Poor Steve Rattner. As if it wasn't bad enough that he's embroiled in a scandal over pension fund bribes, may face criminal charges for his role in the scheme, and was forced to step down as President Obama's "car czar" earlier this week, comes the news that he paid $4.35 million for house in D.C. just two months ago. [peHUB]
Goldman Sachs announced record earnings the day before yesterday. Today it was JPMorgan Chase's turn wow everyone on Wall Street, announcing a $2.7 billion second-quarter profit thanks to "stellar trading and investment banking results." A few months ago, the bank had accepted $25 billion in bailout cash. Now the Jamie Dimon-led bank is "emerging with renewed confidence," reports the Times, and it's "taking advantage of the financial crisis to vault ahead of longtime rivals in the investment banking rankings and grab market share in mortgages and retail banking." When Goldman shared its good news with the world, we wondered if the bank had an exciting party planned. (It didn't.) We didn't bother to ask Dimon's people if they were planning to live it up this evening. Jamie's too cheap to treat anyone to anything fancy, clearly. But he is the kind of guy who would happily rub his good news in the face of the competition!
Remember Sam Israel, the druggie hedge fund manager who made off with $450 million, got caught, and was sentenced to 20 years in prison—but then tried to skip out on the sentence by faking his own death? Hopefully the two weeks Israel spent lost in the woods was worth it! Because it just earned him another two years behind bars. [NYP]
Financier Steve Rattner resigned as "car czar" on Monday to spend more time with his family. You didn't believe that excuse, of course. But now we have a better idea of what it was that ultimately brought Rattner's DC stint to an end. Attorney General Andrew Cuomo has been trying to reach a settlement with Rattner over charges his private equity firm paid bribes to state officials to secure investments from the state pension fund. But a deal hasn't been reached yet, it seems, so "Cuomo's investigation of Rattner has 'intensified' in recent weeks." Let's hope Rattner comes to his senses and works something out with Cuomo. He may not have a job in Washington any longer, but Hollywood is still waiting with baited breath for Rattner to live up to his true potential. [Reuters]
Lucas van Praag, Goldman Sachs' head of corporate communications, was kind enough to get back to us a few minutes ago as to whether Goldman CEO Lloyd Blankfein had any plans to live it up given the firm's blow-out of a second-quarter. Alas, the Dom will not be flowing at Le Cirque tonight, it seems. Says van Praag:
The happiest man in New York today? That would be Lloyd Blankfein, the chairman and CEO of Goldman Sachs, which announced this morning that the bank reeled in a record $13.8 billion in revenue for the second quarter and generated profits of $3.44 billion. It's a big turnaround from a few months ago when the firm was holding out its hand for billions in bailout dollars, of course. But that's water under the bridge. And no one seems to be so sure how Goldman managed to do it. Blankfein attributed the big gains to "the combination of improving financial market conditions and a deep and diverse client franchise" in a news release today, whatever that means. But who cares how Goldman did it? The important thing is to go out and celebrate, right?
It's the of the line for Steve Rattner, the high-profile financier who once managed Michael Bloomberg's fortune, was once rumored to be a candidate for Treasury secretary, but ended up with responsibility for President Obama's auto task force instead. Back in April, the private equity firm that Rattner co-founded, Quadrangle Group, was tied to the pension kickback scheme now under investigation by Andrew Cuomo; now comes word that Rattner is out of a job and heading back home: "The administration said Mr. Rattner decided to return to private life and his family in New York City." [WSJ]
You may still be dealing with the nasty effects of the economic downturn, but the pain and misery appears to be over for the hedge funders who were forced to momentarily put off plans to buy a new jet or private Caribbean island earlier this year. The Post reports the first six months of 2009 were very good for the likes of Steve Cohen, Paul Tudor Jones, Phil Falcone, and John Paulson as "hedge funds overall turned in their best performance in a decade, with funds up 12 percent through the end of June." Before you immediately brush this off as just another example of the rich getting richer while the less fortunate continue to struggle, consider four reasons why it's actually great news that Phil Falcone may end the year with a net worth north of $3 billion:
The Guardian's Paul Collier has proposed a brand new crime (and a brand new word): bankslaughter: "With bankslaughter, when the bank blows up—even if it is a decade later—a criminal investigation traces back to determine whether crucial decisions were reckless. If a reasonable banker faced with the information available at the time would not have taken those risks, the person responsible is dragged off the golf course and jailed." Clusterstock's John Carney thinks this may just be the dumbest idea ever and should be "nipped in the bud before some populist lawmaker tries to make a garden party out of it." In the meantime, if you see Jimmy Cayne, Chuck Prince, or Dick Fuld on a golf course tomorrow and they look a little queasy, now you know why. [Guardian via Clusterstock]
