WIRED’s Danger Room reports a $325 million contract to the Carlyle Group’s ARINC for 22 Mi-17s. That WIRED report raised a number of questions about the deal, beginning with its a cost that could be up to 100% more than other Mi-17 orders around the world. The report also questioned the lack of any competitive solicitation, despite the existence of numerous Mi-17 sources and brokers in North America and abroad.Other elements have ARINC purchasing Russian helicopters and funneling them through a United Arab Emirates firm. How many middlemen are needed? How do multiple hands, each with a profit requirement, impact the final purchase price?
The notational amount of derivatives held by insured U.S. commercial banks increased by $25 trillion in the fourth quarter to $200 trillion. The increase resulted from the migration of investment bank derivatives activity into the commercial banking system. Credit derivatives fell 2% to $16 trillion.
“Roads are the single greatest infrastructure element,” said Richard Chang, principle, Infrastructure Fund of Carlyle Group. “The public’s ability to deliver on such infrastructure is constrained, so the key is finding where private capital fits in.”Odd, the public seems fully capable of delivering $13 trillion in financial interventions, including public private partnerships financed 97% with public funding.
Four days after U.S. lawmakers berated Financial Accounting Standards Board Chairman Robert Herz and threatened to take rulemaking out of his hands, FASB proposed an overhaul of fair-value accounting that may improve profits at banks such as Citigroup Inc. by more than 20 percent.
“You do understand the message that we’re sending?” panel chairman Paul Kanjorski, a Pennsylvania Democrat, asked Herz.
“Yes, I absolutely do, sir,” Herz replied.
After hesitating, Herz said he would try to get a new fair- value rule finished within three weeks.“The financial institutions and their trade groups have been lobbying heavily,” Herz said in an interview after the hearing. “Investors don’t lobby heavily.”
In 1950, banks' share of financial intermediation was about 50 percent, it fell and then rose to about 48 percent in the mid-1970s, then declined to about 33 percent at the turn of the century. If one adjusts the data to include "credit equivalents" for the off-balance-sheet activities of banks, then the adjusted market share of financial intermediation for banks would remain above 40 percent in recent years.From a national standpoint, seven percent (1/14) of bank financial intermediation is in credit equivalents and sits off balance sheet. From an institutional perspective (7/40), almost 20% of credit lies off bank balance sheets. Investors have no true idea of the company's exposure. Add the mark to market change and financial statements may not be worth the paper they occupy. Poor quality killed Wall Street, Congress and the White House, and endangers the accounting profession. None of the aforementioned groups has the citizen's back. They have their hands in each other's pocket. (The graphic above is from CitiGroup.)
Hedge funds and buyout firms would also fall under the purview of a new regulator that would identify companies deemed “systemically important,” or capable of wreaking havoc on financial markets. Officials would have the authority to seize these firms if they threatened the markets, much as they do now with insolvent banks.
Geithner proposed requiring hedge funds and private-equity firms to register with the U.S. Securities and Exchange Commission and to disclose information about their holdings.
Once registered, the investment firms, including venture capital companies, would have to report information about their trades and counterparties to the SEC. The agency would share the data with the systemic-risk regulator, which could restrict the funds’ reliance on short-term financing and limit how much money they can borrow to maximize trading profits. The disclosures wouldn’t be made public.
While Rubenstein, who runs Washington-based Carlyle, said more regulation was unavoidable, the U.S. private-equity industry’s main trade group said its members don’t pose a systemic risk.
“Private-equity firms invest in companies, not exotic securities and their investors are long-term investors, eliminating the ‘run-on-the-bank’ type of risk that helped
create the current financial crisis,” Douglas Lowenstein, president of the Washington-based Private Equity Council, said yesterday in a statement.
Already, holders of the lowest-rated CLO tranches are losing their interest income which is being diverted to pay senior noteholders, in what is viewed as a prelude to a wipeout that will ultimately see them lose their money.
Banks, hedge funds, asset managers and insurance companies are the buyers of CLO tranches, with hedge funds and asset managers typically piling in the riskiest tranches and banks in the safer AAA tranches.
