Lehman Bros liquidators ask awkward questions - Barclays dives 25% on news - Market Cap now £5. 5 Bn.

This Forbes / Reuters / FT report seemed to spook the market as it opened, Liquidators quiz Barclays over Lehman funds-FT .....

Liquidators for Lehman Brothers, Alvarez and Marsal asked Barclays in a letter of February 19th , to account for funds it received as part of its purchase of the failed investment bank's North American unit, the Financial Times reported on Thursday (today) Barclays questioned on funds.

Citing sources close to the situation, the newspaper said U.S. liquidators Alvarez and Marsal were seeking clarification on the fate of US$4.2 billion transferred to Barclays to cover Lehman's bonus and severance payments and other liabilities.

The liquidators calculate only US$900 million has been spent, the newspaper said.

Barclays booked a gain of £2.3bn ($3.3bn) in it's Annual accounts pulished last week, on the difference between the fair value of the assets and liabilities acquired from Lehman and the price paid for them. The gain accounted for about a third of Barclays' pre-tax profits and helped Barclays Capital, its investment banking arm, to record a profit of £1.3bn.

Lehman Brothers Holdings, the bank's remaining businesses, now managed by Alvarez & Marsal, said it was "not making any allegations but is simply requesting factual information from Barclays as to certain discrepancies". Ho Ho. Ho ... but the liquidator wants his money back please.

The Daily Torygraph report Friday that "Sandy Chen, of Panmure Gordon, in a report on Barclays' monoline and structured credit exposures says : "If corporate defaults jump and structured credits undergo another wave of downgrades, we think that the structure of swaps with monolines and other counterparties that Barclays put in place to limit losses could buckle – leading to further impairments and/or writedowns."

Hypo Real Estate and insider trading scandal about to blow in Berlin tomorrw

The ordure is due to enter the air conditioning in Berlin , Monday am. Der Spiegel have the goods on an investigation into insider trading in multiple rescue, German property lender Hypo Real Estate. (211 Mn. shares in issue closed at Euro 2.86)

Their snooping has revealed that prosecutors in Munich started an investigation as long ago as February when big selling preceded an announcement about a 35% asset write down.

Then later in the year there were some "suspicious movements" when a major "liquidity crisis" hit the bank in autumn at the time Lehman bros were thrown to the wolves. This resolved by a rescue plan worked out by the German government and the country's central bank in October - followed by complaint filed by small shareholders that HRE directors provided insufficient information on the bank's situation before it required an emergency bailout.

The Munich-based bank, Germany's biggest victim of the global banking crisis, and its Irish subsidiary Depfa were caught up in a liquidity crunch that worsened after the US investment bank Lehman Brothers declared bankruptcy in September.

It was saved from collapse by a rescue plan worked out by the German government and the country's central bank in October.This involved a credit line is for up to 35 billion euros ($51 billion) and was said to provide adequate financing through to the end of 2009.On Monday September 29th HRE shares fell 70%. (on the same day Commerzbank fell 22% and Deutsche Bank fell 10%)

Finance Minister Peer Steinbrueck (SPD) made it clear at the time he considered it "inconceivable" that the management of Hypo Real Estate (HRE) should continue in office.

The new rescue package included help from Deutsche Bank , der Commerzbank , Commerzbank , der Postbank , Postbank und der HypoVereinsbank and HypoVereinsbank auch Landesbanken, Genossenschaftsbanken und Versicherer wie die Allianz also regional banks, cooperative banks and insurers such as Allianz und die Münchener Rück and Munich Re .

After this massive fall, a German association of small shareholders filed a complaint. State prosecutors in Munich opened an investigation into accusations that HRE directors provided insufficient information on the bank's situation before it required an emergency bailout.

The Bank's problems are said to mainly relate to their acquisition of Dublin-based Depfa Bank last year.

Depfa specialized in lending to public-sector borrowers worldwide, using money in wholesale markets to fund its lending which struggled and then collapsed after Lehman's collapse and the very expensive rescue of other firms including U.S. insurance giant American International Group.

At the time HRE boss Georg Funke said in a statement. "We are very thankful for the backing of all those involved, the solution guarantees the stability of the Hypo Real Estate Group, which will have enough liqudity and will be able to continue functioning even as the financial crisis continues,"

Hypo Real Estate posted a net loss of 3.1 billion euros in the third quarter, and said a week ago that it expects to report new losses in its fourth quarter and annual results.They also announced on December 9th that German Financial Markets Stabilisation Fund (“SoFFin”) had at unchanged terms and maturity, increased the EUR 20 billion framework guarantee granted to Hypo Real Estate Group on 21 November 2008 by an additional amount of EUR 10 billion, bringing the total amount to EUR 30 billion.

In a statement issued on December 20, as the German financiers were settling down to their rumtopf , HRE said the changes to the business model will be accompanied by reductions in
annual costs of approx. EUR 200 million by 2011, and approx. EUR 250 million by 2013.by almost half in three years to 600 million euros (835 million dollars) over the period and another 500 million euros to 2013.

They have also decided to slash staff numbers from the current level of close to 1,800 to around 1,000. Two-thirds of the affected positions are located outside Germany. An additional 200 redundancies will occur until 2013 after installation of a whizz bang new IT system.

Separately, Hypo Real Estate said its recently re-vamped supervisory board decided to terminate the contracts of former CEO Funke (he stepped down as CEO earlier that month) and another former managing board member, Bo Heide-Ottosen, with immediate effect. It said it also was parting company with current board members Markus Fell and Frank Lamby. WAPO

The company did not give reasons for these decisions.

Munich prosecutors searched Hypo Real Estate's offices and the homes of unidentified people who were on the board in 2007-2008 as they investigated suspicions that the company's situation was misrepresented and possible market manipulation.

UPDATE Tuesday 30-12-08 : Der SPIEGEL were a day late with their report - A Black Hole in the Banking Bailout By Beat Balzli, Dinah Deckstein and Jörg Schmitt

The Munich mortgage lender, together with the Irish subsidiary Depfa that it acquired in 2007, had burned massive amounts of money through risky US real estate securities and other reckless business dealings. The company also appears to have covered up the scope of its misdealings. That, at least, is the assumption of public prosecutors who are now investigating HRE executives. According to the search warrant issued, prosecutors are investigating alleged "false statements," "market manipulation," and "breach of trust" by current and former members of HRE's board. In a six-page paper, prosecutors take a tough stance on managers. They claim they made "deliberately false statements" about the company's dramatic situation and that they were guilty of "deliberately concealing" important information and that they had violated their obligation to safeguard company assets.

It was their newly acquired Irish subsidiary where most of the problems arose through fraud...

Gerhard Bruckermann CEO of Depfa showed "Recklessness, bravado and greed" as did his "troop of executives surrounding him". Five years before acqusition from the German Government in 2007 he had moved important parts of the company, which was supposedly rock solid but whose management took too many risks, to tax havens, "in order to save on taxes".

He opened offices all over Europe and Asia, including Turkey and India, as well as Brazil.

"We went from not being a player to being one of the top five" banks in a particular municipal-finance specialty, recalls Herb Jacobs, (he retired February) who ran Depfa's U.S. operation. "It was a wonderful moment."

Bruckermann rewarded himself and his management board for such creativity by raising the board's salary by 100 percent in 2003 -- to €20 million. He went on amass an even greater personal fortune: he is believed to have earned €100 million through the HRE deal.

see npr report here more corrupt, geedy fucking bankers

Where are they now ? No 456 - Erin Callan

Beautiful,blonde, lissom and lovely Erin Callan, Harvard, NY Law School, who became Lehman's Finance Chief and Exec VP in December 2007 is an Alpha female and got star treatment in the WSJ May 17th 2008 "Lehman's Straight Shooter"....

