The Big Banks

January 2008

Bank of America Buys Countrywide for $4B

newser | Bloomberg | Jan 11, 08 6:52 AM CST

Bank of America, five months after throwing a $2 billion lifeline to rapidly sinking Countrywide Financial, will pay nearly $4 billion in stock to save the damaged mortgage lender. The deal makes BofA the nation's largest mortgage lender and loan servicer and should help build a bulwark against the still-spreading default crisis, the Wall Street Journal notes. But fund manager Eric Schopf tells Bloomberg: “I hope Bank of America isn’t throwing good money after bad.” More »
Blair Takes $1M Part-Time JPMorgan Job

newser | Times (UK) | Jan 10, 08 9:32 AM CST

Former British PM Tony Blair will advise JPMorgan Chase on global politics, and pick up a check in the neighborhood of $1 million for his part-time trouble. Blair will keep his current job as the Quartet's envoy to the Middle East, reports the Times of London, but it's hardly his first cash cow: he's inked a $10 million deal for his memoirs and is cleaning up with speaking engagements. More »
Citi, Merrill Look Overseas for More Cash

newser | Wall Street Journal | Jan 10, 08 7:23 AM CST

Merrill Lynch and Citigroup, which have already tapped foreign investors for billions of dollars to help bail them out of the subprime debacle, are headed back to the well, reports the Wall Street Journal . Merrill is seeking some $4 billion more, Citi up to $10 billion—all expected to come from foreign governments—to help recapitalize coffers stripped by writeoffs the past two quarters. More »

December 2007

Goldman Sees Bigger Losses for Big Banks

newser | Wall Street Journal | Dec 27, 07 10:24 AM CST

Goldman Sachs has some bad news for Citigroup, Merrill Lynch, and JPMorgan Chase: An analyst predicts even bigger fourth-quarter writedowns for all three firms than they've already cottoned to, thanks to continued exposure to collateralized debt. The losses will be “significantly larger than investors are anticipating.” How large is that? Try a combined $33.6 billion, the Wall Street Journal reports. More »
Banks Face Simpler, Tougher Times

newser | Wall Street Journal | Dec 26, 07 3:03 PM CST

Investors waiting for the big banks to turn it around after 2007’s subprime debacle might be waiting a long time, the Wall Street Journal warns. The credit crunch has unraveled a complicated modern banking model that gave big firms nearly total balance sheet flexibility. “It was a different world,” said one analyst. Now, banks must “think real hard about their new business model.” More »
Merrill Deal Yields $6.2B in Capital

newser | Wall Street Journal | Dec 24, 07 1:07 PM CST

With another quarter of massive writedowns looming, Merrill Lynch today announced a deal to raise up to $6.2 billion by selling discounted stock to two investors. Up to $5 billion will come from Temasek Holdings, Singapore's state-owned investment company. The other $1.2 billion comes from money managers Davis Selected Advisors, the Wall Street Journal reports. More »
Banks Scuttle SIV Bailout

newser | Wall Street Journal | Dec 21, 07 3:56 PM CST

The three banks charged by Treasury with setting up a fund to bail out investments threatened by the subprime mess are abandoning the project, the Wall Street Journal reports. Citigroup, Bank of America and JP Morgan Chase had been working since September on the plan to rescue structured investment vehicles, but they have struggled to raise money for the project. More »
Morgan Stanley CEO Feels Heat

newser | Wall Street Journal | Dec 20, 07 11:37 AM CST

When John Mack became Morgan Stanley’s CEO in 2005, he told the company to take more risks. “You’ve lost your swagger,” he told his traders. Now, after several questionable moves and yesterday's staggering $9.4 billion writedown, swagger isn’t looking so hot—and Mack could be sent packing, the Wall Street Journal reports. More »
Struggling Citi Names Pandit CEO

newser | Bloomberg | Dec 11, 07 2:19 PM CST

Citigroup today named Vikram Pandit its new CEO. The current head of private-equity and hedge-fund investments will be charged with leading the bank's recovery from staggering losses in the subprime collapse and a 38% drop in its share price this year. The ex-Morgan Stanley president joined Citigroup in April; he replaces Charles Prince, forced out last month. More »
Treasury Secretary Won't Jump to Citigroup

newser | Financial Times (UK) | Dec 5, 07 4:38 AM CST

Treasury Secretary Hank Paulson will stick it out until the end of the Bush presidency and won't jump to Citigroup, the Financial Times reports. His name had been mentioned in connection with the vacant top spot at Citigroup and investors are likely to be disappointed that he has ruled himself out. Citigroup is hoping to find a new boss within the week. More »
Credit Card Execs Grilled Over Rate Hikes

newser | Associated Press | Dec 4, 07 6:55 PM CST

Lawmakers grilled credit card execs today over the practice of hiking interest rates on customers who pay on time, the AP reports. Senator Carl Levin called it unfair, but Bank of America and Discovery execs said that factors like credit scores also affect rates. "It's important criteria for how to manage risk and pricing," said Discovery President Roger Hochschild. More »

