Tag Archives: Merrill Lynch

Bank of America Sets Up War Room, Hires Army of Lawyers

Wikileaks, and its founder Julian Assange, has certainly stirred up some murky waters releasing confidential documents and emails on government activities. Recently Assange stated that he has a large batch of confidential documents that could lead to problems for a major bank, and in at least one interview he has identified that bank to be Bank of America. And the bank are taking the possible threat serious – deadly serious! So does the US Securities and Exchange Commission.

“The nation’s largest bank has set up a war room and assembled a S.W.A.T.  team of lawyers.”

FOX Business Network


According to FOX Business, the largest US bank has set up a war room and assembled a S.W.A.T.  team of lawyers and company officials to deal with the matter if anything should arise. And now the US Securities and Exchange Commission (SEC) is focusing in on the case too.

The Securities and Exchange Commission is keeping a close eye on Bank of America’s (BAC) Wikileaks dilemma to determine whether anything that the info-leaking website might release should have already been turned over to regulators who have conducted numerous investigations into the bank’s activities, FOX Business Network has learned.

The same goes for WikiLeaks.

It is, in fact, illegal to withhold information about criminal activities.

See also: Wikileaks Obstruction of Justice?

If and when the document dump occurs, the SEC – Wall Street’s top cop –  will be examining the material to determine if Bank of America has failed to include the emails and other documents in demands for information the commission has made as part of its many investigations into BofA activities.

Bank of America has been the subject of several high-profile probes by the commission, including issues surrounding its Countrywide Financial subsidiary, and its ill-fated purchase of Merrill Lynch during the dark days of the financial crisis in 2008.

Countrywide, which was the largest issuer of so-called subprime mortgages, has been accused of issuing mortgages to people with little if any documentation of work history or  means to repay the loans.

Neither SEC’s spokesman or BofA’s spokesman had no immediate comment, FOX reports.

If Bank of America purposely failed to turn over documents involving an investigation, the bank could face possible criminal charges of obstructing justice.

But so far, BofA has said that despite all the talk about it being a target, it has no evidence that Assange’s organization has documents involving the bank.

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MORE:

Bank of America vs. WikiLeaks, the inside story
WikiLeaks should motivate information security managers
Bove: WikiLeaks bluffing about Bank of America
The Most Sued Companies in America

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Filed under International Econnomic Politics, National Economic Politics, Technology

At The End of Another Decade

New Years Eve 2010 (around midnight): It’s not only another year, it’s also the beginning of a new decade. Looking back at the past 10 years, the stage is set for a mind-blowing decade of technological breakthroughs that have the potential to change or lives completely. unfortunately, we’re probably also in for a long period of financial instability and high levels of unemployment.

“It is possible that we are facing one of the most important decades in a very long time.”

econotwist


I remember New Years eve of 2000; dot-com-mania, emerging markets,Y2K. However, I also remember 1990; deregulation, digital revolution and another collapse in our financial system. I think I’ve detected two major screw-ups over the last two decades.

I covered the stock market crash in 1987, as one of my first assignments as a financial reporter.

By 1989 economists and politicians had declared the troubles were over, the major  global economies was back on track, producing new jobs.

In my mind, the most memorable from headlines from 1991 was delivered by the Swedish newspaperDagens Industri.”

Like the page 2 editorial:

“Dear God, please cool down our economy.”

And the – now historical – headline from the day the Swedish bank central bank kicked up its key interest rate to 500%:

“Good Night, Sweden”

This was about six months before the crisis hit the Scandinavian banks like a Norwegian heat-seaking Penguin missile, and forced the governments in both Sweden, Denmark and Norway to take public control over the private banks.

They were downsized, sliced up, sold out and merged, and the result was five, six   major banks who orderly divided the Nordic home markets between them, and have so far managed to keep any serious competition out of the region.

All three governments still holds significant ownership in the Nordic banking sector.

The Scandinavian banking crisis was recently held up as an example on how to handle a crisis in the financial industry.

Well, we now have five or six banks in three small countries that have become so “systemically important” that they are “too big to fail,” and will have to be bailed out of “no matter what.”

On a global scale; the creation of financial companies that are of “systemically importance” so they cannot be allowed to default must be (at least one of the) “Biggest Screw-up of the Decade – 1990/2000.”

As for the decade now ending, not keeping up with the developments in the financial industry, allowing it to become an invisible, almost uncontrollable, monster, and not putting a stop to it, is a really heavy regulatory blunder.

In the aftermath of 2001, several financial companies and their executives were accused or convicted of fraud for misusing shareholders’ money, and the U.S. Securities and Exchange Commission fined top investment firms like Citigroup and Merrill Lynch millions of dollars for misleading investors.

Thinking back, it seems like we’ve been moving around in a circle.

Systemically we’re right back where we was in 1992, financially we’re in even deeper trouble.

The new international regulations, as they emerge in the final reports from the Basel Committee (Basel III), doesn’t provide anything that will make any significant and systemically changes.

So, my guess is that we’ll have to struggle with a dysfunctional financial market, debt and “systemically important”banks for still a long time – perhaps another decade.