"42-year-old Ms. Callan is emerging as a galvanizing force at Lehman and a finance chief who topples much of the conventional wisdom about CFOs. She also is the highest-ranking woman on Wall Street. " She also is not trained in accountancy. She has a personal shopper at New York retailer Bergdorf Goodman - Tina Sussman who trucked racks of clothes to her 31st floor apartment at 15 Central Park West - where big swinging dicks like celebrity Hedge funder Daniel Loeb stopped the traffic when he paid $45 million for his Tower side pied a terre.

Lehman had announced selling US$7 Bn commercial mortgage debts, still leaving them with US$29.2 Mn - Ms Callan says they have taken a hit since the start of fiscal 2007 of US$3.5 Bn on commercial mortgages and cutely named "held-for-sale" assets ..bankers speak .. property that won't sell at any price.

Sassy superwoman Ms. Callan was provided with a very hard row to hoe.(See video of her front the Q1 results here with a very optimistic assessment of Q2)

She did of course have a nemesis bearing down on her Mr Einhorn of Greenlight Capital who is openly shorting Lehman stock appeared on CNBC May 27th with Maria Bartiromo suggesting that the Q1 results were a trifle Transparent Lite ™ and that losses were being pushed forward.

He claimed (quite correctly as we now know) that Lehman were over leveraged .He did, as one commentator said almost " flat out call Erin Callan a liar "

``We are nowhere near'' the end of the contraction that left Lehman with about $3 billion of writedowns and losses in the past year, Einhorn said May 28th in a Bloomberg Television interview. ``Lehman is undercapitalized. They continued doubling down as the credit crisis evolved.''

As Mr. Einhorn so elegantly put it at the time Ms Callan so prettily made the disclosures : “(Lehman) just raised $6 billion of capital that they said they didn’t need to replace losses they said they didn’t have.”

Erin becomes Lehman ex CFO

On June 12th as part of a shuffle of the pack at the top of Lehman, Erin Callan became ex CFO and rejoined (albeit very briefly) their Investment Banking Division in ...er...a .. er .. senior capacity.

Erin joins Credit Suisse

Anyway after a brief sojourn at the Hamptons, on July 15th Credit Suisse Group (CS) announced that the pretty lawyer with legsup to her armpits was to start as the new head of its investment bank’s global hedge fund business.

.."Credit Suisse today announced that Erin Callan will be joining the Bank as a Managing Director and Head of its Global Hedge Fund Business. In this newly created position, Ms. Callan will join the Investment Bank Management Committee and the Global Client Steering Committee. Her appointment is effective September 2, 2008 and she will be based in New York."

Credit Suisse announce major problems - cuts

Cuts sweep through Credit Suisse. - Credit Suisse (CS) announced yesterday that they plan to cut 5,300 jobs, or 11% of its workforce, after losses of around 3B francs ($2.5B) in the first two months of this quarter (Q3). About 3,800 of the jobs will come from the investment banking unit, and the reductions will save the bank roughly 2B francs while putting a renewed emphasis on money-management for wealthy clients.

CEO Brady Dougan, who just six weeks ago said "we are the best capitalized bank in the world," said the cuts were necessary to help the bank "weather the continuing challenging market conditions." (cf John Fuld CEO Lehman Bros. March 17th 2008 ``Our liquidity position has been and continues to be very strong,'' )

The bank said its deposit base and funding remain 'very solid.' Dougan and senior executives Walter Kielholz and Paul Calello have agreed to forgo their 2008 bonuses. Shares -4.1% in Zurich, bringing the stock's losses this year to 61%.

Credit Suisse said earlier this week it will eliminate 650 employees in London which comes on top of 400 job cuts at its London offices earlier in the year. Daily Telegraph 4th Dec - Credit Suisse finally wakes up to the new world

Today’s announcement brings the total number of job cuts at Credit Suisse to 7,390, compared with 9,000 at UBS. UBS in October agreed to a $59.2 billion aid package from the Swiss government and the central bank to relieve it of risky assets, while Credit Suisse declined assistance.

Watch this space....

This hurts us more than it will hurt you.

"“promoting a competitive financial services sector leading the world and supporting continued economic innovation.”...remeber that was the Bush plan ... now Hank the Bank according to the Guradian today ...An insider said Paulson dictated the terms after summoning chief executives on Monday. "It wasn't a debate."

More bollocks from Hank ... Government owning a stake in any private U.S. company is objectionable to most Americans, me included. Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable." ...This hurts me more than it hurts you.

Harvey Pitt briefly held the Chairmanship of the US Securities and Exchange Commission (SEC) for two years until 2003 when he resigned on election day.

He is quoted by the BBC as having said yesterday on BBC World News, "We've got a 21st century financial services marketplace and a 19th century regulatory model."

He further added that there was a lack of transparency both within and between organisations and businesses in the financial / insurance sectors in the US.

Belatedly he has placed his finger on the problem that has been glaringly evident to many outside the incestuous world of international finance. The current problems of credit lockdown are a SYMPTOM not a CAUSE.

The falire to close down credit both with individuals (when were you last chased down a mall to open anew Credit card ?) businesses but also between banks and quasi (investment) banks - resulting in the soaring LIBOR rate (whose calculation has been rigged for years - see Friday, April 18, 2008 British Bankers Association caught lying about LIBOR rates ) only reflects that the gig is up for the lying bankers.

Banks of all shapes, sources and sizes have been producing fraudulent balance sheets and declaring non-existent profits and paying massive bonuses and dividends for years -

1. Lloyds bank was offering a higher yield on shares than on their best deposit accounts.
2. 60% of Sacks of Gold Gross Trading profit went in remuneration of staff.
3. leveraging of 30 - 1 was (and still is) common , ie they borrowed £30 for every £1 deposits.

The result is not lack of confidence but confusion, wrought by criminal behaviour of many (but not all) - politicians bereft of ideas have decided to throw the taxpayers money at the problem.

Hank was on the blower again the last few days but we couldn't help him... he had this crazy idea of buying into banks, taking preference shares with a 5% coupon (so he gets his (taxpapyers) money back in 20 years).

Apparently hidden away somewhere was the power for him to do this with the money in his swag bag.

Can you imagine the organisation that must be put in place to oversee this massive shareholding in banks ? Who will staff it ?

Maybe the guys lining Wall Street round the corner from the door marked EXIT at Lehman Bros.

In the UK Gordon Brown...

...says he doesn't want to run banks... Ho.Ho.Ho...This on the day when the Cabinet are ready to give the go ahead to having a National database on every individual which will have details of our web browsing, phone calls .....?

Is this the end of the beginning ? NO way...not even the begining of the start of the early part of the financial holocaust that is on it's way. Especially on those nations where financial jugglery has overtekn real economies, where people make things and sell things with worth, asset value and utility.

Next up for a shock horror explosion of concern and worry is the insurance industry.

One good bit of nes is that the EU is dismantling the nonsense of carbon trading .... Old Lord Patel's Almanac says you will here no more about Global warming in 5 years time as wesern economies fight energy costs to keep their populations fed and watered.

A "Modest proposal"

It would be fair and reasonable to assume that the Sage of Omaha has more public trust than the "experts" whom Hank the Bank is about to draft in to squander the US taxpayers billions.

We suggets therefore that the money be handed to Warren immediately, without delay.

The urgency is, Warren is an old guy and he might die before the weekend.

