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Countrywide followups: There will be lots of hand-wringing on this one, much of it centered on the wisdom of Bank of America inheriting the mortgage mess at Calabasas-based Countrywide. Also, CEO Angelo Mozilo's exit package should get plenty of play – and what about Herb Greenberg’s post on MarketWatch that the Fed was behind the deal because the rumors of a near-bankruptcy were probably true? Obviously it's not doing much to relieve the anxiety on Wall Street, with the Dow down more than 200 points. See below posts. Also, I was a guest this morning on KPCC's "Airtalk" with Larry Mantle.
Recession odds increase: Economists surveyed by the WSJ now put the chances at 42 percent, compared with 23 percent just six months ago. Setting off the alarms was last month's jump in the nation's unemployment rate (that tends to foreshadow recessions). The economists also expect the Fed to cut interest rates by at least another half percentage point over the first half of the year. By the way, the market is way down this morning, probably the result of big mortgage-related losses at Merrill Lynch and write-offs for American Express.
Gas prices keep going up: The Auto Club's weekly survey finds that the average price of self-serve regular gasoline in the Los Angeles-Long Beach area is $3.333, which is 3 cents higher than last week, 3 cents more than last month, and 71 cents above last year.
Bad news is good news: O'Melveny & Myers has been cleaning up on the bankruptcy of OC-based subprime lender New Century Financial. Overall, the firm has billed more than $12.5 million over a six-month period, according to bankruptcy filings. That doesn't appear to include the $3.1 million in billings to deal with subpoenas from the SEC and DOJ. Just for the month of September, the firm billed more than 4,000 hours, with former U.S. Attorney Alejandro Mayorkas working 145 hours. At $705 an hour (half for travel time), that's nearly $100,000 in fees for Mayorkas alone. From The Recorder:
Given the highly complex issues and intensive labor involved with a company in New Century's situation, O'Melveny's rates seem reasonable, said Randall Burrows, a former McKenna & Cuneo partner who is now a managing director at Navigant Consulting Inc. "When you hear tales of New York partners charging over a thousand bucks an hour, they look like normal billing rates to me," said Burrows, an expert on litigation management. "It kind of makes me want to go back to practicing law," he added with a laugh.
Union fissures?: That's what Michael Cieply at the NYT raises this morning, citing the comments of writer John Ridley, who has declared "financial core" (that allows a union member to pay dues and work for employers under its contract). Also, there are a number of soap opera writers who took a similar step (as reported last week by the LAT).
Such actions have been rare, and they mark the extreme edge of discontent within the guild, which has — like the major companies they oppose — so far retained a united front as it seeks more compensation for new media, among other issues. Yet they point toward a growing unease among some guild members that the hardball tactics are backfiring, damaging the public image of the guilds and the well-being of many writers, without making a dent in the biggest companies that oppose them.
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.