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2. Ex-Morgan Stanley employee follows his own advice

Bank of America's public relations team obviously wanted to make a nice splash in Dallas, and a time-honored way to do that is to make the CEO available to local media. Brian Moynihan met with reporters and others at the Dallas Morning News and delivered what one would expect about a great Texas city.

"It's a great market. It's growing. The economy has been stronger here on a relative basis than probably almost anywhere else in the country. They've done a great job over the years of diversifying the economy. It's not only benefiting by traditional things like oil and gas but also a lot of other things," Moynihan was quoted.

"It's an incredibly important market for us...It's an important market in terms of business, and it's a big market to continue investing in. And it's also an important market because we employ a lot of people."

The awkwardness of this statement became clear a bit later, when it was revealed that the bank intended to lay off more than 400 Bank of America employees in Dallas and Richardson by the end of September. The issue is that the bank has fewer customers in need of modifications. In disclosing the layoffs to the state, the bank said the reduction is "part of consolidation efforts in its Legacy Asset Servicing unit, which helps customers avoid home foreclosures." The bank also has suggested that some of the laid off workers might find employment elsewhere in the bank. The bank could certainly use some help in places like Florida and New York, where it has been under fire for shoddy modification and foreclosure performance.

All in all, this isn't a huge blunder. But the bank might have been a bit more sensitive to the timing of Moynihan's grand arrival in the city and the news of the layoffs.

For more:
- here's an article about the layoffs

Read more about: Bank of America, Layoffs
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By Jim Kim

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3. Corzine to be hit with civil charges

There is definitely life after investment banking.

We tend to think of former sell-side types moving on to hedge funds or former investment bankers moving on to perhaps work as a CFO somewhere. But it's always interesting when someone moves on to do something truly entrepreneurial. Case in point: Oliver Chang, who quit his job as head of housing strategy at Morgan Stanley "to follow his own advice and invest in distressed homes to rent," according to Bloomberg.

"He's since become one of the largest landlords in Atlanta. Chang, 37, has more than $500 million for his company Sylvan Road Capital LLC to acquire and rehabilitate homes and expand into other cities across the U.S."

He resigned from Morgan Stanley in May 2012 and co-founded Sylvan Road with a group of principals at Delmar Realty Advisors, a homebuilder that already owned some rentals in the city.

You have to admire Chang's willingness to break out of the Wall Street box and try something new. That said, there is no guarantee of success. He faces a lot of competition -- from big firms such as Blackstone to other local operations. Sylvan Road might have found a niche in that it aims for homes that might need more renovations than other institutional buyers are willing to perform.

For more:
- here's the article

By Jim Kim

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4. Interest rates: A new era looms

Not too long ago, it seemed that criminal charges against Jon Corzine, the CEO of the infamous MFGlobal, were likely. But the conventional wisdom quickly morphed, and it soon became evident that criminal charges were never going to be filed. That rankled critics who were all but baying for an executive of a failed financial firm to be held personally accountable. They wanted someone put in jail.

Criminal charges still seem to be out of the question. But DealBook reports that the CFTC, the federal agency that regulates futures brokers, plans to slap Corzine with civil charges soon, perhaps this week.

"In a rare move against a Wall Street executive, the agency has informed Mr. Corzine's lawyers that it aims to file the civil case without offering him the opportunity to settle, setting up a legal battle that could drag on for years," the paper reports.

"Without directly linking Mr. Corzine to the disappearance of more than $1 billion in customer money, the trading commission will probably blame the chief executive for failing to prevent the breach at a lower rung of the firm, the law enforcement officials said. If found liable, he could face millions of dollars in fines and possibly a ban from trading commodities, jeopardizing his future on Wall Street." Corzine told the publication that such charges are meritless.

At the heart of the suit: negligence and failure to supervise at the executive level.

While the charges will be filed before a settlement, there is still a chance that Corzine will strike a deal. It would, however, be very interesting if this case were to make it to trial, as we'd be given an insider glimpse of the firm's broken management in the heat of a crisis.

As of now, it looks like Corzine alone will be charged, though investigations continue into other executives.

For more:
- here's the article

Read more about: Jon Corzine
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By Jim Kim

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One of my pet themes as of late has been the so-called Great Rotation, a movement out of bonds and into stocks, as the era of ever-dwindling interest rates finally ends. Taking the long view, we've been on quite a ride. Some of you may be old enough to remember the Volker era, during which the then fed chairman vowed to reduce rates, which were in the 20 percent neighborhood (of course real rates were much lower). Since then, rates began a long slog downward, to the point that real interest rates on a lot of assets were actually negative. This long-running boom market in bonds re-oriented Wall Street profoundly.

Now, as rates begin what might be a long-term rise, we should expect a similarly profound impact over time.

The entire industry needs to rethink its businesses. There are massive trading and investment banking implications obviously. But wealth managers and institutional money managers stand to be affected as well. They would be wise to see this as a historic opportunity. You rarely get a marketable moment quite like this, a chance to look your clients in the eye and say, "This is going to happen. You need to be ready. And this is what we can do for you."

For some people, a return to higher rates will be a good thing. There was a day when our parents got by on high rates on their savings. Seniors may breathe a little easier someday soon.

For more:
- here's an interesting overview from the New York Times

Read more about: interest rates, bonds
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5. Dell buyout drama heats up

By Jim Kim

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