It is impossible to predict what he will do with the money but US$5 Bn of his shareholders funds in Sacks of Gold worked wonders so heaven knows how US$700 (and rising) might be applied.

Failing that ..... we start feeding babies to the Hogs in, starting with eirther Alabama or Kentucky.

PS : Or maybe the chicken Farmers could be approached first ....Chicken producer Pilgrim's Pride (PPC) warned it expects a significant Q4 loss, and said it may go into default with its lenders unless they waive or amend its current debt covenant. PPC has been hurt by surging grain and energy costs, weak pricing and demand for chicken, and by its debt load following a 2006 $1B purchase of Gold Kist who had debts of US$144 Mn.

The company announced idling processing facilities in Clinton, Arkansas and another in Bossier City, Louisiana and long term layoffs of 2,300 staff on 11th August.Shares fell 38% Wednesday and slid a further 40% today - now trading at US$3.51. (52 week high US$36)

Clint Rivers, president and chief executive officer in July said Market breast prices averaged about US$1.33 per pound, Rivers said. Market prices should be at least US$2.15 for the industry to break even.

The company also reported in a (now) bitter sweet report at the end of July, that they had sold 7.5 million shares of its common stock for $177 million (US$23 per share - ish) to underwriter Lehman Brothers Inc., to provide the company with more funds. The market price May / June was around US$25.

Maybe, looking at those chickens coming off the PP production line we could cut out the farmer/meat packer and suitably packed distribute processed babies direct - disemblowelled of course, who want's all those mucky intrenal bits?

Lehman - let's not forget the good times...

Forbes - December 1th 2007 Lehman Brothers reported total compensation of $9.5 billion for 2007 , a 9.5 % increase over last year, and bonuses of $5.7 billion. CEO Richard Fuld Jr. received a $35 million stock bonus. According to Forbes, Fuld’s five-year compensation total, excluding this latest bonus, is nearly $312 million.
Five other top executives at Lehman received a total of $58 million in stock, according to separate filings. President Joe Gregory was awarded $29 million and Vice Chairman Thomas Russo was given $9 million.

Times Online - December 14, 2006

Lehman Brothers in $8.7 billion bonus payout
Tom Bawden, New York

Lehman Brothers said it would pay its average member of staff $335,441 (£170,933) this year as it reported a record fourth-quarter profit of $1.0 billion, capping its most profitable year ever.
The US investment bank is paying its 25,936 staff a total of $8.7 billion in salary, bonuses and other benefits for 2006 on the back of a 23 % rise in net income to a record $4.0 billion.

Mind you those shares won't be worth a lot in the morning.

Not forgetting this lady who reached the door marked Exit just in time ...

Lehman left to sink

Who next AIG ? WaMu ? See FT

German banks tie up the Teutonic bridal suites and the greasy dago gets a boody nose for interfering ...Lehman slides into bankruptcy

More consolidation in continental banking as Commerzbank and Dresdener Bank have been happily sharing the same bed and shower arrangements since last month.

Now Deutsche Bank, the biggest bank in Germany with 14 mn customers is setting it's sites on a mega deal to take a 29.75% lump of Postbank, Germany's biggest retail bank with 14.4 million customers and a ravaged stock price and a fall in value from to €7 billion from €10 billion earlier in the year.

Deutsche and Postbank have been seen dining in the finest restuarants and holding hands discreetly and their eyes have been meeting over the lightly underdone lamb cutlets and may soon result in the exchange of room keys, before they pass the word to Daddy at Deutsche Post.... say Lord Patel's moles in the discreet hostelries in Bonn.

Lord Patel's data collection and surveillance systems have been told by the Bonn insiders, where every house is connected to Mozart, he ate there, tied his shoes, here, cuckolded the poor old man there, ate choclate cake here... and they have been telling the The General-Anzeiger newspaper in Bonn where Postbank is based,that a nice chunk will secure an option to also buy the remaining Postbank shares owned by Deutsche Post, which holds 50 percent plus one share in the bank.

The venerated and generally truthful newspaper says that Deutsche Bank's supervisory board have seen the romabtic liasons and have given their blessing to an exchange of body fluids.

Deutsche Bank has been under increasing pressure to agree the Postbank deal in recent weeks after Commerzbank made its move on Dresdner, which kick-started a new round of long-overdue consolidation in Germany's fragmented banking sector.

Handelsblatt reported that the 29.75 % stake in Postbank would cost Deutsche around €2.1 billion.

Then the nasty Spaniards have upset the wedding plans. Spanish Lothario,Banco Santander SA, Spain's biggest bank, has offered to buy up Deutsche Postbank AG in one gulp to expand in Europe's biggest economy.

Lord Patel's moles in Bonn savouring their sachetorter have heard in the last hour that Deutsche Post's supervisory board agreed to sell a 29.75% stake in its Deutsche Postbank unit to Deutsche Bank for a eye goggling modest €2.8 billion putting a total value of about €11/12 on Postbank ...... and you keep the greasy dagos out the door.

Deutsche Bank has said Deutsche Post had also given it an option to acquire another 18 percent of Postbank at a price of 55 euro ($76.63) a share. That option could be exercised from a year to three years after the acquisition of the initial stake closes.

Furthermore, Deutsche Post has granted Deutsche Bank a right of first refusal for the remaining Postbank shares, a move that guarantees Deutsche Bank has the first shot at becoming the bank's majority stakeholder. PostBank Press release xdetails the need for the regulators to approve.

Sounds like a done deal from the public bar of the Dog and Duck..

Lehman's death throes watched calmly by Paulson

Meanwhile in New York Lehman's shares have fallen even more, to below US$4.00 and the bank has a Market Cap of only US$5 Bn (they wrote off US%5.6 Bn in Q3) - Bank of America (Market cap US$147 Bn) is being touted as a white Knight but Paulson says no Government funds are available. You really can't have any sympathy with the bankers who lave been throwing the omen off the seldge as the wolves circled ,Erin Callan (Lehman Brothers), Zoe Cruz (Morgan Stanley), and Sallie Krawcheck (Citi) - hence the "Glass Cliff".. in short , they are set up for failure ... see Carly Fiorina (Hewlett Packard), Kate Swan (W.H. Smith) and Patricia Russo (Alcatel-Lucent) were all appointed to top positions at a time of "tumbling share prices."

It raised $4 billion selling preferred stock. In June, it raised another $2 billion in preferred shares, at much harsher terms, and $4 billion by selling common shares at $28. ...and the Market Cap is less than US$5 BN ..... the black hole is New York not at CERN in Switzerand.

It is increasingly looking, says Erin in a hasty phone call that Paulson is calling the moral hazard card and Lehman will slide into bankruptcy.... unless someone does something, CEO Fulda's (he earned US$40 Mn last year) hasty plan to . “accomplish a significant de-risking of our balance sheet,” in part by putting risky assets into a new company it would spin off to shareholders next year -- well next year might to be reachable from here she tells us.

A busy weekend is ahead as Lehman's flogs off their 55 % stake in Neuberger Berman, their prized asset management business and the bottom feeders have been churning the water Kohlberg Kravis Roberts, Hellman & Friedman, Bain Capital, Clayton, Dubilier & Rice ,Carlyle Group, Hellman & Friedman LLC , General Atlantic LLC, J. C. Flowers, Blackstone Group, and Apollo Management all named in the Press . have until tonight to seal a deal.

This sale has been on the stocks for weeks and values of US$5 -6 Bn. have been placed on the company ... a pretty girl called Mrs Schwartzman says that Stephen wants this one. Seeing he picked up $4.78 billion in compensation for 2007 she must be a happy lady anyway. Nice payday when you consider the market cap of The Blackstone Group L.P. is only US$4.16 billion today lass than half what it was when IPO'd So Stephen coulf buy back the bit of the company he sold off with the profit he made on the sell off.

