$$$23 year old female hedgie seeks hot, promiscuous male roommate. "Dana Vachon, Tim Sykes need not apply."

$$$Polonius is (Posthumously) Avenged [Going Private]

$$$Toyota [WallStrip]

Should the New York Stock Exchange put Paul Krugman on retainer? That’s the conclusion of Paul Greenberg writing in today’s Washington Times.

Surely another dip in the market is bound to come -- so long as there's a business cycle -- but Paul Krugman's magic touch keeps delaying it, turning every down into still another unstoppable up. It's positively unnatural. The man is a kind of walking, talking, and, best of all, writing version of Al Capp's poor little jinx of a character, Joe Btfsplk -- only in reverse, leaving not disaster but good fortune wherever he goes. The New York Stock Exchange ought to put him on retainer. If only Paul Krugman would just keep writing about the coming End of It All, prosperity might be assured.

But it isn’t just Krugman as a contrary indicator of the direction of the financial markets that has caught Greenberg’s attention.

Then there's the language in which Mr. Krugman sends out his jeremiads. It is, in a word, hilarious -- if unintentionally so. He has to be the country's leading practitioner of purple-as-a-bad-bruise prose. Mrs. Malaprop might have spoken like that if only she'd had a Ph.D. in the dismal science.

I've saved my favorite Krugmanism of all time for those occasions when I may need a bit of cheering up: "And when the chickens that didn't hatch come home to roost, we will rue the days when, misled by sloppy accounting and rosy scenarios, we gave away the national nest egg."

As prose, that's a lot of poultry. Try to visualize those chickens that didn't hatch coming home to roost, if you can stop laughing. Why, that's almost Zen, like the sound of one hand clapping. His reference to the national nest egg is just lagniappe.

One note to Greenberg: if you are going to criticize the writings of others, avoid the word “lagniappe.” We have no idea what that word means and no intention of looking it up. In fact, we couldn’t read any further after we saw that word because it made us feel nauseated. It sounds like something we drank at Mardi Gras once and we’re afraid to find out what they put in it.

Sound of one man weeping [Washington Times]

Take the fairly simple premise that you aren't allowed to put pictures of canines in your workplace because Bill Gates had nights terrors after watching Cujo, add Valleywag, and you get CONTROVERSY. Valleywag heard from a friend who heard from another friend that you aren't allowed to put pictures of dogs in your workstation at Microsoft. The justification from Microsoft, according to the source, was that "some people just hate dogs, yo" without any explicit allusion to the Muslim belief that dogs are inherently unclean. Does anyone have any more dirt on this (tips at dealbreaker dot com)? Is this a first in the American workplace - in terms of banning something so innocuous and fundamental to the general aesthetic of your assistant's cubicle? Is Microsoft instead controlled by ancient Egyptians (i.e. - aliens) and is anti-dog out of reverence to cats, or an aversion to the death cult of Anubis? Is this just Valleywag pulling a "Calcanis wants Imus to start a new media network" on us?

Dogs at work - [Valleywag]

You know how there are some people in the DealBreaker audience who like to leave comments about how media people know nothing about finance and we should go back to where we came from and, “Hey, at what address can I send my underwear to for Keith Hahn?” A lot of those readers will probably be somewhat ticked off to hear that a bevy of financial journalists will now not only make your blood pressure raise with “how frighteningly little [they] know about how things work on Wall Street” but actually affect things that happen on Wall Street. Still with us? Reuters introduced a new “sentiment analysis” feature today in which computers will read their articles, decided whether they are positive or negative and then trigger trades based on those results. FINalternatives reports that the new service “allows the machines to interpret the sentiment of news stories as they are published,” i.e. faster than your average trader.

Numerical “sentiment scores” are assigned to the words and phrases in the article and then totaled to give a positive, negative or neutral report card to the company in question. Does anyone else find it a bit disconcerting that Bess Levin or her counterpart at Reuters could be triggering hedge fund trades, based on the fact that she chose to write a scathing article about Apple, after her brand new Mac Book crashed for the third time in six weeks?

Reuters Gets Sentimental [FINalternatives]

The video above comes from Texas Energy Future Holdings, the joint-venture partnership set up by Kohlberg Kravis Roberts and the Texas Pacific Group to fund their acquisition of the Texas energy company TXU. They also have a snappy, graphics laden website called TexasEnergyFuture.com.
We’ve run a lot of stories about the online public relations campaigns of Pirate Capital but until now haven’t touch on the phenomenon of political campaign style advertisements in the TXU deal.

We were wondering who was behind the turn to the public airwaves in order to win sympathy for the buyout. Unfortunately, we didn’t get very far in our inquiries with Texas Energy Future Holdings.

“The investors felt the need to let the public know about the transaction,” Jeff Eller told us twice when we asked about who planned the advertising campaign and how the idea was first hatched.

This morning’s Financial Times reports that Bonderman didn’t fare too well when confronted by Dallas mayor Laura Miller during a panel discussion at Milken Institute's annual conference in Los Angeles.

In matters of substance, I would say that Mr Bonderman won on points. But Ms Miller and a member of the audience managed to rile him enough to concede a hostage to fortune. I concluded that the senior partners of private equity firms, who are under the spotlight around the world, still have much to learn about how to behave adroitly in public.

The turning moment of the discussion came, the FT reports, when Bonderman faced a question from an environmentally concerned audience member.

So why did he lose his cool when a self-righteous man from the audience demanded to know whether he felt an ethical responsibility to cease contributing to global warming? "You and others who are absolutists tend to be wrong almost always, in every event, at any time," Mr Bonderman snapped back, promptly losing the audience's sympathy.

It was an ingenue's error. A smile lit up Ms Miller's face and she said: "That was a really interesting answer." No smart politician would have been caught losing his temper with a critic in that way, especially not on camera. As they have learned, in the age of YouTube, one reckless moment can doom them.

Like the male leads who clash with sparky women in Hollywood films, Mr Bonderman is charming but arrogant. I suspect that is true of the heads of other private equity firms. Who might not be with their stellar financial records? But it is no longer tactically wise to show it and the sooner they learn that the better it will be for them and their investors.

We hadn’t seen the video of the debate. So we asked Jeff Eller about it. Was it televised somewhere?

“It wasn’t a debate, it was a panel discussion, and to the best of our knowledge it wasn’t broadcast anywhere,” he said.

So was the "panel discussion" broadcast or not? Does anyone have the video? We haven’t been able to track it down anywhere. Send what you know to tips@dealbreaker.com.

Private equity needs more charm

Dear Mr. Buffett… [WSJ]

The resumes are already starting to pour in but it's not too late. DealBreaker is still looking for summer interns and we might just be looking for you!

Our internships fall into two categories, editorial and graphics. For editorial interns we’d like someone interested in spending their summer writing, reporting, research and performing mild administrative tasks—things like making frozen margaritas for Bess. Ideal candidates will have an interest in finance, some writing experience, a mischievous sense of humor and a history of causing trouble.

We’re also looking to improve our graphics this summer through the use of slave labor with the help of a graphics intern. The ideal candidate will have a well-developed aesthetic sense, a desire to make pretty pictures on the internet and some experience using photoshop. We’re going to be providing original video and podcatsing content in the near future, so experience in podcasting, film-making or online video is a major plus. It will probably make your summer much more pleasant if you have some interest in finance as well.

DealBreaker internships are great resume building opportunities. This is a nice way of saying they are unpaid—although you can expect to receive cocktails and food on occasion. If you are a student, we will work with you to get credit for the position. Also you should keep in mind that DealBreaker internships are not dead-end jobs. Bess Levin started as an intern, and is now a full-time contributing editor.*

And now she’s also our internship coordinator, too! Send your resumes to bess (at) dealbreaker (dot) com. Include “Editorial Intern” or “Graphics Intern” in the subject line as appropriate.

*Past performance is not necessarily indicative of future results. This "help wanted" item contains forward looking statements that rely on certain assumptions, projections and flat-out baloney that the management of DealBreaker believes to be reasonable or at least knows how to spell.

Put down that Dawkins book and stop reading that Hitchens interview, there may be hope for divine intervention yet. In other big (HUGE) pharma news today, a pill that causes women to lose weight AND their inhibitions could be on the market in the next 10 years (right at the point when age will render us in dire need of administering such a pill to our dates, sans hedge fund). Researchers from the Medical Research Council's Human Reproduction Unit in Edinburgh found the hormone-releasing pill causes female monkeys and shrews to develop the dual effects (which I guess somehow aren't correlated with each other).

Hope for sex-boost slimming pill – [BBC]

Goldman, Merrill and UBS are claiming that the Fed's recent inflation warnings, suggesting interest rate hikes, get the housing market and the general direction of the economy all wrong. Chief economists at the three banks feel that the decline in the housing market has spread to the overall economy, which would indicate a bullish view on bonds and even suggest the need for rate cuts. The Fed disagrees and sees a stabilization of the housing market and no major correlation between the recent housing slump and the overall economy.

The three banks contend that a strong labor market has prevented any cuts on the Fed's part thus far, and believe the Fed is coming around to the more bearish view that the economy is still slowing. The Fed has readjusted its time table for a housing recovery and scaled back the forecast on capital expenditures. Despite this, the latest Fed meeting gave no hint of a rate cut, and the 2.3% rise in the Commerce Dept's price index from a year earlier send off inflation warning signals. Also, the banks are often wrong when it comes to predicting the direction of rate changes. Some highlights of Goldman, UBS and Merrill's glorious track record, from Bloomberg:

Goldman projected an increase in June 2002 and the central bank ended up cutting rates the next quarter. UBS expected the Fed to double its target by the end of 2003 to 2.5 percent from 1.25 percent. Instead, the Fed reduced borrowing costs to 1 percent in June 2003.

Merrill had forecast in early 2006 that the Fed would end a series of increases when its benchmark reached 4.5 percent. Instead, the Fed boosted rates to 5.25 percent in June.

Bernanke Is Wrong on Inflation, Goldman, Merrill Say - [Bloomberg]

Jim Cramer doesn’t want you to hate the game, or the playa. And in his column in the latest issue of New York, the “game” refers to making money; the “playas,” I-bankers (and I-bank CEOs, and, more generally, I-banks). Sure, you might be saying, why shouldn’t I hate the $54 million/year Lloyd Blankfeins and the Goldman Saches of the world? Not only are they terribly unhygienic, but they make more in an hour than I do in a month (or is that just us at DB? Don’t answer that) and I’m a jealous, small and petty person (to say nothing of my unresolved issues from childhood, which probably feed into the pettiness in a vicious, never-ending circle).

You’re saying that, right? Well Big J has the answer. If you invest said “playas,” you’ll get to be part of their “game” and your resentment will disappear because when you’re rich, you can buy the antidote to resentment. Another reason you shouldn’t hate these “playas” is because Cramer used to work for Goldman Sachs and never fails to mention this (or his relationship with Spitzer, which, let’s be honest, you really can’t blame him for, because Goldman Sachs is an incredible institution and Spitzer is essentially God’s special gift to the world and politics at large). Here are some other arguments for why you should cross Lloyd, Dick and Stanley off of your To Kill lists (hint: they all have to do with their outifts making you money, and Chuck Prince having less financial acumen than Cramer’s garbage disposal):

1. These guys are basically stay-at-home moms: underpaid and, more importantly, unappreciated.

Stop envying Goldman Sachs’ Lloyd Blankfein already. Don’t begrudge Bear Stearns’ Jimmy Cayne and Lehman’s Dick Fuld their millions. Let Merrill’s Stan O’Neal and Morgan Stanley’s John Mack get paid more than Croesus. You heard it here first: They deserve it. In fact, they deserve more than they earn now. Those five men are underpaid because they are about to make you very rich if you buy their stocks.

2. They will make you Kings of Great Neck, Dukes of Roslyn with Asset Management alone. And, not to brag or anything, but if you must know, Cramer predicted Asset Management would be a major money-maker YEARS AGO, before assets were even invented. Of course, no one at 85 Broad listened to him, just like they didn’t about gravity or 9/11.

Citigroup executives are worried that managers of activist hedge funds will try to force a break-up of the company, David Wighton of the Financial Times reports this morning.

