Thursday, April 26, 2007

G100: The Ultimate Insider Group

You just never know who you are going to run into at the Milken Institute Global Conference.
We had a good conversation with Daniel Casse there. Casse is president of G100.

Talk about under the radar, prior to meeting Casse we had never heard of the G100, and except for its web site, a google search of G100 brings up zero information on the group.

But, the group is probably the most powerful, most exclusive, regularly-meeting group in the world. The Council on Foreign Relations, the Trilateral Commission? Forget about it. These groups are too big and unwieldy. The G100 is where you want to be, and if you aren't one of a very select few, this post is about as much as you will ever know about them.

According to Casse and its web site, the G100 is a private group of chairmen and chief executive officers of the world’s most significant companies. Capped at 100, membership is by invitation only. Among all the CEO organizations, the G100 is unique. Established in 2000, the group meets twice a year at the Pratt Mansion in New York City for a Thursday night dinner, followed by a half day of "robust, off-the-record discussion" on Friday. Jack Welch regularly chairs the sessions, which he has called “the best meeting out there for CEOs.”

Casse told us, the press is not allowed at meetings. The assistants and aides of the CEO's are not allowed. It is just the CEO's. No one records anything. "The CEO's can let their hair down," he told us.

Casse said the meetings are fascinating and gave us an example of how Chuck Prince, the Chairman and Chief Executive Officer of Citi (formerly CitiGroup) came in and gave a detailed explanation of how he dealt with Citi's regulatory crisis in Japan when in September 2004, Japan's Financial Services Agency (FSA) , the banking and financial services regulatory body of Japan, announced that it had revoked the licenses of the four Citigroup offices in Japan.

Aside from the CEO's, only "top representatives" of certain advisory firms are allowed to come in and make presentations. They include Accenture, Deloitte, Evercore Partners, McKinsey & Co., Merrill Lynch, PricewaterhouseCoopers, Six Sigma Academy ,Skadden, Arps, Slate, Meagher & Flom, Spencer Stuart, The Parthenon Group and Vedder Price.

Wednesday, April 25, 2007

'Father' of Securitized Mortgage Market: First Time in History Median Home Price is Likely to Decline

Lewis Ranieri, generally regarded as the "father" of the securitized mortgage market, told an audience at the Milken Institute Global Conference that, in 2007, for the first time in history the median home price in the United States is likely to decline.

He also added that there will be many technical problems in working out problem mortgages, He said the vast majority of problem loans are securitized and that, in the past, problem loans were in individual portfolios. This time around, because of securitization, there are many, many holders of the securities with an interest in a mortgage. This will mean there will be many more parties that will have to agree to everything. In addition, he added, there are more lawyers and accountants in the picture to complicate matters.

He used as an example from the past: when he restructured mortgages with homeowners, he would never send out a 1099 tax form. In current situations, he said, lawyers and accountants want him to send out 1099 tax forms to homeowners who have restructured their mortgages. He asked rhetorically, "You have just restructured a mortgage for people who haven't been able to make their former payments and now you want to send them a tax bill for restructuring?"

He further stated there will be a "political reaction" and he feared that bad legislation could create problems for the entire mortgage sector that are now just limited to the sub-prime area. He fears, for example, that any legislation creating a moratorium on foreclosures would have a chilling effect on the issuance of home mortgages throughout the industry.

Carlyle Group Insider Sees Giuliani as Potential "Protector in Chief"

The ultimate insider, David Rubenstein, Managing Director and co-Founder of The Carlyle Group, told the Milken Institute Global Conference that a terrorist attack before the elections would have a dramatic impact on the elections and that it would result in Rudy Giuliani winning the election.

He told the conference that following another attack Giuliani would be viewed by voters as the "Protector in Chief".

At the conference, both Forbes Magazine president Steve Forbes and billionaire oil trader, Boone Pickens, strongly endorsed Giuliani.

Tuesday, April 24, 2007

World Bank to Wolfowitz Lawyer: Save It

A special committee looking into whether World Bank President Paul Wolfowitz breached rules by approving a promotion for his girlfriend has declined to meet with his lawyer.

"I have heard indirectly they will not meet with me..." the lawyer, Robert Bennett, told Reuters.

Sunday, April 22, 2007

42 Former World Bankers Call for Wolfowitz to Resign

Pressure on Paul Wolfowitz to resign continues to escalate. On Monday 42 of the World Bank's senior former executives called on him to step down in an open letter published in the FT. “There is only one way for Mr Wolfowitz to further the mission of the bank: he must resign,” the letter said.

Below is the entire text of the letter:



To the Editor of the Financial Times,

For the good of the World Bank, Paul Wolfowitz should resign

Sir,

We are a group of ex-World Bank Group staff who occupied senior positions in the institution (MDs, Senior VPs, VPs, Directors), and write in our personal capacities. Some of us have worked under Paul Wolfowitz, some of us have not, but all of us are watching with great concern the ongoing events at the Bank because of their impact on development and the interests of the poor. At a time when fighting poverty remains crucial in building a more hopeful, more balanced, and more secure world, the World Bank must remain credible if it is to speak with the moral authority necessary to move the poverty agenda forward.

