Cityfile: New York's Most Notable and Influential

• 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

• 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

So how did that little meeting go today in Washington between the president and the CEOs of the nation's largest banks? "It was very encouraging," said Morgan Stanley's John Mack. "We're all in this together," explained Wells Fargo CEO John Stumpf. "Our interests are very much aligned," said Robert Kelly, the chief of The Bank of New York Mellon Corp. "The president made it clear that he'd like this country to get back on track," offered JPMorgan's Jamie Dimon. "He wants us all to help." Sounds like it was almost a lovefest! Or, you know, not. The CEOs weren't given anything to eat—just "glasses of water." And according to someone who was in the room—and despite all that encouraging talk from the CEOs themselves—"it wasn't a relaxed meeting, though the group was engaged and attentive." Thank you for doing President Obama the favor of paying attention, gentlemen. Your sacrifice has been noted for the record. [BN, DB]

• The unemployment rate jumped to 8.1% last month, the highest it's been since December 1983 and above expectations for an 8% rate. [WSJ, NYT, BN]
• A "trading irregularity" at Merrill may have cost the firm hundreds of millions of dollars. Naturally, no one seemed to notice any of this until after the bank was acquired by BofA and Merrill handed out record bonuses. [BN, DB]
• Wells Fargo has slashed its quarterly dividend to a nickel a share. [WSJ]
• Citigroup may sell its stake in Japan's second-largest online broker. [DB]
• Would you like to invest in the bailout? You may get your chance. [WaPo]
• Did you lose your finance job? How about a job at Cantor Fitzgerald? [DB]

• More details about President Obama's plans to limit Wall Street pay are emerging. So is plenty of criticism. "I don't think the president should paint everyone with the same brush," says JPMorgan's Jamie Dimon. [BN, WSJ, BN]
• Wells Fargo has scrapped plans to host a employee conference in Las Vegas after the bank was pummeled with criticism. [WSJ]
• A dozen top bankers from Merrill-BofA have defected to Deutsche Bank. [TD]
• Lazard's fourth-quarter profits dropped by 50 percent. [DB]
• Daniel Och is doubling down on his hedge fund, Och-Ziff. [WSJ]
• Both Citigroup and the Mets say they're standing by their stadium plan. [NYP]
• Bloomberg LP is laying off staff. [Clusterstock]
• The House will hear testimony about Bernie Madoff today from Harry Markopolos, the investigator who tried to blow the whistle on him. [NYT]

• Wells Fargo reported a $2.55 billion loss for the fourth quarter; it also said recently acquired Wachovia lost $11 billion during the period. [BN, WSJ]
• Steve Schwarzman says it's a "wonderful time" for the industry, despite the fact his net worth has dropped by $7 billion in recent months. [BN]
• Andrew Cuomo has subpoenaed former Merrill chief John Thain. [WSJ]
• Wall Street bonuses dropped 44% in 2008. [BN]
• Bank of America's board of directors is now feeling the heat. [NYT]
• It was Tim Geithner who convinced Citi to scrap plans to buy a new jet. [FT]
• Lunch with T. Boone Pickens: now up for auction on Ebay. [DB]

♦  News of the government's rescue package for Citigroup provided the market with boost yesterday, but Citi CEO Vikram Pandit (who still has his job for the time being) has many long days and nights ahead if he's going to turn the bank around. "This is a reprieve, but it's not a complete pardon." [WSJ]
♦  On CNBC, Prince Alwaleed bin Talal, one of the bank's biggest shareholders, expressed confidence in "Mr. Vikram" while "stroking a strand of beads and wearing red-tinted glasses." Then he blamed the bank's problems on Chuck Prince. [NYP]
♦  Tim Geithner may be the man of the hour, but shouldn't he be shouldering some of the blame for the government's missteps thus far? [NYT]
♦  Banks are concerned they may have a credibility problem on their hands. You think? [Reuters]More

