Jan. 4 (Bloomberg) -- The Treasury Department’s inspector general has threatened to punish JPMorgan Chase & Co. for failing to turn over documents to regulators investigating the bank’s ties to Bernard Madoff’s Ponzi scheme.

Inspector General Eric Thorson gave the largest U.S. bank a Jan. 11 deadline to cooperate with the Office of the Comptroller of the Currency probe or risk sanctions for impeding the agency’s oversight. JPMorgan, according to the Dec. 21 letter, contends the information is protected by attorney-client privilege.

Thorson’s letter didn’t spell out what documents the OCC is seeking or the focus of its investigation. Madoff is serving a 150-year sentence after confessing to the fraud that once claimed to have $65 billion in customer assets.

The previously undisclosed OCC probe adds to the lender’s troubles in Washington, where several agencies and lawmakers are investigating the bank’s loss of at least $6.2 billion on botched derivatives trades. The losses have prompted regulators including the Federal Reserve to consider tightening proposed restrictions on proprietary trading.

Jennifer Zuccarelli, a JPMorgan spokeswoman, said the bank “will of course continue to work together with our regulators” on the investigation.

Confidential Guidance

“This dispute does not go to the merits of the matter but it does raise an important issue of principle: Whether we and other banks, large and small alike, have the fundamental right long recognized in this country to communicate freely with and seek confidential guidance from their lawyers,” Zuccarelli said in an interview.

Bryan Hubbard, an OCC spokesman, declined to comment on the agency’s Madoff inquiry.

In the letter sent to JPMorgan general counsel Stephen Cutler, the inspector general -- the Treasury’s internal watchdog -- dismissed JPMorgan’s arguments on attorney-client privilege, saying the OCC “could not do its work” if banks were allowed to withhold information on that basis. The OCC asked the IG office to review the situation, Thorson said in the letter.

Failure to produce records “will have to be seen as a continuing purposeful impediment to the authority of the OCC,” the letter said, and would “require further action by our office.”

The trustee liquidating Madoff’s firm, Irving H. Picard, sued JPMorgan in December 2010, accusing the bank of aiding Madoff’s fraud. The lawsuit, eventually demanding $19 billion, the largest of Picard’s claims, has since been dismissed. Picard has appealed the ruling.

‘Evidenced Fraud’

JPMorgan “had financial reports in its possession that clearly evidenced fraud,” David J. Sheehan, lead counsel for Picard and a partner at Baker & Hostetler LLP, said in a February 2011 statement. JPMorgan was the Madoff firm’s “primary banker for more than two decades,” Sheehan said.

In responding to Picard’s suit, the bank issued a statement in 2011 saying it “did not know about or in any way become a party to the fraud” and called it an “unfounded claim” that JPMorgan earned substantial fees from Madoff’s account. JPMorgan also objected in court when the trustee sought more freedom to use confidential Madoff documents provided by the bank.

The OCC is also investigating the trading losses in the bank’s chief investment office and is preparing an enforcement action, according to a person briefed on the situation who asked not to be named because the matter isn’t public. The cease-and- desist order would require the bank to fix internal risk controls, the person said.

In a second dispute involving demands from federal regulators for documents, a federal magistrate judge in Washington ruled in November that JPMorgan could invoke attorney-client privilege to keep private e-mails requested by the Federal Energy Regulatory Commission.

The agency had accused a JPMorgan unit of making “factual misrepresentations” and omitting material information in communications with the California Independent System Operator, which operates the state’s power grid, and in filings to the commission. The FERC suspended the unit’s electricity-trading authority for six months starting April 1.

--Editors: Maura Reynolds, Anthony Gnoffo

To contact the reporters on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net; Jesse Hamilton in Washington at jhamilton33@bloomberg.net

To contact the editors responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net; David Scheer at dscheer@bloomberg.net

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NEW YORK (Reuters) - Brian Sack, the former head of the Federal Reserve Bank of New York's open market operations who for the last six months served as a senior policy adviser, is to resign effective January 18.

In the latest twist in Sack's tenure at the U.S. central bank, the New York Fed said late on Friday that Sack had announced his intention to resign. It was the second such notice in less than a year.

In April 2012 it was announced that Sack would resign his position overseeing the U.S. central bank's market-based monetary policy actions - including its quantitative easing programs - which he had held since 2009.

But on what was to be his last day on the job, June 29, the New York Fed said Sack had withdrawn his resignation and would instead stay on in a new position as adviser to New York Fed President William Dudley.

Seen as a rising star at the Fed, Sack helped it steer through the fallout from the financial crisis and tepid U.S. recovery from recession.

Through a New York Fed spokesman, Sack declined to comment.

The New York Fed's markets group deals directly with Wall Street and foreign central banks, carrying out Fed actions in the open market. Simon Potter, formerly an internal director of economic research, now heads that group.

(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama and Leslie Adler)

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Michael Corbat, who became CEO of Citigroup three months ago when Vikram Pandit suddenly resigned, has announced his management team, the bank said in a release. 

The new co-presidents are Jamie Forese and Manuel Medina-Mora. 

