Whoopsie - Sandy and Wall Street
Looks like some Banksters might need to check their couches for loose change.
From the New York Post
Billions in bearer bonds could be lost due to Hurricane Sandy
It’s the biggest mystery on Wall Street.
Hurricane Sandy floodwaters inundated a 10,000-square-foot underground vault downtown, soaking 1.3 million bond and stock certificates — including bearer bonds that function like cash — and putting them in danger of turning to mush.
A contractor working for the vault owner, the Depository Trust and Clearing Corp., is feverishly working to restore the paper.
But the value of the threatened notes under 55 Water St. remains unknown to all but the innermost circle of Wall Street bankers.
Some back-pedaling was involved:
Most of its member firms, including Deutsche Bank, JP Morgan Chase, Bank of America, UBS and Citi did not return calls.
The exception was Goldman Sachs, whose spokesman Michael DuVally confirmed Friday to The Post that his firm stored bearer bonds in the DTCC vaults. He acknowledged they would be nearly impossible to redeem if destroyed.
Yesterday morning, DuVally elaborated, and said the value of the Goldman bonds was “less than $1 million.” An hour later, he called back to say, “The market value of bearer bonds potentially impacted is less than $10,000.”
And this afternoon it was only $2.00 - some more:
Belfor, a Texas-based recovery firm rumored to have won the job, had a trailer parked outside 55 Water St. yesterday. When asked about a contract with Goldman to recover $70 billion in bearer bonds, Belfor spokeswoman Alex Gort said, “We have very strict confidentiality.”
Belfor workers at the site yesterday described a “complete restoration job” under “very high security,” but claimed to know nothing about the bonds.
“There are three vaults,” a hardhat said outside the building. “I wasn’t in the vault where the bonds are. Security is very tight down there. I know they were all under water. Billions of dollars’ worth, soaked. I know they are trying to pack them up.”
Bearer bonds are paper certificates, usually issued by governments, that are redeemable after a prescribed term. The bearer submits an attached coupon to receive payment. Because they are typically unregistered and can be used like cash, they were commonly used by those wishing to hide, and not pay taxes on, assets. They were banned in 1982.
But those that haven’t been fully redeemed remain in circulation.
It is fun that these instruments are the ones that are damaged -- used for hiding assets.
The other thought that came to mind is that these vaults are suffering from Kabuki Security -- the security is all a show for the clients and offers no real protection for the goods stored. Fake. Stupid. If such a vault cost $10 million to build, it could have been made 100% waterproof for an additional couple hundred thousand dollars -- less than one percent of the cost to build. Gaskets and positive pressure. You could also fill the vault with helium to prevent fading and decomposition. Schedule two or three days/month where humans could enter and work.
Posted by DaveH at November 19, 2012 7:05 PM