Senior Citigroup executives fear the world’s biggest financial services company could become the target of activist hedge funds that would press for it to be broken up.

The executives believe Citigroup needs to step up its investor relations and explain better to shareholders the value of keeping its businesses together.

Many have dismissed the possibility that Citigroup, valued at $260bn, could become an activist target. But one Citigroup executive said: “Even Citigroup is not too big. It’s not impossible.”

None of executive are named in the story, and at least one person inside Citigroup (who also asked to remain anonymous) tells us that he suspects the story is a plant from executives trying to get management's attention following the campaign by The Children's Investment Fund which appears to have convinced ABN AMRO, the dutch bank at the center of a bidding contest between Barclays, the Royal Bank of Scotland and Bank of America. The fact that the executives feel the need to make their argument for better investor relations through the press, and to raise the threat of activist hedge funds, is a sign of the disfunctional culture at Citi, our source says.

Citigroup chiefs fear push for break-up [Financial Times]

If you didn’t know “How to Dance with Angels,” CFO.com is here to tell you. Even though VC investing is back at 2001 levels, the level of angel investing is ramping up at nearly the same rate. Angel investing, or foregoing VC money in lieu of wealthy individual investors, is seen as a way to prevent the pressures of 20%+ above market returns and allow for more corporate flexibility. More traditional angel return expectations hover around 10%-15% above the S&P. A sense of the overall market, from the article:

Last year angels — wealthy individuals who hope to take advantage of ground-floor investment opportunities in new companies — provided $25.6 billion to burgeoning businesses, an increase of nearly 11 percent over 2005, according to the 2006 Angel Market Analysis released by the Center for Venture Research at the University of New Hampshire. Furthermore, the number of ventures to receive angel funding rose 3 percent, to 51,000, last year, and average deal size grew by 7.5 percent. "This continued rise in total investments points to a healthy angel market," concluded the report.

More after the jump...

A new layer from the Onion o’ Epstein was peeled this weekend and, unsurprisingly, it connects The Man with Strong Proclivities for Both Fourteen Year Old Girls and Spa Treatments with the British Royal family. Turns out that Jeffrey Espstein, the guy whose police report necessitated smoking at least one cigarette after reading, is best buds with Prince Andrew—and the Brits are shocked and appalled (that they didn’t get some PR flak to bury the story sooner.) The bosom buddies were reportedly introduced by mutual friend Ghislaine Maxwell (who probably has her own cornucopia of what narrow-minded individuals might call “issues”). Andrew has shacked up at Epstein’s New York pleasure palace “at least twice”; Epstein has reportedly stayed at one of the Prince’s family’s homes—Sandringham—and “holidayed” with him in Thailand.

The Royals are apparently “troubled” by Epstein’s lifestyle, and especially by the photographs that were taken of Andrew surrounded by topless ladies on a yacht while he was on vacation with The Ep. They will likely schedule a sit-down between the Queen and her Second Greatest Disappointment (no one bounces back from marrying Camilla Parker Bowles, ever), to cut the grown man off at the knees (though they’ll pronounce it ‘shedj-yool,’ just to be contrary).

Prince Andrew's billionaire friend is accused of preying on girl of 14 [Daily Mail]

Jeffrey Epstein Archives

Pfizer has just released a Viagra commercial in Canada that contains nothing but gibberish, save for the word Viagra. While not necessarily Dr. Porkenheimer’s Boner Juice, Pfizer is no stranger to controversial advertising. The FDA made the company take its 2004 “Wild Thing” ad off the air, because the ad implied that people are given nicknames for getting around (the “Festering Ho-bag” campaign was shelved in pre-production).

Pfizer claims that the spot is just a reminder ad, and that consumers already know what Viagra does. Critics argue that pharmaceutical advertising is a stone’s throw from turning into beer (the “Magic Viagra Fridge” anyone?). From the NY Times:

Maxine Thomas, an executive at Taxi, the agency in Toronto that produced the campaign, said the ads take advantage of Viagra’s name recognition. “It’s not as though we need to tell people what it does, because they already know,” she said. “Consumers can fill in the blank for themselves.”

Canada has similar drug advertising rules as the US – you’re allowed to show a translucent neon butterfly floating in an aurora that exists in your bedroom only when you’re sleeping as long as you don’t explicitly say that the drug is a sleep aid. This allows you to bypass the 3 minute roll-call of side-effects and provides the helpful service of letting the populace decide whether it wants to see a neon butterfly. Just annoy a physician today! Everybody wins. You get to try something cool you haven’t even thought of yet, maybe see a neon butterfly, experience some unknown side effects (massive anal leakage, occasional dizziness), and your doctor gets you off his back.

Pfizer is currently teetering around the midpoint of its 52-week range in daily trading, up slightly at the moment (after being down slightly a moment ago).

Minky Viagra? Pfizer Doesn’t Want You to Understand It, Just Buy It – [NYTimes]

How times have changed. It wasn’t so long ago that the SEC stood accused of letting Morgan Stanley chief executive John Mack’s reportedly close connection to the Bush Administration block an investigation into insider trading. Now Mack has endorsed Hillary Clinton.

Business Week reports:

One of Wall Street's big-time Republican fund-raisers, Morgan Stanley (MS) CEO John Mack, has told BusinessWeek that he and his wife, Christy, are endorsing Democratic Presidential candidate Hillary Clinton, whom they supported for re-election as senator.

Mack previously reached Ranger status in Republican campaign finance circles by raising at least $200,000 for President George W. Bush's reelection in 2004. (Former Goldman Sachs (GS) CEO Hank Paulson, now U.S. Treasury Secretary, raised a Pioneer-worthy $100,000.) Mack, who says he'll stay a registered Republican, was also considered a possible candidate for various Bush Administration posts over the years.

It's too early to tell who the other major bank chiefs will back. But Mack's switch could tip the balance of power toward the Democrats. According to nonpartisan contribution tracker PoliticalMoneyLine, three of the other top six bank CEOs (Goldman's Lloyd Blankfein, Lehman's (LEH) Richard Fuld Jr., and JPMorgan Chase's (JPM) Jamie Dimon) have favored Democrats in their political giving patterns over the past few years. Bear Stearns (BSC) CEO Jimmy Cayne is strongly Republican. Citigroup's (C) Charles Prince and Merrill Lynch (MER) CEO Stan O'Neal have bipartisan donation habits.

Melamine Said Common in China Animal Feed
When it first hit that feed from China contained the semi-toxic chemical melamine, people wondered whether the whole thing was intentional. Then, the articles shifted about how it was definitely intentional, as some feed producers spike their product with it as a cheap boost to its nutritional profile. And now the latest stories are about how pretty much everyone uses it and knows about it, which, well, pretty much answers the question about whether it's intentionally placed there (it is). Meanwhile, a number of humans have definitely eaten pigs that ate it (duh), though it's still not clear whether humans in the US have eaten it directly, in the form of gluten. We're guessing that this is another obvious "duh". It also seems possible that this will be an excuse to erect some fresh trade barriers, something that' been on the wish list of many US politicians for some time. Certainly protectionist drums are starting to bang louder, on all sides. And while we're on the subject of the food supply, is anyone else concerned by the apparent collapse in bee populations that's been on the news a lot lately? Let's get a show of hands on that.

Chalco triples in Shanghai listing, rivals Alcoa (Reuters)
You've probably noticed that the Chinese IPO market is red hot. They're doing new ones every day, and they're big. Lots of banks and industrial firms raking in large amounts of cash with the promises of monster profits. The latest is aluminum firm Chalco, which, after tripling in its Shanghai debut, is already on par with Alcoa in terms of market cap. It's already the country's eighth largest stock. What's scary is that you get the impression there are plenty more where that came from.

BoA threatens ABN with $220bn lawsuit over LaSalle (Times Online)
Bank of America really doesn't want ABN Amro to go back on its agreement to sell LaSalle. Just in case there was any ambiguity on that point, the bank has threatened ABN Amro with a little $220 billion lawsuit, should it renege. It's not clear how it came up with that number, which on its face seems ridiculous -- it's ten times the worth of LaSalle itself. But still, nobody wants that kind of threat hanging over their head.

Citigroup Wants to ‘Get It Done’ (Dealbook)
Just in case there were any doubt about Citigroup's commitment to righting the ship, it will announce next weekend its new tagline "Let's Get It Done". The great thing about this slogan is that it's obviously not a message that customers will give a damn about (just a guess: customers don't care much about taglines when it comes to banks), rather it's a message aimed internally. For more effect, it should be "Let's Get It Done, Dammit!" Meanwhile, executives at the company are said to be concerned about it becoming a target for activist hedge funds, that seek its breakup.

$$$Bank of Montreal: New Amaranth? [Bloomberg]

$$$Reader Mail (Again) [Going Private]

$$$Evian Criminals [Slate]

$$$Wallstrip Chat: Tim Wolters [WallStrip]

On Wednesday, Morgan Stanley settled a civil suit with eight of its former female employees who alleged that the bank discriminates against women in terms of how they are trained, paid, and promoted. This was at least the second time since 2004 that the bank has found itself involved in a fracas with the ladies. Following the verdict, we sat down with Jan Tyler, one of the plaintiffs.

DealBreaker: So. Were you happy with your portion of the $46 million settlement?

Jan Tyler: I’m not allowed to say whether I was happy or not, according to Cyrus Mehri [one of the lawyers who represented the eight plaintiffs], who I hate.

DB: Can you blink me an answer?

JT: No. I will tell you this—I’m writing a book. Based on my experience.

DB: Interesting—a memoir?

JT: It’s going to be like a James Frey book [, A Million Little Pieces].

DB: So you’re going to make stuff up?

Because it’s a slow news day and because we know how much you love him and because next week, or the week after, we’ll be introducing the first chapter of “The Banal Existence of Timothy K. Sykes: A Day Trader is Basically The Same Thing As a Hedge Fund Guru,” here’s another picture for you to caption to your heart’s content. You’re welcome.

(And as a 'Thank You' for your efforts, Keith asked me to include this next treat. Don't just stare at it, eat it).

From the looks of this video, things are heating up in Texas. The Star Wars credit sequence-style video seems to be aimed at pressuring the Texas legislature to oppose the buyout of the energy company TXU by KKR and the Texas Pacific Group. And it doesn't pull its punches, comparing the deal to another famous Texas energy concern, Enron.

Add Ed Whitacre, Chairman and CEO of AT&T, to the list of CEOs enrolled in the Lee Raymond Skydiving Institute (motto: It is the size of your golden parachute that matters, not what you do with it). Whitacre has a nice $158mm parachute packed up, on top of his total compensation last year - a whopping $60.1mm. Here’s a rundown of Whitacre’s compensation (in millions):

- $2.1 Salary
- $46.9 Options
- $6.8 Non-equity incentives
- $4.5 Pension and deferred comp
- $0.5 “Other” compensation

The “other” category includes:

- $14k for financial counseling and for people to do his taxes [even his money needs to be counseled]
- $27k in auto benefits [free wash and wax... for 50 cars]
- $38k for the corporate jet [those are some hot flight attendants]
- $11k in supplemental health insurance [in case of meteor]
- $25k in club memberships [but still doesn’t have a Duane Reade club card]
- $101k in company matches to deferred comp [we’ll see your ridiculous expenses, and raise you 100%]
- $8k in communications and security [he does not take advantage of his nights and weekends cell phone plan]
- $25k in tax reimbursements [does he get to reimburse himself for the money he expensed for people to do his taxes?]
- $214k in life insurance premiums

Where are activist nuns when you need them? The WSJ’s Deal Journal reports that Whitacre’s package may be a bit over the top considering AT&T’s performance relative to the market.

AT&T argues that the pay is deserved because the company has “outperformed its peers in delivering value to stockholders” during Whitacre’s tenure. But how about a more basic measure of performance, like how an investment in the company has stacked up against the broader stock market since Whitacre, a serial acquirer, took the top job at the company, then known as SBC Communications, in 1990? By that scorecard the conglomerate that he now runs — which has morphed into the new AT&T — is valued at just under 2.5 times its worth back then, while the Standard & Poor’s 500 stock index has risen more than four fold.