Here's Corbat's memo to employees: 

Dear Colleagues,

As has been the case throughout our history, Citi today is fortunate to have incredibly strong leaders. I'll be relying on their skills and experience as we navigate the challenges and opportunities ahead. Our unparalleled global network gives us a competitive advantage. We need to leverage that advantage throughout our organization and strike the right balance of authority and accountability between our businesses, regions and functions. To that end, I am pleased to share the roles and responsibilities of my direct reports on our management team effective today, as well as a new structure for Operations & Technology.

First, Jamie Forese and Manuel Medina-Mora will become Co-Presidents of our firm. Jamie will now be responsible for each of our Institutional businesses and Manuel will continue to oversee Global Consumer Banking and our franchise in Mexico. Manuel and Jamie have both been part of Citi and its predecessor companies for their entire careers. They are outstanding representatives of our culture and commitment to excellence.

To help them achieve their business objectives, we will be reorganizing Operations & Technology. Having made great progress in O&T by running it as a centralized function focused on strengthening controls and managing expenses, the divisions supporting the Institutional and Consumer businesses will now report to Jamie and Manuel, respectively, while working closely with Don Callahan. This change will better align the priorities and strengthen accountability between our client-facing businesses and their support function as we continue our efforts to become a fully digital bank and improve efficiency through the organization. As Head of O&T, Don will continue to directly manage our Enterprise O&T function and be responsible for all shared infrastructure and for ensuring our systems are regulatory-compliant.

Jim Cowles will become CEO of Europe, the Middle East and Africa. Jim is a Citi veteran who has spent much of his career in EMEA. Having worked with Jim very closely last year, I have great confidence in his ability to lead our businesses in the region.

Bill Mills, in addition to serving as CEO of North America, will now oversee Community Development as well as International Franchise Management, in which role he will have responsibility for corporate governance in our 101 countries. He is uniquely suited for this role, given a career that has taken him across so many of our geographies.

Francisco Aristeguieta, CEO of Latin America, and Stephen Bird, CEO of Asia Pacific, will continue in their current roles as we execute a strategy that leverages our unique footprint in the emerging markets.

John Gerspach will continue to be our Chief Financial Officer, and I have asked him to spearhead our Expense Management, Enterprise Payments and Citi Ventures initiatives as well.

Brian Leach will be taking on responsibility for additional functions which safeguard Citi's license to do business. As Head of Franchise Risk and Strategy, he will now oversee Audit, Compliance and Strategy. Brad Hu, currently Head of Risk for Asia Pacific, will become Citi's Chief Risk Officer and report to Brian.

Gene McQuade will continue to serve as CEO of Citibank, N.A., while overseeing Citi Holdings and Japan. Over the past several years, Gene has greatly improved the oversight and controls of our largest depository vehicle, and I am pleased he has agreed to continue this critical work into next year.

Ed Skyler, Head of Public Affairs, will oversee the Citi Foundation in addition to his current responsibilities, which include Branding & Sponsorships, Communications, and Government Affairs.

Paul McKinnon, Head of Human Resources, and Rohan Weerasinghe, General Counsel and Corporate Secretary, will both continue to serve in their respective positions.

Sara Wechter will serve as my Chief of Staff. Sara brings both banking and corporate governance experience to this role, and I will rely on her ability to think strategically while paying attention to the details as she manages key projects on my behalf.

Finally, Vice Chairman Lew Kaden has informed me that, after more than seven years with the firm, he plans to retire in the coming weeks. Lew, who was previously our Chief Administrative Officer, helped guide Citi through some difficult times, while strengthening our relationships with clients and governments. We will miss his wise counsel.

The three months I have been CEO have been memorable to say the least, and I am very proud of what we have done to prepare for 2013. We developed a budget which contained difficult but necessary choices. Today, we will submit our capital plan to the Federal Reserve. We have finalized the management team and are re-organizing O&T. I know that I can count on each of you to support the entire management team and each other as we move forward.

We will be tested in the year ahead. The environment remains very challenging from a variety of perspectives, and I am going to rely on every person in this company to make sure we are as successful as we possibly can be.

Thank you for all that you do for our company.

- Mike

SEE ALSO: Citigroup Cutting Over 11,000 Jobs >

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January isn't usually known as a time when Wall Streeters start passing around their resumes, but that's starting to change, and it's all because of bonus season.

Since the financial crisis, bulge bracket Wall Street banks have been handing out smaller bonuses made up of less cash. Now when bankers aren't happy with what they've taken home at the end of the year, they start to look for options elsewhere.

On Wall Street (especially in sales), bonuses are tied to team performance, not individual performance, so even if you personally rocked 2012, your team's performance could hurt your bonus prospects.

That's where this January hiring shuffle comes from.

"People who leave because of bonuses are having their positions filled quickly, and they (Wall Street banks) want someone good from a comparable firm." said Jesse Marrus, founder of Wall Street career search firm StreetID. "It's going to be a frenzy to fill those seats... You would think people would wait til the end of Q1 but they have a lot of pressure to keep things going."

Marrus told Business Insider that these positions aren't highly publicized because the hiring is generally done through back channels and networking.

And since Wall Streeters already knew that 2012's bonus season was going to be rough, they could've started the process of talking to friends and peers about their next moves months ago.

Financial professionals don't just want to go to big banks either, they're considering smaller boutiques more than they used to. In December, Jefferies announced that it would be handing out cash bonuses. It was a way for the firm to signal to the Street that if top talent heads over, it will be compensated handsomely.

