubles shook up the money-fund industry last year, began distributing about $1 billion to shareholders on Friday.
The money-market fund said late last month that it was planning the payout, its fifth, which represents about 22% of its remaining asset value of $4.5 billion…..
HSBC Agrees to Sell New York Office Building for $330 Million – Bloomberg
HSBC Holdings Plc, Europe’s largest bank, agreed to sell its New York City headquarters for $330 million in cash to a company controlled by Israeli businessman Nochi Dankner.
The London-based lender will lease back the tower at 452 Fifth Avenue, according to a company statement. HSBC agreed on the transaction with 452 Fifth Owners LLC, a company owned by Koor Industries Ltd. and Property & Building Corp., both controlled by Danker’s IDB Holding Corp…..
September Sales May Foreshadow Holidays - Wall Street Journal
Retailers and analysts will be closely watching September sales reports due Thursday from key store chains for any sign they may need to adjust their already-gloomy holiday forecasts.
Two analyst reports predict that Christmas-season sales will be flat with last year’s dismal results while a third projects they will fall 1%. Stores have been slashing inventories in hopes they can avoid profit-sapping price cuts…..
CIT Board Seeking Members May Spell End for Peek, Experts Say - Bloomberg
CIT Group Inc.’s plans to increase the size of its board as part of a $29 billion debt exchange means the company may be preparing to remove Chief Executive Officer Jeffrey Peek, according to corporate governance experts.
The 101-year-old lender, which may file for bankruptcy should the exchange fail, hired Spencer Stuart, the executive search firm, to help boost the board to 13 members from 10 and said some directors may resign, according to an Oct. 2 regulatory filing. A steering committee of bondholders who provided the company with $3 billion in July will recommend candidates, CIT said…..
Delphi to escape Chapter 11 – Financial Times
Delphi, the Michigan-based car parts maker, is set to emerge from Chapter 11 bankruptcy protection within the next few days after one of the US’s longest, costliest and most complex court-supervised restructurings.
Since filing for court protection in October 2005, Delphi has paid more than $400m to lawyers, financial advisers and consultants, not only for itself but also for six unions representing its US workers. Almost 19,000 documents have been filed with the New York bankruptcy court overseeing the case…..
Tags: Bank of America, CDS, CIT, Citigroup, Credit Crunch, FDIC, Goldman Sachs, HSBC, Ken Lewis, Lehman Brothers, Merrill Lynch, Nouriel Roubini, PPIP, Prince Alwaleed, Retail sales, Sheila Bair, TARP
