Monday, July 6, 2015

Archive: April, 2010

POSTED: Wednesday, April 21, 2010, 1:27 PM

Morgan Stanley today confirmed "a loss of $932 million on the planned disposition of Revel Entertainment Group, LLC," the failed Atlantic City casino a Morgan Stanley subsidiary tried to finance before the economy blew up in 2008. That's equal to six week's profits for the giant Wall Street investment and trading bank.

This and more in Morgan Stanley's profit statement here. Bloomberg tells a bit more about land acquisition and desperate last-ditch financing efforts here.

Joseph N. DiStefano @ 1:27 PM  Permalink | 0 comments
POSTED: Wednesday, April 21, 2010, 12:02 PM

"It's a fact case. It's not a cutting-edge legal theory case," Drexel Law dean Roger J. Dennis tells me, of the Securities and Exchange Commission's civil fraud accusation against Goldman Sachs. The SEC says Goldman failed to warn a group of investors that it was selling them risky home-loan bonds selected by a short-seller who'd make money if the loans weren't paid. Case here, Goldman's denial of wrongdoing here.

Dennis adds: "The SEC is trying to make it a pretty straightforward conventional case, that you ought to accurately disclose conflicts of interest in your material docuemnts" to investors.

The SEC is not saying "anything systematic about the economic meltdown," even though the case does concern, at bottom, bad home loan bonds. "The essence is that Goldman was putting something together and lying about material fact."

Isn't it significant that the government is going after Goldman -- since the government usually goes after only small firms and rogue individuals, preferring to settle with Wall Street's powers? "To prove things beyond a reasonable doubt to a lay jury in a criminal case is a really high burden of proof," Dennis said. "The preponderance of evidence before a judge," in an SEC-style civil proceeding, "is a lot easier to do."

Joseph N. DiStefano @ 12:02 PM  Permalink | 0 comments
POSTED: Wednesday, April 21, 2010, 11:03 AM

Former Main Line money manager and Villanova and Archbishop Carroll ballplayer Barry Bekkedam, who built his Ballamor Capital into a $2 billion-asset private-equity and securities firm with a national client list at its peak, has been named a defendant in an investors' civil lawsuit against confessed Florida fraudster Scott Rothstein. Inquirer story here.   S. Florida Business Journal here.

Bekkedam, who left his Newtown Square family and moved to the Palm Beach area last year, has said his clients lost millions with Rothstein but denied wrongdoing; he said he was trying to help get their money back.

Joseph N. DiStefano @ 11:03 AM  Permalink | 0 comments
POSTED: Wednesday, April 21, 2010, 10:56 AM

US Treasury, Federal Reserve and the Secret Service today rolled out a new $100 bill "with advanced technology to combat counterfeiting."

 New security features: "the 3-D Security Ribbon and the Bell in the Inkwell." That means printed bells, which change in color "from copper to green when the note is tilted," which also makes the bells "appear and disappear within the copper inkwell." 

Took 10 years to figure this out, says US Treasurer Rosie Rios in a statement. Retained from the old $100: the Ben Franklin watermark, and the color-shifting number 100. But Independence Hall has been turned around so you now see "the rear, rather than the front, of the building." Old bills still good.

More for currency nerds at www.newmoney.gov
 


Joseph N. DiStefano @ 10:56 AM  Permalink | 0 comments
POSTED: Wednesday, April 21, 2010, 4:52 PM

Gold leaf, carved wood and marble, and stained glass line the three-story bank office at 123 South Broad Street, famously featured in the 1981 Eddie Murphy-Dan Ackroyd comedy "Trading Places" as a model of old-fashioned financial glamor.

But on the night of March 15, after Philadelphia police officers cordoned off the block so firefighters could stop a smoky, paper-and-plastic-fed electrical fire, it looked more like "Backdraft," the 1991 disaster drama, says landlord Jeffrey R. Seligsohn, whose SSH Management LLC runs the building and a dozen others along South Broad and nearby neighborhoods.

Firefighters broke panels from the stained-glass windows, products of the city's storied Nicola D'Ascenzio studios, to vent black smoke that stained the molded plaster and marble panels, three stories above the floor. "They were coming out of the smoke, completely blackened," Seligsohn said. "They were searching for people. They looked like heroes." No one was badly hurt. Seligsohn credited the quick city police and fire response and city emergency management chief MaryAnn Tierney for a quick decisive response.

Joseph N. DiStefano @ 4:52 PM  Permalink | 0 comments
POSTED: Wednesday, April 21, 2010, 3:40 PM

Pennsylvania Auditor General Jack Wagner says Philadelphia School District finance director Michael Masch has ignored his requests for "detailed information regarding its use of swaps, including all costs, commissions, and other fees incurred from active and terminated swaps."