So what are firms looking for? Marrus said he's noticing a lot of demand for individuals with experience in the European high yield and distressed debt space, and for wealth managers/financial advisors with a thick Rolodex.

No one should be surprised that banks are interested in employees who know their way around Europe, Wall Street's been talking about that for months.

As for why banks want wealth managers — Skiddy von Stade, CEO of job financial search firm OneWire, explained that banks are loving that space because it's "sticky money." Once clients have given their money to a firm it takes a lot them to move it elsewhere.

Another thing to keep in mind regarding this space is that the skill sets that Wall Street firms are looking for in wealth management can differ depending on the firm's size.

"The thing with say, a Merrill is that you have an array of investment products that you can't get at a smaller shop," said von Stade. That's what really makes the difference.

At bigger shops wealth managers are more like salespeople who need to understand each and every product and how it can work for their client. Wealth managers at smaller shops are more "in the weeds financial professionals who really breathe the market," von Stade added.

Bottom line: The most important thing for firms is to find the perfect fit. If they can't do it fast enough through connections, Marrus says they're willing to pay a third party recruiter to find the perfect person for them, and that's encouraging for the industry as a whole.

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Tom Wolfe's Bonfire of the Vanities is a modern classic that perfectly captures an era on Wall Street and in New York City when traders still yelled in pits and bankers were 'masters of the universe.'

That was 1987.

This weekend, for the Daily Beast, Wolfe revisited the city and the neighborhood where his readers met Sherman McCoy, a bond trader with a perfect Park Avenue life, 25 years ago.

But things had changed. Wolfe found no masters of the universe there. Instead he found 'Eunuchs of the Universe.' Wall Street's testosterone driven frat boys had been been replaced by nerds — quants with their math moving faster than the speed of light.

James Simmons of Renaissance Technologies, Edward Thorp of Princeton-Newport Partners... these are the new masters who mind the markets with machines, Wolfe found.

The financial crisis had ravaged the Street, yes, but nothing was as transformative as this sea-change. The 'nerds' had come in with their high speed trading games and dominated. The trading floor was quiet. It was electronic.

So, Wolfe muses, what would happen to Sherman McCoy today?

Nothing. "He couldn't get arrested." His brain would be filled with cortisol (stress) from staring at screens all day, not testosterone from howling at his fellow masters.

From The Daily Beast:

We couldn’t get arrested! We don’t have the endocrines you need to go after pretty young things and pull off those dangerous rendezvous. We don’t have the testosterone, but we do have more than enough liters of cortisol to make sure we worry, worry worry the whole time. But suppose we did do something today in the Bronx that would have had an old white civil rights lawyer and a black race troller coming after us with raucous sham shows of anger in 1987. Today they wouldn’t bother. Today a Sherman McCoy couldn’t afford Park Avenue and would be hard to depict as a ruthless capitalist—and not worth suing in the first place (on behalf of the victim’s family and taking two thirds of the jury’s huge award, that being their scheme in 1987). Besides, today the trollers have closed down the shop. During the 2008 election campaign, President Obama never said, “Rise up! Break your chains and take what’s rightfully yours!” No, having his head on straight he said, “We must all carefully examine our own lives and see how we can improve them.” This so infuriated Reverend Jesse Jackson that during a commercial break in a Fox TV news show he said—not knowing there was an open microphone—“I’d like to cut Obama’s nuts off.” But he quickly disavowed the statement, realized there was absolutely no percentage in his challenging the first black president. He has said nothing but friendly, polite things ever since. Reverend Al Sharpton got it right away and in effect joined the Obama administration as a minister without portfolio...

Sherman McCoy held his tongue, but what he said to himself was, “Oh, ye Eunuchs of the Universe.”

Brutal.

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The word chutzpah comes to mind...

Insurance giant AIG is considering suing the government in a $25 billion shareholder lawsuit over bailout terms, the New York Times' Ben Protess and Michael de la Merced report.

AIG's board will meet tomorrow to decide whether or not it will join the shareholder suit.

Here's the basic premise of the lawsuit, according to the NYTimes:

...The lawsuit does not argue that government help was not needed. It contends that the onerous nature of the rescue — the taking of what became a 92 percent stake in the company, the deal’s high interest rates and the funneling of billions to the insurer’s Wall Street clients — deprived shareholders of tens of billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for “public use, without just compensation.”

The lawsuit was filed by former CEO Maurice Greenberg on behalf of shareholders in 2011.  Greenberg is still a big shareholder in AIG. 

Read the NYTimes full piece here >

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This is a nice move after being dropped from the highly coveted Goldman Sachs partner list...

Former Goldman partner Jason Glen Cahilly is joining the NBA as chief financial officer and VP of strategy, Bloomberg News reported. 

He will begin his new role at the NBA on January 14.

Cahilly, who was the global co-head of media and telecommunications, was a partner at Goldman from 2008 until 2012.

The media banker, who spent 12 years at the firm, was one of the 31 dropped from the partner list last year.  Being named a Goldman partner is a huge deal on the Street.

Cahilly received his undergrad degree in economics and international relations from Bucknell University, according to his LinkedIn profile. He also graduated from Harvard Law.

SEE ALSO: The 31 Most Impressive Athletes On Wall Street >

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Ever since word got out that hedge fund BlueMountain Capital Management was helping JP Morgan exit its ugly $6 billion trading loss last year everyone has been wondering exactly what the firm does.

