June 11th, 2013 by alyx · all ur bankz
Every now and then, we all slip up on the job. Maybe we forget to reply to an email, or don’t commit a file to a repo, or we fall asleep on our keyboard and accidentally transfer $222 million to the wrong account:
An obviously tired German bank employee fell asleep on his keyboard and accidentally transformed a minor transfer into a 222 million euro ($293 million) order, a court heard Monday.
The Hessen labour court heard that the man was supposed to transfer just 62.40 euros from a bank account belonging to a retiree, but instead “fell asleep for an instant, while pushing onto the number 2 key on the keyboard” — making it a huge 222,222,222.22 euro order.
His supervisor got fired for not catching the issue immediately, but appealed, and that’s how this story became breaking news. Of course the court gave him his job back, though it sounds like they should have also issued an edict to serve better coffee in that bank’s back offices…
We bet the board of J.C. Penney thought they were being too cool for school by bringing in a guy from Apple to be their new CEO. Well, as Derek Zoolander once said: “I’ve got a news flash for you, Walter Cronkite. You aren’t.”
Apple-Certified Genius Ron Johnson (former Senior VP of retail – but how hard was it to sell Steve’s iPods, really?) came on board at Penney in November 2011, replacing Myron Ullman, thanks to the efforts of board member Bill Ackman, who wanted to shake things up. Johnson got over $50 million but also effectively contributed just as much of his own personal cash and stock stash when taking the job. He brought along some other Apple-heads like Michael Kramer, who he made COO.
Johnson almost immediately rebranded J.C. Penney (“JCP” in da hizzy!), hired Ellen DeGeneres as spokeswoman, and jettisoned the company’s coupon strategy, which apparently was to shower the world in coupons and offer “sales” 24/7.
“Steve would have called this insanity,” Mr. Johnson said of the sheer volume of promotions. “At some point you, as a brand, just look desperate. JC Penney spent over $1 billion and the customer didn’t even pay attention.”
Well… maybe they did. Because sales at JCP fell 25% last year and the stock, which was trading at 43 in early Feb 2012 has lost over half its value.
How did Johnson screw this up?
- He jumped into the pool head-first without checking to see if there was any water in it. Staged roll-outs? Limited testing? That’s for chumps
- He assumed JCP’s customer base were sick of clipping coupons and would look at actual cost and quality when making their purchasing decisions instead of buying anything because of a Pavlovian response to “75% off” signs.
He assumed wrong. Middlebrows are coupon-clipping legion.
- He abandoned the existing customer base (old people) and tried to replace them with a new, “savvier” base (young people). He signed up hip lines like Joe Fresh and Jonathan Adler without promoting them to their target audience, so of course nobody got the message. (Maybe he forgot to text message them?)
- He didn’t fix the stupid website (which actually redirects to an internal path called “dotcom”), despite cranking out the fourth-highest spending of all Google AdWords customers (per SpyFu). Seriously?
- He never even bothered to move from California, just taking a private jet to Plano a few days a week. “Oh, I’m CEO? Do I really need to come in? Can’t I just work from home?”
So Johnson is out and – what do ya know – Ullman is back (probably nobody else wanted the job). And now he’ll have to try to put the pieces of J.C. Penney back together. This will include settling the court battle with Macy’s over the Martha Stewart fiasco and figuring out how much of Johnson’s changes to keep. With even Forbes making suggestions like “Revitalize Liz Claiborne merchandise,” we’re expecting everything old to be new again, to see if the middlebrows who have trekked off to Kohl’s can be lured back to JCP. A lot of contracts with the newer, hipper shops are already in place so it may not be possible for that new merchandise to be removed from the floor so quickly, but one thing’s for sure – we bet coupons will be back.
Here’s the latest in the Cyprus disaster. There will be a bailout to the tune of €10 billion on a few conditions:
- the island’s second biggest bank – Cyprus Popular (aka Laiki Bank), will be closed. This will result in a savings of €4.2 billion off their bailout package.
- All “good” assets and deposits below €100,000 from Laiki will be transferred to the Bank of Cyprus. Any owners of uninsured accounts over that amount: well, good luck – you’ll need it. (Feel free to translate “Good Luck” to Greek, Turkish, or perhaps Russian).
- If you have a deposit with the Bank of Cyprus over €100,000, get ready to lose up to 40% of it. This means you, Russian oligarchs.
More details at Zero Hedge.