Sadly, this means that the much debated economic recovery, in form of a helluva lot of new jobs, probably not is going to happen anytime soon.

I’m afraid it could take about another decade to get where we would like to be last year, in terms of labor market conditions.

But I’m also sure the next decade will bring a boom in one particular sector:

On this new years eve, we have more people using Facebook than Google, 60.000 new pieces of malware released on the internet every 24 hours and the banks are setting up high frequency information systems, with super fast connections from major central banks, financial authorities and government offices directly into their high frequency trading machines.

It’s all set for another golden age for computer engineers.

As far as the financial industry goes, it reflects the new market conditions imposed by law makers worldwide.

It’s not that amusing to engineer new financial derivatives, so the focus have shifted to the technical side.

The danger is that the financial markets grows even more complex and unpredictable, tied together in an unofficial, unregulated intranet of dark fiber cables.

And this goes beyond the markets and the economy.

Judging by the rapid pace of development over the last 10 years, the next 10 is definitively not gonna be slower.

With the so-called quantum computers just three to five years away, the computer technology, and our whole way of life, is destined for another evolutionary quantum leap, practically.

It is possible that we are facing one of the most important decades in a very long time.

I wish you all the very best.

Happy New Year!

PS:

I’d like to add a special greeting to all new readers/follower in 2010. Thanks for all your encouraging comments.

This summer the econotwis’t blogs (Swapper and Econotwist’s) blasted above  20.000 unique readers per month.

Many of you follow my Twitter, and I’m specially honored to welcome among my followers; the State of Israel, US Homeland Security and the EU Council.

Now that I got your attention; will you please tell the State of Kuwait to stop trying to hack into my computer!?

.

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HCA To Sell $1,5bn of Junk Bonds To Pay Shareholders Dividend

Hospital operator HCA Inc. says Tuesday it plans to sell $1.525 billion of junk bonds and put proceeds toward a $2 billion dividend payment to its private-equity owners. The offering of senior unsecured notes due 2021 is being handled by joint bookrunners Citigroup, Bank of America Merrill Lynch, J.P. Morgan Chase & Co, Barclays PLC, Credit Suisse Group, Deutsche Bank AG, Goldman Sachs Group, Morgan Stanley and Wells Fargo & Co.

“They’ve wiped out all the debt repayment that they’ve accomplished in two years and they’ve wiped out their cash flow.”

Vicki Bryan

Who? Me?

Price guidance is in the area of 7.75%, according to a person familiar with the deal, and books close at end of business Tuesday, with pricing expected Wednesday morning, Dow Jones Newswire reports.

Hospital Corporation of America (HCA) says its third-quarter profit rose 24% to $243 million from $196 million a year earlier, while revenue increased 1.5% to $7.6 billion as its bad-debt provisions fell 21%.

Moody’s Investors Service assigned a Caa1 rating to the bonds, deep in speculative-grade, or junk, territory, but confirmed its existing corporate ratings for HCA at B2 and revised its ratings outlook to positive. Moody’s says that HCA is adding incremental debt but has been able to offset industry pressures, such as increasing bad-debt expense and weak volumes, and realize solid earnings growth.

But Vicki Bryan, analyst at bond research firm Gimme Credit, says the improvements in uncompensated care and bad-debt provisions are due to changes in HCA’s accounting methodology–changes that the company will no longer benefit from next year.

Bryan also noted that it was the third dividend HCA will pay to its owners this year, following a $1.75 billion dividend in February and a $500 million dividend in May.

“They’ve taken $4.25 billion in dividends in a year at the expense of bondholders,” Bryan says.

“They’ve wiped out all the debt repayment that they’ve accomplished in two years and they’ve wiped out their cash flow.”

An HCA spokesman didn’t immediately return a phone call seeking comment.

HCA was taken private in 2006 in a $31 billion leveraged buyout by a private-equity consortium led by Bain Capital, Kohlberg Kravis & Roberts, Merrill Lynch, and Thomas Frist Jr., HCA’s co-founder.

The new notes will be sold through a newly minted parent company, HCA Holdings Inc. That company had been created recently as a subsidiary but will be converted into a parent company as part of a proposed corporate reorganization.

Moody’s credit analysts described the bond offering as covenant-lite, meaning it lacks certain customary bondholders protections that prevent the company from making restricted payments or incurring additional debt.

Since its LBO, HCA has taken periodic steps to refinance portions of its resulting debt burden, including selling $1.4 billion of bonds in March to pay down bank debt while pushing out the maturity on another $2 billion of bank debt to 2017 from 2013. The notes it sold then, which were secured bonds, also came with a 10.5-year maturity and yielded 7.375%.

HCA filed IPO plans earlier this year, projecting the sale of up to an estimated $4.6 billion of stock.

The large offering from HCA was one of several junk bond deals expected Tuesday, but secondary market prices didn’t weaken in the face of a deluge of supply, Dow Jones Newswire writes.

“In high yield, when you see a $1.5 billion new dividend deal, you think you’d see some pushback,” says Scott Grzankowski, analyst at KDP Investment Advisors. “But even though equities are down, overall the high yield market is firm.”

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