Henry Paulson

What To Make Of Hank Paulson's "Texan" Threats On Ken Lewis's Job?

Moe Tkacik | April 24, 2009, 4:11PM

It's clear New York Attorney General Andrew Cuomo's probe into the taxpayer-supported Bank of America-Merrill Lynch merger has widened considerably since he began digging into Merrill's accelerated payout of $3.6 billion in bonuses before the disclosure of a devastating fourth quarter loss. But where is it all headed?

Yesterday Cuomo wrote a letter to Congress, the SEC and TARP Oversight chair Elizabeth Warren disclosing a few findings "that raise questions about the transparency of the TARP program, as well as about corporate governance and disclosure practices at Bank of America." But as former Treasury Secretary Hank Paulson once said about such disclosures, the carefully-worded, heavily redacted documents "create more questions than they answer." The most headline-grabbing detail was Paulson's threat to fire Bank of America CEO Ken Lewis if he backed out of the bank's agreement to buy Merrill Lynch at the agreed upon $10 a share; the second was the revelation that the Fed and Treasury had left the SEC "in the dark" throughout the entire process.

The immediate question at hand is whether Lewis broke securities laws or violated his fiduciary duty to protect his shareholders when he went along with Paulson. Certainly many Bank of America shareholders believe so; the news was met with a statement from CtW, the shareholder group campaigning to oust Lewis in a proxy battle declaring that Lewis "violated their legal duties to shareholders in order to protect their own employment interests" when he decided not to invoke the deal's Material Adverse Change clause, which allows companies to get out of merger agreements under some circumstances. Bank of America shares have lost about two-thirds their value since the Lewis announced it was buying the investment bank.

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Topics: Andrew Cuomo, Henry Paulson, Jamie Dimon, Ken Lewis

Jennifer zuccarrelli

JP Morgan Chief Disses TARP While Poaching Its Staff

Moe Tkacik | April 17, 2009, 11:34AM

Yesterday JP Morgan became the second huge bank this week to announce a return to multibillion dollar profits, largely due to record trading profits that are probably "one-offs" related to AIG, but nevertheless use this triumphant return to the black as an opportunity to boast about its plans to pay back its TARP money and get back into the eight figure bonus business. And JP Morgan CEO Jamie Dimon wasn't exactly at a loss for mirth over that last part in the morning's conference call:

Dimon, calling money received through the Troubled Asset Relief Program "a scarlet letter" and "the TARP baby," said on a conference call with reporters today that the New York- based bank is awaiting guidance from the U.S. Treasury Department...The bank, which bought about $34 billion in mortgage-backed and asset-backed securities in the quarter, doesn't expect to participate as either a buyer or seller in the Treasury's Public-Private Investment Program, known as PPIP. "We learned our lesson" about borrowing from the government, said Dimon.

But if that's so true, what's Jennifer Zuccarrelli, a top aide to former TARP overseer Neel Kashkari, doing on loan to the JP Morgan media relations department?

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Topics: Jamie Dimon, Jennifer zuccarrelli

Barack Obama

What Obama Can Learn From JP Morgan CEO Jamie Dimon

Moe Tkacik | March 27, 2009, 2:17PM

Whatever the 25 bank CEOs descending upon the White House this morning told the president and his economic team, we hope JP Morgan CEO Jamie Dimon repeated one line from the speech he gave at the Chamber of Commerce earlier this month. (It's about 11:30 in.)

One of the main root causes [of the crisis], and this has been going on for a long time, was the huge trade and global financing imbalances which fueled very low rates and excess consumption, and over a long period of time I do not believe you can run those kind of trade deficits...

Dimon was getting at one of the root structural causes of the current crisis -- America takes, the world (China especially) makes, an unsustainable situation sustained above all by an increasingly usurous financial services industry. As the CEO of PNC Financial Services just pointed out, banking is the biggest sector of the American economy -- and it's been to the detriment of everything else.

And while that might seem obvious, intuitive even, Dimon's speech came just three days after Larry Summers told the Financial Times that the global trade imbalance wasn't the problem anymore, that it had been eclipsed by more pressing emergencies, etc. etc.

Naturally Dimon went on to condemn the demonization of Wall Street and corporate America.

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Topics: Bank of America, Barack Obama, Jamie Dimon, Larry Summers