Lehman bros. Hit the buffers, go over the edge , fall of the perch ... how long can John Thain the most expensive liar on Wall Street last at Merrill

Well they've tried teeth and tits.

That doesn't work.

They've tried the Korean connection but it looks like ..

That doesn't work.

They've shuffled a job or two at the top.

That doesn't work.

The shares dropped 45% today closing down US$6.36 @ US$7.79

Which means you can lie about the value of your assets, stuff your balance sheet figures with worthless toxic debt. The truth will out. Since February stockholders have lost 88% of the value of the stock they held in the 4th largest and prestigious bank on Wall Street and Canary Wharf.

Perhaps Moral Hazard had better start kicking in before the US Government runs out of funds to keep these crocks from polluting the earth any longer.

But that means a few Pension funds will hit the dirt.

For all the previous posts on this heap of ordure go here

Korean White Horse for Lehman turns out to be a Unicorn - Nemesis nigh ? Or is that ne... ei ...igh ?

State owned Korea Development Bank (with plans to privatise by 2012) may be riding to the rescue of Lehman Bros. with global gossip suggesting a straight cash infusion - enough to boost the shares 5% on Friday.

This apparently welcome news followed hot on the heels of reports that Lehman Chief Executive Officer Dick Fuld has been eagerly (if not desperately) looking for an emergency cash boost to mainline on from an overseas bank. Some reports talk of him anxiously eyeing the exit door to follow CFO the fragrant and beautiful Erin Callan.

So far, unlike other rivals with fictional balance sheets, Lehman has yet to make any large asset sales in hopes of boosting its bleeding balance sheet.The bank has more than US $60 Bn. (£32.4 Bn) of mortgage-related assets - and the market says they are hugely undercapitalized, even insolvent.

Another day, another dollar. Lehamn Bros, closed down today 6.66% or 96 cents down @ US$13.45 (They were down to US$12 a couple of weeks ago) At the close, the Dow Jones industrial average was down 241.81 points, or 2.08 %, and the broader Standard &Poor's 500-stock index had declined 25.36 points, or 1.96 %.

Apparently normally inscrutable South Korean Financial Services Commission Chairman Jun Kwang-woo told reporters, when asked about KDB's proposed investment, "That would be an international marriage. Would you get married just after one or two blind dates?"

Cross-border acquisitions by South Korean companies should be led by the private sector, and state-run institutions such as KDB should play a "cheerleader role," Jun added and the shares dropped like a stone.

UPDATE : Tuesday Business Week Online Korean Bank Unlikely to Bid for Lehman by Moon Ihlwan. At the close shares were up 4.3% on the day @ US$14.03.

*** The pic of the lip glossed, nylon sheathed and gently sussurating thighs of Erin, as she exits her shining limo, is not added in any way, to add weight to the story but only in the sure and certain knowledge that one particular sad banker , and regular reader will now have to go and change his trousers.

Israeli company Teva to acquire US company Barr to take global lead in generic drugs supply

We posted about American generic manufacturer IVAX being taken over by Teva, Israel's biggest in April 2006. This made Teva the worlds biggest generic company with combined sales to the US market of 330 drugs and sales of US$7 Bn - of which US$1.2 Mn is MS treatment Copaxone - (Glatiramer Acetate ) The first innovative drug to be developed in Israel (at the Weizmann Institute of Science ) and to receive FDA approval, . The US HQ is in Kansas City.

Teva is now to acquire Barr of the US in a $7.5bn deal that will sharply reinforce its position as the largest seller of off-patent medicines. Teva closed at at $45.80 - a dividend yield of 1%.

The agreed takeover, at an agreed 32% premium to the US company's average share price over the past year, will create a group with US$12bn in annual sales, 500 marketed products and more than 200 applications for new drugs filed with US regulators alone. The combined company would be a generic powerhouse employing about 37,000 people globally and operating directly in more than 60 countries.

Teva had a knock-back when clinical trials failed to show a significant benefit for a new dosage of Copaxone, that accounts for one-third of profits and which will be subject to growing competitive pressure in the next few years.

This follow other generic deals recently, with Daiichi-Sankyo of Japan offering up to US $4.6bn for Ranbaxy of India. Fresenius of Germany bidding US$3.7bn for APP of the US - see post Wednesday, July 09, 2008 Heparin -another chapter in the tale APP taken over by Fresenius - Patrick Soon Shong trousers US$3 Billion .

Sanofi-Aventis of France is also tendering US $1.9bn for Czech-based Zentiva although they have rejected the bid as far too low - Bid Fails to Reflect the Company’s Underlying Value and Future Prospects . They have a major position in Czech, Turkish, Romanian and Slovak markets .

Shlomo Yanai, CEO at Teva for less than 18 months ago,sees this as another step in a 5 year plan for Teva double sales by 2012 with a net margin of at least 20 %. Buying Barr would also boost Teva's generic franchise in Central and Eastern Europe as well as Italy and Spain. Barr jumped into the international market when it acquired Croatia's Pliva based in Zagreb in 2006.

For each Barr share, investors will receive US$39.90 in cash and 0.6272 Teva American Depositary Receipts, and Teva will assume $1.5bn of net debt. If the Barr board reject the deal Lehman Bros have negotiated a US$200 Mn break fee .

Teva Q1 Profits shine

On July 29th Teva revaled Q1 figures - Revenue of US$2.823 billion, up 18%, and EPS of 65 cents was ahead of expectations. Teva, saw Europe, 30% of sales, rise 25%, while sales Latin America and other parts of the developing world, were up 37%. Sales in the US rose 12%.

The company attributed a large part of the sales growth to generics in Europe.

The company say the R&D budget from 5.7% to 7% of sales, for improved development of generic drugs. Full year forecast EPS are $2.69 to $2.75.

Mr John Thain, highest paid liar on Wall Street

Mr John Thain 52, has a CV to die for. He is for the moment, the Chairman and CEO of Merrill Lynch. For the burdens of this office he has in excess of US$50 million per year in compensation (Highest paid CEO in US 2007 says AP). Previously, At Sacks of Gold he was President, COO and CFO and therefore a firm and resolute friend of Hank Paulson. He was CEO of NYSE. His favourite band is Led Zeppelin.

On January 15, 2008 -- Thain engineered the sale of US $6.6 billion of preferred shares in Merrill Lynch to a bunch of Japanese, Kuwaiti and other investors

"...These transactions make certain that Merrill is well-capitalized." he said.

On March 8, 2008 -- Thain was interviewed by the French Le Figaro newspaper.

"...Today I can say that we will not need additional funds. These problems are behind us. We will not return to the market."

Thain in his time has been a frequent visitor to the Orient , whilst in Tokyo on April 8th 2008 reuters reported him saying..

"We deliberately raised more capital than we lost last year ... we believe that will allow us to not have to go back to the equity market in the foreseeable future."

On July 17, 2008 Mr Thain took a conference call after posting Merrill's second-quarter results...

"Right now we believe that we are in a very comfortable spot in terms of our capital." he also said that he would not do anything "dumb" like sell assets "at any price we could get".

Those Q2 results were not good. Mr Thain reported a loss of $4.7 billion. Eleven days later Mr Thain was reporting a US$5.7 billion write-down and the issuance of $8.5 billion of stock.

