Exclusive outtakes from industry leaders
Phil Angelides, Financial Crisis Inquiry Commission chairman, says he’d rather see some taking of responsibility than hear another “I’m sorry.”
“Personally I don’t see my role as … to obtain apologies. What I don’t hear is a sense of responsibility and self-assessment about what occurred. There seems to be a disconnect between the practices that people undertook and the financial collapse,” he said at the Reuters Global Financial Regulation Summit.
“I’m struck by the extent to which all fingers point away generally from the person testifying,” Angelides said.
And it’s not just Wall Street executives that he’s talking about.
“When Alan Greenspan came in front of us he said he’d been 70 percent right, 30 percent wrong. Well, you know, the captain of the Titanic was probably 99 percent right and one percent wrong. It’s the enormity of the mistake that matters,” he said.
You can call him mediator, or you can call him negotiator, but don’t call him pay czar.
Kenneth Feinberg says he doesn’t like the shorthand title that’s used to describe his role as the administration’s supervisor of compensation practices at firms that received money under the government’s Troubled Asset Relief Program.
After a cool few months, the phones are heating up again for restructuring advisors.
Michael Kramer, head of restructuring at Perella Weinberg Partners, told the Reuters Restructuring Summit that the calls he gets from possible clients aren’t quite as panicked as early this year.
In zombie films, the dead walk the earth and slowly annihilate the living. Such a frightening prospect may be in store for Europe, the Reuters Restructuring Summit was told.
Banks are one of the big problems, speakers said, as they are unwilling to take the size of write-downs necessary to cut firms’ debts down to a manageable size.
They have all been beneficiaries of European banks’ preference to tinker with company balance sheets rather than fundamentally restructure indebted businesses, one speaker said at this week’s restructuring summit.
“Every time we have a recession I sit down with the head of workout for bank clients and ask what banks are going to learn,” said Hood, who first qualified as an accountant in 1970.
The U.S. recession and global credit crisis pulled a stunning array of corporate giants into bankruptcy court this year. Automakers General Motors and Chrysler, real estate company General Growth, and chemicals maker Lyondell all sought protection from their creditors after being brought down by rapidly changing economics and customer demands.
While the sudden shift in fortunes for some of the world’s biggest companies wiped out the savings of some equity investors, the changes have paved the way for new and interesting investment or takeover opportunities for other investors.
Enough with the view that the current credit crisis will drag the U.S. into a “lost decade” similar to the one that Japan suffered in the 1990s, says Gary Talarico, managing director of Sun Capital Partners.
Talarico lived in Japan for 12 years and worked with Ripplewood Holdings as an adviser on the hugely profitable Shinsei Bank rescue deal. He says the U.S. is much more willing to take the pain of the crisis and emerge much stronger because of it.
Japan’s strategy to cope with their crisis leaned more to the left, Talarico told the Reuters Restructuring Summit in New York. And because of that, the Japanese economy stagnated for years.
As for what is happening in the U.S. right now?
“Creative destruction is a good way to describe it,” Talarico said in reference to the failure of Lehman Brothers, the buyout of Merrill Lynch and the government takeover of AIG.
“These things have to happen. I’m very sad about Lehman. I worked there for 15 years and I absolutely loved the firm. It’s a possibility that if the government moved faster, they might still be alive today. A lot of things might be different. Unfortunately, it is very hard to see the future.
But things have to fail, he said.
“There is no doubt that reckless things were done. Reckless people have to take their pain. But what we can’t afford is a systemic meltdown. It has global implications as well. So, unfortunately, tax payers have to carry some of that burden.”
To hear Talarico’s view on why the U.S. is not headed for a Japan-style slowdown, click here
Martin Fridson — known as the “Dean of the high yield bond market” — is concerned about what we don’t know when it comes to consequences of the U.S. federal government’s $700 billion bailout to help move toxic mortgage debt off their balance sheet.
Fridson, the Chief Executive of Fridson Investment Advisors, told the Reuters Summit on Tuesday that beyond the unforeseen consequences that scare him most, moral hazard and inflationary pressures from the historic government action top his list of concerns.
To listen to Fridson’s comments, click here