The bank holidays that started in Cyprus last week are still in effect. The Bank of Cyprus is set to reopen this week, however there will be capital controls in effect. (source)
Financial Times reports that the Russians are done with Cyprus:
“The Cypriots killed their country in one day,” says Mr Mikhin, the owner of an international shipping business. “The locals should understand: as soon as the money leaves, the people who go to restaurants, buy cars and buy property leave too. The Cypriots’ means of living will disappear.” Mr Mikhin complains that the Cypriots do not appreciate the extent to which Russia has propped up the local economy. “When the Russians leave who is going to stay at the Four Seasons for $500 a night? Angela Merkel?”
More importantly, how long will they be able to keep controls in place to prevent bank runs? People may be learning a hard lesson now: a bank deposit is not riskless. Banks are not vaults.
Ben Bernanke spoke at the New York Economic Club today and warned about the dangers of the impending fiscal cliff. The text of his speech can be seen here.
- Economy recovering at a slow pace. “Since the recession trough in mid-2009, growth in real GDP has averaged only a little more than 2 percent per year.”
- “inflation has generally remained subdued” (except for, you know, gas, food, medical bills, etc)
- “the pendulum appears to have swung too far” in the housing sector, with lenders being tightwads with their money
- “tight credit and a high degree of risk aversion have restrained economic growth” (ie: credit and capital markets suck)
- the financial situation in Europe sucks
- U.S. fiscal policy sucks
Ah, yes, U.S. fiscal policy. Barnanke goes on to say:
Congress and the Administration will need to protect the economy from the full brunt of the severe fiscal tightening at the beginning of next year that is built into current law–the so-called fiscal cliff. The realization of all of the automatic tax increases and spending cuts that make up the fiscal cliff, absent offsetting changes, would pose a substantial threat to the recovery–indeed, by the reckoning of the Congressional Budget Office and that of many outside observers, a fiscal shock of that size would send the economy toppling back into recession.
Bernanke says that a failure to increase the federal debt limit would impose heavy economic costs, and that “the federal budget is on an unsustainable path.”
Uncertainty about how the fiscal cliff, the raising of the debt limit, and the longer-term budget situation will be addressed appears already to be affecting private spending and investment decisions and may be contributing to an increased sense of caution in financial markets, with adverse effects on the economy. Continuing to push off difficult policy choices will only prolong and intensify these uncertainties. Moreover, while the details of whatever agreement is reached to resolve the fiscal cliff are important, the economic confidence of both market participants and the general public likely will also be influenced by the extent to which our political system proves able to deliver a reasonable solution with a minimum of uncertainty and delay.
Also interesting is that Bernanke maintains that the FED is “doing its part,” but that “monetary policy can help support the economic recovery, it is by no means a panacea for our economic ills.”
In other words, don’t blame the FED! Actually, this speech makes it sound like Benny is getting desperate. I think he is starting to drop hints that he can’t fix the problem. But if he expects congress to solve it, then I think it’s Thelma and Louise time. How long before he’s seen in a bar telling people what he really thinks?
Or maybe he’ll snap and rob a bank, getting away in a double decker bus!
Ah Vikram Pandit. We have followed your act for a few years now. We finally report with sadness the Bandit’s sudden retirement from Citigroup (we had hoped that Buford T. Justice would take over as CEO, like in that crappy third film). Sorry for taking so long to cover the story about Vikram’s departure, but it takes time to go through stages of grief, and we have finally hit the acceptance level.
As you are no doubt aware, Bandit
was forced out by Michael E. O’Neill and the board resigned rather abruptly a month ago and was replaced by Michael Corbat. About his resignation, he said: “I’ve been thinking about this for a long time. It was my decision. I made it talking to Mr. O’Neill, and we did it understanding that the company was ready.” Of course. Why would the board force him out anyway? Because, as ZeroHedge reported, Citi’s stock dropped 90% since he took over in December 2007? Nah, that’s no reason to force out a CEO.
Don’t feel too badly for Vikram Pandit. He made over $200 million during his term there, and in addition, he’ll receive a $6.7 million “bonus” that was owed to him for his “work” in 2012. John Havens, the bank’s COO who quit at the same time as Pandit, will also receive $6.8 million. Citi calls these payments “incentive awards,” and not severance. Hey, who are we to argue? Bandit was actually scheduled to receive more compensation as part of a retention package granted in 2011 (about $24 million) but that has been forfeited. We hope that doesn’t mean he’ll have to give up his $17 million apartment in Central Park West.
Bandit now joins Ken Lewis in CEO Heaven (Hell?). As you can see above, he has earned the coveted “X.” We will miss him.
*Note: rumors that Vikram Pandit was spotted driving cases of Coors east of the Mississippi are unfounded.