On Monday Mr Thain, agreed to sell a pile of mortgage-backed collateralised debt obligations(CDO's) with a notional value of $30.6 billion to a distressed debt investor, Lone Star Funds (LSF) , for the princely sum of $6.7 billion he also lent LSF 75% of the money they needed to buy them .Remember that July 17th conference call when Mr Thain said that he would not do anything "dumb" like sell assets "at any price we could get".

Barry Ritholtz ( chief market strategist for Ritholtz Research) thinks that because of prior write downs and the only recourse in default by the buyer is to return the paper, that the actual sale price is about 6 cents on the dollar.

Now is this US$50Mn a year CEO Mr Thain, is he a liar? Or is he a fool ?

The SEC needs to investigate him, rather than short-sellers.

Merrill Lynch has a market capitalization of US$24 billion and has raised US$30 billion since December just to keep making their payroll and put petrol in the chauffered limos. How long will investors be duped into supporting this disaster? You can be sure that the other suspects Citicorp , Lehman Brothers , Washington Mutual will be announcing even more massive write-downs and capital dilution in the coming weeks.

More Good News by James Quinn - Is the U.S. Banking System Safe?

Click here for topless Maria Sharapova in Sports Illustrated swimwear shots.

Monging rumours @ Sacks of Gold - shock moves on the Street : Amazing Pictures !!!!

The Wall Street Journal have a shocking story today ,"Goldman is queried on Bear's fall"

Apparently Alan Schwartz, who headed Bear Stearns Cos. at the tiome it sunk in March, called Goldman Chief Executive Officer Lloyd Blankfein to ask if there was any truth to talk that in the days preceding Bear Stearns's fall, if traders in the Goldman London office manipulated the struggling firm's stock. (A "spokesman" for the Goldman CEO says he doesn't recall having such a conversation with Mr. Schwartz)

By coincidence CEO Richard Fuld Jr of struggling Lehman Brothers Holdings Inc. whose shares (and reputation) have been battered, has also contacted Mr. Blankfein.

To those inoccents abroad (fed a diet of stories ... My word is my bond etc.,) who don't sit in the plush banking parlours of Wall Street or Bishopsgate - spreading rumors one knows to be false with the intention of manipulating a public company's price is illegal.

But rumours haven't stopped there , and these fancy Credit Default Swaps (CDS's), a fancy sort of insurance / casino chip / IOU which banks bet with have left a toxic trail ...
Which may just ring a bell to those who read the post Thursday, June 12, 2008 Lehman shuffle the team, no new faces, no new ideas, ... the Bonfire of the Vanities ... Wail Street just needs a few more sparks about the semi-exit of glamorous lawyer, Alpha female and short lived CFO at Lehman Bros. Ms. Erin Callan.

In which Lord Patel remarked ..."Erin is of course good pals with Chicagoan Kenneth C Griffin and has helped over several years (with Lehman's dosh) his US$20 Bn, Chicago based Citadel Investment Group. He is of course a big noise in Chicago, a supporter of Barak Obama and also the lovely Michelle. Citadel daily trading activity reportedly is reputed to account for "more than 10% of daily U.S. listed equity options contract volume" and issued investment grade bonds in 2006."

Now the immensely rich, immensely powerful Kenneth C Griffin didn't get where he is today by acting on false rumours... no he, naturally, prefers the facts.

So, speaking hypothetically, any CFO half way out the door marked Exit in possession of a great deal of accurate information, maybe looking for another, safer berth ....

For those unfamiliar with the glamorous good looks of 42 year old Ms Callan , but who will no doubt be interested in her future career on Wall Street , here is a picture.

Late news .."Credit Suisse today announced that Erin Callan will be joining the Bank as a Managing Director and Head of its Global Hedge Fund Business. In this newly created position, Ms. Callan will join the Investment Bank Management Committee and the Global Client Steering Committee. Her appointment is effective September 2, 2008 and she will be based in New York."

Anyway here is a picture of this fascinating lady....

In one of those crazy co-incidences Goldman CEO Lloyd Blankfein $27 million Goldman's Whitehall real estate investment fund is a 30% investor in brand spanking new apartment on the swanky "Tower" side of gleaming white 15 Central Park West where Erin recently took a 31st floor apartment... price not known. Hedge funder Daniel Loeb stopped the traffic when he paid $45 million, or $4,200 a square foot, for his pad on the "Tower" side ...... two years ago, asking prices are now US$6,000 per sq. ft plus.

Handy too for her personal buyer Michelle Beauvais at Bergdorf Goodman to pop round with a rail of frocks for her to try on.

RUSH UPDATE - http://www.spartacuslives.org/node/18821 How Goldman won big on mortgage meltdown Wall Street Journal Dec 14, 2007 On Mortgage Meltdown, A Team's Bearish Bets Netted Firm Billions; A Nudge From the CFO A useful link provided some time ago by George Dutton Many Thanks GD

Day 1 : Paulson's "trickle up" economics

Comment on the actions of the US administration in the UK press is limited as the announcement came too late. The BBC 4 Financial commentators in the early hours appear to think that this papering over another gaping hole in the global financial system is fine. No mention of the way the market will short Lehman Bros.

Probably the best knee - jerk public reactions come from the reader comments in the New York Times to Paulson's announcement.

The very best first - this from frd-Chicago

"Taxpayers are going to make a killing on this deal."

"This bloated quasi-govt monopoly openly supported and donated to the Republicans and Bush in the elections in order to keep their gilded fiefdom humming along while they abuse, manipulate, profit, and contort economic reality on the backs of the average American. "

"The seeds of this debacle were planted nearly 30 years ago when Ronald Reagen unleashed his reign of voodoo trickle-down economics."

"So a bankrupt government is going to save bankrupt lenders."

"It's taken 7 years and a lot of hard work but it looks like the Bush administration will successfully leave our country in international and domestic ruin by the time they slink from office in in January 2009."

"My question is, what if even the government's billions don't restore confidence?"

"According to Treasury Direct, the National Debt stands at $9.503 trillion today, slightly more than $300 billion below the debt ceiling, and up about $75 billion since June 30. If the government continues to accelerate its borrowing like this, how long will it take before we exhaust the "full faith and credit" of the country and become a nation dependent on the kindness of strangers?"

"If we're going to get into nationalizing huge chunks of private industry, why not nationalize something useful, like the healthcare industry?"

"That this nation, under God, shall have a new birth of freedom; and that government of the money lenders, by the money lenders, for the money lenders, shall not perish from the earth."

"The US economy has not been a truly capitalist system for a very long time. We have actually been a socialist state (managed capitalism in the current jargon) for a very long time. Strip out the military-industrial complex, social security and related programs, government salaries and construction, farm aid, etc. and what would our economy actually look like?"

.... and finally ...

"We have lost the trust of investors around the world and now placed the full faith and trust of our government, out of necessity, to back the mortgage loan market that remains. Our journalists concentrate so eagerly on the families facing foreclosure but ignore the families, around the world, that have lost trust in our mortgage bonds. "

On the Company website , Richard F Syron , Chairman and CEO of Freddie Mac says ...."This affirmation of the important role of the GSEs, and that we should continue to operate as shareholder-owned companies, should go a long way toward reassuring world markets that Freddie Mac and Fannie Mae will continue to support America's homebuyers and renters. I applaud Secretary Paulson and Chairman Bernanke for their leadership and encourage Congress to act quickly to pass the new legislative proposals."

Freddie Mac sells three-month and six-month reference bills every Monday, which will be the time when world opinion crystallises into buying into what is promised a new way of running the business. Bloomberg quotes Wrightson ICAP LLC, a research company that specializes in government finance, in Jersey City, New Jersey. .."``We were glad to read that Treasury officials had been calling around to ensure adequate participation in the auction,'' Wrightson wrote, without attributing the information .. and the BBC talked of arms being twisted up backs.