Ed Whitacre’s Country Club Retirement – [WSJ Deal Journal]

“If you want to be five guys and a dog, you don’t need a lot of money,” Joseph Perella tells DealBook’s Andrew Ross Sorkin in today’s profile of his new investment bank, Perella Weinberg. “If you want to have a firm with global reach and presence and you want to fund the model that we developed, that needed significant capital.”

Sorkin’s piece tells the tale of how Perella and Tarek F. Abdel-Meguid spent the summer after they left Morgan Stanley hanging around the offices of Weil, Gotshal & Manges, having lunch with the likes of Sandy Weil and Steve Schwarzman and plotting to take over the world.

Once it became clear to Mr. Perella and Mr. Meguid that they were not going back to Morgan Stanley, they came up with a grand plan: to create a boutique bank far bigger than a merger adviser, one that would also include a large asset-management business.

And unlike many of the most successful boutiques, which started on a shoestring, like Evercore Partners or Greenhill & Company, the two men wanted to start much, much bigger.

Mr. Perella said he told Mr. Meguid: “If this is like starting Wassperella” — referring to Wasserstein Perella, a firm he started with Bruce Wasserstein — “or an M.& A. boutique, I’m not interested. Been there, done that.”

We’ve all had those kind of summers. You’ve left your job, you just pal around with your buddies, you hatch grand schemes and promise yourself that next time around things will be different. But we don’t all know the grandson of Sidney Weinberg, who Sorkin describes as “the patriarch of the modern Goldman Sachs” or ten other people who are willing to put up a total $1.1 billion to fund your dreams.

The Pressure of Great Expectations [New York Times]

a. Taller guy is teasing shorter guy about being vertically challenged: “I won’t process your trade until you hit my hand. Hit it; hit it; you can’t hit it ‘cause you’re so short!”

b. You can’t see it, but behind the camera, there’s another guy, and the three men are currently in the midst of one intense game of Monkey in the Middle.

c. “Sieg heil!”

d. “No, seriously, I switched over to Speed Stick and I’m telling you, no stains, no smells. It’s like I’m a new man.”

e. Guy just sunk the game-winning three in the first round of Trader Detritus Basketball (TDB)

f. Super Trader is about to take flight.

g. TRADE: a renowned non-traditional dance that uses the body and ordinary objects to create percussive physical theatre performance. (What’s the sound of someone stomping his foot and banging two Bloomberg terminals together? The sound of all that is good and pure in the world.)

Surely you can do better? Let us know.

Run on Wall Street Sends Dow Above 13,000 [NYT]

Ken Kutaragi, CEO of Sony Computer Entertainment and creator of the PlayStation, announced that he is retiring yesterday. He will officially step down in June. This is indicative of just how bad things are at Sony, as Kutaragi is the human face of the PlayStation. This would be like Nintendo distancing itself from Shigeru Miyamoto (designer of Mario, Donkey Kong, Zelda) - or at least not letting him give company presentations. More on the story, from CNet:

Kutaragi is one of the most celebrated figures in consumer electronics history, having shipped more than 200 million PlayStation and PlayStation 2 consoles, as well as the PlayStation Portable. Some analysts believe that had the PS3 been perceived as a hit or even a mild hit, there's a good chance he would be sticking around for the full 10-year lifecycle Sony gives its consoles.

But the PS3 is widely seen as a commercial flop, given its third-place position among next-generation video game consoles, trailing Microsoft's second-place Xbox 360 and the surprising leader, Nintendo's genre-busting Wii. The PS3 is even trailing sales of the venerable PlayStation 2 at this point.

Sony says sayonara to father of PlayStation - [CNet]

Just in case you were worried that JP Morgan was going to make good on its “threat” to ship off to Stamford (who were they threatening? Their own employees?), DealBook notes that the move is, in all likelihood, a bluff. Also: a cheap and what will (probably) turn out to be an unsuccessful attempt to get New York to raise its $100 million incentive offer to the $650 million it gave Goldman Sachs in 2005 (would you give your mistress a diamond the same size as the one you gave your wife? Actually, that analogy doesn’t quite work).

Even the mayor of Stamford, Dannel Malloy knows he and his city are just a pawn in Jamie Dimon’s (incredibly) passive aggressive attempt, telling the Stamford Advocate, “It’s a little leverage. I’m not holding my breath.”

J.P. Morgan in Stamford? Even the Mayor Has Doubts [DealBook]

Ernst & Young with another entry into the Teambuilding Unintentional Humor Hall of Fame (thanks to a reader tip). If you missed yesterday's spiritually transcendent entry, or if you just need a pick-me-up, click here. The new entry is sans-video, but makes up for it in lyrical genius. The primary verse is "E-Y, E-Y, Ernst and Young! From top to finish, we're gonna be number #1," only with about 10 other interstitial vocal tracks coming in and screaming out a few syllables in a pitch I can only describe as Mariah Carey punched right in the baby maker. Much like Jimmy Page's guitar playing in "Ten Years Gone," a veritable wall of sound is created.

Listen here.

The constant repetition of "E-Y, E-Y" also makes the song sound like a rejected track from Terry Gilliam's Time Bandits.

PS - Time Bandits, if anyone recalls, has perhaps the greatest ending of any movie ever - where the main character's parents literally blow up, in a rather casual manner as far as exploding parents go, and then Sean Connery as a modern fireman (and pre-modern King Agamemnon) drives up and winks (can anyone find a clip of this?). That "your parents just exploded" wink. Credits. George Harrison chanting. I swear a couple of my staffers at JPM were directed by Gilliam. You have a stomach ulcer? Wink. Staffed on new project. Credits.

The government cannot effectively regulate the hedge fund industry and it’s a good thing too, Robert Steel said yesterday. The setting was a Manhattan Institute conference. Steel, a former Goldman Sachs executive who is now the Treasury Department’s top domestic finance official, raised two original arguments against hedge fund registration and regulation. Since this is something we talk about a lot around here we found ourselves a bit surprised that we hadn’t heard these ideas before.

Steel, the Treasury undersecretary for domestic finance, also said it would be costly and impossible to train enough people to keep tabs on some 8,000 hedge funds.

“I don't like the moral hazard of communicating a government all-clear,” Steel said at a conference hosted by the Manhattan Institute in New York today. The risk is that regulation “communicates confidence in a product that is riskier than normal investors should get involved in,” he said.

Both points are the sort of thing that are so obvious—once they’re raised. You instantly feel like you’ve known them all along.

Steel Says Hedge-Fund Regulation Risks 'Moral Hazard' [Bloomberg]

Last night we stopped by CNBC's On The Money to discuss the stories you told us about "dirty banks." Rats on the trading floor, garbage stuffed under the floorboards and the unmistakable scent of men making money. You told us the stories, we told America, and now you can watch it here to complete the virtuous circle.

Was This a Democratic Debate? (WSJ)
The Democrats debated last night, but there was a poker tournament at the local club, so it really wasn't much of a priority. Maybe we'll watch them when it's just down to Obama, Edwards and HIllary, but at this point, we really don't care too much about what Joe Biden and Dennis Kucinich (remind us to tell the story about the time we got to ask Dennis Kucinich a question at a press conference). But apparently, the subject of hedge funds came up, and both Hillary and Edwards sung their praises. Edwards worked for one in a past life, which he admitted, so he was pretty hamstrung. Meanwhile, Hillary said they reflected the entrepreneurial spirit of America, which is pretty much true. In other words, it looks like hedge funds' extensive investments into Democratic candidates is paying off. They weren't asked about private equity, so it's not clear whether the rightward tilt of PE funds would've brought out the guns.

In Nikko Bid, Citigroup Wins the Day (Dealbook)
In the end, it was relatively painless, as Citigroup announced today that it had successfully garnered 61% of Nikko Cordial, giving it a majority stake in the bank. It had offered to buy up the entire company, but it was hoping to at least gain 50%. So, Citi is declaring it a victory. Up until the end, there were reports of holdout institutions that felt Citi's offer was unsatisfactory.

Microsoft exceeds Wall Street expectations (Seattle Post-Intelligencer)
Valleywag reported yesterday afternoon that the hold music on the Microsoft conference call was the theme song from the Titanic, which, symbolically, seems like a real mistake. That being said, the company has gone another quarter without hitting an iceberg. Despite the fact that the company is dead and irrelevant (according to people who know about these things), it turned in a record quarter, beat expectations, demonstrates strong sales of Vista and Office, and guided solidly.

$$$Leveraged Sell-Out on Andrew. [LSO]

$$$CNBC. Tonight. 7. Dirty Investment banks. Do it. [On The Money]

$$$Lindsay Campbell: Ninja? [WallStrip]

We heard a rumor yesterday that our feathered friend "Andrew" may have been let go from what was allegedly his position (on the 38th floor?) at Bear Stearns. Obviously, we have no idea if this is true (we only have moles in the top three and at SAC, Citadel, Renaissance, and Third Point). If it's not, well, good. We like it when people are able to pay their rent. If it is, we think Bear should stop focusing on its image and start focusing on hiring a new cleaning staff. Besides not realizing that if you drink two Red Bulls a day for two weeks, you'll need more than a twelve pack to get by, what is Andy really guilty of (other than being incredibly fashionable)?

Nothing. He didn't name his firm, give any stock tips, or release a sex tape with the CEO's wife (presumably). But if Big A was shown the door, it wouldn't be the first time Bear Stearns got its knickers in a twit over one of its employees talking to the press. With that in mind, we give you Lee Munson. The man, the myth, the legend. The guy who got fired from (what people believe was) Bear Stearns for discussing a lot more than his choice of collars and shoe-shining techniques.

You cannot make this stuff up (obviously, we’ve tried and failed):

Munson on theology:

"If I ripped my skin out, you know what would flow out?" he asked. "Bloody cash, baby. Money! Rip it out, it's gold!" Mr. Munson held his arms up higher, crucifixion-style. "I want to be like Jesus," he said. "You know why? 'Cause I'm rich with blood and I want to bleed on you, because you'll be wealthy if I bleed on you. Or maybe if you're a bitch, I'll fucking squirt you with a little bit of silver."

Private equity executives make no secret that relatively plentiful credit is the fuel power the surge in giant leveraged buyout deals, allowing the buyout shops to make acquisitions on companies which might have been untouchable in earlier eras. So it comes as a bit of a surprise to hear so many of them seem to be warning us about rising debt coupled with looser lending standards. Carlyle founder William Conway has rang the alarm bells with a memo of his that was “leaked” to the press everywhere. Remarks of Leon Black and Steve Schwarzman also have been read as warnings.

The latest entrant is the chief executive of BlackRock, Larry Fink. BlackRock is not a private equity shop—it’s an asset management firm that was spun-off of the Blackstone Group way back in 1992. But Fink’s background is in debt and private equity. He was a bond-trader at Credit Suisse and worked at Blackstone before the spin-off. And now he’s telling the Financial Times that the leveraged debt fueling the buyouts may be the next subprime mortgage crisis.

“If I was the chairman of the Federal Reserve, I’d be paying more attention to that because, to me, this is going to be tomorrow’s problem,” Mr Fink said in an interview with the Financial Times. “Standards have deteriorated to levels that we never even dreamed that we would see.”

So has Larry gone over to the other side? Perhaps. His business does compete for investment dollars with private equity firms and hedge funds, and so he may have a vested interest in seeing the current golden age of private equity come to an end.

But there’s a more paranoid theory that was suggested to us by a source (who requested that we keep him anonymous) who works at a smaller private equity shop. His theory was that the big shots in private equity were beginning to worry that the loose credit standards were allowing others in the buyout market to make bids that might once have been exclusively within the reach of the Blackstone’s, Apollo’s and KKR’s of the world. The relatively easy access to credit was fostering competition in the once cozy world of private equity, and driving-up the prices of the companies they want to take private. So they want to talk investors out of getting involved in lending into the buyout market in order to make it harder for competitors to raise funds.

Of course, as even our source admitted, this theory is more than a bit paranoid. But just because you are paranoid doesn’t mean Henry Kravis isn’t thinking about how to crush you.

