Wall Street Folly

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John Thain overheard dining last week at San Pietro: "Under the circumstances with this tough economy, I think I'll have tap water." $BAC

Did Thain really say that?  According to the NY Post, yes he did, while breaking bread, possibly reluctantly, last week with BlackRock Chairman Larry Fink at San Pietro.

Blackstone ($BX) merging distressed fund with its GSO Capital; BlackRock loan fund might default; Citi, Old Lane managers splitting ($C); IPO market freeze hitting venture cap and co's that need financing; SEC may charge Reserve Management

• Blackstone to Merge Distressed Fund With GSO Capital
• BlackRock Loan Fund May Default as Prices Tumble
• Old Lane Managers Look for Exit From Citi
• With IPOs at lowest level since 1977, firms run out of options
• Reserve Says SEC May Allege Securities Violations

Goldman's bonus pool said to be around $12 billion, down from $20B; Merrill's Asia Pacific president exiting; BlackRock cutting 500 jobs; Ex-Merrill debt vet launching distressed fund

Lehman trying to get rid of some of its riskiest assets?

It was another rough day for Lehman Brothers as investors scurried for the exits with rumors swirling about whether they'd have to raise billions more in capital.  Contrary to rumors early in the day, Lehman hadn't visited the Fed's discount window for funding (and hadn't done so since April 16 when they accessed it for "testing purposes").  However, regardless of how Lehman spins it, the market seems to believe that they will need to fill their coffers further.   The stock closed at $30.50, down $3.33.

According to a report by CNBC's Charlie Gasparino, Lehman may be exploring selling some of its riskier assets.....

BlackRock may be looking to be a hedge fund sugar daddy

Need money for your start-up hedge fund?  You just might want to chat up the folks at BlackRock -- they're thinking of taking minority interests in new funds:

BlackRock, whose existing hedge funds are overseen internally, plans to start buying into startup managers within 12 months, said Howard Berkowitz, head of the hedge-fund group. The New York-based company, which took over Merrill Lynch & Co.'s investment arm last year, manages $1.15 trillion in assets.

``If we find some really good young managers then we will be on the ground floor and be able to get a great rate of return,'' he said in an interview at the GAIM conference in Monaco today.