Last week, The Wall Street Journal ran an interesting story about Wachovia.
It seems a Wachovia mortgage lending executive named
Robert Verrone was leaving. Through the years, he'd been nicknamed ''Large Loan Verrone'' due to a proclivity for $50 million-plus commercial mortgages.
The story also said that Verrone loved to quote lines from the Godfather films during negotiations. I'm willing to bet one of them was, ''I'm gonna make him an offer he can't refuse.'' Considering how Wachovia has been doing lately, perhaps his new nickname should be ``Large Loss.''
Personally, I think giving people on Wall Street mob-sounding middle names is a great idea. We could have had Stan ''Good Deal'' O'Neal, the Merrill Lynch boss whose severance topped $160 million.
Or maybe Charles ''Don't Chintz the Prince'' of Citigroup, who got shown the door with a pocketful of millions.
I'm even reminded of a former New York Stock Exchange chief whose severance of more than $140 million was later challenged in court. But his last name was Grasso, and I can't think of a thing that would rhyme with it.
The Wachovia story said the company is the target of a money laundering investigation, and its first-quarter loss of $393 million was actually $708 million. (Hey, anyone can forget to write down a check.)
Then, the story concluded: ``As of 4 p.m. New York Stock Exchange composite trading Tuesday, Wachovia shares were up 30 cents.''
That's right: No news is bad news in this case.
It reminded me of a speech I once gave to a group that was very interested in my coverage of the financial industry, including the stock market crash of 1987, the tech stock bubble of the late 1990s and the toxic mortgage slime now oozing through the world economy.
When it came time for questions, one woman asked me this: ``Some days the stock market rises and some days it falls. Why is that?''
My big concern was making the answer easily understandable. I could list some complex economic models, or recite an equation that yields the intersection of national income and projected gross domestic product, for instance. But that would be complicated. Besides, I don't understand that stuff.
So I opted for a simple answer that nonetheless told her all she needed to know about the market.
''When it comes to equities,'' I said officiously, using the word equities because it sounds more sophisticated, ``many people prefer the price-to-earnings valuation method. But others base their analysis on a basket of indicators such as productivity enhancement and trade deficit trends.''
I then concluded, ``But personally, I have no idea why the stock market rises or falls.''
OK, so it's no Modigliani-Miller theorem. But I believe the Fields' Yields Formula -- which is that there is no explaining what Wall Street does -- is confirmed by recent activities.
For example, also from the Wall Street Journal: ''Legg [Mason] stumbles with $255 million loss, plans fresh round of capital raising.'' Its shares rose.
Capital raising, of course, means new investors pump money into your company. It's very ''in'' among Wall Street's barely buoyant boys of bombast these days. Last week, government-sponsored mortgage player Fannie Mae said it must raise another $6 billion after warning that its $2 billion quarterly loss was the good news.
Perhaps I'm naive, but I can't believe there are people willing to give these people more money. What do they say to potential investors? ``Man, aren't you glad you didn't get in early?''
Some investment banks raising capital have noted that, except for their multibillion dollar losses on mortgages, they're doing very well.
That's a bit like Mrs. Lincoln saying that, except for the last part, it was a nice evening at the theater.
Ironically, I have a credit card from an institution making headlines with mortgage meltdowns and asset write-downs. Typically, I only use it for charging gasoline.
Considering the current pain at the pump, I'll probably need to do some capital raising of my own soon.
Gregg Fields, a former Miami Herald business writer, is coordinator of the master's in business journalism program at Florida International University. He can be reached at fields@fiu.edu
