Cityfile: New York's Most Notable and Influential

Morgan Stanley Loses Bragging Rights | Yesterday it was reported that Morgan Stanley would be "first in line" to pay back the money it received last fall from the U.S government as part of the good ol' TARP. Morgan Stanley won't be able to claim that honor, sadly. U.S. Bancorp and BB&T were the first banks to repay the government in full today. Morgan and Goldman Sachs are now claiming that they plan to settle the matter by the end of the day. Let's hurry it up, gentlemen. It's not like bureaucrats in Washington work investment banking hours, you know. [NYT/Dealbook]

• The market has been up big the last few weeks. But the ride may be over. "The market has gone too far, too fast," as one fund manager puts it. [BN]
• Following the stress tests last week, a number of banks have been busy de-stressing: Both Morgan Stanley and Wells Fargo raised billions late last week to satisfy new capital requirements mandated by the Fed. [NYT]
• Meanwhile, Bank of America, which needs to raise $34 billion (down from the $50 billion it could have been forced to raise) is looking to offload its stake in China Construction Bank, although finding takers isn't easy. [WSJ]
• Warning: Turning around AIG may take a bit longer than expected. [WSJ] More

• Morgan Stanley reported a larger-than-expected loss for the first quarter this morning. The bank reported it lost $177 million, down from the $1.41 billion profit it collected during the same period in 2008. [WSJ, NYT, BN]
• David Kellermann, the chief financial officer of Freddie Mac, was found dead in his Virginia home, the result of an apparent suicide. [WaPo, BN]
• Things have gone from bad to worse for Steve Rattner: New York City's comptroller is investigating whether Quadrangle "intentionally misled or deceived" city pension funds by failing to disclose finder's fees. [WSJ]More

• Government officials—the people who essentially run Citigroup these days—have had talks about replacing CEO Vikram Pandit. About time! [FT]
• UBS is considering selling all or part of its hedge funds business. [Reuters]
• The Treasury Department's plan to rescue banks by having the government link up with private investors is "inherently vulnerable to fraud," says a government investigator, which is not very reassuring news. [WSJ, NYT]
• All the financial institutions that reported better-than-expected results may have also undermined investors' confidence in the sector. [NYT, DB]  More

• JPMorgan Chase reported a $2.1 billion profit in the first quarter, exceeding estimates. Unlike Goldman, though, Jamie Dimon says the bank hasn't decided whether to return the $25 billion it's received in bailout money. [DB, WSJ, BN]
• General Growth Properties, the second-largest mall operator, filed Chapter 11 today, making it one of the largest real estate failures in history. [AP, WSJ]
• AIG is close to a deal to sell its auto insurance business for $2 billion. [FT]
• Investors remain concerned about the situation at GE and whether the company will be forced to go out and raise additional capital. [WSJ]
• Foreclosure filings jumped 24 percent in the first quarter. [CNN]
• Blackstone boss Steve Schwarzman says he's really worried about the "decline of capitalism." But he's got $25 billion sitting on the sidelines, and he's ready to pounce at any second assuming the world isn't ending. [Fortune]

• Wall Street opened higher this morning after Wells Fargo predicted it would report a record $3 billion profit for the first quarter of 2009. [CNN, AP]
• You may soon be able to bail out America, too: The Obama administration is currently looking at ways to "give ordinary Americans a chance to profit from the bailouts that are being financed by their tax dollars." [NYT]
• Meredith Whitney has become as close to a household name as a banking industry analyst can get. But is she overhyped? [WSJ] More

• The Treasury is expected to announce in the next few days that it will be extending bailout funds to a handful of life insurance companies. [WSJ]
• Brian Moynihan, who took over Merrill Lynch after John Thain was ousted, is emerging as a potential successor to Bank of America chief Ken Lewis. [WSJ]
• Not that Lewis necessarily needs to be replaced, at least according to Meredith Whitney, who (bizarrely) says Lewis has "done a great job." [BN]
• Blackstone, KKR, and Carlyle are in the running to acquire the mobile phone operations that Verizon Wireless is selling now that it's acquired Alltel. [BN]
• Looks like Jim Cramer has a new enemy. Nouriel Roubini is calling the CNBC star "a buffoon," and Cramer has since responded in kind, of course. [NYP] More

• Andrew Cuomo reports that 15 of the top 20 recipients of the $165 million in AIG bonuses have agreed to give back the cash. As for the other five, Cuomo is still "thinking about" releasing their names. Hint, hint. [NYT]
• Tim Geithner will call for the Treasury to be granted the power to seize troubled financial firms when he goes before a Congressional panel today. [DB]
• More trouble for AIG: The IRS is looking into cushy tax deals that were structured by the same unit that collected those millions in bonuses. [WSJ]
• Goldman Sachs plans to give back its bailout money in the next month. [DB]
• More on the programs unveiled by Tim Geithner yesterday, which created plenty of enthusiasm on Wall Street and sent the Dow up 7 percent. [NYT]
• The trustee overseeing the Madoff mess says he found an additional $75 million laying around, so there's some good news for you. [NYT]
• What a difference a year makes: "The best-performing deal of billionaire Henry Kravis's empire is a deep-discount retailer selling $1 dog treats and $2 bleach to lower-income shoppers." [WSJ]

