Steel Owes Thain a Royalty Payment

Correct me if I am wrong, but I do believe Robert Steel of Wachovia owes a royalty payment to John Thain of Merrill Lynch.

Why? For for this manuevuer:

"Wachovia Corp increased its previously reported second-quarter loss
to $9.11 billion to cover costs to settle a probe of auction-rate
securities sales, and said it will cut more jobs as the housing market

The fourth-largest U.S. bank is now reporting a loss of $4.31 per
share, up from the $8.86 billion, or $4.20 a share, it reported on July
22, according to its quarterly report filed on Monday with the U.S.
Securities and Exchange Commission.

Wachovia also now plans to cut 6,950 jobs, 600 more than it had
disclosed, with the additional cuts coming from mortgage operations,
spokeswoman Christy Phillips-Brown said. The cuts affect about 5.8
percent of Wachovia’s 120,000-person workforce. Wachovia also is also
eliminating 4,400 open positions…

The quarter marks the second in a row when Charlotte, North
Carolina-based Wachovia revised results to increase the size of its
reported loss. Wachovia increased its first-quarter loss to $708
million from an original $393 million because of a write-down tied to
life insurance policies."

Let’s see, July 22 to August 11 is less than 3 weeks . . . 250 million dollar bump . . . Yes, that fits the technical rules for licensing. The 393M to 708M last quarter is clearly

I am quite nearly positive Thain owns the copyright on this, and is entitled to standard ASCAP licensing fees on this bit of post earnings write-down sleight of hand. .

Of course,t here is no reason for the SEC to be investigating this, as over lunch I heard several people discussing why some company’s stock was going down. That is without any shadow of a doubt a far more worthwhile usage of SEC manpower (and the Ken doll that runs the place) than any of this foolishness where investors are losing money due to fraud, malfeasance and theft. 


UPDATE: Aug 13, 2008 5:02am

Add JPM to the list of royalty payees:

J.P. Morgan Chase & Co. is taking another $1.5 billion write-down as a result of the subprime mortgage mess at the bank, but the bank appears to be trying to keep the disclosure off the radar.

The bank disclosed Monday in its quarterly filing with the Securities and Exchange Commission that it’s taken an additional $1.5 billion in losses on the portfolio at its investment banking arm, and there could be more to come.
J.P. Morgan (JPM) had $19.5 billion exposure in Alt-A mortgages, $1.9 billion in subprime mortgage exposure and $11.6 billion in commercial mortgage-backed securities. For these securities, though hedged, "the trading conditions have substantially deteriorated," the bank said.

Throughout the credit crisis, when banks have taken losses, no matter how grudgingly, they’ve made the effort to spell it out to the market through public announcements. That’s why J.P. Morgan’s decision to slip this disclosure on page 10 of a federal filing smells fishy.
Shhh…another write-down at J.P. Morgan


Wachovia boosts loss to $9.11 bln, cuts more jobs
Jonathan Stempel
Reuters Aug 11, 2008 7:02pm EDT

Shhh…another write-down at J.P. Morgan
Dimon & Co. keep noise on latest loss to a minimum
MarketWatch,  10:45 a.m. EDT Aug. 12, 2008

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What's been said:

Discussions found on the web:
  1. Ecklebob commented on Aug 12

    Barry, I totally understand how MER and WB could need to correct their numbers. I often find $1,$5,$10 and $20 bills in pockets of clothes in my closet. I never seem to remember how the cash got there and it throws my weekly accounting system all to Hell. I’m sure it is an innocent error on the parts of these institutions. love your blog. Sincerely, Hank Paulson

  2. ben commented on Aug 12


    You take time out for lunch?

  3. Jeff commented on Aug 12

    Another revision by a financial services company? Stunning, just stunning, I tell you! Are people insane (or am I missing something?) buying these stocks right now? On what premise, other than the fact that they have gotten murdered (and justifiably so) over the past 6-9 months, are people trying to call a “bottom” here?

    These revisions are criminal and yet the SEC couldn’t care less and focuses most of their efforts on scapegoating short sellers. We live in interesting times, that’s for sure.