They also quote Mizuho Asset, with US $37.5 billion funds as part of Japan's second-largest bank, who have no plans to bid at Freddie Mac's auction today.

``We are concerned about the U.S. housing market, so we don't have any agency debt,'' said Hiromasa Nakamura, a senior fund manager at Mizuho. ``It will be a difficult auction.''

Japan's Fukoku Mutual Life Insurance Co. said there's a risk those losses ( above the declared US$400Bn (ish) losses already declared by those exposed to US residential mortgage securities)will spread and recommended investors put their money into government debt, pinpointing Germany or France.

What Lord Patel cannot fully grasp is that Fannie Mae and Freddie Mac between them hold US$5 Trillion load and mortgages and the US Government have now effectively told the bond holders that their bonds are 100% secured. So that effectively increasesUS Government indebtedness from the current US$ 9.5 Trillion (approx) to say US$14.5 Trillion whichever way you slice the deal.

White House Announcement due on making "Implicit Guarantee" for Fanny Mae and Freddie Mac real, with US Govt taking up shares , backing Fed loans

The Authorities haven't closed the market down but have let the New York Times know in the last few minutes that the Bush administration will ask Congress to approve a rescue package that would give the government the authority to buy billions of dollars in stock in Fannie Mae and Freddie Mac and also lend to the companies to meet their short-term funding needs.

In concert the Federal Reserve voted on Sunday to also open a lending facility for Fannie Mae and Freddie Mac, if they need emergency capital. The two companies would be able to post their own securities as collateral.

The plan apparently asks Congress to give the government the authority over the next 2 years to buy an unspecified amount of stock in the two companies.

Simultaneously it would permit the companies to have greater access to the Treasury, by expanding the credit line that each company has from the Treasury. Each company now has a $2.25 billion credit line, set nearly 40 years ago by Congress. At the time, Fannie had only about $15 billion in outstanding debt. It now has total debt of about $800 billion, while Freddie has about $740 billion.

The 2 companies also hold or guarantee mortgages valued at more than $5 trillion.

This will require an immediate lifting of the national debt limit which requires Congressional approval . It will ask Congress to give the Federal Reserve a role in setting the rules for how big a capital cushion each company must hold which they think will re-assure markets.

When President Bush took office five years ago, the national debt was at $5.6 trillion; it was increased for the 5th time in his Presidency on September 27th last year 850 billion U.S. dollars to 9.815 trillion dollars by a vote of 53-42 . Last week it stood at over US$9.39 trillion, or US$124,400 for a family of four. Interest payments on the debt are already 9.5 % of all government expenditures.

An official statement is expected some time later

The Bush administration wants a fast reolsution and want Congress to adopt the plan immediately.

Last Friday, the Senate approved a measure that will form ther basis of the Amdiminstartions plans .

This "surprise" announcement is intended to send a sharp signal to both stock markets and debt markets that the government was standing behind the mortgage companies.

The credit line provided by the Treasury to the companies has always been seen by the market place as evidence that the two companies would be rescued by the government if they ever encountered severe financial problems.

This is despite years of denial by leaders from the Federal Reserve and to officials from Republican and Democratic administrations has denied the existence of a so-called “implicit guarantee.” Those who denied the existence of the guarantee included Treasury secretaries Robert Rubin, Lawrence Summers and Henry M. Paulson Jr., and Federal Reserve Chairmen Alan Greenspan and Ben S. Bernanke.

The implicit guarantee was a useful device both for the companies and the federal government. It has enabled the companies to get money in the debt markets at rates far lower than other companies and close to the same as treasury securities. At the same time, the Federal government did not have to record on its budget any significant liabilities for the large subsidy it was, in effecting, providing to the companies. Yet it also raised concerns among critics, who said it was unfair to rival companies and that it promoted a management laxity since executives knew that the companies could always count on a hand from the government if they began to falter.

Motivating the change was the central role of the two institutions and the depth of ownership in the paper they have issued. Every major bank, and many mutual funds and pension funds and foreign governments, hold significant amounts of securities issued by Fannie and Freddie, which have been viewed over the years as being almost as safe as treasury securities. A default by either one of the companies could be catastrophic for the financial system.

No mention of Lehman Bros. Nor of closing the market for a day , which would seem sensible until this plan is actually enacted.

PS : Apparently the Commander in Chief ducked announcing this grand plan of showering money on Wall Street and left it to Mr Paulson (Ex CEO Sacks of Gold) to talk to his own, from the steps of the Bell Tower entrance of the White House.

For those seeking a straightforward brief account of the role of Fannie Mae and Freddie Mac there is an excellent piece in the New York Times today by Peter Goodman - Government as the Big Lender

Market turmoil - NYSE to be shut Monday. NSPD/51 gets dusted off

Since posting about Lehman brothers troubles - Wednesday, June 11, 2008 Lehman Brothers investments exposed as losses pile up..Alpha female CFO Ms Erin Callan NYPD cop's daughter's is on the case things have got worse.No.No. Things were bad, just how bad we now realise.

On Friday Lehman Bros. shares US$22 when the above was written, closed on Friday 16.5% down on the day at US$16.56 and had been as low as US$14.

Credit Default swaps are a fancy financiers name for a bet on the chances of Lehman's bonds being paid. Lehman's credit default swap spreads widened 35 basis points to 320 basis points on Friday. That means folks were happy to pay US$320,000 per year for five years to insure $10 million in debt.

The Market capitalisation is about twice what the balance sheet shows as nett assets - assuming the figures can be believed.

With the problems of Fannie Mae and Freddie Mac, Bernanke and Paulson are loking for a solution. This means they need to line up lawyers, financiers, legislators and shareholders. The authorities cannot allow these 3 major institutions to simply declare bankruptcy.

Expect the New York Stock Exchange to close Monday whilst they try to sort this out.Maybe even longer. Maybe other markets will follow.

The cost will be US$trillions to the tax payer, the mortgage holders, and equity markets and the US$ will plumb new depths against the Euro and oil will probably hit US$170.

Time to dust off Presidential Decision Directive 67 (PDD 67), issued 21 October 1998, which relates to enduring constitutional government, continuity of operations (COOP) planning, and continuity of government (COG) operations... plus National Security and Homeland Security Presidential Directive / NATIONAL SECURITY PRESIDENTIAL DIRECTIVE/NSPD 51/HOMELAND SECURITY PRESIDENTIAL DIRECTIVE/HSPD-20 which President Bush issued on May 7th 2007. which includes function (g) Protecting and stabilizing the Nation's economy and ensuring public confidence in its financial systems; ???? .....more
Sunday, May 20, 2007 NSPD/51- Prudent Planning for "Catastrophic Emergencies" ?

Or go to one of our favourites Signs of the Economic Apocalypse

Making matters worse: The gaping U.S. current-account deficit -- the amount by which the value of goods, services and investments bought in the U.S. from overseas exceeds the amount the U.S. sells abroad -- and the low levels of domestic savings means that foreigners must purchase more than $3 billion every business day to fund the imbalance.

Since roughly half of the nation's nearly $10 trillion national debt is held by foreigners, mostly in Treasury bills and bonds, such a withdrawal could have enormous consequences.

