Monday, November 5, 2007

Enron’s Last Victim

A couple from the WSJ's DealJournal blog, the first having a comment relevant to current goings on:

Once burnt, twice shy. That is how one should look at CIBC’s decision to hawk its U.S. investment-banking operations to Oppenheimer & Co. for a song — a minimum of $50 million.

Canadian Imperial Bank of Commerce has suffered its share of burnt digits on U.S. soil over the years.

Exhibit A: Enron Corp. From 1998 to 2001, CIBC aided and abetted fraud at the rogue energy trader by structuring 34 Enron financings as “asset sales” instead of loans, according to the SEC. The transactions let Enron boost earnings by more than $1 billion and avoid disclosure of more than $2.6 billion in debt, the SEC charged. Oops!

In 2005, CIBC settled civil lawsuits related to its entanglement with Enron for about $3 billion, one of the largest such settlements to date....MORE

And back to Citi:

Citi’s Math Problem
Citigroup just can’t seem to get the number right ts shares, down about 4%, are leading markets lower again today after the financial colossus on Sunday announced write-offs of $8 billion to $11 billion to reflect the declining value of subprime-mortgage-related securities just since Sept. 30. (CNBC says the number could actually be closer to $12 billion.) That is on top of the $2.2 billion of trading losses and mortgage-related write-downs the bank announced Oct. 15. As of Sept. 30, its exposure to highly leveraged financings totaled $57 billion - $19 billion in funded commitments and $38 billion in unfunded commitments.

It all is reminiscent of the episode of “Taxi” when the apartment of cab master Louie DePalma (played by Danny DeVito) is burnt down by the Rev. Jim Ignatowski...MORE