For the Bank to succeed, it must be effective, especially on matters of good governance which Mr. Wolfowitz rightly emphasized as crucial to poverty reduction. What staff objected to was not the principle -- which they applauded. Rather it was that the policy was implemented with no consultation, and little transparency or apparent consistency. Now, as a result of a process of broad consultation that he was forced to undertake by the Board, Mr. Wolfowitz has been able to forge a consensus on how to raise the bar on corruption in a practical way. It is this that can serve as a lasting legacy at the Bank.

Mr. Wolfowitz says he believes in the mission of the Bank and wishes to continue. We believe that he can no longer be an effective leader. He has lost the trust and respect of Bank staff at all levels, provoked a rift among senior managers, developed tense relations with the Board, damaged his own credibility on good governance –his flagship issue, and alienated some key shareholders at a time when their support is essential for a successful replenishment of the resources needed to help the poorest countries, especially in Africa.

We have taken note of the fact that the ministers who met last weekend in Washington took the unusual step of expressing publicly their great concern about the situation in the Bank. And staff and some of our senior colleagues within the Bank have advised Mr. Wolfowitz that the best course of action for the future of the Bank would be for him to step down. This painful, unprecedented action was not a rash conclusion. We support it and salute the courage of our colleagues. Like them, we believe this is a regrettable but essential step to prevent the Bank’s effectiveness as a development institution, and its credibility as the international community’s trustee of resources for fighting poverty, from being fatally compromised. There is only one way for Mr. Wolfowitz to further the mission of the Bank: he should resign.

Gautam Kaji, former Managing Director

Peter Woicke, former Managing Director and EVP

Shengman Zhang, former Managing Director

Roberto Danino, former senior VP and general counsel

Gary Perlin, former Senior VP and CFO

Jean-Louis Sarbib, former senior VP

Shahid Javed Burki, former VP

Cesare Calari, former VP

David de Ferranti, former VP

Ian Goldin, former VP

Ian Johnson, former VP

Geoffrey Lamb, former VP

Johannes Linn, former VP

Callisto Madavo, former VP

Gobind Nankani, former VP

Christiaan Poortman, former VP

Jean-François Rischard, former VP

Jo Ritzen, former VP

Richard Stern, former VP

John Wilton, former VP

Michael Barth, former Director

Amar Bhattacharya, former Senior Adviser

Gerard Caprio, former Director

Michael Carter, former Director

Dennis de Tray, former Director

Paula Donovan, former Director

Marisa Fernandez-Palacios, former Director

Charles Griffin, former Director

Jean-Philippe Halphen, former Director

Ann Hamilton, former Director

Paul Isenman, former Director

Homi Kharas, former Regional chief economist

Harinder Kohli, former Director

Olivier Lafourcade, former Director

Philippe Liétard, former Director

Serge Michailof, former Direector

Bernard Pasquier, former Director

Manuel Penalver Quesada, former Director

Enrique Rueda-Sabater, former Director

Alexander Shakow, former Director

Karl Voltaire, former Director

Saturday, April 21, 2007

Blumenthal Unloads on Wolfowitz

Sidney Blumenthal has the latest episode in the Riza-Wolfowitz Affair, which results in Blumenthal calling for even more investigations. This time with national security clearance questions:

...Wolfowitz's World Bank scandal over his girlfriend reveals many of the same qualities that created the wreckage he left in his wake in Iraq: grandiosity, cronyism, self-dealing and lying -- followed by an energetic campaign to deflect accountability. As with the war, he has retreated behind his fervent profession of good intentions to excuse himself. The ginning up of the conservative propaganda mill that once disseminated Wolfowitz's disinformation on WMD to defend him as the innocent victim of a political smear only underlines his tried-and-true methods of operation. The hollowness of his defense echoes in the thunderous absurdity of Monday's Wall Street Journal editorial: "Paul Wolfowitz, meet the Duke lacrosse team." ...

The World Bank continued to pay ...[Riza's] salary, which was raised by $60,000 to $193,590 annually, more than the $183,500 paid to Secretary of State Condoleezza Rice, and all of it tax-free. Moreover, Wolfowitz got the State Department to agree that the ratings of her performance would automatically be "outstanding." ..

[At her new job at the ]State Department officials familiar with the details of this matter confirmed to me that Shaha Ali Riza was detailed to the State Department and had unescorted access while working for Elizabeth Cheney. Access to the building requires a national security clearance or permanent escort by a person with such a clearance. But the State Department has no record of having issued a national security clearance to Riza...

...officials stress that the department would never issue a clearance to a non-U.S. citizen as part of a contractual requisition. Issuing a national security clearance to a foreign national under instructions from a Pentagon official would constitute a violation of the executive orders governing clearances, they say.

Given these circumstances, the inspector general of the Defense Department should be ordered to investigate how Shaha Ali Riza was issued a Pentagon security clearance. And the inspector general of the State Department should investigate who ordered Riza's building pass and whether there was a Pentagon credentials transmittal letter.