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As predicted, the London operations of MF Global, the group that received bonuses the day before the bankruptcy filing, was apparently involved with the 'misplacement' of customer account money. And some of that customer money was in the hands of JP Morgan.
Bloomberg
KPMG Recovered $500 Million of MF Global U.K. Client Assets
By Kit Chellel
Nov 29, 2011 2:12 PM ET
MF Global (MF)’s U.K. administrators have recovered about half of the estimated $1 billion of customer funds frozen when the brokerage collapsed on Oct. 31.
The final recovery amount will depend on how much can be taken back from the third-party financial firms which held money for MF Global’s U.K. clients, said Richard Heis, a partner at KPMG LLP.
KPMG, which was appointed to supervise the administration of MF Global UK Ltd., said Nov. 27 that it hoped to return some money to the broker’s clients by March.
MF Global Holdings Ltd., the New York-based holding company, sought protection on Oct. 31 in the fifth-largest financial company bankruptcy by assets. There may be more than $1.2 billion missing from MF Global Inc.’s customer accounts in the U.S., according to the court-appointed trustee in the U.S., James Giddens.
About $200 million of the missing customer funds may have been found at JPMorgan Chase in the U.K., the New York Times reported today.
While KPMG wouldn’t confirm the accuracy of the report, it said it didn’t believe the $200 million reportedly found would affect recoveries for U.K. clients.
“Based on the information available, the joint special administrators are not aware of any threat to the segregated money held on behalf of MF Global U.K. clients arising from the matters set out in the New York Times report,” the firm said in an e-mailed statement today.
I will be surprised if they do not try and rally stocks in the face of this to put the brave face on and whistle past the graveyard once again. This is what traders like to do when they have been caught offsides by the news. But they may not be able to sustain it without official help from the strong trading desks of the financial sector.
Forbes
S&P Goes On Downgrade Spree, Hits Most U.S. Banks
By Michael Aneiro
November 29, 2011, 5:04 PM ET
Standard & Poor’s on Tuesday afternoon grabbed its downgrade stick and went on a rampage, whacking just about every major financial institution in sight. Most big U.S. banks got hit, as did many European institutions. The downgrades were part of the rating agency’s application of its revised bank criteria to 37 of the largest rated banks. Here’s a partial list of the carnage:
Bank of America Corp. (BAC) to A- from A
Bank of New York Mellon Corp. (BK) to A+ from AA-
Barclays PLC (BCS) to A from A+
Wells Fargo Bank N.A. (WFC) to AA- from AA
Citibank N.A. (C) to A from A+
Goldman Sachs & Co. (GS) to A from A+
JPMorgan Chase & Co. (JPM) to A from A+
Morgan Stanley (MS) to A- from A
Bloomberg
BofA, Goldman, Citi Credit Ratings Reduced by S&P
By Dakin Campbell and Hugh Son
Nov 29, 2011 5:14 PM ET
Nov. 29 (Bloomberg) --Bank of America Corp. (BAC), Goldman Sachs Group Inc. (GS) and Citigroup Inc. (C) had long-term credit grades reduced to A- from A by Standard & Poor’s after the ratings firm revised criteria for dozens of the largest global lenders.
Standard & Poor’s made the same cut to Morgan Stanley (MS) and Bank of America’s Merrill Lynch unit. JPMorgan Chase & Co. (JPM) was reduced one level to A from A+. S&P upgraded Bank of China Ltd. (3988) and China Construction Bank Corp. (939) to A from A- and maintained the A rating on Industrial and Commercial Bank of China Ltd., giving all three lenders higher grades than most big U.S. banks.
The moves may increase pressure on firms bracing for Europe’s mounting sovereign debt crisis and navigating economic weakness. Bank of America, which has plunged 62 percent this year in New York trading, said in a regulatory filing this month that it may have to post billions of dollars of additional collateral and termination payments on its trades if it were to be downgraded one level by rating companies.
