Britney Spears turns 28 today. Erin Callan, the former CFO of Lehman Brothers, is turning 44. Lucy Liu is 41. Stone Phillips is turning 55. Senate Majority Leader Harry Reid is 70. Real estate marketing queen Louise Sunshine is turning 69. Nelly Furtado turns 31. Foo Fighters bassist Nate Mendel is turning 41. Author George Saunders is 51. And tennis legend Monica Seles celebrates her 36th birthday today.
• Bank of America went ahead with the purchase of Merrill Lynch—even after having last-minute doubts—because Washington pushed it to do so. [WSJ]
• Yesterday's testimony by Harry Markopolos before a House subcommittee looking into the Madoff affair was eye-opening, to say the least. [NYT, Reuters]
• One damning accusation by Markopolos: Walter Noel's Fairfield Greenwich Group went on a "three-year auditing shopping spree." [Fortune]
• Another Markopolos revelation: The Wall Street Journal missed numerous chances to break the Madoff story open. [Clusterstock]
• Reaction to Obama's plan to cap Wall Street pay—and opinions as to whether it could even work or not—has been all over the map. [WSJ, BN, NYT]
• Erin Callan took a leave from Credit Suisse because she's been summoned to testify before a grand jury about the collapse of Lehman Brothers. [NYP]
• The number of new claims for jobless benefits reached its highest level since the 1982 recession last week. [WSJ]
Erin Callan, the rising Wall Street star who became the chief financial officer of Lehman Brothers only to be ousted a few months before the firm filed for bankruptcy, is leaving the new job she started just five months ago. Callan is taking a "personal leave" from her job as head of Credit Suisse's hedge fund division; Dealbreaker is now suggesting she could have had a nervous breakdown this morning. [Bloomberg]
Erin Callan has had a tumultuous year, hasn't she? The former star at Lehman Bros can sit back and relax today. Not only has she landed on her feet (unlike so many of her former colleagues), it's also her 43rd birthday. Others celebrating: Stone Phillips is 54. Senate Majority Leader Harry Reid is turning 69. Real estate marketing queen Louise Sunshine is 68. Nelly Furtado is 30. Nate Mendel of the Foo Fighters is 40. Monica Seles is turning 35. Lucy Liu is 40. And Ms. Britney Spears—you've heard of her, haven't you?—is celebrating her 27th birthday today.
♦ Former Lehman CFO Erin Callan has gone into contract on an apartment at 40 East 66th Street, one month after cashing out at 15 CPW. The Credit Suisse exec is reportedly paying between $7.5 and $8 million for the three-bedroom condo. [NYP]
♦ Tommy Hilfiger has found a new apartment to rent. (His Plaza apartment remains on the market for $50 million.) The fashion mogul is reportedly paying $50,000 a month for a five-bedroom spread at 807 Park Avenue, inside the converted townhouse that was owned by Diddy until 2004. [NYP]
♦ A week ago, we reported Bella Sapir had closed on a new penthouse at 250 East 53rd Street for $8.895 million. Now the Post reports she's already trying to flip the place for a profit. She's relisted the 4,500-square-foot spread for $13.5 million with Corcoran's Angela Rapoport. [NYP, Corcoran]
Erin Callan, who served as Lehman's chief financial officer until she was ousted in June, is saying goodbye to 15 Central Park West. According to the WSJ, she's selling her condo for $11.8 million, just below the asking price of $12 million. Callan made a tidy profit: She agreed to pay $6.48 million for the apartment three years ago—back when the building was under construction—although she only closed on the purchase in April, which is when she first put it on the market for $14 million. One unusual footnote to the story: The 2,400-square-foot apartment is located on the 31st floor, the same floor she occupied when she worked at Lehman.
Fortune snagged an interview with Erin Callan, who served as second-in-command at Lehman Brothers until she was ousted in June. What does she have to say about the whole debacle? Callan says she's lucky she got when she did (duh!) and probably overdid it a wee bit with the press. She also mentions that Dick Fuld broke into tears when he fired her. [Fortune via Dealbreaker]
I cannot say I expected a blog best beloved for its breathless Gossip Girl recaps* would be the blog whose archives I spent the most time raiding to read up on the collapse of capitalism. But this crisis has been full of surprises and one of them is that reading New York magazine's Daily Intel blog could have saved investors a shit ton of money, because they have been paying superclose attention to the saga of America's Crapital Structure and they take very good notes. They reeled me into their archived coverage of what they call the "White Men With Money" beat when they ingeniously dubbed Goldman Sachs CEO Lloyd Blankfein the "Lila Fowler of Wall Street" after the moneyed alpha girl of the Sweet Valley High series. It wasn't a connection I'd think to make, but maybe that's because I'm not as savvy at parsing rumors…1. For instance, they totally rejected the worthless albeit true rumor about Merrill Lynch CEO John Thain's bad toupee and embraced the ex Goldman banker wholeheartedly. He looked like Clark Kent, therefore he would save his company with magical superpowers and common decency and it was really as simple as that. 2. Conversely, they did not like Lehman Brothers CEO Dick Fuld. Did not trust his eyebrows. And seized an early opportunity in June to lambaste him for being a style nazi. He was superficial! And people like that are always way too concerned about what other people think, and they overlook what's inside. Korean Development Bank was no more likely to save him from his deluded sense of reality than Elizabeth Wakefield was Bruce Patman. 3. Early into their shift steering the John Thain love train, they hired a prominent astrologer to see what was in his stars for the year. Just to make sure their instincts were correct. WERE THEY EVER.
Rumors: did they take down Lehman? This was one of those nagging questions to which we were too overwhelmed to answer yesterday. Now we know: Yes and no! On the one hand, as both rumormonger David Einhorn and pretty stiletto-wearing former Lehman CFO Erin Callan could tell you, that is how capitalism works. You short a stock, you start a word-of-mouth marketing campaign about how, say, "Lehman is the new Bear," which translates roughly to "Lehman is the new venerable investment bank whose demise those terrible short-sellers and their malicious rumormongering will turn into a self-fulfilling prophecy," and, lo and behold, the shit happens. Of course…it doesn't happen if your company has a sane and convincing leader who can go on CNBC and say, "here, look at our books! Our firm has such robust ratios of cash and hard tangible assets to covenants and other accounts payable that it really doesn't matter what our stock price does because, familiar as we are with the pussy nature of Wall Street confidence and the easily-distracted myopic ephemera-addled lemmings who govern such day-to-day fluctuations, we've seen to it to inoculate our business from such attacks by stockpiling enough hard currency and solid — but also liquid! — financial instruments that we can weather a crisis of confidence without having to undermine our case by begging them for money!" Lehman had no such leader. And it had no such assets!
The most powerful woman on Wall Street—at least according to Portfolio—is out of a job. Erin Callan, the chief financial officer of Lehman Brothers and the woman who has been on the firing line since Lehman accounced a series of unexpectedly large write-downs (and a disastrous quarterly loss), has been demoted. She'll stay at the bank, albeit not as CFO. And she's not the only one. Joe Gregory, the firm's president and chief operating officer, has been demoted, too.