• Tim Geithner has unveiled his latest plan to deal with the financial crisis. This one involves a partnership between the government and private investors, and could eventually involve buying up to $1 trillion in toxic assets from banks, although it isn't generating unanimous support. "It fills me with a sense of despair," says the Times's Paul Krugman. [WSJ, NYT, BN, NYT]
• New documents over the weekend indicate AIG paid out $218 million in bonuses, more than the previously disclosed $165 million. [Reuters]
• Here's another way to look at the AIG mess: If those bonuses hadn't been paid, the U.S. government may have had $1.7 trillion to worry about. [NYP]
• That trip to AIG on Saturday? Lots of reporters, many fewer protesters. [AP]
• Obama reiterated his support for Geithner on 60 Minutes. [Dealbreaker]More

• Yesterday the House approved a 90% tax on bonuses paid to execs at certain firms that received government aid. Now some lawmakers are talking about banning all bonus payments at bailed-out firms. [Reuters]
• It's unclear if the 90% tax will hold up in court. It's also possible it will do more harm than good and ultimately "wreck what's left of our economy." [BI]
• Andrew Cuomo says AIG has provided him with a list of employees who earned bonuses, but he won't release the names until the security situation has been sorted out, which is good news since it's getting a little rough out there what with all the death threats and protests. [AP, NYT, Reuters]
• Just who knew about the AIG bonuses—and when they knew it—is being closely scrutinized, although Treasury Secretary Tim Geithner says he is prepared to accept full responsibility. [NYT, CNN]More

It was Charles Rangel, as chairman of the House Ways and Means Committee, who introduced the legislation today imposing a 90 percent tax on the bonuses paid to execs at bailed-out companies. "These people are getting away with murder," Rangel proclaimed on the House floor earlier today during the debate over the bill. But now the bill has passed and Rangel's work is done and it's time to return home. First-class, baby! Via a tipster who emailed us moments ago: "Charlie Rangel is on the Acela RIGHT NOW in FIRST CLASS. Got up to make sure it was him and it is. I know plenty of congressmen ride first class but it's still annoying." And a tad ironic, too!

• The AIG mess rolls on. Lawmakers are up in arms. Voters are pissed. Tim Geithner is on the defensive. President Obama's agenda has been disrupted. And AIG chief Ed Liddy will get to see some of the emotion first hand when he turns up on Capitol Hill later today to face the music. [NYT, WSJ, BN]
• Billions used to bail out AIG may end up benefiting the hedge funds that made big bets that the housing market was going to crumble. [WSJ]
• As the pressure mounts on Tim Geithner, here's a roundup of all the things he's gotten wrong, just in case you need a little refresher. [BI]
• The State of New Jersey has filed suit against Lehman for fraud. [CNN]
• Citigroup's chief economist is leaving the bank to take a senior position at the Treasury Department. Somehow this is entirely fitting. [DBK]
• The fact that Citi has four new board members may not bode well for Vikram Pandit and his chances of remaining in charge of the bank. [NYP]
• Warren Buffett owns 20% of Moody's, so when he talks about the broken financial system, you won't hear him talk much about rating agencies. [NYT] 
• In the FT, Hank Paulson says it's time to reform the financial system. Thanks for sharing. And thanks for coming to that conclusion just now. [FT]

• The epic fallout from AIG's decision to pay out bonuses enters a second day: Andrew Cuomo says he plans to subpoena company execs, the Obama administration is scrambling to cool emotions, but clearly his influence is limited. Sen. Chuck Grassley of Iowa has suggested that AIG execs follow a "Japanese model" and choose between "apology or suicide." [NYT, ABC, WSJ]
• Given the new restrictions on Wall Street bonuses, banks are now looking for loopholes and planning to boost base salaries to offset lower bonuses. [WSJ]
• Goldman Sachs is bailing out its own employees: It's offering to lend money to more than 1,000 employees who've been squeezed by the crisis. [NYT]
• Mortgage fraud is at an all-time high, but you probably figured that. [CNN]
• Unsurprisingly, banks are raising interest rates and cutting credit lines. [BN]
• Housing starts surged in February from a record low the month before.  [BN]

• Following yesterday's stock market surge, some analysts see a comeback in the making. Believe it when you see it. [CNN]
• Investors pulled $11 billion out of hedge funds in February. [BN]
• Related: hedge funds may slash 20,000 jobs around the world this year. [DB]
• Even the junky little banks that should have never been given a piece of the bailout in the first place now want to give the money back. [NYT]
• Some 45% of the world's wealth has been destroyed over the past year, says Blackstone CEO Steve Schwarzman. [Reuters]
• Tim Geithner appeared on Charlie Rose's show yesterday. [BN]
• Quadrangle Group, the firm formerly headed up by Steve Rattner, has hired three new execs to help manage Michael Bloomberg's money. [DB]
• Good work if you can get it: Hedge find titan John Paulson has made about half a billion bucks since the fall shorting a couple of British banks. [BN]

Merrill's Trips to Orlando Now Under Investigation | Remember those Merrill Lynch junkets to the Ritz-Carlton in Orlando, which the Orlando-Sentinel first revealed last month and which we reported on again last week? Yea, well, it looks like Merrill is now in a bit of trouble. The Office of the Special Inspector General for the Troubled Asset Relief Program has confirmed that it is now looking into whether or the trips violated the law. [Orlando-Sentinel via BI]