“It’s evident that stress from the European banking system is taking its worldwide toll,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, said in an e-mail.
S&P, a unit of New York-based McGraw-Hill Cos. (MHP), has been changing the way it looks at debt after its faulty grades contributed to the credit-market seizure that brought down Lehman Brothers Holdings Inc. and Bear Stearns Cos. It started to review the methodology in December 2008, months after the collapse of those two firms.
`Adverse Impact'
Downgrades “could likely have a material adverse effect on our liquidity, potential loss of access to credit markets, the related cost of funds, our businesses and on certain trading revenues, particularly in those businesses where counterparty creditworthiness is critical,” Charlotte, North Carolina-based Bank of America said in this month’s filing.
The company, which noted the risk of downgrades from S&P and Fitch Ratings in its third-quarter filing, previously said it has prepared by lining up funding for a year.
The following table shows firms that were downgraded by S&P, followed by a list of banks that were upgraded.
Downgraded:
Banco Bilbao Vizcaya Argentaria S.A.
Bank of America Corp.
Bank of New York Mellon Corp.
Barclays Plc
Citigroup Inc.
Rabobank Nederland
Goldman Sachs Group Inc.
HSBC Holdings Plc
JPMorgan Chase & Co.
Lloyds Banking Group Plc
Morgan Stanley
Royal Bank of Scotland Plc
UBS AG
Wells Fargo & Co.
Upgraded:
Bank of China Ltd.
China Construction Bank Corp.
Intraday commentary on gold, silver and the world currency situation here.
American Airlines declared bankruptcy today.
After the bell S&P downgraded JP Morgan, UBS, Wells Fargo, Citi, Goldman, Bank of America et al.
"Bank of America Corp. (BAC), Goldman Sachs Group Inc. and Citigroup Inc. (C) had long-term credit grades downgraded to A- from A by Standard & Poor’s after the ratings firm revised its criteria for the banking industry.
Standard & Poor’s also made the same cut to Bank of America’s Merrill Lynch unit. S&P listed its ratings for 37 of the largest financial institutions in a statement today.
The move may increase pressure on Bank of America, which has plunged 62 percent this year in New York trading. The second-biggest U.S. lender by assets said in a filing this month that a ratings cut could trigger billions of dollars in collateral payments and crimp access to credit markets.
Downgrades may be costly for banks. Bank of America said in a regulatory filing this month that it may have to post $5.1 billion of additional collateral and termination payments on its trades were it to be downgraded one level by rating companies.
Ratings downgrades “could likely have a material adverse effect on our liquidity, potential loss of access to credit markets, the related cost of funds, our businesses and on certain trading revenues, particularly in those businesses where counterparty creditworthiness is critical,” Bank of America said in the filing.
The company, which noted the risk of downgrades from S&P and Fitch Ratings in its third-quarter filing, previously said it has prepared by lining up funding for a year."
Some of my friends and I noted in our discussions today that the Banks were lagging the SP 500 noticeably, especially on FAZ and some other plays on bank stock declines. Because of the divergences between the SP 500 and the Banks, as well as the weakness in the NDX 100 I shifted my positions to decidedly bearish into the close. Long gold bullion, a little silver, and short stocks.
Bloomberg says the SEC will look into any unusual activity on the bank stocks today in light of these after hour downgrades. Yeah, uh huh, sure. And they will file the information with the silver manipulation report from the CFTC.
When it comes, the financial reckoning will be like a thief in the night. Or like MF Global if you prefer. There will be a bank holiday, and after a few days you will be informed by the bank on how much of your money you have left, and when you can expect to have access to it.
American Airlines declared bankruptcy today.
After the bell the credit ratings of Bank of America and Citigroup were cut from A to A- with a negative outlook.
Additional news includes other banks including Goldman, UBS and JP Morgan.
One of my friends remarked during the day that the banks index was lagging badly, but it was not fully reflected in the SP 500 futures. Perhaps now we see why.
