Wall Street exec pay to go on trial

And, good! A federal judge has rejected a deal between the Securities and Exchange Commission and Bank of America. NY State Attorney General Andrew Cuomo is already lining up state-level charges.

U.S. District Judge Jed Rakoff, in his ruling, found that the settlement "suggests a rather cynical relationship between the parties: the SEC gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger, the bank's management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth."

He also called the deal “not remotely fair.”

"I've never seen this," said James Cox, a Duke University law professor and securities law expert. "To me, it's long overdue," he added. "It's truly a come-to-Jesus moment for Bank of America and its relationship with its various officers," Duke Cox said. "They need to hang up a scalp or two."

Or half a dozen scalps. I love it!

And, I’m glad a judge got, in essence, mad as hell to force this.

Now, let’s see what comment the Obama Administration SEC, or Department of Justice, has tomorrow.

Read BofA CEO Ken Lewis’ lips not his bank wallet

The Bank of America CEO, in denying there’s a bunch of bad banks in a bylined WSJ column, would prefer you do NOT read an actual news story about the financial status of his bank.

McClatchy reports that B of A, along with Citibank, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase, has a current potential loss exposure to derivatives of nearly $600 billion.

Now, that’s potential, not actual.

But that figure jumped nearly 50 percent in 90 days.

AND, worse yet for Mr. Lewis, it DOESN’T include the corpse-like Merrill Lynch “assets” that B of A bought.

Do read that an actual news story, though. It’s an eye-opener.

BofA rebuffed Lehman — for Merrill Lynch

After dropping out of the race to buy Lehman Brothers Sunday afternoon, Bank of America switched to Merrill Lynch , acquiring the financial giant to the tune of $44 billion, or $29 a share.

The price is well above where Merrill was trading recently.

Merrill is a winner, or Merrill shareholders are.

In the long term, BofA shareholders may be, but, with the amount of debt and purchases the company has made recently, I don’t know about the short term.

The takeover comes on the heels of buying Countrywide earlier this year.

And, it’s not the first time BofA has acted swiftly. As the story notes, it bought MBNA (the card company, not the senator and Veep candidate) in 2005 on a week’s notice.

Finally, is it good for the consumer? Or the country as a whole?

Well, BofA is going to give you a vomitorium Yes answer to that, touting mortgages, investment banking, commercial banking and more all under one roof.

I’m not so sure about agglomeration of this size. What if some CEO of the future, in some future subprime mortgage-type bubble, overextended an institution of this size?

Barclay’s and BofA lead to take over Lehman

My, how fast news moves. This Sunday morning story about possible Lehman buyers, listing Barclay’s and Bank of America, was hugely out of date hours later. Neither will pull the trigger before the 9 a.m. Monday opening bell on Wall Street.

That, in turn could send the market plunging, especially depending on what the assessment is of Hurricane Ike damages by that time.

The holdup is that both would-be buyers have said they’d like some sort of federal guarantee, which ain’t gonna happen.

So, as I first blogged Friday, the options are:
• A fire-sale price;
• Bankruptcy;
• And, a new option No. 3, where Lehman’s bad debt gets dumped in a pool and divvied up somehow, to make it a better sale target, similar to Long-Term Capital Management in 1998.

One option on the fire sale would be a sale in pieces. As for the “bad debt” or “bad bank” idea, lots of financial companies that were flush in 1998 aren’t now.

Barclay’s, as of Saturday, was reportedly in the running, but the British bank has pulled out, specifically over Treasury Secretary Henry Paulson’s refusal to grant a guarantee deal like that in the Bear Stearns bailout.

Bank of America was reportedly also a suitor. Make that one a definite was.

You can count out Bank of America now, too. It dropped out for the same reasons as Barclay’s.

That sound you here is Lehman stock already plummeting amongst Asian traders, and about to do so in Europe.

That said, I’ll offer up 1-in-5 odds that, despite all the talk about how the government “doesn’t want this to happen,” etc., Lehman files for bankruptcy before the end of this week, probably before the end of business Wednesday.

Schadenfreude for Goldman Sachs outsourcing

Ahh, so sad for the daytraders, fund managers and other folks at the Goldman Sachs, JPMorgans and Morgan Stanleys of the world, having their six-figure, even high six-figure, jobs outsourced to India.

You know something?

That’s the WTO, biatches.

Many of the nearly 200,000 jobs that major U.S. banks expect to whack by the end of next year aren’t disappearing, they’re just disappearing from U.S. soil. Supposedly, somewhere from 20-40 percent of investment research jobs could be sent offshore.

You know something?

That’s free trade, biatches.

Beyond schadenfreude, it’s nail-biting and back-biting time in Manhattan’s downtown canyon walls, too. The NYT story says nobody from Morgan Stanley, Goldman Sachs, Merrill Lynch or Citigroup would talk to them.

That’s all right. Maybe you’ll hang around before the last NYT job is outsourced to Mumbai.

And, here’s part of why they don’t want to talk — silence is coming straight from the top:

“Some of that is self-serving,” Octavio Marenzi, chief executive of Celent, said of the impulse to keep quiet. “If I admit that research analysts can be off-shored to India, that means that I could too.”

So, Mr. CEO has to decide whether to go to New Delhi or accept a golden parachute buyout.

You know something?

That’s the real world, biatches, except we don’t get golden parachutes out here.

Will Waxman subpoena Bernanke over Bear and BlackRock?

Will Henry Waxman, chairman of the House Oversight and Government Reform Committee, maybe even HAVE TO subpoena Ben Bernanke, The Worst Fed Head Since Greenspan™?

Well, as more and more comes out about the $30 billion line of credit to JPMorgan to buy out Bear Stearns, maybe the answer is yes. Waxman wants to know why the BlackRock financial management firm got a no-bid contract to manage this.

Well, Big Ben will tell you, Henry, that the depth of the emergency meant there wasn’t time to take bids, even if that further reflects on his already less-than-stellar reputation.

Waxman says he wants to know more about BlackRock's role in managing the money, why it received a no-bid contract and whether the company's portfolio has investments in distressed mortgages or anything that may be in conflict with its new role in managing the Fed's money during the housing meltdown.

A bit more info about BlackRock:

1. It’s 49 percent owned by Merrill Lynch. This gives credence to the story that the Street was ready to get out the long knives for Bear Stearns.
2. Despite a public protestation otherwise, one wonders if Waxman isn’t just barking up the right tree on BlackRock problems. In February, admitting it was against normal company policy to comment on rumors, BlackRock said it had no CDO exposure.