Elevating form over substance

McCain%20Feingold.gifThe McCain-Feingold campaign finance bill was not John McCain’s finest hour. John Lott makes a good point about the utter hypocrisy of it all in connection with the Clintons’ recent loan to Hillary’s cash-strapped campaign:

Former President Clinton stands to reap around $20 million — and will sever a politically sensitive partnership tie to Dubai — by ending his high-profile business relationship with the investment firm of billionaire friend Ron Burkle. . . .
Obviously Clinton has gotten a lot of money from other sources, so there is no need to single out Burkle, but Burkle obviously can’t donate $10 or $12 million to Clinton’s campaign. Yet, if he pays Clinton for work that isn’t very obvious, Clinton can then turn around and spend it on a campaign. Does it really matter that Burkle can’t give the money directly to Clinton?

Another Underachieving Enron Task Force Alum Rings the Bell

Fresh off his victory in the Joseph Nacchio trial, former Enron Task Force prosecutor Cliff Stricklin is the latest former Enron Task Force prosecutor to land a cush job at a big firm. Sean Berkowitz and Andrew Weissmann, among other Task Force prosecutors, cashed in earlier.

The puff piece announcing Stricklin’s new job left out a few details of his work with the Enron Task Force. Stricklin was one of the lead prosecutors during the first Enron Broadband trial in which the Task Force was caught eliciting false testimony from one of the Task Force’s main witnesses (Ken Rice) and threatening two defense-friendly witnesses, Beth Stier and Lawrence Ciscon.

During the trial, U.S. District Judge Vanessa Gilmore angrily cut off Stricklin from further cross-examination of one of the defendants and rebuked him in open court when Stricklin violated one of the Judge’s limine orders.

That trial — which appeared to be a tap-in for the Task Force at the outset — ended in a crushing defeat for the Task Force. Stricklin parleyed his work in the Broadband case into a role on the prosecution team in the Lay-Skilling trial, where he proceeded to give a lesson in what not to ask on re-direct. That performance led to his appointment as the lead prosecutor in the Naccio case.

So, as Jeff Skilling fights for freedom from what amounts to a barbaric life sentence and many other lives have been shattered by the work of the Enron Task Force, the folks who cut corners to achieve those results are doing quite well, thank you.

Given the dismal track record and the dubious tactics of the Enron Task Force, it makes one wonder just what these big law firms would have offered up to former Task Force members if they had done a really good job?

The Dear Abby of business

Lucy.jpgLucy Kellaway, Financial Times columnist and associate editor, pens an entertaining blog called Dear Lucy in which she solicits letters from businesspeople about various business problems. Sometimes she comments on them, but all the time she opens them up to reader comments, which range between the insightful, hilarious and bizarre. The following is last week’s letter:

I recently submitted an expense report following a routine trip to Frankfurt. Instead of attaching the total bill, I mistakenly attached a fully itemised printout. Unfortunately, this was returned to me, copied to my boss, with one item ñ ìPrivate Room Entertainment: Adults Only Movieî ñ highlighted as an illegitimate business expense. I ordered the film more out of curiosity than habit and am usually meticulous over my expenses. I work in the finance department and am a loyal and trusted employee. The form was seen by my secretary, though, and I am anxious that it may become a topic of conversation with her lunchtime colleagues. How do I salvage the situation?
Manager, Male, 43

The following was one reader’s advice:

“Go to work tomorrow dressed as a lady. It’s sure to deflect from any comments made.”

Why betting against Pete Maravich in H-O-R-S-E was not a good idea

Warning labels?

Enron%20stock%20price.gifRemember when the various credit-rating agencies contended that their relatively sanguine ratings of Enron’s debt up until the company went belly-up were the result of the company’s misrepresentations? One of the more ludicrous allegations was that the rating agencies didn’t understand the true nature of such relatively common structured finance transactions as derivative pre-pay transactions. Yeah, right.
Fast forward a few years and get a load of this W$J article:

In an acknowledgment that the system it used to rate billions of dollars of mortgage-related securities was potentially flawed, Moody’s Corp. said it is considering a new way of rating those and other sometimes-volatile structured finance vehicles.
The credit-rating firm is considering an overhaul of its rating procedures that could include new labels to help investors distinguish collateralized debt obligations and other structured-finance investments from corporate bonds and Treasury securities. . .
More broadly, the ratings firm is trying to decide whether to add warning labels that essentially acknowledge the limitations of its ratings.

Warning labels on highly-volatile structured finance investment vehicles? Barry Ritholtz has some fun with that one.

Are they finally getting serious?

Continental%20Airlines%20logo%20020708.jpgThe Wall Street Journal ($) reported yesterday afternoon that Houston-based Continental Airlines seemingly perpetual merger negotiations (see also here) with Chicago-based United Airlines are accelerating for a variety of reasons. A Continental-United deal is contingent on Northwest Airlines’ ongoing merger negotiations with Delta Airlines because Northwest currently owns the right to block a Continental merger. However, that right evaporates if Northwest merges with Delta.
Whether all of this is the product of rational thought or irrational exuberance remains is another issue. As noted recently here and many other times on this blog, the airline industry is a mess overall and combining two large airlines does not necessarily provide any meaningful competitive benefit. Continental performed in the middle of the airline industry last year, doing reasonably well financially and operationally, but ranking ninth-worst in terms of frequency of bumping customers from flights. Only Delta was worse at bumping customers among the major carriers.
United, on the other hand, has been a basket case for years. In its first full year of operations after emerging from its long bankruptcy case, United’s earnings were among the worst in the industry last year (only JetBlue’s were worse). Moreover, United struggled with operations, ranking seventh in on-time percentage after a disastrous December that included numerous cancellations and delays. Meanwhile, United’s rate of customer complaints was second-worst, ahead of only US Airways, as Professor Bainbridge would attest.
So, what to make of all this? At this point, it’s hard to say, other than management of both airlines are probably betting that the biggest airlines have the best chance of survival when the inevitable shakeout of the industry finally is allowed to happen (chronic reorganizations of distressed airlines have delayed that process up to now).
Color me as skeptical.