Any damage from CLOs would follow on the back of writedowns by banks of more than $700 billion (476.8 billion pounds) from credit-related losses since the credit crunch began.
The number of CLOs in distress is rising as the credit quality of their portfolios continues to decline. Moody's placed 2,600 tranches of U.S. and European CLO obligations totalling $100 billion on review for possible downgrade on March 4.
Bankers expect 25 percent of European CLOs to be in the vulnerable position of having turned junior fees off by April and the number could rise as high as 95 percent by year-end.
Did Treasury Chief Geithner think banks would be willing to sell assets that weren't completely marked down?
Geithner danced around the question, but on further probing signalled that Treasury was willing to pump more money into any bank needing further capital--including if it is a result of liquidating assets via the Treasury plan. I took this to me that Treasury is protecting all major banks currently standing, from failure.
From Geithner's comments, more regulation of the financial sector coming.
You would think the people in the room (Rubenstein, Soros, Rubin, Levitt, Summers, Volcker, Schwarzman, Whitney, Altman, Binder) will have major input on what the regulations will look like. Geithner also mentioned the upcoming G-20 meetings and the fact that any changes in regulation will have to be global in nature. My thought, the One World financial plan is near.
“This ambitious program is structured in a way to attract private capital and help banks sell distressed or toxic assets,” said David Marchick, head of government and regulatory affairs at Washington-based Carlyle Group, a closely held private-equity firm.
Risk-taking institutional investors, like hedge funds and private equity funds, have refused to pay more than about 30 cents on the dollar for many bundles of mortgages, even if most of the borrowers are still current. But banks holding those mortgages, not wanting to book huge losses on their holdings, have often refused to sell for less than 60 cents on the dollar.
Hawaiian Telcom Chairman Walter Dods said in a statement that it is important that the employees be compensated.
The insurer tried to settle its credit default swap contracts at a discount -- both before and after it received its first bailout last September. Goldman refused and ultimately secured everything it was owed by AIG.
Russia is also planning to propose the creation of a new reserve currency, to be issued by international financial institutions, at the April G20 meeting, according to the text of its proposals published on Monday. It has significantly reduced the dollar's share in its own reserves in recent years.
Morris, a longtime Democratic consultant who also worked for Sen. Chuck Schumer, quietly registered as a financial broker just months after Hevesi took office in 2003.
Few people are said to have known of his involvement with Searle & Co., which is located above a Greenwich, Conn.
A Hunt Financial Ventures lawyer said the firm was told before it won $116.7 million in pension business to contact Morris, who instructed it to pay the referral fees to certain companies.
The central bank will increase its purchases of mortgage-backed securities by $750 billion, on top of a previously announced $500 billion. It also will double its purchases of debt in Fannie Mae and Freddie Mac to $200 billion. The Fed also said it will buy $300 billion in long-term Treasury bonds.
George H.W. Bush made millions working for the Carlyle Group, a high-powered Washington, D.C. consulting firm.
The Carlyle Group is one of the world's largest private equity firms, with more than $85.5 billion under management. With 66 funds across four investment disciplines (buyouts, growth capital, real estate and leveraged finance), Carlyle combines global vision with local insight, relying on a top-flight team of 480+ investment professionals operating out of offices in 20 countries to uncover superior opportunities in North America, Europe, Asia, Australia, the Middle East/North Africa and Latin America.
While open to opportunities wherever they can be found, Carlyle focuses on sectors in which it has demonstrated expertise: aerospace & defense, automotive & transportation, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, real estate, technology & business services and telecommunications & media.
Our mission is to be the premier global private equity firm, leveraging the insight of Carlyle's team of investment professionals to generate extraordinary returns across a range of investment choices, while maintaining our good name and the good name of our investors.
“The Europeans want to use this as a forum to discuss global coordination of regulation, and the Americans are more interested in global coordination of firefighting,” said Randal Quarles, a former U.S. Treasury undersecretary and now a managing director at the Carlyle Group in Washington.