Heparin -another chapter in the tale APP taken over by Fresenius - Patrick Soon Shong trousers US$3 Billion

German medical group Fresenius (FREG_p.DE: Quote) the biggest worldwide provider of dialysis services have bid a remarkable US$3.7 Bn. for APP Pharmaceuticals (APPX.O: Quote, ) who have, since problems with Chinese supplies of heparin pre cursor, become the dominant US supplier of heparin for dialysis , which hit competitor Baxter International Inc (BAX.N: Quote)

The high price saw Fresenius stock declining as they intend to finance part part of the deal through a capital increase. The deal will not only help Fresenius control costs (heparin from APPX has more than doubled in price) but provide an edge on competitor , dialysis services group DaVita Inc. (DVA.N: Quote, )

Fresenius will pay a 29% premium to the market price on Monday of US$23 per share and a possible US $6 a share in the second quarter of 2011 if APP beats a core profit target. Fresenius will also take on APP's net debt of about $940 million. It expects to close the deal at the end of 2008 or start of 2009 after regulatory approval when AP will become part of the Fresenius ' Kabi unit, its infusion drug therapy and nutrition division.

"With the APP platform, Fresenius Kabi will be able to market its product range in the U.S. Fresenius Kabi's international marketing and sales network will allow us to sell APP's products globally," Fresenius Chief Executive Ulf Schneider said.

Fresenius plans to finance the purchase with a mix of debt and equity aimed at minimizing the impact on Fresenius SE's credit ratings, with the largest portion through debt.

Colourful and controversial Patrick Soon-Shiong, APP founder and holder of over 80% of the APP outstanding stock, had given his written consent and a voting agreement and will pick up US$3 Bn. see Saturday, May 17, 2008 see Heparin - APP doubles prices, triples production - the fascinating life of Dr Soon-Shiong and cures for cancer and diabetes

We said at the time "Keep an eye open for more interesting information about this very interesting man and his very interesting career." .. which probably explains why a lot of interest has been shown in the last 2 days in the above post by folks at JP Morgan and Lehman Bros.... amomgst others.

Well maybe Baxter International just got unlucky with their suppliers of heparin from China enabling APP to snuck in, take over the dialysis market, double prices ... Patrick must have had good contacts in China to ensure supplies were not contaminated.

UPDATE WED 4.45 BST Here is soemthing very interesting about this very intersting company run by the very intersting Dr Patrick Soon Shiong. Footnoted.org notes an 8K SEC filing at around 2-30 on July 2nd ...there was Footnoted noted ..."sudden uptick in the company’s stock on Wednesday afternoon, someone seems to have picked up on the filing, or at least used it as a convenient excuse to buy."

"But it’s not just the stock that bounced. A short time ago, I spoke with Ryan Dietrick, a senior technical strategist at Schaeffer’s Research who said the options activity late last week looked unusual, given that normal open interest for APPX options had been “very light”. But on Thursday, someone made a pretty bold bet and bought 540 August call options @ 17.50 a share, which Dietrick says likely went for $1.30 to $1.40. Right now, those options are going for $6.30 a share, which makes whomever bought those options on Thursday either very smart or unusually lucky."

A Commentator posts ...."Hmmm, looks suspicious. I wonder if someone got the call first…"

It's that time of the month again ....

Yes it's that time of the month (the last Tuesday of each month at 9:00 am
ET.) when Standard & Poors S&P/Case-Shiller Home Price Index is published. The latest for April shows continuing annual declines in the prices of existing single family homes across the United States with all 20 sample cities (MSAs) now posting annual declines, 13 of which are posting record low annual declines, and 10 of which are in double-digits.

David M. Blitzer, Chairman of the Index Committee at Standard & Poor's sums it up succintly "There might be some regional pockets of improvement, but on an annual basis the overall numbers continue to decline." (full chart here)

San Francisco Chronicle "Last month, foreclosures represented 43.3 % of all home sales in Contra Costa County and 26.8 % in Alameda County, according to DataQuick Information Systems."

Wall Street Journal "The weakness has not been contained to the bubble markets ...On a monthly basis, prices surprisingly rose in 8 cities ..... we attribute most of unexpected increase to seasonal distortions as prices are typically higher during the spring selling season –Michelle Meyer, Lehman Brothers who have a lot riding on the US domestic mortgage market ....

"In two years the price of a home will be the equivalent of the taxes due."
Comment by Good Luck. - June 24, 2008 at 12:00 pm

Seeking Alpha Comment by Dapperdan19 "For those lamenting/moralizing about credit worthiness, all I can say is that the credit quality going through and getting approved for the past 9 months is the best credit quality I've ever seen in my lifetime.

Anyone doing loans right now will tell you the same thing. It's much tougher to get an approval, but the benefit is that overall credit quality is extremely high right now.

Detroit Free Press "Metro Detroit remains the only metro area in the top 20 that has an index level under 100. It was at 93.79 in April, below the 100 set in 2000 as the baseline. That means home prices have not risen enough since 2000 to offset the current erosion "

Forbes "... another decline in the S&P/Case-Shiller home price index, which fell 15.3% in April from the similar period a year earlier. The drop may be a blessing in disguise though, pointing toward the eventual bottom for the housing market.

Miami Herald " Military officials promised changes ...House Oversight Committee Chairman Rep. Henry Waxman talked of ..."defense officials overlooking Miam based AEY's ''long record of failed and dubious performance.'' That record, as compiled by the committee, included delivering damaged helmets to the Iraqi army, falsely blaming a hurricane in Miami for failing to deliver 10,000 Biretta pistols (James BOn's oridginal and favourite weapon) to Iraq's security forces and delivering the wrong model of laser pointer and rifle attachments to the U.S Embassy in Colombia.

''It appears that anyone -- no matter how inexperienced or unqualified -- can win a lucrative federal contract worth hundreds of millions of dollars,'' Waxman said, adding it was ``hard to imagine a less-qualified company than AEY.'' .... don't fret so, Senator, there are certainly worse ones somewhere in there who hav been scamming the DOD and the Pentagon , USAID for a long, long time.

Some scurrilous celeb rag asked David on his way out of the Lakers game who won...he looked a bit blank ... and said..."Who cares ?"

Cioffi and Tannin, Bear Stearns Dynamic Duo led away in handcuffs by the FBI, charged with criminal offences ...après nous, le déluge

A September 2007 Business Week report said that at a London conference in February, 2006, Matthew Tannin, a senior managing director at Bear Stearns, told investors that...

"... buying into one of the hedge funds he was hawking, the Bear Stearns High-Grade Structured Credit Strategies Fund, was akin to putting money in an ordinary bank account"

The Feds.the Department of Justice and the Securities and Exchange Commission made two major and very public moves today to crackdown, swiftly and very visibly, to demonstrate that wrongdoers in the mortgage meltdown can expect to be handled with ruthless efficiency.

The Bear Stearns Dynamic Duo, Ralph R. Cioffi, 52, and Matthew Tannin, 46, who just 18 months ago enjoyed their status (and 6 figure rewards) as top hedge managers in a firm at the vanguard of the residential mortgage backed seciritisation boom , were arrested at their homes early today. Cioffi at his family home in Tenafly, New Jersey, and and Tannin in his Manhattan duplex by agents of the Federal Bureau of Investigation .They were later indicted for mail fraud and conspiracy to commit securities fraud this morning by agents of the Federal Bureau of Investigation .

The two men were charged with misleading investors about the health of two Bear Stearns hedge funds whose collapse last year ignited the subprime mortgage crisis. Cioffi was also charged with insider trading. The Securities and Exchange Commission sued the men today, claiming they duped investors before the funds imploded.

If convicted of conspiracy to commit securities fraud, wire fraud or mail fraud, the defendants face as long as 30 years in prison. The case is U.S. v. Cioffi, U.S. District Court for the Eastern District of New York (Brooklyn) about which we are going to hear a great deal more in the coming months.