♦  Employers cut 240,000 jobs in October, bringing the year's total job losses to nearly 1.2 million. The unemployment rate is now 6.5%, up from from 6.1% in September. [CNNMoney]
♦  Why has the market been falling sharply in recent days? One reason is that hedge funds have been selling billions of their holdings to meet demands for cash from their investors and their lenders. [WSJ]
♦  Citigroup is reportedly planning another round of layoffs. [DB]
♦  Ken Griffin's Citadel says his fund lost about 22 percent last month. [NYP]
♦  The evidence is largely anecdotal, but it appears there's been an increase in suicides related to the financial crisis. [NYT] More

♦  Bad day ahead? Stocks fell sharply in Europe and Asia overnight and ugly corporate earnings have investors worried. [MW]
♦  Wachovia, which is being acquired by Wells Fargo, reported a third-quarter loss of $23.9 billion. [Bloomberg]
♦  Yahoo says it will lay off 10 percent of its work force. [NYT]
♦  Federal prosecutors looking into the collapse of Lehman have subpoenaed other firms to find out if their analysts were misled by Lehman execs. [WSJ]More

♦  In a extraordinarily bold move, the U.S. will use $250 billion to take equity stakes in major financial institutions like Citigroup, Bank of America, Wells Fargo, Goldman Sachs and JPMorgan Chase as part of an effort to restore confidence in the system, unlock the credit markets and "avoid financial collapse." [WSJ, NYT]
♦  The government's move isn't unprecedented, although not everyone is very happy with the "partial nationalization" approach. [NYT, WaPo]
♦  Global markets continued to rise overnight as investors responded to news of the government's plan.  [Bloomberg]
♦  Notwithstanding the bailout, some hedge fund titans like Steve Cohen, John Paulson, and Israel Englander are staying on the sidelines and keeping their billions in cash. [WSJ]More

♦  The Federal Reserve said on Wednesday that it would provide up to $37.8 billion to AIG. That's on top of the $85 billion lifetime the insurance giant got a few weeks ago. [NYT]
♦  Hank Paulson suggested yesterday the government may invest in banks as part of the next step in trying to resolve the credit crisis. [Bloomberg, NYT]
♦  Talks continue between Wells Fargo and Citigroup, who are both vying for control of Wachovia, although they appear close to a settlement. [WSJ, DB] More

♦  Invoking emergency powers, the Fed will create a special fund to buy up commercial paper—short-term debt that companies typically use for such things as payroll—in an effort to ease up the credit markets. [Bloomberg]
♦  Wachovia and its sparring suitors, Citigroup and Wells Fargo, have agreed to a two-day truce as negotiators try to work out a resolution. [WSJ, DB]
♦  Did you miss Lehman CEO Dick Fuld's testimony before the House yesterday? A recap. [WSJ, FT, NYT]
♦  Bank of America reports that profits plunged 68% in the third quarter. [CNNMoney]More

The Citi Suit | Citigroup's lawsuit against Wachovia and Wells Fargo is now public: Citi is asking for a whopping $60 billion (including $20 billion in compensatory damages and $40 billion in punitive damages) for breach of contract and tortious interference. Of course, the suit may be moot if the Fed brokers a deal between the three banks, as it has been suggesting. But if you're bored today and you're not interested in looking through Sarah Palin's tax returns (or you're interested to see what you get when you hire 80 lawyers to work round the clock for an entire weekend), the lawsuit is after the jump.More

♦ The legal battle between Citigroup and Wells Fargo raged over the weekend as both banks sought the upper hand in their bid for Wachovia. A Fed-led settlement which would divide Wachovia's assets may put an end to the dispute. [NYT, WSJ]
♦ Bank of America has agreed to settle government claims related to Countrywide Financial. The total price tag could exceed $8.6 billion. [WSJ]
♦ Dick Fuld will make his first appearance in weeks when he speaks before a House committee today. [NYP]
♦ Eli Lilly has agreed to acquire ImClone Systems for $6.5 billion. [Reuters]More

♦  Citigroup isn't getting Wachovia after all: Just four days after the banks agreed to a deal, Wachovia has changed course and will now sell the company to Wells Fargo for $15.4 billion. [WSJ, NYT]
♦  The $700 billion bailout bill will reach the House for a vote today. This should be interesting. [NYT]
♦  JPMorgan Chase, which purchased a failed Washington Mutual last week, is already cleaning out the executive suite. [Bloomberg]More