Liliane is a Footnote to elohim | Bloomberg | 25 Dec 2008
New York University, the largest private university in the U.S. by number of students, became the latest known victim of Bernard Madoff's alleged $50 billion Ponzi scheme when it sued a fund manager over $24 million in losses. J. Ezra Merkin, his Gabriel Capital LP fund and Ariel Fund Ltd. invested NYU's money with Madoff without telling investors or proper due diligence, according to a complaint filed yesterday in New York state court in Manhattan. NYU, which said it had $94 million invested in Ariel, alleged Merkin made all the investment and executive decisions for the fund. ... Merkin, the chairman of GMAC LLC, the finance arm of General Motors Corp. [49% stake] that is 51 percent owned by Cerberus Capital Management LLC [privately-held Chrysler], was also blamed by Yeshiva University for losses. The school alleged it lost about $110 million in investments tied to Madoff, most through Merkin's Ascot Partners LP fund. Merkin resigned as a [Yeshiva] school trustee [?!] and as its investment chairman on Dec. 12. Madoff was also a trustee. Additionally, Tufts University said last week that it lost $20 million, or less than 2 percent of its endowment, from investments through Ascot.
J. Ezra Merkin, his Gabriel Capital LP fund and Ariel Fund Ltd. invested NYU's money with Madoff without telling investors or proper due diligence, according to a complaint filed yesterday in New York state court in Manhattan. NYU, which said it had $94 million invested in Ariel, alleged Merkin made all the investment and executive decisions for the fund. ...
Merkin, the chairman of GMAC LLC, the finance arm of General Motors Corp. [49% stake] that is 51 percent owned by Cerberus Capital Management LLC [privately-held Chrysler], was also blamed by Yeshiva University for losses. The school alleged it lost about $110 million in investments tied to Madoff, most through Merkin's Ascot Partners LP fund.
Merkin resigned as a [Yeshiva] school trustee [?!] and as its investment chairman on Dec. 12. Madoff was also a trustee. Additionally, Tufts University said last week that it lost $20 million, or less than 2 percent of its endowment, from investments through Ascot.
Firstly, there are no coincidences. Merkin screwed a yeshiva, he screwed GMAC.
Secondly, GMAC cascade of losses is attributable to ResCap mortgage biz which turned south Q4 2006, not either supplier obligations or consumer defaults -- which were flat because Murkins and Yurpeens needs they cars.
For the fourth quarter, ResCap posted an operating loss of $651 million, a decrease from earnings of $118 million in the prior-year period. The loss reflects increased reserves related to both higher delinquency and greater loss severity in the nonprime held for investment loan portfolio, more difficult market conditions for mortgages held for sale, and credit losses related to lending relationships with certain third-party nonprime market participants. In addition, rising short-term interest rates and market volatility suppressed the value of the mortgage servicing assets, and the slowdown in new home construction negatively affected financial performance.
Thirdly, GMAC defaulted its bond holders over a year ago. Its campaign to convert debt to equity began Q3 2007 (pdf).
GMAC and ResCap maintained strong liquidity and capital positions in the quarter Cash and certain marketable securities totaled $28.8 billion at the end of 9/39/07 [FYE] -- Of this total, ResCap held $6.5 billion, including $2.2 billion at GMAC BankGMAC injected $1 billion of capital into ResCap in Q3 2007Owners intend to convert $1.1 billion of GMAC preferred equity to common equity as of 11/1/07
By July 2008, the losses were almost too big to shuffle in three-card monte. See? Players kicked the core business to the curb to pocket bubble banking returns.
Finance holding company regulators, i.e. the FRB, with FDIC, extended GMAC resolution deadline three times, the latest being 26 Dec 2008. Anticipating failure to close a swap deal with bondholders, again, this week the FRB extinguishes GMAC Level I assets and "grants" GMAC a bank holding company charter on the back of its sorry depository subsidiary. The business press insinuates the timing of this "emergency" determination is a Bush boon to preserve factory jobs. (Don't get me started on the MOU... or the GM/UAW gag on VEBA terms in the 2007 contract ...)
Hell, no | Dealbook | 19 Dec 2008
GMAC is trying to restructure $38 billion of debt but is short of the 75 percent of approvals needed to become a bank holding company and qualify for funds from the Treasury Department's $700 billion rescue package.
One final note: Geithner runs that operation for Paulson et al out of the FRBNY, and he's not going anywhere come 21 January 2009. Diversity is the key to economic and political evolution.
A Voluntary Employees Beneficiary Association (VEBA) is a tax-exempt trust authorized by Internal Revenue Code Section 501(c)(9). The tax objective of this type of benefit plan are to (1) enable your employer to make tax-free deposits on your behalf to the Plan, (2) to credit [sure as hell ain't the same thing as to collect] employee accounts with tax-free investment earnings, and (3) to enable employees to obtain tax-free reimbursements for medical expenses and insurance premium payments --'nother flava of health savings accounts (HSAs). You know who shovelled that shite ...
The backstory on UAW Ford, Chrysler, and GM is the foundation of a new pyramid scheme. Like Barry's little noted campaign recommendation to establish mandatory 401* contributions. Seriously. ALL your payrolls is mine to play with.
(Santa finished wrapping another xmas ...) Diversity is the key to economic and political evolution.