Well Bloomberg Markets Magazine has a deep dive into the hedge fund, helmed by Harvard Law graduate Andrew Feldstein, and to put it gently, they're basically one of Wall Street's trash compactors.

And, by the way, when Bloomberg Markets last checked on the fund in October it was up 13.6% for 2012, so that strategy is working.

From Bloomberg Markets:

Feldstein is betting that BlueMountain can make money on assets that banks no longer want to own and on loans that banks no longer want to make, according to an October marketing document for the new fund obtained by Bloomberg Markets. As banks shed risky assets, Feldstein is making money picking through these flea markets of finance. “This market will continue to grow,” says Paul Rowady, a senior analyst at research firm Tabb Group LLC in Westborough, Massachusetts. “Their intuition to be a leader is spot on.”

One man's trash is another man's treasure.

But here's the thing: Feldstein was on the JPMorgan team that helped create the credit derivatives market in the early 1990s. He knows that market like he knows the back of his hand. As Bloomberg Markets put it, having him unwind your complex credit trade "is like having a tall green monster on the loose and calling in Dr. Frankenstein to deal with it."

Makes sense.

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TARP – the infamous Troubled Assets Relief Program that bailed out Wall Street in 2008 – is over. The Treasury Department announced it will be completing the sale of the remaining shares it owns of the banks and of General Motors.

But in reality it’s not over. The biggest Wall Street banks are now far bigger than they were four years ago when they were considered too big to fail. The five largest have almost 44 percent of all US bank deposits.

That’s up from 37 percent in 2007, just before the crash. A decade ago they had just 28 percent.

The biggest banks keep getting bigger because they can borrow more cheaply than smaller banks. That’s because investors believe the government will bail them out if they get into trouble, rather than force them into a form of bankruptcy (as the new Dodd-Frank law makes possible).

That’s why it’s necessary to limit their size and break up the biggest.

Washington may be getting the message. A few months ago Dan Tarullo, the Fed governor who specializes in bank regulation, proposed capping the size of the banks’ balance sheets.

Some former titans of Wall Street are saying much the same thing. Even Sandy Weill, who created Citigroup (which required $445 billion in TARP loans and asset guarantees) is proposing the biggest banks be broken up. 

The new Congress may also be supportive. The new chairman of the House Financial Services Committee, Texas Republican Jeb Hensarling, has been a strong ally of small banks in their push to rein in their bigger rivals, and has expressed concern about the largest being too big to fail.

It’s not irrelevant that the Dallas branch of the Federal Reserve Board, in Hensarling’s home district, has also proposed breaking up the biggest.

Meanwhile, over in the Senate, Ohio Senator Sherrod Brown, is a strong advocate for breaking up the big banks and is now on the Senate Finance Committee. And Elizabeth Warren, scourge of Wall Street, will sit on the Senate Banking Committee.

In other words, the timing is right. The oven is ready. All we need is another multi-billion dollar banking loss – like JP Morgan Chase’s last year – and the biggest banks are cooked.

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It was only a matter of time before Rolling Stone's Matt Taibbi threw in his two cents on the AIG vs. the U.S. government issue.

Naturally, he's outraged about the whole mess, and he's directing that outrage at the insurance company's former CEO, Hank Greenberg.

It makes sense. Greenberg is the man who filed the initial suit on behalf of AIG shareholders alleging that the U.S. government handled the company's bailout in a manner that was contrary to their interests. That argument was dismissed in a NYC Court, but the case was allowed to proceed in Washington D.C.

That's where AIG's board could join in, if they so choose, after hearing arguments for and against the suit at a meeting today.

Now here's Taibbi's take:

But here's the funny thing about the lawsuit filed against the government: It isn't all wrong. In fact, parts of it are quite on the mark.

The only problem is, the suit is being filed by maybe the biggest douchebag of all time, Hank Greenberg (and his company, Starr International), a man who has not only been proven to be corrupt and a fraud, but who perhaps more than anyone else was responsible for the galactic balance-sheet goat-f*ck that caused AIG's implosion in the first place. If there is such a person as an innocent AIG shareholder who was harmed by the government's conduct, it sure as hell isn't Hank Greenberg.

Business Insider also pointed out that, during his tenure as CEO, Greenberg oversaw the creation of the unit that made the risky bets that brought the company to the brink of collapse. Taibbi goes into the gory details of all that:

Well, AIG, under Greenberg's watch, had entered into hundreds of billions of dollars of cosmically stupid credit default swap bets with all of the biggest banks in the world, essentially taking book for all of Wall Street, in many cases taking the wrong side of bets against the mortgage markets, among other things. Greenberg was dumb enough to allow his subordinate Joe Cassano to enter into these contracts, which were written in such a way that if AIG's credit rating were ever to fall, AIG would suddenly owe its customers billions in cash collateral.

When the ratings agencies started downgrading AIG because of anxiety over all of the investigations into the company's accounting, all of those collateral calls started coming due. Before you knew it, companies like Goldman were demanding more cash in collateral than AIG had, and when the company was finally bled dry, that's when the bailout took place.

All that said, Taibbi does grant Greenberg one little piece of satisfaction. He writes that the powers-that-be on Wall Street "absolutely did conspire to seize AIG and then use a monstrous mixture of AIG's assets and public money to keep themselves alive."