  4. GaryK commented on Aug 12

    The SEC is worthless and corrupt.

  5. Stuart commented on Aug 12

    The SEC’s constituents have been exposed. They are the financial industry and the Sr. Executives. Joe Public, FU.

    Their double standard short selling prohibition whereby 19 financial firms were protected against short selling, naked or legitimate, yet they were themselves permitted to continue short selling with impunity. That said it all. The SEC only cares about the stability of the market which is code for don’t rock the boat for the major players. What will it take to change this, don’t know, but it’s one helluva good question.

  6. GaryK commented on Aug 12

    Any thoughts on what will happen tomorrow regarding the “No naked short selling of the 19 protected financial companies?” I wanted to load up on SKF today considering that JPM and WB were having their problems, but was too scared that the SEC will come up with some kind of bogus ruling that would crush me.

  7. LALA commented on Aug 12

    Rule has to expire tomorrow unless an act of congress (currently on vacation) makes it law.

    Better question is what is going to happen to oil (and thus financials) when the largest US Navy Armada plus allies (british and france), since the first gulf war, steams into the Persian Gulf at the end of this week? Bush cannot really be planning to create a US/EU naval blockade round Iran (with supporting air and land elements) to prevent the shipment of benzene and certain other refined oil products headed to Iranian ports?

  8. Steve Barry commented on Aug 12

    They apparently can pass the red-face test…all they have to do is say “those were the facts AT THAT TIME.” For example: “I said at 3:59PM that we weren’t going to raise any more capital, but we did at 4:00PM, because our situation changed.”

    Remember…”it’s not a lie if you believe it” – George Costanza

  9. Mike in NOLa commented on Aug 12

    One can hope Cuomo the Younger gets appointed in the new administration. He seems to be filling Elliot’s shoes pretty nicely lately.

  10. larster commented on Aug 12

    Why is this different than the administrations execution of the Iraq occupation? Things used to be done behind closed doors, now they just flip us the bird and we take it. Surely there is someone of repute (R or D) that can stand up and speak out on this. If not , woe is us.

  11. CNBC Sucks commented on Aug 13


    Sir, your forthright, consistent, and aptly communicated sarcasm toward financial services malfeasance is a joy. And kudos to Steve Barry for finding a way to add George Costanza to the mix.

    I submerge again so my best to you all,

    CNBC Sucks (it still does, right?)

  12. MarkTX commented on Aug 13

    Damn, I thought the SEC had a chance of winning the BCS this year.

    But then again, only a few are invited….

  13. David commented on Aug 13

    I think it is very clear. Our economy is facing failure. This is all the fed and the sec can due. Try to keep it going as long as they can. I think the Bear bailout was done because Bear had pleadged investor funds. Or could not ever pay them off. All of the brokerage houses are in the same pot.I think the fed will back all failures. The dollar will tumble.

  14. Dr. Kenneth Noisewater commented on Aug 13

    “One can hope Cuomo the Younger gets appointed in the new administration. He seems to be filling Elliot’s shoes pretty nicely lately.”

    You mean like he did at HUD??

    I’ll pass, thanks.

    (At least it’s better to fill his shoes than his escorts..)

  15. Scott commented on Aug 13

    Speaking of rumors, just fyi, I’ve heard that this was all orchestrated, that all the financials would underreport at their earnings calls, and then revise as they put out their Qs.

    Note JPM in addition to Merrill and WB. Earnings calls nicely timed with the short squeeze and the Fannie-Freddie rescue. I love it when a plan comes together.

    The A team is sho ‘nuff in charge here.

  16. winslow commented on Aug 13

    Obama should be lambasting the current practices of the Fed, SEC, & administration and should followup on what SHOULD be done. This is an opportune moment to try and right the many wrongs. Why don’t I hear specifics?

  17. CNBC Sucks commented on Aug 13

    Well I didn’t kick my The Big Picture comments habit today so I will start tomorrow. Since this thread suffered an early death, let me ask anybody who is still paying attention:
    a) Is Barry still on CNBC?
    b) Is anything going on at CNBC that’s any different from two weeks ago?

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