Last-Minute Cyprus Bailout Will Shut Down Bank and Tax Biggest Accounts

Max Read · 03/25/13 07:22AM

A late-night agreement between European finance ministers and the government of Cyprus will keep Cyprus in the eurozone and bail out the struggling island nation—by levying an enormous one-time tax on the biggest deposits in one of its banks. Under the deal, the Cyprus Popular Bank, or Laiki, will be divided into a "good" bank and a "bad" bank; the Goofus will be slowly wound down and closed while the Gallant will be folded into the country's largest bank, Bank of Cyprus. Deposits of over 100,000 euros in both banks will be subject to a haircut of as much as 30 percent—but unlike last week's controversial proposed plan, this deal will not tax smaller depositors. The Cyprus bailout deal has been difficult to reach for a variety of reasons, chief among them the country's desire to preserve its banking sector, the engine of its economy, and the eurozone's desire to punish the Russian oligarchs widely believed to be the largest depositors in Cyprus' banks. ("In my view, the stealing of what has already been stolen continues," Russian President Dmitri Medvedev said in response to the latest deal.) This bailout agreement should allow Cyprus to (sort of) remain in the eurozone (against the wishes of the majority of its citizens; "luckily," no one in Cyprus is voting on the package) and eventually recover its banking income without directly taking money from the little guy—but years of enforced austerity will hurt him just as badly. No one's happy. At least they're less unhappy than they were last week? [Telegraph | QZ | Reuters]

AIG Fight Backs

cityfile · 12/07/09 11:07AM

Remember those protests outside AIG last fall? Those angry hearings in Washington? The bus trips to visit the suburban homes of AIG executives. The populist anger has subsided a good deal since then (even if the bill to bail out the firm has gone up), which is probably why five AIG executives are now threatening to quit the company if their pay is cut by Washington. [WSJ]

Bailed Out AIG Execs: We Want More Money

Ravi Somaiya · 12/07/09 07:32AM

Five AIG executives don't care that the government had to bail their company out because they were utterly inept. They want their full 'compensation' or they'll quit.

Fed Nets $14 Billion on Bailout

Andrew Belonsky · 08/31/09 05:30AM

Maybe Ben Bernanke really did know what he was doing, because the Federal Reserve has raked in an estimated $14 billion from fees and interests stemming from the bailout. But, never fear, there could still be bigger, uncounted losses. [FT]

Steven Rattner Is Basically an Asshole

John Cook · 08/03/09 10:07AM

Steven Rattner is the social-climbing financier who resigned as auto czar because his private equity firm is embroiled in a pay-to-play scandal. Everyone's waiting for shoes to drop, but New York says Rattner's biggest problem is that nobody likes him.

Morgan Stanley Loses Bragging Rights

cityfile · 06/17/09 08:55AM

Yesterday it was reported that Morgan Stanley would be "first in line" to pay back the money it received last fall from the U.S government as part of the good ol' TARP. Morgan Stanley won't be able to claim that honor, sadly. U.S. Bancorp and BB&T were the first banks to repay the government in full today. Morgan and Goldman Sachs are now claiming that they plan to settle the matter by the end of the day. Let's hurry it up, gentlemen. It's not like bureaucrats in Washington work investment banking hours, you know. [NYT/Dealbook]

Wall Street: Monday Morning

cityfile · 05/11/09 05:41AM

• The market has been up big the last few weeks. But the ride may be over. "The market has gone too far, too fast," as one fund manager puts it. [BN]
• Following the stress tests last week, a number of banks have been busy de-stressing: Both Morgan Stanley and Wells Fargo raised billions late last week to satisfy new capital requirements mandated by the Fed. [NYT]
• Meanwhile, Bank of America, which needs to raise $34 billion (down from the $50 billion it could have been forced to raise) is looking to offload its stake in China Construction Bank, although finding takers isn't easy. [WSJ]
• Warning: Turning around AIG may take a bit longer than expected. [WSJ]

Wall Street: Wednesday Morning

cityfile · 04/22/09 05:48AM

• Morgan Stanley reported a larger-than-expected loss for the first quarter this morning. The bank reported it lost $177 million, down from the $1.41 billion profit it collected during the same period in 2008. [WSJ, NYT, BN]
• David Kellermann, the chief financial officer of Freddie Mac, was found dead in his Virginia home, the result of an apparent suicide. [WaPo, BN]
• Things have gone from bad to worse for Steve Rattner: New York City's comptroller is investigating whether Quadrangle "intentionally misled or deceived" city pension funds by failing to disclose finder's fees. [WSJ]

Wall Street: Tuesday Morning

cityfile · 04/21/09 05:54AM

• Government officials—the people who essentially run Citigroup these days—have had talks about replacing CEO Vikram Pandit. About time! [FT]
• UBS is considering selling all or part of its hedge funds business. [Reuters]
• The Treasury Department's plan to rescue banks by having the government link up with private investors is "inherently vulnerable to fraud," says a government investigator, which is not very reassuring news. [WSJ, NYT]
• All the financial institutions that reported better-than-expected results may have also undermined investors' confidence in the sector. [NYT, DB]