In essence, AIG was the helpless fat guy in the lifeboat who got eaten when the rest of the survivors ran out of food.

In a vacuum, perhaps, there might be some sort of claim here, and there are ordinary people who worked for AIG who were probably harmed when the state decided not to force companies like Goldman to take even a 1 percent haircut on their CDS contracts with the firm. But Hank Greenberg, the guy who started all of this mess by monkeying with shady reinsurance deals and signing off on the bank's incredibly irresponsible bookmaking during the pre-crisis years, is not the guy to bring that claim.

So in short, down with Hank, and also, down with Wall Street. Got it.

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Everyone's making a huge deal out of the news that hedge fund manager Dan Loeb is long Herbalife.

(And they should, because it means war with Pershing Square's, Bill Ackman).

But in all our excitement over a good knock-down, drag-out hedge fund fight we shouldn't forget that Loeb's Third Point had a solid year (up 21.2%) thanks to its long positions in Greek government bonds, AIG, Yahoo, Murphy Oil Corp, and Delphi Corp.

And it should also be noted that Loeb has picked up a long position in another one of today's news makers, Morgan Stanley. Earlier the bank announced that it would be cutting 1600 jobs, and the market liked it.

Here's why Loeb likes Morgan:

During the Fourth Quarter, we initiated a position in Morgan Stanley (MS), which we believe is in the early innings of a turnaround. The bank’s investment banking advisory and equity sales and trading businesses – which we know well from our perspectives as both investors and long-time satisfied clients – have consistently won top three market shares and are impressively positioned. Although MS has historically failed to capitalize on its strengths, its leadership currently is focused on growing its good businesses while consolidating and successfully fixing its previously troubled Wealth Management business. In 2013, we expect Morgan Stanley to tackle its other weak business, Fixed Income, Currency, and Commodities (FICC) sales and trading. Morgan Stanley's stock currently trades at a 20% discount to tangible book (down from a 35% discount when we acquired our stake at an average cost of $16.77 per share), and we view MS at these prices as a chance to buy a free call option on a promising restructuring.

Loeb also tipped his hat to the bank's CEO James Gorman and said that he think has Morgan Stanley's management has the stuff to deal with the the company's problem areas.

Plus, overall, the he thinks world's macro picture will improve, which is great for deals.

We'll find out if that optimism shows up in Morgan's earnings next week.

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Marvin Schwartz, managing director and portfolio manager at Neuberger Berman, is selling his amazing Westchester estate for $30 million, the NY Post reports.

The place is called Twin Ponds (one of the ponds is under the house), and it sits on 21.7 acres of land. The 6 bedroom, 3,600 square foot house boasts floor to ceilings windows, but it's really the grounds that will take your breath away.

The pool and massive wine cellar aren't too shabby either.

Sally Slater at Douglas Elliman has the listing.

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NEW YORK (Reuters) - A U.S. regulatory probe of JP Morgan Chase & Co is expected to result in an order that the bank correct lapses in how it polices suspect money flows, in an action expected as soon as Friday, people familiar with the situation said.

The action would be in the form of a cease-and-desist order, which regulators use to force banks to improve compliance weaknesses, the sources said.

The order is expected to be issued by the Office of the Comptroller of the Currency and the Federal Reserve.

JP Morgan is not expected to pay a monetary penalty, according to one person familiar with the situation.

The Treasury Department's anti money-laundering unit, the Financial Crimes Enforcement Network, also could take a separate action against the bank.

A JP Morgan spokeswoman declined comment.

The status of the inquiry could change and the timing of the action could extend to next week or later.

The JP Morgan inquiry dates back several months, according to people familiar with the probe. Under the order, the bank is expected to be required to bolster systems it uses to monitor risk and transactions.

The order is the latest action that U.S. regulators have taken this year to force banks to tighten their anti money- laundering systems, which are supposed to flag suspect transactions from sanctioned countries or those from customers with ties to drug trafficking or terrorism.

Britain-based bank Standard Chartered Plc agreed to pay a total of $667 million to U.S. and state regulators to resolve anti-money laundering probes, while HSBC Holdings Plc, also headquartered in Britain, agreed in December to pay $1.9 billion to settle a U.S. inquiry.

In April, the Comptroller of the Currency identified major lapses in compliance systems at U.S. bank Citigroup Inc, though Citigroup didn't pay a monetary penalty.

(Reporting by Carrick Mollenkamp and Emily Flitter of Reuters, and Brett Wolf of the Compliance Complete service Thomson Reuters Accelus; Editing by David Holmes)

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Subject: Hey, do you have a minute?Either come to my office or we can meet in a conference room.

Uh oh.

Unless that email is coming from the co-worker you’ve been secretly dating or (one of) the secretaries you’re having an affair with, you’re probably going to be fired in the next 5-10 minutes if you see this subject line in your inbox.

I usually write about how to get into investment banking, private equity and finance in general on this site. But layoffs are a part of life if you work in finance.

Early Warning Signs Of The Layoff

The first stage of the layoff is a rumor about a certain number of people being fired. Sometimes it’s in the thousands; sometimes it’s in the hundreds if it’s just in one department.

Unfortunately, rumors are usually true in the finance industry. Or at the very least have some basis in truth.

So when you start hearing rumblings that people are getting fired, it’s safe to assume that they are.