BlackRock chief warns on leveraged loans [Financial Times]

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The PS3, as advertised, is smart. The console, a Scorpio (released 11/11), likes long walks on the beach and processing medical research about proteins in its free time. Over 250k PS3s are currently employed in Stanford University’s Folding@home project to improve processing power. Like the SETI program, Folding@home uses networked systems of volunteers to create a larger computing grid that works as one virtual machine. We should all be out folding proteins because, from the Folding@home website:

when proteins do not fold correctly (i.e. "misfold"), there can be serious consequences, including many well known diseases, such as Alzheimer's, Mad Cow (BSE), CJD, ALS, Huntington's, Parkinson's disease, and many Cancers and cancer-related syndromes.

Unfortunately, even “the most powerful distributed-computing service on the planet” can’t drive up PS3 sales, which still significantly trail the Wii. At least it has its tech specs to fall back on. The PS3 remains the Jeff “I’m f***ing smart” Skilling of the video game industry, boasting:

Calling PS3 machines "games" is a bit like describing an F15 fighter jet as a "lighter than air machine." Sony has said that PS3s have as much as 30 times more processing power than an average PC and can’t get AIDS.

In other console news, Nintendo released earnings this morning, showing a 77% increase in net profit over the same period last year and a near doubling of revenue.

PS3 a Hit for Stanford Grid Project – [Yahoo]
Nintendo 1Q profits pumped up by Wii – [Yahoo]

He might not've known it at the time, but hurricane-loving icthyophile Brian Hunter had started a trend. Blow up fund, start new one. Rinse and repeat. And Bo Collins, formerly with the now-defunct MotherRock is following in suit. Though it allegedly will not be turned into a hedge fund, Business Week’s Matthew Goldstein reports that Bo and several former MotherRock colleagues are starting a venture called 1618 Group, with tens of millions raised already from one investor. The group will be managing the generous (foolish, unwise, crazy) man’s money by “trading energy contracts and investing in energy-related private equity deals."

Sadly, Collins does not share Hunter’s love of great food and fine wine, and choose not to name the Two Buck Chuck (though Franzia was apparently a strong contender). Bo (overconfidently?) picked 1618 in reference to the Greek “golden ratio” (1.6180339887). (De Divina Proportione claims the ratio’s application yields “pleasing, harmonious proportions” and psychologists believe that it factors in the humans’ perceptions of beauty. So if not a major money maker, Collins’s venture is sure to be sexy beast).

While we haven’t yet obtained any of 1618’s “private” documents, if they’re as “confidential” as Solengo, it’ll only be a matter of time. (We kid the Solengists).

Will Bo Collins' Second Act Be Golden? [Business Week]

We’re a little late to this (via Valleywag via M&A++), but here is an Ernst & Young offering to the Teambuilding Unintentional Humor Hall of Fame. This one may be better than HSBC’s “Let’s Live It.” The video, slick “how do you pack all those classic 80’s hits on one CD!?” production quality and all, is a four and a half minute send-up of the Gospel favorite “Oh Happy Day.” The lead, less Mahalia Jackson and more a person picked to play Amy Grant in the fifth run of an off-Broadway musical about her life, takes us to a very special place with lyrics like, “When Ernst & Young… (wait for it) When Ernst & Young …(second verse same as the first)… When Ernst & Young… (ok, seriously?).“ At least “when Jesus washed” contains a verb, unless Ernst-ing is something cool I haven’t heard of yet.

Corporate Culture – [M&A++]

The resumes are already starting to pour in but it's not too late. DealBreaker is still looking for summer interns and we might just be looking for you!

Our internships fall into two categories, editorial and graphics. For editorial interns we’d like someone interested in spending their summer writing, reporting, research and performing mild administrative tasks—things like making frozen margaritas for Bess and keeping Keith Hahn away from Carney’s whiskey. Ideal candidates will have an interest in finance, some writing experience, a mischievous sense of humor and a history of causing trouble.

We’re also looking to improve our graphics this summer through the use of slave labor with the help of a graphics intern. The ideal candidate will have a well-developed aesthetic sense, a desire to make pretty pictures on the internet and some experience using photoshop. We’re going to be providing original video and podcatsing content in the near future, so experience in podcasting, film-making or online video is a major plus. It will probably make your summer much more pleasant if you have some interest in finance as well.

DealBreaker internships are great resume building opportunities. This is a nice way of saying they are unpaid—although you can expect to receive cocktails and food on occasion. If you are a student, we will work with you to get credit for the position. Also you should keep in mind that DealBreaker internships are not dead-end jobs. Bess Levin started as an intern, and is now a full-time contributing editor.*

And now she’s also our internship coordinator, too! Send your resumes to bess (at) dealbreaker (dot) com. Include “Editorial Intern” or “Graphics Intern” in the subject line as appropriate.

*Past performance is not necessarily indicative of future results. This "help wanted" item contains forward looking statements that rely on certain assumptions, projections and flat-out baloney that the management of DealBreaker believes to be reasonable or at least knows how to spell.

New York Magazine profiles “Six real New Yorkers” in a segment called "Sex Diaries" to determine who's getting some. The article literally counts the episodes.

The inevitable Wall Street entry clocks in with an end of week count that includes one act of fellatio, one act of cunnilingus and one act of intercourse with the woman on top. The only hitch is that he's married, seemingly faithful and lost all his model and bottle instincts. The magazine labels this as sexual frustration. Is it?

Do single (or at least sleazier) traders do any better on average (does someone want to make a market here)? Judging by how frantically the pinstriped sect is trying to cram into Tenjune (or Joshua Tree) most nights we'd have to say the jury's still out (and those callouses are not from working out, or a Bloomberg terminal).

Here's the breakdown of a frustrating week, from NY Mag:

THE SEXUALLY FRUSTRATED DAD
Male, 43, Wall Street trader, Bay Ridge, married, three kids.

DAY 1
7:00 A.M. Wake up feeling frisky. My wife says, “Let’s all go to early Mass.”
7:30 P.M. She tells me she really wants to make love with me. It’s too early; the kids are still up.
9:30 She says she’s tired, just snuggles, and falls asleep. Oh, well.

DAY 2
7:00 A.M. Wake up kind of excited, but it’s time to get everybody up.
7:15 Get a nice flash of tits before my wife goes into bathroom.
9:00 P.M. Been a long day and I really want her, but she won’t be home from work for three more hours.
MIDNIGHT Think I said good night to her. May have dreamed it.

DAY 3
6:30 A.M. Awake to put on coffee. She is comatose.
4:00 P.M. Go for a drink. See a bartender friend. She is really hot, but not my wife.
8:00 Home and missing her—another late night.

Read more about this guy’s riveting week after the jump…

As most of you probably know, John Thain brushed off the claims of a Goldman analyst today that Reg NMS will “erode the transatlantic stock exchange group’s market share and benefit its main US rival, the Nasdaq.” Tossed them to the wind; knocked them down; scoffed; said, “Whatchu talkin’ about, Willis?” Now, these responses make sense if you’re going to buy the party line that the New York Stock Exchange is, as they say, in compliance with the group of rules known as the Regulation National Market System, and believe the Goldman analyst, Joshua Carter, to be on the right track.

But, as John Francis Carney III has pointed out (like the crazy homeless man who shouts at you when you walk into your building every day) in the past, there’s a good chance that the NYSE isn’t in compliance with Reg NMS. Yes, JFC3 has said, these rules that allegedly help rather than hurt the NYSE—excuse us, NYSE Euronext—are not even being followed by the small elves that push buttons on the corner of Broad and Wall. Or, at the very least, we cannot get any firm confirmation from the NYSE or the SEC that NYSE is in compliance. But why would that be? Why would just John Thain allow this to happen? And why did Erin Burnett show up to the set today walking with a limp? The answers* may surprise you.

The Weinsteins are starting a $285mm film fund with an Asian fetish. Along with $15mm of Weinstein blood money (every time Uma Thurman kills a Japanese teenager we get $50 bucks!), Goldman is set to raise $245mm in debt and $25mm in equity for the fund. The goal of the fund is to back 31 Asian-themed releases in the next six years, and it's identified up and comers like Jackie Chan to be in some of these movies.

The Weinsteins, never ones to back away in the face of certain defeat (a quality they liken to the Spartans, a huge market success), are completely ignoring domestic box-office trends. From Bloomberg:

The five films distributed by Weinstein Co. this year, including ``Grindhouse,'' a thriller about a stalker from directors Tarantino and Robert Rodriguez, have taken in $21 million, compared with $133.4 million from nine releases during the same period in 2006, according to Box Office Mojo.

The upside: growth in the Asian film industry. The film industry is expecting 5% annual growth over the next 3 years, with Asia as a key driver in a market expected to generate over $100bn by 2010.

Weinsteins Plan $285 Million Film Fund for Asia, Hire Goldman – [Bloomberg]

At the beginning of the month a dispute broke out between CNBC’s Charlie Gasparino and DealBook’s Andrew Ross Sorkin. Gasparino had reported that Apollo was considering going public, following the footsteps of the Blackstone Group and the map laid out by Fortress Investment Group into the public markets. Sorkin declared that CNBC had simply got the story wrong. “It’s not true. Apollo is not going public next month, nor the month after that — and probably not the month after that either,” Sorkin wrote.

As the story progressed it seemed that Sorkin was at least half-right. Reports were published indicating that Apollo was not yet getting ready for a public offering of shares. It was said to be considering a private offering of equity instead. Since these privately sold shares would probably come complete with registration rights that would allow them to be sold on the public markets eventually, the CNBC story didn’t look quite as far off as Sorkin’s item made it seem.

But the reports coming out from the Milken Institute's annual Global Conference indicate that Sorkin may have overshot in his takedown of Gasparino’s report. Apollo founder Leon Black stopped short of commenting on his firm’s plans for an equity offering, but it seems clear they are at least considering a public offering.

Here’s how Business Week describes Black’s remarks at the conference:

But Black did build his case for public ownership of the businesses. He said publicly traded shares would allow him to retain top managers and recruit new ones by offering them stock in the firm. He also said such an offering would give him currency to acquire other, smaller firms. One of the ways Black said he's been able to achieve superior returns was by hiring investment managers with experience in specific industries. He said he'd like to expand that expertise, noting that health care and energy were two areas in which his firm was weak.

Does that sound like someone who isn’t considering a public offering?

The Predator's New Ball [Business Week]

The Dow closed at over 13,000 yesterday and it’s all everyone can do not to send themselves into anaphylactic shock (except for John Thain—he actually did go into anaphylactic shock. You’ve got to read those labels, people, even non-peanut products “may contain trace nuts”). Our DB Senior Dow Correspondent’s response? “I can't wait for the reaction when we go from 19,000 to 20,000, which at that point will be a mere 5% move -- does anyone realize it is NOT A BIG DEAL anymore?? 1,000 point moves SHOULD happen up here! You’re killing me, Smalls!”

In other news, the graphics guy at the Wall Street Journal is just coming down from a serious acid trip:

Other than looking a little confused when holding up the premiere premier first issue, Jon Stewart’s interview with Matt Cooper about his Valerie Plame piece in Portfolio aired Monday without any discussion of the mag. This, despite Cooper's insistence that he was entirely focused on promoting Portfolio. Here's a quote from Cooper in the Portfolio blog:

I still haven't seen the show. I've been on the road promoting Portfolio in Atlanta and now on to Minneapolis and haven't had Comedy Central in my hotel rooms. But I'll be curious what it looked like.

The interview was good. Jon is tough on the press as everyone who watches the show knows so I found myself defending a profession that I think he rightly critiques most nights but kept trying to bring it back to the mag because, hey, that's what I was there to promote.

By "bring it back to the mag" Cooper meant not talking about the mag at all. Papa Nast cannot be happy - it's one chance to develop some street-cred with the "younger than Tom Wolfe" generation was squandered.

Does it sadden anyone that the Daily Show is reaching for guests in the depths of Portfolio? I don’t know whether that speaks more to Daily Show guest bookings or Portfolio’s insta-“prestige.” At least it’s a bit amusing that Portfolio needs to be referred to as “Conde Nast” Portfolio just to seem legit. You need to pump at least $125mm into your magazine launch for branding.

