M & A wrap: S&P chief downgraded
The chief of Standard & Poor’s will step down next month, to be replaced by a senior Citibank executive, in a move announced a few weeks after the credit rating agency downgraded U.S. government debt and sparked a row with Washington.
Australian brewer Foster’s Group put pressure on SABMiller to raise its $10 billion hostile takeover offer on Tuesday, unveiling a $521 million capital return to shareholders.
Deutsche Bank AG knew in 2006 that a mortgage company it was preparing to buy lied to the U.S. government about its mortgages, yet went ahead with the purchase and should be held financially responsible, the Justice Department said on Monday.
Mortgage-backed securities are also at the center of another investigation of a prominent bank, as Goldman Sachs CEO Lloyd Blankfein has hired high-profile Washington defense attorney Reid Weingarten to represent him as the Justice Department looks further into Goldman’s role in the financial crisis.
NYT’s DealBook contributor Peter Henning called the Goldman investigation an “overreaction,” adding that until subpoenas are issued, the news that “Mr. Blankfein has hired his own lawyer does not tell us much, other than that he did what every other corporate executive involved in an investigation would do.”
Where’s Lloyd?
Lloyd Blankfein has very much been a man in the news lately, sometimes to good effect and sometimes not so much. In the past few weeks the Goldman Sachs CEO has made headlines by declaring that his firm was “doing God’s work” and, just this week, by suggesting that Goldman probably would have survived without the government largess that was channeled its way at the height of last year’s financial sector meltdown. Those comments, made in interviews with the Times of London and Vanity Fair, were part of a broad media offensive which has sought to burnish the image of the bank Rolling Stone’s Matt Taibbi famously described as a blood sucking vampire squid.
It seems surprising, then, that the nearly ubiquitous Blankfein will be absent when Goldman convenes its annual U.S. financial services conference next week, featuring such industry heavyweights as JPMorgan’s Jamie Dimon and Blackstone’s Steve Schwarzman, there will be no appearance by Blankfein or any other Goldman senior executive. That’s in sharp contrast to what happens at many top banks when they sponsor conferences; Bank of America’s outgoing CEO Ken Lewis, for example, was keynote speaker at his bank’s financial services conference early last month.
Does this mean Blankfein has said his piece for now and is going to adopt a lower profile going forward? Not necessarily, Goldman says. Blankfein, or whoever the Goldman CEO is at a given time, is never a featured guest at the conference, said Ed Canaday, a spokesman for the bank. “Historically we have not had our CEO or another member of senior management speak at the conference,” he said. “I know it’s different from some other companies but that’s how it’s been done historically.”
Meanwhile Bank of America, which on the initial conference agenda had the initials “TBD” next to its name in the space where other banks listed their CEOs, has dropped out entirely as speculation swirls about who will take the top job at the troubled lender. Given Blankfein is as secure in his job as any CEO of a major bank, perhaps the next Bank of America chief will take a page out of his book and be conspicuously absent from the stage next year.
Mixed messages from Goldman’s first family?
This probably wasn’t what Lloyd Blankfein had in mind when he reportedly asked Goldman Sachs employees to cut back on conspicuous displays of consumption.
The New York Post, which screamed the news about Blankfein’s order to exercise restraint from its front page on Tuesday, reported on its Page Six gossip column Wednesday that his wife sent a rather different message at a charity event in the Hamptons last Saturday.
According to Page Six, Laura Blankfein and Susan Friedman, wife of Richard Friedman, a Goldman managing director, “caused a huge scene” as they waited with lesser donors for the doors to open for a charity event for ovarian cancer research.
“Their behavior was obnoxious. They were screaming,” one witness told the Post, who added that Blankfein said she wouldn’t wait with “people who spend less money than me.”
Of course it’s not the first time that Wall Street wives’ high-falutin’ ways have gotten tongues wagging. Former Pan Am stewardess Susan Gutfreund, the free-spending wife of 80′s era Salomon Brothers CEO John, was gossip column fodder, as was Henry Kravis’ ex-wife, fashion designer Carolyne Roehm.
More recently, an anonymous Wall Street spouse penned a column for Portfolio.com entitled “Confessions of a Bailout CEO Wife” that bemoaned the inability to throw birthday parties at “Michelin hotspots” and other sad side effects of her vow of “financial abstinence.”
(reporting by Steve Eder; photo by Reuters)
Princely Sums
(fixes typo in third paragraph)
Talk about the end of the salad days. The White House is pledging action against “irresponsible” bonuses for executives at bailed-out Wall Street companies and Senator Claire McCaskill has proposed a law to cap their compensation to $400,000 a year.
Masters of Wall Street should not make more money than the president of the United States, she argues, at least not until they wean themselves from government aid. So what’s a Wall Street executive to do on only $400,000 a year? Here are some ideas – precluding paying rent, buying food, putting gas in the car or getting the poodle a trim:
REAL ESTATE: Thank goodness the property market crash has opened some affordability gaps for the newly upper-middle-class executive. The prospective banking executive could pick up a one bedroom, one bathroom co-op condo on West 45th street, or see if she could get a mortgage on Bernard Madoff’s Montauk $3.3 million East Hampton estate. In this market? Unlikely. Plus, agents will tell you the market price is actually much higher. Pity.
OFFICE OR HOME DECORATION: He could spend a year’s salary on four painted portraits of billionaire investor Warren Buffet. In May, performance artist Michael Israel painted a portrait of the head of Berkshire Hathaway in 10 minutes flat. Six months later, a Minneapolis executive bought it for $100,000 in an eBay auction, with the proceeds going to the non-profit Girls Inc program.
PARTY PARTY PARTY: The future titan of Wall Street may not be able to afford Rod Stewart, who played at Steve Schwarzman’s big birthday bash in 2007 for $1 million, but he could gorge on 10,000 or so of the Blackstone chief’s favorite crab claws, which were going for $40 per claw back in the heyday of high finance.
SUPERBOWL: StubHub had a Super Bowl luxury suite going for $83,340, so a bank exec could still easily play the part of overpaid sports junky and still have more than $300,000 to lose on the outcome of the game. If he wants to be a bit more frugal, club premium seats are going for $10,511 a pop. If ego demanded, he could afford 4 seconds of TV advertising.
Bonuses are completely discretionary—conditioned upon the performance of the firm as a whole.
Bonuses are not warranted at all for any firm getting government aid.
How many jobs would the $18 billion have saved?
All S&P employees should be investigated and their stock portfolios revealed! Some of them must have lots of short positions set up before the U.S. downgrade!