Counterparty risk among the world's largest derivative market makers has risen by 75% since the start of the year, with the bulk of the rise coming in the last three weeks.
The perceived risk of failure among the major OTC derivative market makers is in its highest percentile.
Geithner said the Treasury will provide “precise” details of the plan in the next few weeks. “People will see how it’s going to operate and then it will go into place over the following weeks and months.”
The leverage increases the potential rewards while reducing the risk, allowing investors to pay a higher price for the toxic assets.
Bernanke’s reply: “Well, my forecasting record on this recession is about the same as the win-loss record of the Washington Nationals.”
The recession “surprised us in being more severe than anticipated,” he added. So the answer to Rubenstein’s question “depends critically on our ability to get the banking system and the financial system more broadly, not necessarily back to 2005, but back to a situation where…the markets are reasonably stable, and they… can perform their critical function of providing credit to the economy.
“If we can do that,” he said, “then I think that there’s a good chance that the recession will end later this year and that 2010 will be a period of growth.”
Exxon Mobil Corp is in constant dialogue with Baghdad to create the investment climate that would allow it to become a significant player in Iraq's energy sector, Exxon's chief executive said on Monday.
Representatives of U.S. banks, JP Morgan and Citibank and others came to Baghdad on January 28th, participated in an international banking conference that explored correspondent banking relations that would deepen commercial ties between Iraq and the international community, business community. Citibank has already established correspondent relationship services agreement with Iraq’s Warka Bank.
The D.C.-based private equity giant said funds will be injected into healthy, growing companies in such sectors as energy, financial services, health care, industrial, infrastructure, technology and transportation in the Middle East and North Africa (MENA) region.
Sungard was acquired on August 11, 2005 by a consortium of private equity investment funds associated with Bain Capital Partners, The Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co., Providence Equity Partners, Silver Lake Partners and Texas Pacific Group.
The D.C.-based private equity giant said funds will be injected into healthy, growing companies in such sectors as energy, financial services, health care, industrial, infrastructure, technology and transportation in the Middle East and North Africa (MENA) region.The November dinner, in honor of Muammar al-Gadhafi's son, paid off. The Carlyle Group hosted the soiree at the Washington Club. The elder Gadhafi was elected Chairman of the African Union. He favors an economic union on the continent. What timing!
Starting March 17, large investors -- including hedge funds and private-equity firms -- can obtain cheap credit from the Fed and use the money to buy newly issued securities backed by such loans."
The TALF effectively turns the Fed into a generous prime brokerage. The central bank lends money for up to three years to investment firms to buy bonds backed by assets like auto or credit-card loans. The Fed needs to lure investors back into the market for these asset-backed securities, or ABS, where new issuance has almost disappeared."
“Private equity firms will spend 70 percent of their time shoring up their investments, 20 percent of their time shoring up their investor base, 5 percent trying to raise new money and 5 percent trying to do new deals,” says David Rubenstein, co-founder of Carlyle. Keeping the companies they own alive through a brutal slowdown is, as Rubenstein implies, practically a full-time job. Firms are attempting to restructure the debt in those companies, buying the debt of their deals either because it is cheap or to have a seat at the table when the companies hit the wall and control goes to the creditors."
The coalition, known as the Healthcare Reform Dialogue, is led by the president of the American Hospital Association, Richard J. Umbdenstock, and includes representatives of doctors and nurses, patients and consumers, insurers, drug companies and employers of all sizes.
Peter S. Adler, president of the Keystone Center, a nonprofit group facilitating the discussions, said the dialogue started with 20 participating organizations and now had 18.
“S.E.I.U. and Afscme have left the table,” Mr. Adler said Friday in an interview. “They have voluntarily pulled out at this moment. We are trying to keep the lines of communication open.”
SEIU President Andy Stern already weighed in on trends in paying for coverage. He said the following in summer 2006. Note he is the head of a health care workers
union.
Andrew Stern, president of the Services Employees International Union. "We have to recognize that employer-based heath care is ending. It's dying. It will not return," he said Friday at a forum sponsored by the Brookings Institution, a Washington think tank.