Daily Show Interview with Matt Cooper
Behind the Scenes at Daily Show - [Portfolio]

Lots of action today in the battle for ABN Amro.

First a quick recap for those who haven’t been following the story in Joe Weisenthal’s Opening Bell. ABN Amro is the largest Dutch Bank but it has come under pressure from shareholders—particularly the Children’s Investment Fund, the huge British hedge fund—to sell itself after a period of lagging performance. The managers of ABN Amro opened up talks with Barclays, which offered a 100% equity deal worth 36.25 euros for the Dutch bank.

Despite the widespread impression that ABN Amro’s management want to close a deal with Barclays, there were rumors of rival bids from the start. Yesterday the Royal Bank of Scotland put in a competing bid for ABN Amro. The RBS offer is reportedly worth 72.2 billion euros, consisting of seventy-percent cash and thirty-percent RBS stock. RBS has partnered up with Fortis, a Belgian banking firm, and Banco Santander Central Hispano, Spain’s largest bank, in making its bid.

Although the RBS bid is significantly higher than the Barclays bid, it is running into trouble. First, they bid is subject to what the lawyers call a “diligence out”—meaning RBS could walk away from the deal if it discovers undisclosed liabilities when it examines ABN Amro’s book. Second, there are questions about how RBS will finance the acquisition—at close to $100 billion it is said to be the largest buyout ever in the financial sector.

The Financial Times' Lex column this morning wonders whether RBS can find financing for the deal. “A bid would require €50bn of financing, mostly equity – ABN is not a supermarket, which can be leveraged up with bridge financing. RBS and co will have to demonstrate they can come up with the cash in short order,” Lex writes.

And the Wall Street Journal’s Deal Journal raises questions about the very size of the deal. That $100 billion neighborhood might look rich, but look who else has lived there before: MCI WorldCom’s $114 billion for Sprint, and America Online’s purchase $165 billion deal with Time Warner. “Are you sure you want in?” Dennis Berman asks.

Perhaps most importantly, the RBS bid is contingent on ABN Amro keeping it’s American operation, LaSalle Bank. On Monday, ABN Amro agreed to sell LaSalle to Bank of America for $21 billion, a deal that DealBook notes is “widely seen as an attempt to discourage an approach by the Royal Bank of Scotland consortium.”

But now Barclays has run into trouble too, with Bloomberg reporting that the Securities and Exchange Commission has evidence that Barclays used insider knowledge gained from serving as a lender on bankruptcy panels to trade securities. Barclays is reportedly in settlement talks. Although not directly related to the deal for ABN Amro, anything that casts a shadow on Barclays is bound to make ABN shareholders at least think twice about trading their ABN shares for Barclays shares.

All this comes as both Barclays and ABN Amro are scheduled to have their annual shareholder meetings today. Stay tuned.

Battle for ABN Amro [Financial Times]
Life Inside the $100 Billion Club Ain’t So Grand [Deal Journal]
The Battle Is On for ABN Amro [Dealbook]

Barclays Probed by SEC Over Bankruptcy Conflicts [Bloomberg]

Nissan's Net Profit Drops 46% Due to Restructuring Costs (WSJ)
It's been a rough year for the golden boy, Carlos Ghosn. Just last summer, people were likening him to Midas, and GM was thought to be stupid for not embracing him with open arms. But maybe he could've spend more time tending to matters at home. Nissan's financial house continues to be in disarray, and Ghosn himself has missed key performance benchmarks. In the US and Japan, the company was hurt by a lack of new products, which is funny, since that's something that Ghosn pushed heavily early on in his tenure. Maybe he's bored. Or maybe he's like moses, not fit to lead the new kingdom once his people arrive.

Ford's Net Loss Narrows, Boosted by International Units (WSJ)
As a rule, we don't trust any figures put out by American auto companies. Our first inclination is to assume that they're completely misleading and that in fact they're losing more money than they ever have before. That being said, if we take off our skeptical glasses for one second, and just look at what seems to have been reported, Ford has narrowed its losses to a mere $282 million. Think that's bad? Last quarter it was over a billion. But, that's still really bad, no? Ford isn't exactly in the position to be dropping $282 million in the recycling bin. The company benefited by solid sales growth internationally, and some life at its finance division.

TheStreet.com Acquires Stockpickr.com
We're not sure why it's being overlooked by the mainstream press, but last night TheStreet.com announced that it would acquire the reaming 50.1% of Stockpickr.com that it didn't already own, which is a blockbuster deal that represents the marriage of online personal finance 1.0 and online personal finance 2.0 (you know it's 2.0 because stockpickr.com doesn't have an 'e' in its name). The sub headline for the press release says: "Leading social networking site that shows you how the rich get richer". Great, so now they've confirmed that cliche.

Why Freakonomics Bothers Me (Orgtheory.net)
We're going to take credit for being early on this trend (see last line here), but if you haven't been paying attention, there seems to be a full-on revolt against Freakonomics. The gist seems to be that people are tired of what's being dubbed "cute-o-nomics", the focus on small, quirky things, as opposed to the big problems. This is becoming a real meme. It was started by an article in the New Republic, but now many of our favorite bloggers are talking about it. Then again, maybe it's jealousy.

$$$Interview: No Longer Bitter Banker [Banker's Ball]

$$$The Prince of Papers, Now a Frog [Long or Short Capital]

$$$This show (intentionally) sucks! [WallStrip]

Also: Apple posts higher profit on strong MacBook sales [Reuters]

An eighteen-month law suit against Morgan Stanley by eight of its former female employees was settled today. While no hanky-panky (the best kind of hanky) took place, the women felt that they had been discriminated against in terms of how they were trained, promoted and paid. The bank settled for a minimum of $46 million; Morgan’s 2,700 female brokers will see a pay increase of around $16 million, and the bank promised that it will “overhaul the way accounts are distributed in the firm’s retail branches — a practice that determined [the women’s] opportunities for pay and advancement,” favoring the men in the brokerage business.

We don’t want to make the generalization that men lie, and make promises they never keep (although Carney did swear he’d bring me beer today and yet, here I am, no beer!) but perhaps we’ll make the sweeping generalization that the men who run Morgan Stanley might. Back in 2004, the bank paid $54 million to settle a case by Allison Schieffelin for: discrimination against women, vis-à-vis pay and promotions.

Jan Tyler, one of the women named in the suit, spoke with us today, and while she wasn’t allowed to say whether or not she was happy with her part of the settlement (or blink us an answer), she did offer that she will be writing a book based on the experience. She holds no grudges against Morgan Stanley, and wishes them all the best. And John Mack is my biological father.*

Wall St. Firm Will Settle Sex Bias Suit [NYT]

*More on Jan later. James Frey is all we can say for now and we've already said too much.

Google is about to incorporate an algorithm that changes searches based on the personal information of logged-in users. The change will happen in the coming weeks.

Yahoo disagrees with Google’s approach (and continually surpassing estimates), from the Wall Street Journal:

Yahoo Inc. says it has experimented with using search histories to tailor results for individuals, but it doesn't favor this approach -- at least partly because the results didn't differ enough for users to see a big impact. Eckart Walther, Yahoo's vice president of product for Web search, says the company's research shows there are perils to personalizing search results. "If you get it right, people really like it," he says. "If you get it wrong, they dislike it even more."

Should a search engine differentiate between users and alter its service accordingly? Isn’t this a reduction in user control? Are the algorithms taking over? When will a search engine first be charged with discrimination based on provided results? Your thoughts?

Search Engines Seek to Get Inside Your Head – [WSJ via AOL]

Patrick Byrne, the CEO of Overstock.com, is seeking $3.5bn in damages from 10 prime brokers for intentionally manipulating Overstock’s share price through naked shorting. The big names charged are Bear Stearns, Citigroup, Credit Suisse, Goldman Sachs, Merrill Lynch, and Morgan Stanley.

Naked shorting, aside from something you shouldn’t do in cold weather, is when a brokerage “sells stock it does not own and then fails to borrow the shares to cover the position, thus artificially boosting the supply of shares and deflating their prices.” Historical cases involving malfeasance on the part of prime brokerages have usually favored the brokerages, but new SEC regulations have illuminated certain practices more than before. Some info on the situation from CFO.com:

In 2002, the same consortium of attorneys handling the Overstock case helped Jag Media file similar charges in a Texas court against 100 brokerages, only to have the claims dismissed. But this time, says one of the lead attorneys, Wes Christian of Christian Smith & Jewell, more information about the phantom shares is available, thanks in part to the Securities and Exchange Commission's 2004 Reg SHO. "The evidence just gets better and better," he says. Eight other companies have lodged similar complaints against brokers in state courts, Christian says, with more suits likely to follow; clearinghouses Depository Trust and The Clearing Corp. also face legal action.

Overstock (Nasdaq: OSTK) hit almost $70 back in late 2004, but has since plummeted into the teens. The company released earnings today and is up over 5%, despite a “dramatically improving” business that experienced an 11% drop in revenues but improved margins and cash burn.

Naked Hunch – [CFO.com]
Dramatic Losses at Overstock – [The Motley Fool]

Those of you who have Stephen Schwarzman’s “anonymous” blog—“Secrets with Stephen”—bookmarked may have noticed a drop-off in dish. No speculations concerning the how’s and why’s of Henry Kravis’s new puppy, Mr. Barky Von Schnauzer, and his recent “operation.” No stalkerishly in-depth posts about Sam Zell’s wife getting her dry cleaning done. Not even any thinly veiled accounts of having dinner at the home of someone sounding suspiciously like Kohlberg, who served a sea bass that Stephen felt “left something to be desired.” What’s up, you might’ve wondered to yourself. Well, it could have something to do with the fact that Schwarzman received a note from Blackstone IT last week informing him that they’d been keeping track and found “an average of 4.5 hours a day on something called secretswithstephen.blogspot.com to be inappropriate use of a company computer” or it could be because Blackstone is currently in its “quiet period.”

Like all things evil, the time during which a company like Blackstone is advised by its lawyers to stay mum can be traced back to the SEC and religion. It starts when a firm registers an IPO with the Commission and (typically) lasts 40 days after the offering. During this time, the only business statements by company and its people are to be written in the prospectus.

Sounds kind of lame, right? Especially for a guy like Schwarzman, who’s noted in the past that his favorite way to blow off steam is a little coffee klatsch with the girls. The Economist thinks so too. It argues that instead of achieving its stated goal of protecting investors, the result is “unequal access to information,” because if you’re an investor with the connections to meet with top execs and bankers, you’ll get a better picture than the peons (read: the public) will get from newspapers and the internet.

The Dow is hovering over 13,000 again this afternoon, after slipping into 13,000 territory just for a minute (just to see how it feels) this morning. If the Dow closes over 13,000, it will be just 188 days since the Dow first closed over 12,000, on October 19 of last year. The Dow would rise 1,000 points every 7 months or so in the boom days of the mid-90s, although this represented a much greater % increase in the expansion of the market. Before the 2,726 day gap between the Dow rising from 11,000 to 12,000, the Dow was rising 1,000 points in just 219 days on average (since it hit 4,000).

Here’s a closer look at when the Dow first closed above each thousand, since it hit 4,000 in 1995:

Feb 23, 1995: Dow closes above 4,000
Nov 21, 1995: Dow closes above 5,000
Oct 14, 1996: Dow closes above 6,000
Feb 13, 1997: Dow closes above 7,000
Jul 16, 1997: Dow closes above 8,000
Apr 6, 1998: Dow closes above 9,000
Mar 29, 1999: Dow closes above 10,000
May 3, 1999: Dow closes above 11,000
Oct 19, 2006: Dow closes above 12,000

Any predictions on when the Dow will close over 14,000?

Dow Reaches 13000 on Profits, Alcoa – [WSJ]
Dow Closes Above the 12,000 Mark – [About.com]

You’re going to want to sit down for this: CNN Money reports today that—are you sitting down? Seriously, sit down—having a pile of money will not make you taller, smarter, or luckier (it may still increase the odds that you’ll be rich enough to hire an indigenous pool boy named Eduardo, though, so relax and put down the gun for now). A poll by U.S. Trust reveals that three out of four wealthy investors find that hedge funds “are difficult to investigate and that it is difficult to find a good fund.”