Other early warning signs of impending layoffs include:

• Emails from very high-up execs in the firm reminding everyone to be frugal.
• Closing dinners for deals getting canceled or scaled back due to “market conditions” or “cost-saving measures.”
• Maximum dinner expenses dropping from $30 or $35 to $25… or $20… or even (gasp) $15.

Who Will Be Affected

This one depends on the state of the economy, and which groups have been in a “bubble” over the past few years.

In general, ECM, M&A, and Leveraged Finance tend to be harder-hit by recessions than other groups because companies stop issuing equity/debt and doing deals when the market tanks.

Debt Capital Markets (DCM), by contrast, tends to remain more stable because companies always need debt for day-to-day funding.

But it’s very dependent on the market: in the late 80s and early 90s after the junk bond market imploded, everyone there was laid off; in the aftermath of the mid-2000s bubble, lots of people in mortgages / CDOs / Fixed Income were laid off.

No group is “safe” from layoffs, but Restructuring can be counter-cyclical– however, there are few Restructuring groups on Wall Street, so don’t count on being rescued by going there.

Preparing For The Battle

If you know layoffs are coming and you’re not sure whether or not you’re on “the list,” there are a few things you can do to prepare beforehand.

1. Remove everything important from your cubicle, but be subtle about it.
2. Start contacting headhunters and other friends at other firms so you can explore “strategic alternatives.”
3. Form a close-knit group of co-workers you can trust and discuss everything everyone hears each day.

You might think the first point is stupid, but you’d be surprised at the sheer quantity of stuff people have in their cubicles. I’ve seen tax returns, expensive cameras and digital equipment, even wedding rings stowed away in the hidden depths of peoples’ cubicles before.

If you get fired you’ll probably have to leave the building immediately, without much time to gather all your belongings. So make sure you get everything beforehand.

The only catch here is that you have be subtle about removing all your stuff. Don’t completely empty out your cube; just make sure the important stuff is safe and keep decoy items on your desk to avoid attracting attention.

Points 2 and 3 are self-explanatory; it’s critical to have that support network in place at all times anyway, but it’s especially the case when layoffs start.

The Moment Of Impact

You’ll either get an email like the one above:

Subject: Hey, do you have a minute?Either come to my office or we can meet in a conference room.

Or you’ll be summoned to this mysterious conference room via a phone call or someone directly approaching you.

In investment banking people love to waste time on making font sizes consistent and formatting PowerPoint, but they hate to waste time on firing people. So it will be quick, and you’ll be informed of the decision upfront.

At this point, you need to keep your calm and pay attention to the only number that matters: your severance (if you get any…).

After that, you’ll either be escorted out of the building immediately or you might get a few minutes or few hours to remove some of your personal belongings.

Occasionally when people leave voluntarily, they might be allowed to stick around for a few days to a week so they can “transition” projects. But I’ve never seen people stick around that long when it’s involuntary.

One exception to this: sometimes laid-off senior bankers stick around longer because they do indeed need time to transition clients and projects to other senior bankers.

The Aftermath

So, what happens when you’re laid off and shown the door?

Well, to start with, you suddenly have an additional 80-100 hours of free time each week (if you’re an Analyst).

But all you can do is decide what to do next – whether that’s moving to another firm, switching industries, or just taking a break.

Regardless of what you decide, I would strongly recommend taking a week off and removing yourself from the grind for awhile. Go to Thailand; go to Hawaii; go wherever you want and unwind for awhile.

Just think: as long as you didn’t spend too much on models and bottles, you could do this for months.

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In 2011, Wall Street lost one of its greatest to brain cancer, billionaire private equity investor Teddy Forstmann.

And while Forstmann was a huge public figure — he was a philanthropist who also owned IMG, the biggest sports and modeling talent agency in the world — a lot of his life was quite private.

On the private side of things was the Gulfstream V (G V) jet he got after buying, turning around, and then selling the Gulfstream in the 1990s.

The February issue of Vanity Fair has a long profile of Forstmann's last days told by a man who spent many of them with him — Rich Cohen, the ghostwriter working on Forstmann's biography. Forstmann loved to travel, so Cohen ended up spending a lot of time on the Gulfstream going from New York City to Paris, London and beyond.

Here's what it was like:

We met at a heliport on the west Side of Manhattan. Teddy's driver carried his bags across the concrete. I followed behind with my own, battered valise, climbing into the passenger cabin of the helicopter as Teddy gave the signal and up we went....

Soon the helicopter set us down on a runway at the Morristown Municipal Airport in New Jersey. Teddy's plane was waiting, its turbines already spinning, its crew standing in starched uniforms, its jet bridge ascending to technological heaven as the tycoon and his ghost made their way across the tarmac...

Teddy's plan was all command center: deep leather chairs, financial journals, and flat-screens. There was a bed, but it was hidden away, disguised...

We landed in Paris as the sun was going down. the city was gold and blue and strung with lights. When you are rich, you do not stand in line to show your passport. Instead, after the G V rolled to a stop, scotch glasses clinking in the tray beside the single malts, a customs official came aboard, greeted us in her beautiful language, gave our documents the once-over, sad, Oui Oui Monsieur Forstmann, and bid us adieu as we moved on to the car, then off through the moody twilit streets.

Pretty boss, right?

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Writer Rich Cohen had the pleasure and the frustration of being late billionaire investor Teddy Fortmann's shadow during his last days.

