Cityfile: New York's Most Notable and Influential

The Hamptons real estate market really sucks at the moment, as you may have heard. According to stats guru Jonathan Miller, the number of unsold homes on the East End rose 15 percent during the first quarter while the median price of a house dropped 23.5 percent compared to a year earlier. One brokerage firm reports that sales of Hamptons homes have plunged by 67 percent during the first three months of 2009. But Michael Daly, the founder of North Haven's True North Realty, is keeping it all in perspective:More

Former Lehman chief Dick Fuld may have been willing to hand over his luxe Florida home to his wife for $100, but he's looking for a little bit more from the sale of his Park Avenue apartment. Fuld purchased the 6,200-square-foot co-op at 640 Park in 2006 for $21 million. Now rumor has it he's looking to exit the building and has tapped Kathryn Steinberg of Edward Lee Cave to handle the sale. And he'd like to make a eight-figure profit on the deal, too.More

• Goldman Sachs, JPMorgan Chase, and Morgan Stanley have applied to refund a total of $45 billion of bailout money. The government now has to decide whether to take the cash and run the risk of upsetting less fortunate banks who can't afford to repay their bailout money. [BN, DB]
• Money management giant Blackrock has its hand in just about everything these days, which is why lots of people are asking questions. [NYT, WSJ]
• Eight months after Lehman Brothers went down and lawyers are raising questions about the "rushed sale" of its capital markets unit to Barclays. [DB]
• American Express says it plans to eliminate 4,000 jobs. [NYT] 
• Builders broke ground on the fewest homes on record in April. Housing starts dropped 12.8%, although Wall Street had been predicting an increase. [BN]
• Tim Geithner says he doesn't want to institute pay caps. He just wants to curb aggressive risk-taking. Of course, if you can't take risk, you can't make a lot of money, so we're right back where we started, aren't we? [NYT]

• AIG's Ed Liddy now says the company will need three to five years to carry out its restructuring plan and repay taxpayer bailout money. [NYT]
• Hedge funds actually saw returns rise more than three percent in April. [DB]
• Walter Noel's Fairfield Greenwich hedge fund is no more. The disgraced firm is handing over its remaining $2.5 billion to Sciens Capital. [NYP]
• The rich get richer: As financial firms raise capital and pay back TARP money, it's Goldman, Morgan Stanley and JPMorgan that are profiting. [Fortune]More

• Citigroup posted its first profit in 18 months today, which made Wall Street very happy and sent Citi shares up to a whopping $4. [WSJ, DB]
• GE's first-quarter profit fell less than expected, dropping 35% compared to a year earlier, results that gave shares a boost in early trading. [BN, WSJ]
• AIG chief Ed Liddy still owns a big stake in Goldman Sachs, info that will be most pleasing to Goldman conspiracy theorists out there. [NYT, NYT]
• Is the banking business showing signs of recovery? [NYT]
• Carl Icahn and Kirk Kerkorian are locked in battle over MGM Mirage. [WSJ]
• General Growth Properties's bankruptcy will make hedge funder Bill Ackman a very rich man. And he already happens to be a very rich man. [NYT]
• The president of the Federal Reserve Bank of San Francisco now says it was a mistake to allow Lehman Brothers to collapse. Now you tell us? [BN]

Weil Gotchal is one of three major law firms that has asked new associates to hang out until 2011 before showing up to work. The firms are encouraging recruits to push back their start dates on account of the recession, naturally, but Weil may have a harder time pleading poverty as of this afternoon. The firm just requested the largest quarterly fee in bankruptcy history for its work on the Lehman Brothers meltdown. Weil is asking a judge to turn over $55.1 million for the the work it has done over just the past four months—plus expenses, of course—and insiders say it will probably get every penny of it. And Weil is expected to earn another $200 million in the event General Motors files for bankruptcy protection. It isn't often that we wish we'd gone into bankruptcy law. But it looks like today is one of those days.

• 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]

• Citigroup chief Vikram Pandit says the bank is "having the best quarter since 2007." Good news. Don't pay any attention to the fact regulators are making "contingency plans" in case Citi "takes a sudden turn for the worse." [BN, WSJ]
• Yet another Citi misstep: In addition to $3.5 million in gift cards, the bank gave out $13 million to employees whose vacations were canceled. [BN]
• Andrew Cuomo's assault on Bank of America continues: He's sent a new letter to BofA chief Ken Lewis demanding information on bonus payments—and he even had Barney Frank co-sign it. That will definitely do the trick. [NYP]
• Lehman's buyout division is back in business under new ownership. [FT]
• Boutique investment banking is back, in case you didn't hear. [DB]
• A firm that JP Morgan inherited when it took over Bear Stearns was sold to Barclays for $30 million. Bear paid $625 million for it in 2001. [WSJ]
• The jobless rate may reach 9.4% this year, a new survey suggests. [BN]