The study showed that actual, inanimate piles of money don’t have brains or the human-like capabilities to say, “Invest me in a SAC or a Rennassaince or something, but please, no Amaranths.” Underscoring this idea, CNN noted, “a huge bank account alone is no help in identifying potential winners,” which is really quite stunning, considering the fact that Keith’s bank account brings him breakfast in bed, waxes his car, and rotates his tires. (Cough, overachiever, cough). What we think they’re getting at is that being rich is hard; a pretty tough pill to swallow. Especially if you have some sort of sick and twisted need to stay rich ("These people earned their money, and they now hate to lose it").

And if your bank account does happen to have such magical funding-picking capabilities? The hardships still aren’t over. As Paul Napoli, U.S. Trust’s vice chairman told Reuters, “Wealthy investors [also deal with being] daunted by hedge funds' high minimum investments, high fees and lack of information on how the money is invested.” WILL THIS SUFFERING EVER END?

Wealthy stumped by hedge fund picks [CNN Money via Dealbook]

The 10 craziest tax deductions, according to Kiplinger:

1. Pet food for wild cats – if cats make your workplace safer, by eating snakes and rodents (Citi, per our reader survey, is immediately investing in these)

2. Moving your pet – the same as moving anything else when deducting moving expenses after an occupational switch

3. Business convention in Bermuda – you don’t even have to justify why your convention was in Bermuda, or why your boss is now orange

4. Body oil – if you can prove that it’s a business expense (in the same way astroglide makes banking easier?)

5. Private airplane – if you’re using it for various business purposes or can somehow prove that you live in the boonies and that there are no better commercial options (we hope MGM got to deduct the millions it spent on Soul Plane)

6. Babysitting fees – if you’re doing something charitable while your kids are with the sitter, like having a dinner where you actually have to talk to spouse 1.0 (the harpy) or spouse 2.0 (the much younger model who thinks she can talk to cats)

7. A boob job – again, if it’s for business (that analyst to associate promotion doesn’t hinge on your modeling skills)

8. Landscaping – if you meet people at your home and everyone does their business in your yard (hey, if that’s your thing…)

9. Free beer – if it’s part of a promotion for your business

10. Swimming pool – if you “require” it for medical purposes, you can deduct it as a medical expense

The lesson – when spending money on something frivolous, make sure you can justify it as a BUSINESS expense. Anyone deduct anything crazy this year (we promise the IRS doesn’t read this site)? By the way, the picture is of the IRS logo. The IRS, masters of image and branding, sporting the patriotic flying nutsac on a rope, buttressed by garland.

10 Craziest Tax Deductions – [Kiplinger, via AOL Money & Finance]

Footnoted.org dissects the Regis (RGS) press release involving the merging of its 51 accredited cosmetology schools (how exactly does a cosmetology school gets accredited we wonder?) with Empire Education Group. The subtext – Regis dropped the ball, or at least the curling iron, with an aggressive expansion into beauty schools starting 3 years ago.

Regis’ spin, from the 8K:

“In order to maximize the enormous potential of the beauty school division, it would be necessary for Regis to invest heavily in information technology platforms and management [Windows Vista also does your hair]. Merging with Empire is by far the best and fastest way for us to achieve our goals. We are highly confident [Do these beauty schools make us look fat?] that Empire’s management team will operate the beauty schools at the highest level [Cosmetology grade inflation]. Regis will be able to add significant value [an ungodly amount of mousse] to the venture with our strong education and marketing programs coupled with the ancillary benefits that the Vidal Sassoon Academies [especially after Vidal Sassoon Academy 4: Beauticians on Patrol] (which are not part of this transaction) and Horst Rechelbacher [Gesundheit?] (the founder of Aveda and a beauty industry icon [A smiley face with bangs]) will provide. In addition, we will have double the number of qualified graduates who will have placement opportunities at our Regis operated salons [Bulge bracket salon opportunity - this is no SuperCuts].”

Beauty school dropout… - [Footnoted.org]

Apollo Management has been amazingly tight-lipped about the rumors of a possible IPO. Until now. Yesterday Leon Black confirmed that Apollo is considering an IPO of the buyout shop he founded.

Leon Black, founder of Apollo Management LP, said executives of the New York-based buyout firm were examining whether to sell shares to the public, a step being taken by rival Blackstone Group LP.
"We're looking at this, as is every other private-equity fund,'' Black, 55, said today during a panel discussion at the Milken Institute Global Conference in Beverly Hills, California. Any setback to equity markets, trading at record highs, would likely come from a "geopolitical'' crisis, he said.

Apollo is also considering the private sale of shares, which would raise capital while avoiding the scrutiny that comes with an initial public offering, two people familiar with the talks said April 5. A private placement wouldn't preclude an IPO, and would allow Apollo to gauge the success of Blackstone's offering before going ahead with its own, they said.

So that's the confirmation. Apollo is now officially considering selling equity, either in a private or a public sale. Got that?

Black Says Apollo Weighs IPO, Market Drop Possible [Bloomberg]

Rival Bidders Offer $98 Billion for ABN Amro (Dealbook)
The hotly anticipated counterbid for ABN Amro came through, as the group led by RBS (along with Fortis and Banco Santander) offered up $98 billion for the company, solidly above the offer made by Barclays. It's time for a third raise now from a private equity dark horse, just to make everyone hit the roof. One difference with the RBS bid is that it wants ABN Amro to hold onto its LaSalle division in Chicago, which it sees as a nice toehold for the US market. Even though the RBS bid is higher, the company might still prefer to team up with Barclays, which would see its structure remain very much intact.

Chase Says It Will Move if City Balks (NYT)
JP Morgan Chase says that if the city of New York doesn't give it more subsidies to build a new skyscraper in Manhattan, it will move thousands of employees to Stamford. Oh yeah, that's real mature -- just leave if you don't get what you want. Obviously, New York is sort of sensitive right now, since everyone's talking about how it's not the financial capital of the world, so it doesn't want an employer like Chase to move to Stamford. Then again, taxpayers shouldn't be forced to shoulder these burdens (even though they are all the time). How about this. Citigroup should vacate its Long Island City building, which it can because it's laying off so many people, and JPM should take over that. Long Island City seems like a nice compromise between Manhattan and Stamford, to us.

FDA: More animals got tainted food (Boston Globe)
The FDA has announced that the contamination of the pet food supply chain spreads beyond just pets into feed for other animals. Specifically, it says that thousands of hogs across multiple states have eaten food laced with the poisonous industrial chemical. Honestly, at first this story seemed really overblown, in part because we're not pet people (if you are, whatever makes you happy). Also, we held out the possibility that there was some sort of statistical fluke going on. Now that the story really has legs and isn't just about pets it's getting more interesting. At the moment, the current operating thesis at the FDA is still that certain rogue distributors in China added the chemical to the food in the hopes of artificially boosting the food's nitrogen content. The big news, however, may come next week, when the FDA tests things soy, corn and rice gluten, which go into a lot of industrially produced human foods -- that's yet another reason to stop eating that garbage. Lean meats, fresh veggies, fruits, nuts, beer, and wine; that's the way to go.

Wal-Mart plans to add 400 US health clinics (Bloomberg)
We're big fans of walk-in, nurse-staffed clinics that can perform basic medical functions at a cheap price. There's really no reason to pay a doctor $105 so that he can say "yep, you stepped on a rusty nail, you should probably update that tetanus shot". There's no nurse in the world that couldn't do the same thing. Same for things like checking for strep throat, doing a urinary tract infection test and a host of other routinized things that could be done by technicians. People always respond to this idea with the concern that Nurses won't be able to deal with more serious things, which is totally true. That's why they should just deal with a set number of conditions and then tell the patient to go see better trained help when that's why they need. So it's cool to see that Wal-Mart is pushing this concept heavily, as it's announced that 400 of its stores will soon have these cut-rate walk-in clinics. Between this and its prescription drug pricing, the company may singlehandedly tame the runaway inflation in the healthcare space. Well, probably not, but we can hope.

$$$Jim Cramer made $2.4 million last year, by not following his own stock tipping advice. [Talking Biz News]

$$$John Drexel: no longer with us. [Yahoo!News]

$$$Oakley's: because it's 1997, that's why. [WallStrip]

There’s a piece in today’s Post entitled “Tools of the Trade” and, not to stroke Rupert Murdoch’s ego or anything but, they certainly nailed it. The mean girls over at Dealbook have already made a new entry in their slambook, though that’s not exactly surprising, given their catty nature. But the article and its subject, “Andrew,” a 24 year-old investment banker, even has mild-mannered gossip blog Gawker passing judgement. Gawker! We were planning on just rising above the whole thing, especially after Dana Vachon surmised that Andy is probably a “Citi branch manager” (we don’t do retail). But then we received a 540-word diatribe on the situation from Tim Sykes and we figured, what the hey. Finance types have been persecuted for TOO LONG. If we have to be the first people to say it, so be it. Next year, in Jerusalem.

First, a quick primer on “Andrew.”

Age: 24

Salary estimate: $190,000, including projected bonus

Suit: Hickey Freeman suit, $2,749

White shirt: "There's a saying in the banking world that you can never have too many blue suits or white shirts. I get mine from Hickey Freeman [$149-$249] as my standby, but I also shop at Charles Tyrwhitt [$99-$200], Thomas Pink [$149-$249] and Turnbull and Asser [over $250]. I get my white shirts heavy-starched."

Collar: "I always buy cutaway collars and French cuffs from the British stores (Tyrwhitt, Pink, Turnbull & Asser), and Barrel (button) cuffs from Hickey Freeman."

Watch: Breitling Navitimer, $5,299

Shoes: Ferragamo loafers, $395 at Saks Fifth Avenue.

Shoe-shining: "I like to shine my own shoes."

Red Bull: "Every two weeks I buy a 12-pack of sugar-free Red Bull. I have one before I get in the shower, and then I drink one on the way to work." [Ed. note: as a very clever DB reader points out: HOW IS THIS POSSIBLE??]

Apparently, it tastes nothing like chicken.

The force field that seems to have protected Steve Jobs from the harsh scrutiny that the press and regulators have applied to other executives allegedly involved in stock options backdating is being put to the test today. The Securities and Exchange Commission filed charges against two former Apple executives—former chief financial officer Fred Anderson and former general counsel Nancy Heinen. And one of them has reacted by pointing an accusatory finger at the man at the top of the Apple.

Each of the two formers have reacted very differently to the charges. Heinen has vowed to fight the backdating charges, joining the thin ranks of other corporate executives who have decided to fight the SEC rather than settle. Anderson is going the other way. The announcement of his settlement with the SEC was made right after the charges were filed. But Anderson didn’t just settle—he released a statement placing the blame for the backdating of stock options at Apple squarely on the shoulders of chief executive Steve Jobs.

The statement shreds one of Jobs strongest lines of defense—that he didn’t understand the accounting implications of changing the options grant dates. Anderson’s statement has Steve Jobs as the key actor at each of the critical points. It sounds as if the ‘Apple Rule’—the unwritten rule protecting high-profile, popular executives (but not unpopular executives or formers) that regulators, prosecutors and the press seem to follow on backdating—is about to take a pounding.

The stock is trading up on the news—perhaps under the impression that the Apple Rule will continue to protect Jobs—but the reactions from the press and online media have been swift and punishing.
ValleyWag predicts that Jobs may face charges, going so far as to announce that its editor has sold out his position.

“Disclosure. I just sold all my Apple stock, before writing this post. (The stock is soaring, but I can't believe traders have properly digested the news.) Steve Jobs, the company's hugely valuable chief executive, must now be squarely in the sights of securities regulators,” ValleyWag says.

Endgadget also smells blood in the waters of Cupertino, where Apple’s headquarters is located. “The tech exec superstar who's largely gotten off clean despite Apple's lingering backdated stock options scandal is now being publicly blamed for wrongdoings by former Apple CFO Fred Anderson,” Endgaget writes.

Perhaps the most surprising reaction comes from Business 2.0’s blog, which examines how Jobs and Anderson dealt with their backdated stock options and concludes that the difference proves that Anderson is financially much smarter than Jobs. Anderson reportedly made as much as $3.5 million on his backdated stock options—an amount he has now agreed to “disgorge” (read: fork-over) to the government—while Jobs exchanged his backdated stock options for restricted shares. Jobs trade means he missed out on a $3.6 billion gain.

