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TheStreet Open House

Citigroup Liquidation, UBS Trader Miracle: Quick Links

Stocks in this article: CBACUBSRIMMYHOO

BOSTON ( TheStreet) -- Here's your quick fix of company, market, economic and investing news for Friday, Sept. 16, including a report that President Barack Obama pushed for the liquidation of Citigroup (C) in 2009.

Bank News

¿ Treasury Secretary Timothy Geithner ignored a March 2009 order from Obama to consider dissolving Citigroup (C) while continuing stress tests on banks, according to The Associated Press, which got an early peek at "Confidence Men: Wall Street, Washington, and The Education of A President," a book by Pulitzer Prize-winning author Ron Suskind due out next week.

In the book, Obama does not deny Suskind's account, but does not reveal what he told Geithner when he found out. "Agitated may be too strong a word," Suskind quotes Obama as saying. Obama says later in the book that he was trying to be decisive but "the speed with which the bureaucracy could exercise my decision was slower than I wanted."






¿ There's nothing like the threat of bankruptcy to get people to stop harassing you for cash. Citing sources with knowledge of the bank's strategy, Bloomberg reports that Bank of America (BAC) CEO Brian Moynihan is considering putting the troubled Countrywide mortgage unit into bankruptcy if litigation losses continue to hamper the bank:
The threat of a Countrywide bankruptcy is a "nuclear" option that Chief Executive Officer Brian T. Moynihan could use as leverage against plaintiffs seeking refunds on bad mortgages, said analyst Mike Mayo of Credit Agricole Securities USA. Moynihan has booked at least $30 billion of costs for faulty home loans, most sold by Countrywide during the housing boom, and analysts estimate the total could double in coming years






¿ Most people use Facebook to complain about the weather or post photos of their cats. UBS (UBS) trader Kweku Adoboli, charged with making unauthorized trades that piled up $2 billion in losses, was asking friends if they could spare a dime. From Bloomberg:
As Switzerland's central bank imposed a limit on the franc's appreciation against the euro on Sept. 6, UBS AG trader Kweku Adoboli's Facebook profile had a plea for his friends: "Need a miracle." Just over a week later, at 3:30 a.m. yesterday, police in London arrested the 31-year-old Adoboli on suspicion of fraud by abuse of position.

Meanwhile, trader-turned-blogger Kid Dynamite explains how truly difficult it is for a trader to lose $2 billion, no matter how easy it sounds:

There are conceivable ways we can twist hypothetical client trades into $2B errors, but they don't excuse the fact that there has to be negligence at multiple rungs in the chain of command and risk management.


Company News

¿ With tongue firmly in cheek, Forbes explains why it could be worse for Research In Motion (RIMM) after the Blackberry maker released a terrible second-quarter earnings report after Thursday's closing bell.

RIM is still profitable ... RIM still has cash (and plenty of patents) ... RIM still has a big installed base ... Global warming, earthquakes, and the return of the saber-toothed cat could one day make Silicon Valley uninhabitable.

Yep, it certainly could be worse for RIM. The company could see its profit margins shrink and it could lose market share to a rival competitor ... uh oh.






¿ A Yahoo! (YHOO) divided is worth more than the sum of its parts, according to private equity firm Silver Lake and other buyers that could carve the tech giant up. From The New York Times:
The Asian investments complicate any buyout of Yahoo. The board has yet to decide whether to keep those assets, sell them or spin them off, the individuals said. Many analysts consider those holdings the crown jewels of its portfolio, collectively worth more than the sum of the rest of its operations.


Markets

¿ You know that eurozone debt crisis that everyone has been yammering about for months? Turns out it could be a big deal. In an article with the ominous headline " Central banks do not take this kind of action unless something is up," the U.K.'s Telegraph reports:

Just like three years ago, the central banks are addressing liquidity problems. This time, how to fill a dollar funding gap in Europe's banks. Many are struggling to borrow the dollars they need for the international business transactions generally conducted in the U.S. currency. The reason? U.S. funds are so freaked out at the goings-on in the eurozone that they're refusing to lend to European banks on fears they won't get their money back.






¿ Reuters helpfully lays out what might happen if Greece defaults on its debt, as Greek credit default swaps price in a more than 90% chance of default:
European stock markets saw their biggest monthly fall since the mid-2009 in August, and have shed nearly 6% this month as fears of a Greek default escalated. "History teaches us stocks can get cheaper, but confidence will be blown so much in the process it will take years to recover," said Louise Cooper, markets analyst at BGC Partners.

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