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BB&T announced it will acquire BankAtlantic, including $2.1 billion in loans and roughly $3.3 billion in deposits, for an estimated premium of $301 million above BankAtlantic's current net asset value, the Journal reported. BankAtlantic's parent, BankAtlantic Bancorp, needed to raise capital.
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MF's Doom: As feared, MF Global, the brokerage run by Goldman Sachs alum and former New Jersey politico Jon Corzine, filed for bankruptcy protection. A last-minute attempt to sell the firm fell through when it was discovered that hundreds of millions of dollars of customer funds were missing, according to the Times' "DealBook." Yes, hundreds of millions, and that phrase may understate it, since, after an initial estimate of "as much as $950 million," the figure was revised downward to "less than $700 million." (Phew!) Regulators are investigating the matter, which in the best case scenario "might simply reflect sloppy internal controls at MF Global," the "DealBook" story says. Though it usually doesn't add anything to assert a negative, in this case it's important to note that neither Corzine nor his firm has been accused of wrongdoing as we type this. Now, for all you schadenfreude junkies out there, the Journal's "DealJournal" blog has a list of the biggest losers from this debacle (chiefly Corzine, J.C. Flowers, other institutional shareholders). The FT posted the chapter 11 petition filing, which lists the biggest unsecured creditors, ranging from JPMorgan Chase and Deutsche Bank (trustees standing in for bondholders) to a law firm in Tel Aviv. In its accompanying declaration, MF Global revealed that in the last week the SEC and CFTC had "expressed their grave concerns" about its viability. (Now you tell us!) According to another "DealBook" piece, speculating on who's exposed to MF Global has replaced guessing who's exposed to Europe as the parlor game du jour, at least temporarily. A story in the FT says Corzine himself was "bullish to the end." As recently as three weeks ago, he was talking about usurping his former employer Goldman as the top investment bank within a decade. Enough of this yenta talk, let's zoom out to the bigger picture. For "DealBook" editor Andrew Ross Sorkin, a key takeaway is that just because someone once worked at Goldman Sachs doesn't mean he or she is infallible. "Think John Thain. Or Robert Rubin," Sorkin writes. A Reuters story draws a similar lesson: just because a firm has primary dealer status at the New York Fed doesn't mean it's invincible. And "Heard on the Street" in the Journal finds both reassuring and troubling signs in MF Global's collapse. The reassuring part: despite being led by the ultimate Government Sachs insider (or the penultimate one, depending on how you think Corzine stacks up against Hank Paulson), MF was not TBTF; "three years after Lehman Brothers, financial firms can again fail without markets convulsing and government having to rush to the rescue." The scary part, the column says, is that this situation shows European debt exposure can be lethal.
Wall Street Journal
"At least four Fannie Mae employees have been placed on administrative leave as part of an investigation by federal authorities into a transaction involving distressed debt on multifamily property." Hmm … Fannie Mae …Multi Family …there's just something about the initials "M" and "F" this week…
"SunTrust Banks and Regions Financial will stop charging customers for making purchases with debit cards, marking the latest banking-industry retreat from a monthly fee that drew an outraged response from customers."
Columnist Francesco Guerrera previews a forthcoming book by long-time outspoken bank analyst Michael Mayo. The book title kind of says it all: "Exile on Wall Street: One Analyst's Fight to Save the Big Banks From Themselves."
"The price tag to settle the state and federal investigation of bank foreclosure practices has increased by at least $5 billion in recent weeks," to $25 billion, the Journal reports, citing anonymous sources. In return for extra money, the megaservicers could cut their liability for dodgy lending practices during the go-go years, the story says. But any deal still hinges on bringing California attorney general Kamala Harris back into the fold. The last trial balloon that got leaked to the Journal doesn't seem to have done the trick.
Financial Times
"The Securities and Exchange Commission's case against two former State Street executives accused of misleading investors about a $3bn investment fund's exposure to subprime mortgages was thrown out, dealing a blow to US efforts to hold individuals accountable in cases linked to the financial crisis."
New York Times
"In paying the full amounts A.I.G. owed financial companies, the New York Fed disregarded the expectations of senior Fed officials in Washington," the watchdog Government Accountability Office said in a report.
Yesterday's e-mail edition of the Morning Scan contained a broken link to our extended riff on Joe Nocera's Saturday Times column. Here's a link that works (we hope).
After stomaching Nocera's horrific tale about a brazenly offensive Halloween office party at a "foreclosure mill" law firm, we really aren't in the mood to read about Meredith Whitney's annual costume competition. But that's unfair to Whitney. Apparently, the prize is a donation to the charity of the winner's choice. So here's a link to the "DealBook" story. Let us know how it was.
Washington Post
At the Federal Open Market Committee meeting this week, "policymakers are expected to debate how the Fed communicates with the public." Our two cents: don't ask Alan "the Sphinx" Greenspan for advice on this one.