Oddly enough, that financially unsound decision may be what keeps Jobs out of trouble on backdating. He can credibly claim that he did not profit from the backdated stock options since he never cashed them in. But prosecutors and regulators have already shown a willingness to bring charges in other cases where executives did not personally see profits from backdating, so this might not be enough to keep the Apple Rule intact.

SEC files charges against 2 former Apple officers over options [Associated Press in the International Herald Tribune]
Former Apple CFO settles with SEC [Reuters]
Former CFO blames Jobs for backdated options grant [San Jose Mercury News]
Ex-CFO says Jobs was warned of options dates [Market Watch]
Attorney for Fred Anderson Issues Statement Regarding Settlement of Claims with the SEC [Press Release via Business Wire]
Steve Jobs in regulators' sights [ValleyWag]
Former Apple CFO publicly blames Jobs for stock options scandal [Endgadget]
Why Fred Anderson Is Smarter Than Steve Jobs [Business 2.0]

Earlier on DealBreaker: Backdating and Apple stories from the DealBreaker Archives.

Gene Simmons was just spotted on the Citi fixed income floor, accompanied by blaring KISS music, courtesy of the traders. Our Citi tipper had no idea why this was happening. Anyone have the scoop?

Comment or send any info to tips@dealbreaker.com. Info like this is always welcome, and we hope to do more SpotMarket features fueled by your anecdotes. Unfortunately, the "coolest" person who ever appeared on my old floor of 277 Park was John Edwards, although he was dressed as a member of KISS, and did carry a giant sack of money out with him.

UPDATE: We're told that Gene may be starting a hedge fund and is really into finance and like, stuff. A new reality show - "Fund of Rock?"

The other day, Keith and I were sitting around discussing life and things of that nature when the conversation turned to the physical act of love. Not the actual physical act of love—would that he I could be so lucky!—but the topic of the physical act of love. He wondered why it was so hard to find a consenting partner, while I noted that it seemed as though the sheer number treats available at the buffet had increased exponentially (Carney was disqualified from the conversation because he's currently practicing tantra). We thought that, perhaps, this was merely a coincidence of the unfortunate/fortunate bad/good haircuts we'd recently had. Turns out, it’s actually all your doing:

Since 2000, men, mostly between ages 25 and 44, have accounted for more than three-fourths of the population increase in Lower Manhattan. As a result, according to a special census calculation, the sex ratio there increased to 126 men per 100 women in 2005, from 101 men per 100 women in 2000. In the rest of Manhattan, and in the city over all, there were only 90 men for every 100 women.

A: Unicellular organisms.

What the marketing director of Chase jerks off to every morning. - [Copyranter]

The results of yesterday’s “Which bank has the dirtiest working conditions” poll are in. Some of the results may surprise you, some may not. If you actually read what we wrote about Bear Stearns’s in-house cafeteria and its 42 health-code points violations, for instance, you won’t (or shouldn’t) be surprised to learn that it landed in the top three (and if you read the part about contaminated food and inadequate levels of personal cleanliness and are still stunned, don’t invite us over to your home any time soon). If you didn’t know, though, that the 85 Broad is basically one step away from a gas station restroom on the Garden State Parkway (going South), you might be a bit caught off guard to learn that the Kingdom also landed at the top of the list of shame (all that glitters is not gold, indeed). Let’s examine the cold hard (dirty, disgusting, scatological) facts now.

The signs of the approaching summer are everywhere. DealBreaker is hiring summer interns. The recruiting departments at all the Wall Street banks are in a frenzy preparing for their own summer interns. We're gearing up for our coverage of the follies of those same summer interns. Colleges and business schools are lining up commencement speakers.

The first big entry in this last category is Hank Paulson, who has been grabbed by Dartmouth. Paulson was an English major who graduated from Dartmouth with the class of 1968. Hank will be receiving an honorary degree at the ceremony. The college says it invited Hank because of his financial success and record of public service. We’re sure the fund-raising office had nothing to do with his selection.

Tuck’s ceremony will be graced by the presence of Harold W. "Terry" McGraw III, Chairman, President and CEO of the McGraw-Hill Companies. Do those kids up in Hanover know how to party of what. Terry is an animal, we hear.*

* Yeah. No. Not really. Not at all.

Treasury secretary to be Dartmouth commencement speaker [Boston Globe]

Alpha Magazine released its list of the Top 25 Moneymakers in hedge funds.

The top 10:
1. James Simons
2. Ken Griffin
3. Edward Lampert
4. George Soros
5. Steven Cohen
6. Bruce Kovner
7. Paul Tudor Jones II
8. Timothy Barakett
9. David Tepper
10. Carl Icahn

Some details on the top 3, from Alpha Magazine:

Last year three hedge fund titans each took home well in excess of $1 billion in what proved to be by far the most lucrative year in the six that Alpha has ranked the highest-earning managers. In total, the top 25 earners raked in more than $14 billion, equivalent to the GDP of Jordan or Uruguay. Their average take was a staggering $570 million, compared with $362 million in 2005 and $251 million the year before that. Just to qualify for our list, a manager needed to have earned at least $240 million -- nearly double the $130 million cutoff of a year ago and more than all but four managers made when we ran our first list in 2002.

Many of the guys on the list need no introduction, but who on earth is #1, how is it possible to quietly make $1.7bn, and what tax bracket is this guy in?

Simons is no stranger to a large payday, even though you might not know it from media coverage of hedge funds over the last several years (relative to the press hedge fund moguls like Griffin, Soros, Lampert, Cohen and Kovner get). Simons made $670mm in 2004, $1.5bn in 2005 and $1.7mm in 2006, which means he earned 97% of his net worth of around $4bn in the last 3 years. That’s quite an ascent from a paltry couple hundred million dollar fortune to the 64th richest person in the country.

How did Simmons do it? Simons was, to put it mildly, good at math. He went to MIT, got a PhD at Berkeley at 23, and taught math at Harvard (and probably a much harder course than "Magic of Numbers"). In 1974 Simons unleashed the Chern-Simons form (aka Chern-Simons invariants, or Chern-Simons theory) upon the unsuspecting world in the wildly popular paper - Characteristic Forms and Geometric Invariants. The Chern-Simons form was the Farah Fawcett poster of math major dorm rooms in the 1970s. Differential geometer Shiing-Shen Chern (and Jesus) was Simons’ co-pilot, and rock of stability.

Simons, having scored once (and only once) at a Renaissance fair, founded Renaissance Technologies Corp in 1982. The firm now has about $12bn under management (not including its Renaissance Institutional Equity Fund (RIEF) fund which has an asset ceiling of $100bn and is still accumulating capital), and a bag of holding, somewhere deep within its HQ on Long Island. The $6bn Renaissance Medallion (it gives Simons +5 dexterity) fund has averaged 37% annual returns after fees since 1989, which is even more impressive considering that the fees are insane. Simons charges a 5% management fee and a 44% incentive fee.

To say Renaissance is a bit quant heavy would be an understatement, as the firm is chalk full of international science and math studs, who wouldn’t tell you what they do on a day to day basis even if they were socially capable of having a normal conversation. The firm’s strategy is long/short, on secrets.

The Top 25 Moneymakers: The New Tycoons – [Alpha]
The hedge fund salary calculator – [FT Alphaville]

Ed Balls, the Economic Secretary to the Treasury in England, wants a global system to monitor investment banks’ exposure to hedge funds.

Balls dangled this plan at a speech given at a Financial Services Authority (FSA) conference on regulation. Although Balls inserted this info into his speech at the last minute, FSA chief John Tiner fully supports Balls, who is juggling several regulatory initiatives in his reform agenda. Balls plans to be in the face of G8 finance ministers regarding hedge fund regulation.

Few economic secretaries in politics are as cold as Balls when pushing ideas on top brass, and Balls is not shrinking from domestic anti-regulatory pressure, considering that 90% of European hedge fund business is conducted in London. UK-based hedge funds have shown little desire to constrict Balls in his efforts thus far, primarily because Balls doesn’t want increased scrutiny of hedge funds or managers, but wants to focus prime brokering or “the part of investment banks that liaise with hedge funds.”

Many New Labour politicians have teased Balls for his origins in the Fabian Society, which hangs slightly farther to the left on many New Labour reforms. Fortunately, this involvement has not been a cancer to Balls, who expects to hang around at least as long as Labour remains in power.

Tighter scrutiny of banks' fund exposure urged – [Telegraph]
U.K. Signals Willingness To Deal On Hedge Funds – [FINalternatives]

Former Comverse exec and current Kobi Alexander is in the process of establishing a scholarship fund in Namibia, worth $150 million in Namibian currency. The fund’s goal is it support top students to “further their studies in science and technology,” and translates to about $21,300 U.S. For those of you who like to read into things—perhaps with due cause—Alexander’s extradition hearing begins tomorrow. (Kobi moved his family to Namibia last year after his role in an alleged stock-option scheme was brought to light.)

We’re not quite sure how to feel about this. One the one hand, he’s supporting education and people in need. And that’s nice; humanity and all that. But on the other hand, this man is an alleged criminal; we don’t want his blood money (and we speak for the children of Namibia, too). That’s right—even we have standards. (We will continue, however, to support the Save A Whale with AIDS Foundation.)

FUGITIVE 'KOBI' AS NAMIBIA NURTURER [NYP]

If different sectors of the financial industry were to hold primaries, Mitt Romney would be the clear favorite to win the private equity primary. The founder of Bain Capital who is running for the Republican nomination for president has been received far more than any other White House contender from the private equity industry, taking in $258,000 in the first quarter of 2007, according to Dan Primack at PEHub.com.

The list of Romney’s donors include Steve Schwarzman of the Blackstone Group and Henry Kravis of Kohlberg Kravis Roberts. And despite the amounts collected from private equity employees, Romney has hardly topped out. Only one of his donors—Charles Haneman of H.I.G. Capital—has hit the statuory maximum donation. So Romney can probably expect to collect even more from his former fellow private equity colleagues.

Unlike hedge funds managers—many of whom have only recently become politically active and tend to lean toward Democrats—the top names in private equity have a history of political involvement with Republicans. Schwarzman is also a donor to John McCain’s campaign and there was talk that he might have been in the running for the top job at the Treasury department. That job eventually went to Hank Paulson, who had been running Goldman Sachs.

Romney Rakes in LBO Dough [PE Hub]

Yell warns U.S. growth to slow to 3 pct, shares dive (Reuters)
The British firm Yell warned that its growth in the US would slow, prompting a hit to its shares. You know what Yell does, right? Hint, it's Yell as in yellow. Hint that's yellow as in Yellow Book. But yeah, believe it or not, these things are still major cash cows; they're even still growing (although apparently at a slower pace than in the past). So, when was the last time that you used a phone book to get a number? We honestly can't remember; that could be part of the company's problem.

Toyota Surpasses GM in Global Sales in First Quarter (Bloomberg)
This is new news that really feels like really old news. For the first time, Toyota has sold more cars than GM (globally) in the first quarter. Toyota raced ahead on the back of 9% growth, while GM turned in a modest 3% gain. The company also gained 13% in the US do to demand for its Prius and from output at its San Antonio truck factory. As has been heaviy discussed, the company plans on opening up several more plants throughout the south. This reminds us of a funny discussion we had this weekend about the auto industry. Remember back in the 90s, whenever you were discussing some iconic American brand, like Maytag, people would always interject as a throwaway "Maytags (which are probably built in Mexico)..." as way of sort of disparaging the company? Now people do that with Toyota, so they say "Toyotas (which are actually built in the US)", which is just the opposite, but doesn't really have the same oomph. It's not even clear what they're trying to get across.

Top Hedge Fund Managers Earn Over $240 Million (NYT)
Oh look, it's an article about high levels of compensation in the New York Times. Stop the presses. Apparently, some hedge fund managers make lots and lots of money. What's funny is that this is the Times' excuse for news, since, you know, this is sort of an old story. Not only are we several years into the latest hedge fund boom, but there's also been a spate of hedge fund-related articles of late, particularly in magazines. So yeah, for the last time: if you run a successful hedge fund, get ready to make bank.