• Just in case you've missed the excitement on TV, Ben Bernanke appeared on Capitol Hill today to testify about Bank of America's acquisition of Merrill Lynch. Lawmakers grilled him, Bernanke played defense: quality entertainment as usual! [NYT, WSJ]
• Financier Allen Stanford appeared in court today and pleaded not guilty to charges he swindled investors out of $7 billion. [WSJ]
• The job market hasn't improved: The number of Americans filing jobless claims rose last week to the highest level in more than a month. [CNN]
• Good news! AIG is reducing its debt with the Fed by $25 billion. [NYT]
• Andrew Cuomo is recusing himself from the investigation into the hedge fund that handed his finances and is now tied to Cuomo's kickback query. [BN]
• There's a shortage of banking industry CEOs—decent ones, at least—which explains why Vikram Pandit is still in charge at Citigroup and Ken Lewis is still running the show at Bank of America. "The best players won't risk their careers going to a troubled enterprise," explains one recruiting expert. [WSJ]
• Andrew Cuomo has been investigating pension fund corruption for the past few months. Now his own ties to just such an entity are raising questions. [BN]
• Wanna invest in a hedge fund? You're in luck. A number of them are looking to diversify their investor bases and are now targeting the middle class. [NYP]
• Stocks rose this morning ahead of a report by the Fed this afternoon. [CNN]
• Good news for JPMorgan Chase: It's "the world's strongest bank." [DB]
• Good news for Barclays: Its name will grace a Brooklyn subway station. [NYT]
• Jeffry Picower was once considered one of Bernie Madoff's victims. Not so much any longer, now that it appears he withdrew as much as $5 billion from his various Madoff accounts between 1995 and 2008. [ProPublica]
Last month the CIA revealed it was looking for laid-off Wall Streeters to join its ranks, part of an effort to find people with backgrounds in "economics and financial services to help assess overseas economies and to track down illicit money used to finance terrorist activities." Investment Dealers' Digest has a long article on the subject and has interviews with a bunch of people who made the jump. The good news: It turns out the hours are much better compared to Wall Street. The bad? With salaries ranging from $48,682 to $95,026 a year, even first-year investment banking analysts take home more. Of course they can't claim they're defending America and saving the world from evil, so you'll have to factor that into the equation somehow. [IDD via Dealbook]
Goldman Sachs is denying a report by the Guardian that the bank plans to hand out the "biggest bonus payouts in the firm's 140-year history" later this year. "We won't know what our compensation benefit number is until the end of the fourth quarter, which is at the end of December," explained a spokesman, dismissing the story as "pure speculation." In other words, it may end up being a record amount. But it's too soon to say for sure. And the bank wouldn't want employees to think they could coast from now until the end of the year, now would it? [NYDN]
• Employees at Goldman Sachs can expect the "biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year." [Guardian]
• Banks like Merrill Lynch, UBS and Citigroup are "hiking pay for their top investment bankers in an attempt to stop an exodus of talent." [FT]
• Bill Gross of Pimco has "emerged as one of the nation's most influential financiers." How do we know this? Tim Geithner has him on speed-dial. [NYT]
• Russian-American billionaire Len Blavatnik is suing JPMorgan for allegedly mismanaging an investment account with $1 billion in assets. [NYT]
• Jack Welch is lending his name to a new online MBA program. [WSJ]
• Warren Buffett auctions off lunch every year for charity. The bidding is open, but it's not expected to rake in the fortune it did in years past. [Guardian]
According to Crain's, New York's 100 top-paid executives took home $1.2 billion in compensation last year. And a handful of them, it turns out, are execs who happen to work at banks that received bailouts from Washington: "Number four on the list is Goldman's CEO Lloyd Blankfein, with $42.9 million. Following him is Citigroup's CEO Vikram Pandit, raking in $38.2 million. Jamie Dimon, head of JPMorgan Chase, comes next in line with $35.7 million. Goldman and JPMorgan, which received $10 billion and $25 billion, respectively, in government aid, have recently moved to repay the funds. Citigroup is still saddled with the $45 billion in aid it's accepted." Topping the list, in case you're wondering, is Peter Kraus of Alliance Bernstein, who was paid $52 million just to take the job. But American taxpayers also had a hand in making 2008 a very good year for Kraus: In addition to his take from Alliance, he earned $25 million for the three months he put in at Merrill Lynch in late 2008. [NYP]
Did the Wall Street Journal really think people would fall over in disbelief at the news that the CEOs of a few bailed-out banks used their corporate jets to fly off on vacation? Like, last Christmas? By now, you've probably figured out that these companies blow tons of money on not-so-important things. (Like, say, office renovations, or jaunts to the Olympics and Wimbledon aboard their company jets.) If the paper really wants to break a story open wide, perhaps it could look into why a JPMorgan Chase-owned Gulfstream G-V was on the tarmac at a small airport in Brazil that happens to be known as a major transfer point for South American drug cartels? (See above.) Now that could be something big! [WSJ]