The importance of recruiting classes

football%20player.gifThe institutionalized fanaticism that is college football recruiting reached its annual zenith yesterday as hundreds of the nation’s best high school senior football players signed National Letters of Intent with various big-time college football programs. It never fails to amaze me how much interest the competition between big-time college programs for 17 and 18 year-olds generates among the supporters of those programs.
But as this earlier post noted, there is no doubt that it is important to the success of the programs. For example, over the past decade, the respective programs of the University of Texas and Texas A&M have mostly been going in the opposite direction, UT up and A&M down. This Suzanne Halliburton/Austin-American Statesman article reviews the past ten UT recruiting classes, while Ryan over at TAMABINP does the same here with regard to A&M’s recruiting classes over the same period. As noted earlier here, A&M remains well a decided step below UT in the overall quality of its recruiting classes.
By the way, this website developed by three Stetson School of Business and Economics at Mercer University economists contains information about an econometric football recruiting model that predicts the collegiate choices of high school football players. Check it out.

A nice reward

Pebble%20Beach%20no%207.jpgSo, what’s the reward for inducing Microsoft to overpay for Yahoo!?
Answer: Playing in the AT&T Pebble Beach National Pro-Am (scroll down to the bottom of the list).
Perhaps Bear Stearns’ board should have thought of such a reward? ;^)
By the way, Yang will be able to compare notes during the tournament with Houston’s Jim Crane, who can tell him a thing or two about a takeover battle.
Update: The Epicurean Dealmaker provides this alternately witty and elegant analysis of the Microsoft bid for Yahoo!

The First and Last 100 Days?

uh%20fountain.pngOver at the University of Houston, the university is celebrating the arrival of its impressive new Chancellor and President, Renu Khator. As a part of that celebration, the university has posted this interesting website entitled Building Our Future: The First 100 Days that solicits ideas from the university and Houston communities on the direction of the city’s primary public university. Check it out and participate in an exciting time for UH.
Meanwhile, on the other side of the optimism scale, the desperate state of Texas Southern University continues. Ubu Roi over at blogHouston.net provides this good overview of the daunting challenges facing new TSU President, John Rudley (previous posts on TSU are here). As Roi points out, one of TSU’s better schools — its law school — is at risk of losing its accreditation, and that news comes on the heels of a regional accrediting body recently placing the entire university on probation. Meanwhile, President Rudley is wrestling with the legislative requirements for obtaining $40 million in emergency funding that the institution desperately needs just to keep the lights on.
As noted earlier here, here, and here, TSU is a once-essential institution that is at serious risk of becoming irrelevant. During the era of segregated education in Texas, TSU was arguably Texas’ best university for minority students. The institution educated many of Texas’ finest minority leaders, including Barbara Jordan and Mickey Leland. However, over the past 20 years, TSU has been bypassed by both the University of Houston-Downtown Campus and Houston Community College as the preferred open admissions alternatives for the Houston area’s college students.
At this point, a merger of TSU with one of the other university systems probably makes the most sense, but even that alternative is not easy. Merging UH-Downtown and TSU would serve the purpose of largely consolidating Houston’s open admissions institutions, but the UH system does not have sufficient endowed capital to absorb TSU, a shameful legacy of Texas’ underfunding of UH’s endowment in comparison to the other two major public university systems in Texas, the University of Texas and Texas A&M University systems. Texas A&M already has an open admissions university in its system at Prairie View A&M and UT probably has little interest in increasing its investment in the Houston area given the UT Health Science Center’s huge presence in the Texas Medical Center. So, TSU is not a particularly good fit for those far wealthier systems, either.
Thus, at least for the time being, TSU will continue to muddle along. But don’t be fooled. TSU is on life support and the emergency measures for keeping it alive are are inadequate to provide the long-term vision that the university needs. It’s well past time for state and community leaders to put their parochial interests aside and come up with a long-term plan for TSU that provides the institution with a specific purpose within the framework of college alternatives for Houston area residents. Sadly, dangling $40 million in front of TSU to keep the lights on is not going to accomplish much of anything in defining TSU’s purpose.

Waxing philosophic on bad announcing

buck%20and%20aikman.jpgMy standards for announcers of football games are not high, but it seemed to me that the Fox Sports announcing team of Joe Buck and Troy Aikman in last weekend’s Super Bowl LXII game were unusually bad. For example, neither of them made much of Coach Belichick’s dubious decision of going for it on 4th and 13 on the Giants 32 yard line rather trying a long field goal (49 yards) that is made easier by the pristine conditions in which the game was played. In particular, Aikman — who has that annoying ability to say absolutely nothing of substance while reciting overlapping clichÈs — could not bring himself to stop rhapsodizing about Tom Brady’s “coolness under fire” despite the fact that Brady was missing badly on relatively easy passes while looking antsy in the pocket over the brutal pounding that he was enduring from the Giants’ front seven.
Noting the same mediocrity in announcing quality, Michael BÈrubÈ takes up another key call in the game and provides this imaginary dialogue between Buck and Aikman.
We can only dream. ;^)