It's Schadenfreude Saturday!

Includes: C, GJM
by: Greg Newton

Capping the payoff

Having earned been paid $115 million since 1999 for taking lunch and, on a busy day, pontificating, former Treasury secretary Bob Rubin capped his payoff for helping debauche Glass-Steagall, without which intervention Citi (NYSE:C) might still be a functional financial institution rather than a ward of state.

Not forgetting, of course:

Inside and outside the bank, Mr. Rubin is blamed by some for pushing Citigroup to rev up risk-taking as the housing and derivatives bubbles expanded — a move that has saddled Citigroup with tens of billions of dollars in write-downs and necessitated a sweeping government bailout of the financial giant...Citigroup’s share price is down 70% since he came on board.

In the next turn of the revolving door, NakedShorts has the over/under on Hank Paulson joining the board of JP Morgan Chase (NYSE:JPM) (or similar) at Sep. 2009. And is taking the under.

Bailing on another Ponzi

The eponymous J. Ezra Merkin resigned as chairman of GMAC LLC (NYSE:GJM), slipping over the gunwales of the Cerberus-GM joint venture under cover of a “board restructuring” triggered by a TARP-funded bailout that, but for the fact that TARP has no rules other than whatever Hank & Neel say they are, seemed to have broken every rule in the book.

Mr Merkin stands at an intersection of two of the largest current business stories — the federal bailout of the auto companies and the Madoff financial scandal.

In addition to being chairman of GMAC, Mr Merkin is a hedge fund operator who invested more than $1.8 billion of his clients’ money with Mr Madoff. Mr. Merkin’s three private investment funds — Ascot, Ariel and Gabriel — are among the largest of the so-called feeder funds that placed investors’ money with Mr Madoff without their knowledge, according to the investors. Mr Merkin collected millions of dollars in management fees annually for his work.

Among all the allegedly professional money managers hit by the Madoff fraud, Merkin has been the most egregiously self-pitying, whimpering, in his Dec. 11 letter to his Ascot Partners LP hedge fund investors, that “As one of the largest investors in our fund, I have also suffered major losses from this catastrophe.” At least with GMAC off his plate, he’ll have plenty of time for the deposition hell that awaits.

Gross miscalculation

Barrons’ is out with the first part of its annual WrongTable (© Alchemy of Trading) this weekend, and the first question indicates pretty much how everybody did.

Barron’s: Let’s forget about 2008 — and that includes most of your stock picks. With the market down 36% from its highs, the government bailing out everything in sight and a new president coming to town, what is the outlook for 2009?

And my personal favorite, if not the worst, of the records on display? (Click for a more legible image).


Of course, at the beginning of 2008, Gross had neither established his stranglehold on Fred Reserve policy, nor had Pimco been named among the four entirely unconflicted investment managers — with Goldman Sachs Asset Mgt, BlackRock Inc (NYSE:BLK) and Wellington Mgt Co — that will help Fred’s New York branch buy in $500 billion worth of mortgage-backed securities by mid-2009. So Bill’s 2009 picks, which should show up next week, might be worth following. Unless, of course, he needs to unload a little something on the great unwashed.
Capping the payoff

by David Enrich (apparently a real name)
The Wall Street Journal Jan. 10 2009

by Josh Fineman
Bloomberg Jan. 10 2009

Bailing on another Ponzi

by Leslie Wayne
The New York Times Jan. 10 2009

by Steven M. Davidoff
DealBook (NYSE:NYT) Jan. 5 2009

Ascot Partners LP, Dec. 11 2008
(via The New York Times)

Gross miscalculation

by Lauren R. Rublin
Barron’s Jan. 12 2008 (Subscription required)

Barron’s Jan. 12 2008 (Subscription required)

by Stephen Bernard
AP Jan. 5 2009

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