Cioffi managed the two funds that collapsed, and Tannin served as his chief operating officer. The hedge funds invested virtually all their assets in subprime-mortgage-related securities. Their investment bets failed last June when prices for collateralized-debt obligations - CDOs, linked to residential mortgage loans plummeted , as they turned sour amidst rising late payments by and defaults by borrowers with poor credit histories or heavy debt.

U.S. prosecutors are focusing on an e-mail allegedly sent by the two suggesting that their funds were headed for trouble, four days before they told investors they were comfortable with their holdings, the Wall Street Journal reported today, citing people familiar with the situation.

Today, both men walked out of FBI headquarters in lower Manhattan looking straight ahead with their hands cuffed behind their backs. Cioffi, wearing a blue blazer, tan slacks and no tie, and Tannin, wearing a blue suit and tie, were led into separate vehicles.

In another move today, two government officials said more than 400 people have been charged in a U.S. Justice Department mortgage-fraud sweep.

Called Operation Malicious Mortgage, the arrests are to be announced this afternoon by FBI Director Robert Mueller and Deputy Attorney General Mark Filip at the Justice Department in Washington. A number of arrests were made earlier this week.

The Department of Justice (DOJ) said it was pursuing 144 cases against the 406 defendants.

The DOJ estimates that total losses to homeowners and borrowers from the identified mortgage frauds in this sweep amounted to about US$1bn (£500m).

"Mortgage fraud and related securities fraud pose a significant threat to our economy, to the stability of our nation's housing market and to the peace of mind to millions of Americans," Mark Filip, Deputy US Attorney General is reported saying. Filip was a Federal judge in Chicago and selected by Ed Mukasey to take over effectively from the position of Gonzalez's no 2 Paul McNulty who resigned last summer. He has an impressive pedigree, there will be a lot of cell doors slamming shut this summer.

Cases involve false employment records and inflation of property values.

As nanny used to say..."There'll be tears before bedtime"

For those who missed it, start at the bottom ....

Tuesday, June 17, 2008 Bear Stearns : the gig is up , Bank Robbers to be charged this week

Tuesday, June 03, 2008 Bradford and Bingley catch cold, Wall Street gets pneumonia : S&P cans Big US Banks ratings - shares slide

Tuesday, April 01, 2008 Lehman Bros 17/3 - " Our liquidity position has been and continues to be very strong,'' Offers US$3 Bn. Convertible stock 7.25% coupon / 33% discount

Monday, March 31, 2008 German Financial regulator BaFin estimates global shakedown of US$600 Bn of which German share is 10%

Ludwig von Mises summed it up like this:"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

Friday, March 28, 2008 The Banker's Money Pit swallows helicopter funds at an increasing and alarming rate. When do the Fed and the BOE run out of paper and printing ink ?

Monday, 17th March 2008 Bear Stearns basket case goes to J P Morgan for US$2 a share - share prices shrinking faster than Glaciers - Nightmare on Wall Street Part : 13

Friday , 4th March 2008 Bear Stearns shares crash 42% - Joe Lewis has lost US$600 Mn.

Friday, December 21, 2007 Bank robbers don't carry guns and wear masks these days

October 15th 2007 - You Tube- John Bird and John Fortune

Saturday, September 01, 2007 Bear Stearns - serial NY Bankruptcy Court appearances - fugitive UK citizen in the dock in Vienna - white collar crime - banking Caribbean style (Cioffi first fingered)

US Housing defaults rise again, City budgets hit , and bankruptcy looms as reduced Property tax incomes cut State employee retirement benefits

Realty Trac report today that default notices, auction sale notices and bank repossessions — were reported on 243,353 properties in the US which shows nationwide ;

1. A 4 % increase from the previous month
2. A 65 % increase from April 2007.
3. This represents about 2% of the total number of households in the US.

Nevada, California, Arizona continue to see the highest rates of foreclosure, with Nevada still highest, leaving one in every 146 Nevada households in April having a foreclosure filing, nearly 4 times the national average nearly and double the rate in April 2007.

California with 64,683 reorted filings came second , slightly down in numbers from March but 112 % up from April 2007.

6 California cities feature in the Nations Top 10. Merced took the top spot, followed by Stockton at No. 2, Modesto (3rd) Riverside-San Bernardino (4th) ,Vallejo-Fairfield (6th) Bakersfield (8th) - site of the ill fated Lehman / Sun Cal backed McAllister Ranch debacle. see Wednesday, June 11, 2008 Lehman Brothers investments exposed as losses pile up..Alpha female CFO Ms Erin Callan NYPD cop's daughter's is on the case (leaving Florida cities Cape Coral-Fort Myers (5th), Port Lucie-Fort Pierce (9th) Fort Lauderdale at No. 10.

Arizona showed accelerating foreclosure activity with a monthly increas in April of 26% a total increase of 181 % from April 2007,

Not only do foreclosures slow sales and depress prices it can affect Property Tax incomes , putting municipal budgets in peril. For example, the city council in Vallejo, California - with the nation's 6th highest foreclosure rate in April , and facing a projected US$16 million deficit in the fiscal year 2008-09 (commences July 1st) voted unanimously on May 7th to have the city file for bankruptcy. Which they did, on May 27th (City Press release)

Chapter 9 bankruptcy allows the city to gain temporary protection from creditors whilst allowing the city to continue to offer citizens necessary services.

The bankruptcy process will however $750,000 to $2 million in legal fees alone, city officials said.

More California cities may file for bankruptcy because they face the same toxic mix of falling tax revenue, rising payroll expenses and a slumping housing market . "I don't think Vallejo is unique," said Mark Levinson, a bankruptcy attorney hired by Vallejo. "Vallejo is not the only city in California or the U.S. that is saddled with employee contracts that are burdensome."

Vallejo promised its employees salaries, benefits and retirement packages that it simply cannot pay, signing generous labour contracts during economically flush times, claims Marcia Fritz, vice president of the California Foundation for Fiscal Responsibility

Governor Arnold Schwarzenegger asked Gerald Parsky ( he served as the California campaign chairman for President George W. Bush in 2000 and 2004.) of Los Angeles, former chairman of the UC Board of Regents to head a bi-partisan gubernatorial commission - Public Employee Post-Employment Benefits Commission - that studied California's public pension and healthcare liabilities. Parsky's firm, Aurora Capital Partners, also happens to invest $150 million for CalPERS, which just happens to be one of the world's largest pensions.

After 12 months looking at the California's liabilities they reported in January that their unfunded obligations were a jaw dropping US$118 billion for retiree healthcare -- the state of California was on the hook for US$48 billion -- plus US$63.5 billion for pensions.(Full report pdf) pensions were funded up to 89% , they were 119% funded in 2000.

Last month Schwarzenegger ordered his finance director, Mike Genest, to find a way to pay down the state's $48-billion unfunded healthcare obligation over a 30-year period without "raising taxes or dipping into the state's general fund." Genest estimates it will cost the state an extra $1.1 billion annually to fully fund retiree healthcare. It's already kicking in $1.6 billion, plus $4 billion for pensions.

As a small aside the Parsky report recommendation 28 has widespread utility worldwide...

Which means, don't trust the actuaries, investment analysts, brokers, and check every assumption and calculation they make to arrive at their conclusions. Many (if not all) listed UK companies underfunded pensions to boost profits, share prices and Director's share option and bonuses.

At Appendix 3 Page 231 they even provide a through 16 page handy guide, "How to read an Actuarial Valuation" ...which is recommended reading to anyone with a Pension of any sort.

...and Lord Patel wished he had been able to read a copy about 15 years ago.