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Citi common diluted 74%. Fed converts up to $25 billion of preferred to common, as expected, however with the twist that other private preferred investors have to agree to terms. C shares down 42% post announcement... Did people not see this coming??? Although this was worse than expected. Government keeps making rules up on the fly.

• BofA served with bonus subpoena after Ken Lewis' 4 hour interrogation (Bloomberg)
• 14,000 additional layoffs at JPM (Reuters)
• The financial terrorist system to demand another $750 billion soon (Reuters)
• Regulatory investigation into shady European "dark pools" (

Rumor of the night, as reported by our friends at Debtwire, is that everyone's favorite private jet company Textron, which we brought to people's attention before anyone cared about it, has hired former Masters, now merely Janitors, of the Universe, Goldman Sachs, and makers of fine, fine left bank Burgundy, Rothschild to sell the businesses that make up TXT's industrial division.

The acrimony over the world's largest DIP is reaching fever pitch. For a second day in a row, Judge Gerber said he will listen to yet another round of arguments tomorrow before deciding whether to approve the Debtor in Possession loan. As we wrote previously, the fate of the company (at least over the next 6 months) hangs in the approval of the DIP, as without it Lyondell will proceed straight to liquidation.

Well, at least he didn't blow the 90% of AUM in his PSIV fund for nothing.

Letter to investors attached below, mostly as pertains to SHLD. We are going through this now, but at first read some very odd and disjointed ramblings...Eddie sure ain't no Howard Marks

Um, if the story met all those criteria Ken would be out of a job by 6 pm today... Regardless, we look forward to hearing his story too and providing "objective perspective."

Um, if the story met all those criteria Ken would be out of a job by 6 pm today... Regardless, we look forward to hearing his story too and providing "objective perspective."

This is simply pathetic.

"Give me your toxic debt, your default mortgages, your huddled worthless assets yearning to be offloaded on the taxpayer's balance sheet"

PS: Send printing presses

Huw van Steenis of Morgan Stanley out with a very sobering report on the hedge and fund of fund industries earlier, with the simple conclusion that hedge funds asset under management may fall from $1.2 trillion to $500 billion (in their bear case scenario; $950 billion in the base case). Aside from poor ongoing performance, the culprit will be escalating redemptions from both private clients, and the marginal (if any) role of fund of funds (90% of all Och Ziff redemptions came from FoF) and endowments (not to mention state pension funds) will play in the future.

courtesy of www.drudgereport.com

courtesy of www.drudgereport.com

Moody's just piledrived Gannett and cut its bond rating to junk. The company which was downgraded to the lowest IG rating Baa3 on February 2, just got the last kiss as Moody's cut its unsecured debt rating to Ba2. Not as much harsh language as S&P has been dispensing lately, just the sad reality of the situation as Gannett enters Junkville.

But, but...this was all contained the last time the company lied about its current state... Looks like US Taxpayer Capital LLC will need some CDS salespeople/traders as it is the unwitting recipient of a $300 billion CDS book.

Feb. 26 (Bloomberg) -- American International Group Inc. may get a backstop from the U.S. to protect against further losses on credit-default swaps, according to a person familiar with the matter.

The surprisingly resilient HY and IG market over the last two months (and the reason why so many hedge funds outperformed benchmarks) is starting to crack. We have discussed how purely fundamental assumptions about recoveries in the upcoming wave of defaults will likely reprice risk substantially lower, however a mere glance at existing technicals imply the HY market, especially the single B rated tranche and single names, will soon experience a drubbing.