November 2007

Banks Seeking Cash Spur New Merger Round

newser | Wall Street Journal | Nov 28, 07 7:09 PM CST

An informal merger overture from Bank of America to cash-starved Citigroup was recently rejected, the Wall Street Journal reports, in favor of a smaller, $7.5 billion infusion from the Abu Dhabi government, approved by the bank today. But the offer, quickly disavowed by BoA, underscores the fact that a new round of opportunistic deals may be in the making as more and more financial firms are forced to replenish their capital reserves. More »
Citigroup Readies Layoffs, Round Two

newser | CNBC | Nov 26, 07 11:01 AM CST

Citigroup is planning "massive" new layoffs, CNBC reports, less than a year after the financial giant cut 17,000 jobs. After announcing that it may have to write down as much as $11 billion more in mortgage losses, Citigroup has been looking for ways to cut costs, as well as searching for a new CEO and considering a breakup. Company sources say the number of layoffs could reach as high as 45,000. More »
Citigroup Leads Steep Nosedive

newser | Wall Street Journal | Nov 19, 07 3:48 PM CST

Stocks fell today—the Dow by more than 200 points—after a Goldman analyst downgraded Citigroup to "sell" in the morning, setting off a skid. The same analyst lowered target prices on Merrill Lynch, Morgan Stanley, and several other stocks, which fell by over 2%, the Journal reports. The Dow was down 218.35 to 12,958.44, the Nasdaq 43.86 to 2,593.38, and the S&P 500 25.47 to 1,433.27. More »
Goldman Leads Wall Street Bonus War

newser | Bloomberg | Nov 19, 07 11:56 AM CST

The Big Five Wall Street securities firms will pay $38 billion in bonuses this year—up from $36 billion last year—while shareholders tote up $74 billion in losses, their worst year since 2002, Bloomberg reports. All but Goldman Sachs lost more than 20% of their market value, says an analyst, but "they're all going to have to fall into line. If Bear and Merrill plead poverty, they're going to lose all of their good people.'' More »
In Thain, Merrill Picks CEO as Risk Manager

newser | Wall Street Journal | Nov 15, 07 4:24 AM CST

The choice of NYSE's John Thain as Merrill Lynch's new CEO signals a focus on a new kind of manager for the financial giant, the Wall Street Journal observes: a strong risk manager. A low-key, detail-oriented veteran, Thain resembles the top execs of the firms least damaged by the subprime mortgage collapse, the paper notes: "They aren't risk-averse but they have a deep understanding of risk and have the battle scars to prove it." More »
John Thain to Be Merrill CEO

newser | Wall Street Journal | Nov 14, 07 12:18 PM CST

Merrill Lynch will name NYSE chief John Thain as its CEO as soon as today, an insider tells the Wall Street Journal . The former Goldman Sachs president, on Merrill’s shortlist since Stan O'Neal was shown the door two weeks ago, was also under consideration for Citigroup’s top post. The move comes as something of a surprise, as Wall Streeters had focused attention on BlackRock CEO Larry Fink. More »
Street Foresees Very Good Year

newser | Bloomberg | Nov 13, 07 12:44 PM CST

Despite $45 billion in subprime writedowns, rolling CEO heads, and an $84 billion drop in market value, Wall Street will somehow post its second-most-profitable year ever, reports Bloomberg. “As the bombs are dropping and the mines are exploding, it's a bit of a surprise,'' said an investment banker. Goldman Sachs and Lehman Brothers will record their best years ever. More »
Big Banks Settle on Superfund Terms

newser | New York Times | Nov 11, 07 12:49 PM CST

The country’s top three banks have finalized agreements for the $75 billion superfund they hope will cushion further blows to the credit market, reports the NY Times. After nearly two months of haggling, Bank of America, Citigroup, and JPMorgan Chase agreed to simpler conditions than outlined in the fund’s proposals, but some analysts still insist the fund won’t succeed. More »
Siemens, Banks Bow to US Pressure to End Iran Biz

newser | Guardian (UK) | Nov 9, 07 4:44 AM CST

The Siemens company in Germany, one of the world's largest engineering operations, and the country's three largest banks are cutting business ties with Iran under White House pressure to get out or risk US interests. It's a sign that major European corporations are beginning to line up behind American economic pressure on Iran to give up its nuclear ambitions. More »