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Opinion

Abigail Hofman: Tarp and the Whistleblower Hotline

Merckle may have committed suicide because his empire was floundering but if I were a senior manager of a bank that is still in receipt of funds from the Troubled Asset Relief Program (Tarp), I might feel a little suicidal myself. In late September, I read a document enticingly entitled: ‘Practical considerations for implementing a luxury expenditures policy’, produced by Navigant Consulting. I don’t think I have laughed so much since details of the refurbishment of former Merrill CEO John Thain’s office surfaced.

Apparently, all recipients of Tarp funds needed to implement an excessive or luxury expenditures policy that had to be filed with the US Treasury and the company’s primary regulatory body and published on the company website by September 13. Navigant Consulting has prepared a luxury expenditures policy template for embattled Tarp firms that makes delicious reading. According to this document, each firm should establish a Tarp governance committee, whose members should include the CFO and the general counsel. In a nod to John Thain, who remains unemployed – the only senior banker to be vanquished by a commode – the Navigant template has a whole section dedicated to office and facility renovations. Another section is ominously headed “Aviation or other transportation services”. I was shocked to read: “It is... expected that each employee shall report any instances of non-compliance... to the employee’s immediate supervisor and/or to the Whistleblower Hotline.” I am sure some vindictive souls will never be off the phone to the Whistleblower Hotline. What a tempting way to settle office feuds.


And how will jet-loving Bank of America chief executive Ken Lewis, or Citi’s patrician chief, Vikram Pandit, react to this new humiliation? I imagine a future gathering of key US financiers at the Federal Reserve. Two stretch limousines purr to a halt. Goldman CEO Lloyd Blankfein and JPMorgan chief Jamie Dimon emerge surrounded by bodyguards and flunkies. The stretch limos have personalized nameplates: GOD1 for Dimon and 69MN for Lloyd. Then there’s a cacophony of hooting as Lewy and Pandy try to pass through the police cordon in a shared shabby yellow cab with the windows rolled down because there’s no air-conditioning. Can a self-respecting investment banker be expected to put up with such deprivation? Is it any wonder therefore that in late September Tom King, Citi’s 48-year-old head of corporate and investment banking and a 20-year veteran of the firm (he started at Salomon), resigned. It is rumoured that King might resurface at Barclays, which did not take government assistance and so has no outside restrictions on employee expenses. There’ll be more about Citi and its senior management in my next column.


Indeed former Citi employees are everywhere. For example, I recently noticed a triumvirate of Citi refugees camped out at Lloyds Banking Group. Top of the totem pole is G Truett Tate, group executive director for wholesale and international banking. Then there is Andrew Geczy as head of wholesale markets. Geczy, described by one mole as a “legendary lord of structured finance: a smart and secretive American”, used to be head of structured corporate finance at Citi. This September the two Gs were joined by another G, James Garvey. Garvey also has Citi as an alma mater but most recently was a partner at Goldman Sachs and chairman of European debt capital markets. At Lloyds, Garvey will be head of capital markets and advisory. He will report to Geczy. All I can say is I would rather be a rat in a sewer than work in the capital markets area of Lloyds at the moment. The bank is a ward of the UK government and might be forced to sell parts of its retail and corporate operations by the European competition authorities. With such a cloudy horizon, I can’t see the capital markets division receiving sufficient resources to allow it to compete with more-established UK players. I look forward to talking to Garvey about the opportunity he sees at Lloyds. 



Abigail Hofman: Barclays – Misguided or misjudged? Abigail Hofman: Morgan Stanley's succession story

Abigail Hofman: The rise of restructuring

Abigail Hofman: Tarp and the Whistleblower Hotline



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