Wagner, who's running for governor, has been questioning towns' use of interest-rate swaps and other derivative securities sold by JPMorgan Chase & Co., Goldman Sachs, and other Wall Street firms to schools and school districts across the state under a law approved by Gov. Ed Rendell in his first term.

The swaps obliged clients like Philadelphia to trade interest-rate obligations with other investors - for example, fixed-rate interest payments from my bonds, for variable-rate interest off your bonds. The swaps purchased by Philadelphia schools and many other PA towns were supposed to protect them from higher borrowing costs, in case U.S. interest rates rose. But they have lately ended up costing towns millions, as interest rates hang near record lows.

This time, Wagner demanded the information by April 30, he told Masch, or "I will assume that the district is refusing to provide the requested information and we will proceed accordingly."

No immediate response from School District officials. As I wrote last December (here and here), Masch said the district's $1 billion-plus in swaps contracts "have worked as advertised, earning the schools a net '$12 million since 2004,'" and that the district believes swaps also made its debt "cost lots less than fixed-bond rates would have cost."

"Masch based his savings claim on the net $17 million in up-front cash that banks paid the school district when it first bought swaps in fiscal 2004, plus gains in 2006 and '07.

"But the gains reversed as interest rates fell. For the past two years, the city has had to pay the banks an average $8 million a year under terms of the swaps. Not much protection there.

"Still, Masch expects it's cheaper to wait for interest rates to rise, reducing what schools would owe, than follow Wagner's suggestion and pay to 'unwind' the swaps all at once," which would cost over $100 million, by his estimate.

What will Wagner do if the school district won't cooperate? “I’m not sure," he told me. "We have legal options. It’s costly and it’s time-consuming.

"We’re not asking for a lot here. Simply another pair of eyes, looking at swaps. The (Delaware River Port Authority) lost $60 million in swaps. It has another $150 million at risk. We’re finding virtually every public entity has some derivatives at risk with swaps.

"We are doing an audit of the Philadelphia School District. We are of the opinion some of these instruments are not done professionally. We are not placing blame on the local entity. Our concern is more at Wall Street. We know some municipalities can handle this. We hope that’s the case with the Philadelphia School District. But we’re not sure."

Joseph N. DiStefano @ 3:40 PM  Permalink | 0 comments
POSTED: Tuesday, April 20, 2010, 12:31 PM

Bancorp Bank, the Philadelphia- and Wilmington-based multi-niche deposit bank headed by Jefferson Bank founder and investment-dynasty matriarch Betsy Zubrow Cohen, says it's "terminated" plans to buy Chicago-based American Home Mortgage Holdings, Inc. and its American Home Bank unit "due to continuing delays in attempting to consummate this transaction." Reminds us of Metro Bank's cancelled Republic First deal, also scuttled due to regulatory failure to approve.

Instead, Bancorp wrote in its 10-K filed with the Securities and Exchange Commission last month, "we are currently pursuing the establishment of a de novo [that means brand new] Federal Savings Bank to be located in southern New Jersey, contiguous with our Philadelphia/ Wilmington area market.

"The pursuit of establishing that institution replaces the pursuit of the AHB acquisition," and will make "mortgage loans, various deposit accounts and other banking services."
 

Joseph N. DiStefano @ 12:31 PM  Permalink | 0 comments
POSTED: Tuesday, April 20, 2010, 10:31 AM

Berkadia Commercial Mortgage, the former GMAC Commercial Mortgage of Horsham (bought last year by a partnership of Warren Buffett's Berkshire Hathaway and NY insurance turnaround specialist Leucadia Corp.) says it's set up a $16.25 million  refinancing loan, by Long Island-based Bethpage Federal Credit Union, for the Whitman Plaza shopping center at Oregon and Randoloph in South Philadelphia.

Bethpage is charging a fixed 7% loan rate, amortizing over 30 years; fixed-rate for five years, adjustable for five more to 275 basis points (around 2.75%) over the Federal Home Loan Bank index. The previous loan was financed through a commercial mortgage-backed securitization. Berkadia's David Fishler arranged the new deal.

The 25-year-old, 279,000 sq ft shopping center, which includes a Kmart discount store (whose lease came up for renewal during talks), Pathmark grocery, Fashion Bug, Payless Shoes, Radio Shack, Party City, is still owned by a unit of builder Breslin Realty Development.




Joseph N. DiStefano @ 10:31 AM  Permalink | 0 comments
About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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