In 2010 Cohen was contracted to ghostwrite Forstmann's biography, but Forstmann died of brain cancer before he could finish.

Before then, though, Cohen ate, traveled and riffed with the legend. He wrote about the experience in the February issue of Vanity Fair. The article is a melancholy look at a man who seems almost subconsciously aware of his own end — and he's lonely.

From Vanity Fair:

In the fall of 2010 I started to write Teddy's book. This meant a change in our relationship. Instead of being me and Teddy in the world, it was going to be me and Teddy in my mind, and he didn't not like it. It increasingly seemed to me that, for Teddy, the purpose of the book was fun, and the fun was having a friend to pal around with, tell stories to, a friend who would listen and be impressed and make you believe that it had all been worth it after al. Teddy or his office would call several times a week. He wanted me to travel with him to India, New Orleans, Brazil. when I said no, it was time to write, he got pissed. "What kind of ghostwriter are you?" he asked.

It was this frustration on Forstmann's part that lead to his one and only argument with Cohen. Forstmann wanted Cohen to have dinner with him on the first night of Rosh Hashanah and wouldn't take no for an answer.

For the first time, I got mad at Teddy. I stopped being a ghost. I put my body on and started to shout. I mean, here i was on Rosh Hashanah, with my wife and my children, my little thing, my on lt little thing in this too big world, and a billionaire who had everything else was demanding I give him this too. I said something like, "First of all Teddy...Rosh Hashanah is two days and two nights@ Second, you call yourself a dodger fan? I though Sandy Koufax settled this about 40 years ago. If Koufax didn't pitch in the World Series on Hom Kippur, I'm sure as hell not coming into the city to have dinner at Marea on Rosh Hashanah.

It stunned Teddy. He was not used to people talking to him this way. He behaved like a bear that had been slapped in the nose. "I'm not mad at you," he said finally. "When I get mad believe you will know it."

Cohen writes that he only saw Forstmann one more time after this argument before he died.

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Sure, Wall Street guys in NYC tend to spend too much time in the office, but it seems to be paying off on another front: gorgeous women. We picked out ten financiers who have found the time to land some of the city's leading ladies.

Olivier Sarkozy

What he does: Managing Director at The Carlyle Group

Net Worth: $60 Million [Stats via]

Rumors of Olivier dating Mary-Kate Olsen started earlier last year in May, when the couple was spotted together in the Hamptons over Memorial Day weekend. Now, the fully committed couple are jetting off together and look more in love than ever. This weekend, there was even word of their possible engagement. Though the couple is seventeen years apart, Mary Kate(age 26) is worth $150 million, making her almost $100 million richer than the 43 year old financier.

Abie Cohen

What he does: Financier for UBS

Leandra Medine, a.k.a the Man Repeller, got married last summer to her on-again, off-again boyfriend Abie Cohen. They met six years ago at a Halloween party while she was still in high school and he was a student at NYU. After tying the knot in June, she finally revealed his identity in the November issue of Town & Country.

Jared Kushner

What he does: Investor: Real Estate Mogul, Owner of New York Observer

Net Worth: $200 Million

Alright, we know he's not a banker, but he's one big investor. Jared is the principal owner of his family real estate development firm, Kushner Properties, and is the owner of the New York Observer. (He bought the paper for $10 million when he was 25.)

Three years ago, he married 31 year old Ivanka Trump in a lavish ceremony at the Trump National Golf Club in New Jersey. Among the star-studded guests were Russell Crowe, Natalie Portman, Barbara Walters, Regis Philbin, and former New York City Mayor Rudy Giuliani. Ivanka, also the heir of a real estate mogul, is an executive at Donald's firm and has since started her own fashion line.

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Last week, it was reported that Morgan Stanley would ax 1,600 jobs, or about 6 percent of the global institutional securities group, Bloomberg News reports. 

The latest round of reductions are expected to begin today and continue into the coming weeks.

According to Bloomberg News, half of those cuts are expected to be here in the U.S. 

The bank is also expected to eliminate about 15% of the i-banking positions in Asia, Bloomberg reports. 

Meanwhile, Fox Business reports that the Dubai office's equities division will be hit, too.

Layoffs have been hitting a bunch of the big Wall Street banks.

Last summer, Deutsche Bank said it would eliminate 1,900 jobs with 1,500 of those coming from its investment bank.

A few months later, Swiss banking giant UBSsaid it would cut 10,000 jobs.

Just last month, Citigroup said it would be cutting 11,000 positions globally.

Following Deutsche's move back in July, bank analyst Meredith Whitney predicted we would see 50,000 layoffs. Whitney recently said that we haven't even started to see the beginning of those layoffs.

If you're seeing cuts go down at Morgan Stanley, send us an email at jlaroche@businessinsider.com.  We'll be discreet! 

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There's no denying it.  The Wall Street interview process is really, really hard. 

We've heard all the interview horror stories and we've seen the insanely challenging questions that will leave you feeling like a complete fool.

Fortunately, Goldman Sachs has put together a Careers Blog on its website, which features a bunch of great interviewing tips.

We've compiled them in the slides that follow to help you ace your next interview. 

Remember: The interview is meant to determine if you're a good fit for the company.

The interview is used to determine if you have the necessary skills and experience for the job, to see if you are motivated to do the job, to figure out if you will thrive in the company's culture and if the company is a good fit for you.