Wall Street: Thursday Morning

cityfile · 04/16/09 05:48AM

• JPMorgan Chase reported a $2.1 billion profit in the first quarter, exceeding estimates. Unlike Goldman, though, Jamie Dimon says the bank hasn't decided whether to return the $25 billion it's received in bailout money. [DB, WSJ, BN]
• General Growth Properties, the second-largest mall operator, filed Chapter 11 today, making it one of the largest real estate failures in history. [AP, WSJ]
• AIG is close to a deal to sell its auto insurance business for $2 billion. [FT]
• Investors remain concerned about the situation at GE and whether the company will be forced to go out and raise additional capital. [WSJ]
• Foreclosure filings jumped 24 percent in the first quarter. [CNN]
• Blackstone boss Steve Schwarzman says he's really worried about the "decline of capitalism." But he's got $25 billion sitting on the sidelines, and he's ready to pounce at any second assuming the world isn't ending. [Fortune]

Wells Fargo's Record Profit, The Case Against Meredith

cityfile · 04/09/09 05:37AM

• Wall Street opened higher this morning after Wells Fargo predicted it would report a record $3 billion profit for the first quarter of 2009. [CNN, AP]
• You may soon be able to bail out America, too: The Obama administration is currently looking at ways to "give ordinary Americans a chance to profit from the bailouts that are being financed by their tax dollars." [NYT]
• Meredith Whitney has become as close to a household name as a banking industry analyst can get. But is she overhyped? [WSJ]

Welcome to the Party, Life Insurers

cityfile · 04/08/09 05:38AM

• The Treasury is expected to announce in the next few days that it will be extending bailout funds to a handful of life insurance companies. [WSJ]
• Brian Moynihan, who took over Merrill Lynch after John Thain was ousted, is emerging as a potential successor to Bank of America chief Ken Lewis. [WSJ]
• Not that Lewis necessarily needs to be replaced, at least according to Meredith Whitney, who (bizarrely) says Lewis has "done a great job." [BN]
• Blackstone, KKR, and Carlyle are in the running to acquire the mobile phone operations that Verizon Wireless is selling now that it's acquired Alltel. [BN]
• Looks like Jim Cramer has a new enemy. Nouriel Roubini is calling the CNBC star "a buffoon," and Cramer has since responded in kind, of course. [NYP]

Cuomo Closes In, Geithner's Power Grab

cityfile · 03/24/09 05:34AM

Andrew Cuomo reports that 15 of the top 20 recipients of the $165 million in AIG bonuses have agreed to give back the cash. As for the other five, Cuomo is still "thinking about" releasing their names. Hint, hint. [NYT]
• Tim Geithner will call for the Treasury to be granted the power to seize troubled financial firms when he goes before a Congressional panel today. [DB]
• More trouble for AIG: The IRS is looking into cushy tax deals that were structured by the same unit that collected those millions in bonuses. [WSJ]
• Goldman Sachs plans to give back its bailout money in the next month. [DB]
• More on the programs unveiled by Tim Geithner yesterday, which created plenty of enthusiasm on Wall Street and sent the Dow up 7 percent. [NYT]
• The trustee overseeing the Madoff mess says he found an additional $75 million laying around, so there's some good news for you. [NYT]
• What a difference a year makes: "The best-performing deal of billionaire Henry Kravis's empire is a deep-discount retailer selling $1 dog treats and $2 bleach to lower-income shoppers." [WSJ]

Geithner Lays Out His New Plan

cityfile · 03/23/09 05:51AM

• Tim Geithner has unveiled his latest plan to deal with the financial crisis. This one involves a partnership between the government and private investors, and could eventually involve buying up to $1 trillion in toxic assets from banks, although it isn't generating unanimous support. "It fills me with a sense of despair," says the Times's Paul Krugman. [WSJ, NYT, BN, NYT]
• New documents over the weekend indicate AIG paid out $218 million in bonuses, more than the previously disclosed $165 million. [Reuters]
• Here's another way to look at the AIG mess: If those bonuses hadn't been paid, the U.S. government may have had $1.7 trillion to worry about. [NYP]
• That trip to AIG on Saturday? Lots of reporters, many fewer protesters. [AP]
• Obama reiterated his support for Geithner on 60 Minutes. [Dealbreaker]

The Battle over Bonuses Rages On

cityfile · 03/20/09 05:54AM

• Yesterday the House approved a 90% tax on bonuses paid to execs at certain firms that received government aid. Now some lawmakers are talking about banning all bonus payments at bailed-out firms. [Reuters]
• It's unclear if the 90% tax will hold up in court. It's also possible it will do more harm than good and ultimately "wreck what's left of our economy." [BI]
Andrew Cuomo says AIG has provided him with a list of employees who earned bonuses, but he won't release the names until the security situation has been sorted out, which is good news since it's getting a little rough out there what with all the death threats and protests. [AP, NYT, Reuters]
• Just who knew about the AIG bonuses—and when they knew it—is being closely scrutinized, although Treasury Secretary Tim Geithner says he is prepared to accept full responsibility. [NYT, CNN]