Partners & Spade, the latest venture by Andy Spade, opened a new outpost on Great Jones Street last night. The shop, which is only open on weekends and sells objects from $10 to $80,000, doesn't sell any "products," though. Spade prefers to calls the items on display "installations." And what is the most popular "installation," according to Spade? "A collection of Lehman Brothers–branded merchandise ranging from an infant onesie to a golf-ball set, all procured on eBay." This white Lehman-branded baseball cap is priced at $80. Sure, you could buy the same exact cap on eBay directly for one-eighth the price. But it wouldn't have Spade's seal of approval, would it?  [Vanity Fair]

• As part of the rescue plan currently under discussion in Washington, the government would end up with 40 percent of Citigroup, which isn't quite the same as nationalizing it, but is pretty darn close. [NYT] 
• JPMorgan Chase cut its dividend to a nickel yesterday. [AP]
• John Thain spent six hours answering Andrew Cuomo's questions last week. But he'll make a return visit this week now that a judge has ruled Thain has to provide more detail on Merrill's controversial bonus payouts. [Reuters]
• AIG needs more government money. Feel free to laugh or cry about this. [DB]
• UBS may end up going to court as it tries to fight an order to disclose the names of its American clients suspected of offshore tax evasion. [NYT]
• Allen Stanford had ties to Joe Biden's brother and son, apparently. [WSJ]
• A bankrupt Lehman Brothers is spinning off its venture capital arm. [WSJ]
• Home prices in 20 U.S. cities declined an average of 18.5% in December. [BN]
• Federal chairman Ben Bernanke says the recession should end this year and 2010 "will be a year of recovery," if the banking system's stabilized. Reassuring words, provided you still believe anything Bernanke has to say. [WSJ]

• The government is in talks with Citigroup to raise its stake in the beleaguered bank to between 25 and 40 percent. [WSJ, DB]
• Federal regulators plan to review the financial condition of 20 banks this week as part of a round of "stress tests." [NYT, BN]
• Regulators have seized Allen Stanford's companies in Antigua and Barbuda; Stanford has also surrendered his passport to U.S. authorities. [Reuters]
• Shares in UBS have fallen to an all-time low as the bank continues to reel from allegations of tax fraud. [Reuters, DB]
• Even Dubai needs a bailout these days: The UAE said yesterday it will give the once-highflying emirate $10 billion. [WSJ]
• Steve Feinberg's Cerberus is closing down its Hong Kong office. [FT]
• Hedge funder Richard Perry is cutting fees to keep investors happy. [WSJ]
• The SEC is now in hot water over its handling of insider-trading accusations involving former executives at Lehman Brothers. [NYT]

• Bank of America went ahead with the purchase of Merrill Lynch—even after having last-minute doubts—because Washington pushed it to do so. [WSJ]
• Yesterday's testimony by Harry Markopolos before a House subcommittee looking into the Madoff affair was eye-opening, to say the least. [NYT, Reuters]
• One damning accusation by Markopolos: Walter Noel's Fairfield Greenwich Group went on a "three-year auditing shopping spree." [Fortune]
• Another Markopolos revelation: The Wall Street Journal missed numerous chances to break the Madoff story open. [Clusterstock]
• Reaction to Obama's plan to cap Wall Street pay—and opinions as to whether it could even work or not—has been all over the map. [WSJ, BN, NYT] 
• Erin Callan took a leave from Credit Suisse because she's been summoned to testify before a grand jury about the collapse of Lehman Brothers. [NYP]
• The number of new claims for jobless benefits reached its highest level since the 1982 recession last week. [WSJ]

Erin Callan Takes Leave | Erin Callan, the rising Wall Street star who became the chief financial officer of Lehman Brothers only to be ousted a few months before the firm filed for bankruptcy, is leaving the new job she started just five months ago. Callan is taking a "personal leave" from her job as head of Credit Suisse's hedge fund division; Dealbreaker is now suggesting she could have had a nervous breakdown this morning. [Bloomberg]

You missed your chance to swoop in like a vulture and take advantage of some of the poor souls who lost everything to Bernie Madoff's Ponzi scheme. Over the weekend, Palm Beach's Kofski Antiques held a two-day "Madoff Estate" sale and offered up the possessions of two Madoff investors who lost their fortunes as part of the alleged fraud. Included in the mix was a $3,000 mink coat and $3,850 crystal horse head. Then there there was this set of Eureka Grand Baroque Sterling flatware, which went for a mere $350. Don't be too disappointed if you missed out, though. Kofski's owner says he has another Madoff sale in the works, as well as a sale by a "top executive of Lehman Brothers." Excellent! We're totally buying one of Dick Fuld's old squash racquets.

• President Obama is expected to push for tight restrictions on executive compensation in order to improve public perception of the bailout. [WSJ]
• A group of angry Bank of America shareholders will demand that Ken Lewis get the boot at the bank's upcoming annual meeting. [NYP]
• Lehman Brothers is still hiring people to help wind down the firm. And it's receiving a ton of resumes from out-of-work Wall Streeters. [WSJ]
• Weill-gate continues: Now it turns out Sandy Weill used a Citi jet to go on a  Mexican vacation, although he may reimburse Citi for some expenses. [NYP]
• Deutsche Bank plans to cut bonuses by an average of 60 percent. [BN]
• Fortune explains why Merrill had such a disastrous fourth quarter. [Fortune]
• Consumer spending fell in December for a sixth consecutive month. [BN]