Source: Goldman Sachs

The first thing you need to do before the actual interview is figure out why you want it.

In preparation for the interview, Goldman Sachs suggests you answer these questions:

1.  Which experiences and skills make you perfect for the job?

2.  What are your strengths and weaknesses?

3.  Do you have the necessary skills and commitment?

4.  How do you know you want this job? 

Source: Goldman Sachs

Then you need to craft your story in a way that will resonate with your interviewer.

Once you've answered these questions about why you're the right candidate you should craft a story that will leave an impact on your interviewer.

Source: Goldman Sachs

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This week Wall Street's big investment banks will report on how they did in Q4 2012, and while they won't be reporting the train wreck numbers that made the financial crisis so... exciting, there are a few stories to watch that could make a major impact on the world of finance.

The banks to watch this week are Morgan Stanley, Bank of America and JP Morgan.

Here's why:

Morgan Stanley's earnings mean we'll get an idea of what bank CEO James Gorman's "tough times mean change" philosophy is doing to make his company more competitive. At Bank of America, it's time to take a hard look at legal fees. And at JP Morgan, the London Whale could take a bite out of CEO Jamie Dimon.

First up, Morgan Stanley. Last week, the bank announced that it would axe 1600 jobs starting today. Coming from James Gorman's firm, that shouldn't surprise anyone. Sure, the mass layoffs of 2009 and 2010 seem to have abated, but Gorman has always been outspoken about his belief that the business of banking is changing and Wall Street has to change with it — it's adapt or die.

Gorman has even attacked compensation saying that the Street has "too many overpaid bankers"and cut his bank's pay pool by 9% last year.

It doesn't necessarily look like investors are being reassured by this tough talk. Morgan Stanley's stock has been relatively flat for the last year having crawled back from a serious beating starting in May after the Facebook IPO disaster (MS was lead underwriter).

Bottom line: We'll see if MS earnings reflect what Gorman thinks about the new Wall Street.

Then there's Bank of America, where the story is still all about cash and legal fees.

Back in October, CEO Brian Moynihan declared victory over everyone who doubted whether or not his firm could amass enough cash to build a strong balance sheet. 

From Bloomberg:

“We’re going to officially declare victory on one of those operating principles,” Moynihan said in the town-hall style meeting. “The reason why is, we have the top capital in the industry, the top liquidity in the industry.” People have stopped asking if the bank needs more funds to absorb losses and now want to know when investors will get the excess, he said.

Yes, after selling assets like crazy, after receiving a $5 billion cash injection from Warren Buffett last year, Bank of America is ready to increase its dividend.

Maybe. While Moynihan was sounding optimistic, bank analyst Meredith Whitney was raining on his parade. "This is going to be an endless beat down for the banks in terms of legal claims,"she told CNBC.

Since the financial crisis, Bank of America alone has paid out $50 billion in mortgage related legal fees and it's not over yet.

And what's most important about that, as Fortune's Stephen Gandel pointed out after the bank agreed to pay out an $11.6 billion settlement to Fannie Mae last Monday, is that Bank of America has consistently underestimated the amount of money it has to pay out in legal fees... by a whole lot.

From Fortune:

...bank reserves, and in particular legal reserves, are murky. Banks only give a total amount, and not what goes into that calculation. It's the 'trust us' approach. And at least in BofA's case, it's not clear investors should. Take the Fannie settlement. BofA said it had not previously reserved for $2.7 billion of the deal. The bank is paying Fannie $11.6 billion, but that includes buying back nearly $7 billion in loans. Many of those loans may be worth as much as half of their original value. So out of a roughly $7.8 billion deal (final cost), BofA had put only 65% of the settlement aside. By that math, BofA's $16 billion reserve fund for these types of deals should really be more like $24 billion.

In all, BofA had set aside $6.4 billion, or enough to cover just 55% of the cost of the all the legal settlements and losses the bank announced on Monday.

Last quarter, Bank of America estimated its total Fannie losses as $1 billion (obviously not enough), and part of their latest settlement last week was adding $900 million more to its legal reserves.

Fine, but another mortgage related suit filed by the Justice Department in October could cost the bank another $1 billion.

Then there's the suit AIG filed this weekend. The insurer is suing the NY Fed just to find out if they have a right to sue Bank of America for bad residential mortgage-backed securities it bought from Countrywide before the financial crisis.

If the Court says yes, AIG could seek another $7 billion from Bank of America.

We'll see if the bank is accounting for all of that on Thursday.

The last story to watch is at JP Morgan. This weekend Bloomberg reported that the bank is circulating a report that blames CEO Jamie Dimon for the bank's massive $6.8 billion "London Whale" trading loss last year.

The board will decide whether or not to release that report to the public today. For his part, Dimon has said he wants to "let it all hang out."

Still, this would be a fall from grace for Dimon. He's widely considered the most competent banker on Wall Street, and he's definitely the highest paid. He received $23 million total pay in 2011, including a $4.5 billion cash bonus. The board has already decided that his bonus will be cut this year because of the trading loss.

Tomorrow, we'll see if it gets any worse than that.

All that said, here's the schedule for earnings this week:

• Tuesday: JP Morgan
• Wednesday: Goldman Sachs
• Thursday: Bank of America
• Friday: Morgan Stanley

All of this goes down before the bell, so wake up early.

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