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Top 10 at 10: Bernie Madoff's secretary tells all; US banks need US$69 bln; A big painful list; Roubini on 'Stress'

Top 10 at 10: Bernie Madoff's secretary tells all; US banks need US$69 bln; A big painful list; Roubini on 'Stress'

1. Oh goody. Bernie Madoff's secretary, Eleanor Squillari, has told all to Vanity Fair in this cracking yarn. There's even a video. Compelling stuff. Here's a taste.

Bernie Madoff was a sexist, egomaniacal, short-tempered control freak"”yet everybody loved him. "Bernie was irresistible to women" and "had a roving eye." Squillari once caught him perusing the escort ads in the back of a magazine, and he frequently visited massage parlors. "Once, I looked in his address book and found, under M, about a dozen phone numbers for his masseuses. "˜If you ever lose your address book and somebody finds it, they're going to think you're a pervert,' I said."
2. It turns out Bernie Madoff treated his hedge fund like a giant piggybank, the New York Times' Dealbook reported.
Madoff listed family members, boat captains, housekeepers and others as employees of Bernard L. Madoff Investment Securities, even though they never actually worked for the firm, newly released documents show. The convicted swindler also used his firm's money to pay for real estate, yachts, private planes and country club memberships, according to court filings by the trustee charged with liquidating the Madoff firm and recovering money for victims of Mr. Madoff's multibillion-dollar Ponzi scheme. The documents back up a previous assertion by lawyers for the trustee, Irving H. Picard, that Mr. Madoff used his business as a personal "piggy bank."
3. The leaks from the US bank stress tests due for official release on Friday are coming thick and fast. Bloomberg is reporting that Citigroup needs to raise US$34 billion, Wells Fargo needs US$15 billion, GMAC needs US$15 billion and Citigroup needs US$5 billion.  Meanwhile is reporting that American Express and JP Morgan don't need extra capital. Here's a nice Reuters piece on how the stress tests work and what the experts think. The banks now have to raise US$69 billion. They're dreaming. Only the US government has that much money to spare right now. It means Citi, BoA and Wells Fargo will become government-controlled. This should have been done properly at least three  months ago. 4. The former CEO of ANZ's Australian operations, Brian Hartzer, has turned up as the new CEO of Royal Bank of Scotland's retail and wealth divisions in Britain, BusinessSpectator reports. Hartzer is being replaced for now by Graham Hodges, who is leaving as CEO of ANZ National and being replaced by Jenny Fagg. 5. It looks like the plans for a second Southern Cross Cable optic fibre connection to the rest of the world have fallen over in a minefield of bureacracy. Here's the scoop on Computerworld. How depressing. This is a disaster for New Zealand's internet economy. 6. Here's an interesting view from Ann Woolner at Bloomberg on the way the US government bullied the Chrysler bond holders into accepting the planned bankruptcy and how it's illegal. 7. Felix Salmon at Reuters points to the extraordinary smoking gun document from inside the SEC that show it was told in specific detail all about the Ponzi scheme that Texan cricketing billionair Sir Allen Stanford was running in...wait for it...2003. Details were given to the Wall St Journal and Washington Post too...
It's all pretty unambiguous stuff, and it was received by the SEC in September 2003 "” more than five years before Alex Dalmady published his own, similar, analysis. What's more, the letter was copied to the Wall Street Journal, the Miami Herald, and the Washington Post; none of them seem to have done anything with it. If Stanford had been shut down in 2003, billions of dollars would have been saved. But no one seemed to care "” certainly not enough to do anything about it. Which is quite disgraceful.
8. Mathew Richardson and Nouriel Roubini point out (rightly I think) that the US government's stress test process is a missed opportunity to impose some discipline on banks. Here's a taste.
Joseph Schumpeter famously argued that the essence of capitalism was creative destruction, by which new economic structures are born from the rubble of older ones. The government stress tests on the 19 largest US banks, the results of which are due be announced on Thursday, could have facilitated this process. The opportunity looks likely to be missed.
9. Here are Richardson and Roubini again in on a similar angle. Worth reding too. 10. Here's an excellent piece from the Centre for Public Integrity in the United States with the list of the top 25 subprime lenders and how they are collecting trillions in bailouts after making billions of dollars in profits. Here's a taste and the list below. Read the article to understand this massive American failure and why none of the managers of these banks can be trusted again. HT The equally excellent Planet Money on US National Public Radio.
The truth is these mega-banks invested trillions, made billions, and took risks with their eyes wide open. Now, because they are deemed "too big to fail," they need trillions in government bailouts and guarantees to solve problems they helped create. But let's look at it another way: perhaps these mega-banks are simply "too politically connected to fail." Their unbridled political contributions and massive lobbying created the lack of regulation and oversight that led to this crisis. Where is the accountability -- of management and boards, of auditors and regulators -- for what has happened? It is time to set aside the myth of the mega-bank as victim

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