Word: banking
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Boutique firms believe that Citi's troubles will shift the balance in the M&A business again. "We are being approached by more and more clients who are concerned about getting services from entities that are having trouble," says Kenneth Berliner, who is the president of top boutique investment bank Peter J. Solomon. "How much longer are the bankers who work there going to stick around...
...There are two major arguments against the level of regulation that the Administration would like. The first is that regulations do not prevent people from acting rashly or dishonestly. Rogue traders can still lose hundreds of millions of dollars on an investment bank trading floor with a PC and access to their firm's capital. Inside trading and naked shorting of stocks happen all the time, although both are illegal. Fighting regulation because some people refuse to be regulated turns out to be indefensible because the alternative is chaos...
...Lost in the argument about why there was not risk management in place when a bank like Citigroup moved to the brink of collapse was the fact that Citigroup had a committee of its board of directors charged with monitoring the risks taken by the bank. Citi also had an army of risk managers who probably reported to an executive who also ran a part of the company that was taking risks. Of course, it is fair to assume that the bank also had a chief financial officer who had an excellent idea of what Citi had on its balance...
...much to say that boards and executives who turn their backs on protecting the interests of their depositors, shareholders, customers, and employees will be keelhauled. This applies as much to hedge funds which have customers and shareholders of their own as it does to the Bank of America (BAC) which is, under the banking laws already in place, is regulated to within an inch of its life...
Ironically, what helped start the rally in mid March were upbeat words from Citigroup CEO Vikram Pandit about Citigroup's profitable performance during the first two months of 2009. Friday's stock market swoon, traders say, was partly triggered by cautious comments from Bank of America CEO Ken Lewis and JP Morgan Chase CEO Jamie Dimon, who both noted that March was proving to be a more difficult month than either January or February. As Dimon told Bloomberg TV while standing outside the White House after a group of bankers met with President Obama, "This downturn - it's pretty powerful...