Clash over N.Y. Times a page turner (LA Times)
Today is the big day of reckoning over at the New York Times, when shareholders are expected to storm the gates and depose the once might Sulzbergers. Well, sort of. First of all, it's not clear how motivated the shareholders actually are to do something about the reviled dual class structure at the times. More importantly, because of the dual class structure, the vote won't have much significance -- sort of like all the non-binding resolutions that Congress passes these days. Still, it should be a fun scene at the meeting. If anyone has any first-hand reports, we'd love it if you passed them on.

$$$ Lindsay Campbell: The $Honey of Web 2.0?

$$$ Down the Tubes, Slow But Sure [Going Private]

$$$ Attn: Traders/Hedge Fund Managers/Ibankers: I am intelligent (have been invited to high IQ organizations), educated at a top school and very ambitious. Not looking to be a "trophy wife"--although such opportunities have been presented to me. [Craigslist]

$$$ What's Lindsay Campbell's superpower?

Wall Street does not reward "downsizing" as automatically as once thought, according to a summary of several studies on the Financial Page of this week's New Yorker. This negates the oft-cited "seven-per-cent rule" - or that a company's stock price jumps 7% after a major layoff announcement. The recent examples in the Cities of Group and Circuit have followed this trend, with share prices staying flat or dipping since each major layoff announcements. From The New Yorker:

Over the past decade, many academics have looked at how layoffs affect stock prices, and they’ve found that the seven-per-cent rule is bunk. Instead of rising sharply, the stock of companies that trim their workforces is likely to fall. A recent meta-study that surveyed research from several countries, covering thousands of layoff announcements, concluded that, on average, markets had “a significantly negative” reaction to job cuts. Individual companies, of course, sometimes see stock prices jump after layoff news, but there’s no evidence that downsizing is a guaranteed hit with investors.

The article contends that the seven-per-cent rule is more a product of media coverage on downsizing success stories, which are big news, while the scores of companies that stagnate following layoffs get little to no coverage. When the status quo is performance that results in major layoffs, it's hardly news when a company maintains it.

The other insight is that even "successful" cost-reducing layoffs don't often increase the value of a company, which suggests that the Street is smarter than public perception, and values a workforce in more than just the cost line of a P&L.

It’s the Workforce, Stupid! - [New Yorker]

Paul Tudor Jones II’s is hedging his political bets. He donated to Republican Rudy Giuliani’s presidential “exploratory committee” (apparently that’s political speak for the campaign before the campaign). And next month he’s holding a big fund raiser for Democratic nomination hopeful Barack Obama, the New York Observer’s Politicker blog notes.

On May 19th, commodity trading billionaire Paul Tudor Jones II will host a fund-raiser for Barack Obama, according to a knowledgeable source. The event will be held at Jones' oceanfront Greenwich mansion, which reportedly sits on top of a 25-car garage. More than 500 guests are expected to attend.

The Politicker implies that Jones may have dumped Giuliani in keeping with his reputation for getting out of losing investment positions. We’re not so sure. While we’re not exactly experts in presidential politics here at DealBreaker, it seems to us that this is not so much a strike against Rudy as much as Hillary. She’s supposed to be the candidate with all the pull on Wall Street (wife of Bill Clinton, connected to Citigroup's Robert Rubin) and her position as a senator from New York, should give her connections to nearby Greenwich, Connecticut’s hedge fund money. But Obama has been cleaning her clock when it comes to donations from the world of finance. And now he can add PTJII to the list.

Big Rudy Guy and Allan Houston to Raise Money for Obama [Politicker]

A well-known financier—cough, Lloyd Blankfein, cough—once said, “The Sunday Styles’ ‘Weddings and Celebrations’ section exists solely to make people feel bad about themselves. If you’re unwed—it’s a reminder that you probably never will be; for the single women, it reinforces the fact that they will die alone, save for their cats and the indelible crows feet caused by years of putting careers before relationships. For the men, it’s a splash of cold water on their no-longer-youthful faces that no one wants an aging bachelor—even Jay McInerney is all, ‘I’d argue that having three divorces and four wives to my name is a small price to pay in exchange for being off that bitch of a singles market.' And if you’re reading ‘W&C’ and are wearing the tiniest handcuff known to mankind? Well, that’s just the cruelest punishment of all. You know what these people are in for.” (Which is part of the reason people stopped inviting him to their weddings and bar mitzvahs-- who needs that kind of negativity?)

With that said, we here at Dealbreaker are always up for trivializing the pain of others, and noticed some time ago the considerable Venn Diagram overlap between the unfortunate souls “married last evening at the Tribeca Rooftop” and the same people having jobs in the industry of which we cover. Every Monday, we’ll review the Times wedding announcements that involve professionals, assign them “market value,” based on experience, firm, any other occupational variables we see fit. Feel free to add your own ratings scale and we may or may not incorporate it into our own next week.

Salima Vahabzadeh, Paul Sheppard

Bride:

-Graduated from Cornell (+1)

-Received her MBA (-1) from Wharton (this pains us but: +3)

-Is responsible for corporate finance mergers and acquisitions (+2) at Allen & Company (-1)

Pre-merger valuation: 4 points

“Firing Jamie Dimon was the worst thing Sandy ever did,” the investment banker said. It was a glorious Friday afternoon. The weather had performed an April summersault, turning over from winter to what felt like summer almost overnight. It was the kind of weather that inspires people—okay, us—to leave work early and starting drinking with friends. Which is how we found ourselves looking out onto a narrow street in the East Village drinking pints and talking about Jamie Dimon, Sandy Weill, Citigroup and JP Morgan Chase.

“It was over something completely trivial,” the banker said. He definitely had our attention with this remark. Lots of people believe that Citigroup has suffered since Jamie Dimon was let go by his longtime mentor Sandy Weill. And a lot of people have theories about why this friendship soured. But we love hearing all of them. He took the head-off his pilsner while we waited for him to expand. This is an old interviewers trick—using silence to elicit elaboration. His counter-strategy of drinking more was testing the limits of his patience.

He took the bottom off his beer and looked to the bartender for another round. We broke. “Okay, okay. What was it? What was it that got him canned?” we asked.

The next round arrived. We placed a bill on the bar but kept our hand on it. The message in the motions: keep talking and this round is on DealBreaker.

“It was something involving his daughter. Sandy’s daughter,” he said. Our hand came off the bill. This round was definitely on us. What had happened between Dimon and little miss Weill that could get Dimon thrown out of Citigroup?

“Completely trivial. I think Weill wanted his daughter to get a job, some promotion. Dimon didn’t want to give it to her. Thought she was under-qualified,” he said. “The guy I work for was in the room one day when they had a fight over it. When the fight was over, apparently so was the relationship. It was very strange because Sandy and Jamie had this whole father-son thing going on. This was Sandy choosing blood over his more or less adopted child, Jamie. Like Hamlet in reverse. The step-father kills the kid. Or maybe King Lear, with Dimon as the daughter who won’t suck up to daddy Lear.”

We aren’t even going to call Dimon’s office to authenticate this. And certainly not Weill. They probably wouldn’t comment. And if they did comment, it would just be a denial. We’d actually heard this theory before but this was the first time we’d heard it from someone claiming to have anything this close to first hand knowledge of the dispute. It was second-hand knowledge but that's as close as anyone has ever got to this story.

The next round was on us also. Not as a reward for that story. It was, after all, an old and often told story. But as an enticement for the next one, the one about Dimon’s plans for acquisitions and his meeting with Bear Stearns executives. But that will have to wait for another post.

Columbia Business School (CBS) just released this year’s Follies video features, which hit the internets hard last year with a spot-on rendition of “Every Breath You Take” focused on CBS dean Glen Hubbard getting passed over for the Fed Chairman job for Ben Bernanke.

Even DealBook concedes that this year’s crop isn’t as strong as the Police spoof. The relative highlight, however, is “Baby Got WACC,” which is a kind of disjointed take on the jobs b-schoolers aspire to land. Moving from solely token banker jokes (probably out of necessity, since the song is so long), buy side jokes are up this year, with lines like, “I wanna buy you low and ugh, lever up, ugh! ugh!” and “So ladies if the cash is churn, and you want a 5x return.”

Watching a b-schooler slug through this, with a lack of melanin content exacerbated by corporate lingo, makes you realize something – (real) rappers are pretty talented!

Here’s the classic Police spoof, released Spring 2006:

Columbia Raps About Big, Bulging Buyouts – [DealBook]
Columbia Business School Follies

We’ve heard some speculation this afternoon that Bausch and Lomb (BOL) may be the target of a take-over. We haven’t heard any names (though considering its size, it could be anyone) and have no idea if the rumors are true but they are up 9%. So maybe there’ll be a buy or maybe it’s just the weather (and the drinks). Anyone have any guesses?

Most folks reading this item work in finance. Seventy-seven percent of you who filled out our last reader survey told us you worked for a financial services company. But there are a few of you—we’re thinking of you, Todd Thompson—who might find themselves “between positions” this summer. And we’ve got some good news for you.

DealBreaker is looking for summer interns. Our internships fall into two categories, editorial and graphics. For editorial interns we’d like someone interested in spending their summer writing, reporting, research and performing mild administrative tasks—things like making frozen margaritas for Bess and keeping Keith Hahn away from Carney’s whiskey. Ideal candidates will have an interest in finance, some writing experience, a mischievous sense of humor and a history of causing trouble.

We’re also looking to improve our graphics this summer through the use of slave labor with the help of a graphics intern. The ideal candidate will have a well-developed aesthetic sense, a desire to make pretty pictures on the internet and some experience using photoshop. We’re going to be providing original video and podcatsing content in the near future, so experience in podcasting, film-making or online video is a major plus. It will probably make your summer much more pleasant if you have some interest in finance as well.

DealBreaker internships are great resume building opportunities. This is a nice way of saying they are unpaid—although you can expect to receive cocktails and food on occasion. If you are a student, we will work with you to get credit for the position. Also you should keep in mind that DealBreaker internships are not dead-end jobs. Bess Levin started as an intern, and is now a full-time contributing editor.

And now she’s also our internship coordinator, too! Send your resumes to bess (at) dealbreaker (dot) com. Include “Editorial Intern” or “Graphics Intern” in the subject line as appropriate.

Last time we checked, the varying levels of cleanliness in any given bank had no direct effect on its earnings potential. But we were thinking along the lines of an overflowing wastebasket here, a dusty LCD screen there—not all-out filth so disgusting and repulsive that it could put any one of the city’s most unsanitary restaurants to shame. In other words, we weren’t thinking about Bear Stearns. Sick and tired of being just a tier-two institution, an after thought, a whatshisname? bank, Bear proudly made a name for itself last week when its in-house cafeteria failed a health code test, reports New York. The BS eatery racked up 42 points in violations; 28 is the number at which a restaurant will be shut down.

Among this year’s violations: milk or milk product undated, improperly dated, or expired; food not protected from potential source of contamination during storage; personal cleanliness inadequate (clean garments and effective hair restraint not worn). “We take all inspections very seriously, are proud of our track record, and made every effort to immediately address any concerns,” says a Bear spokeswoman. Bankers seem unfazed.

So: bankers have low standards when it comes to the sanitation of their surroundings. There’s a metaphor in there somewhere. Which brings us to our next question:

Bear vs. Germs: Inspections Hit Wall St. [NYM]

Apparently there is an inverse relationship between negative fake news and share price performance. A recent Onion article that plays on RadioShack’s outdated image and irrelevance to the American consumer is having a positive effect on the company’s share price. RadioShack (NYSE: RSH) is up 0.7% in daily trading, outpacing the major US indices, despite reporting on Friday that the company plans to cut 280 jobs.

Job cuts are usually seen as bad news, or at least signs that a company is not in growth mode, but for RadioShack job cuts are pure comic gold. Even though one analyst claims that RadioShack has a “bloated infrastructure” and is still searching to find “categories and services that it can use to expand gross margin drivers,” RadioShack’s struggle is fake news’ gain, which investors are valuing far more than having easy access to robots that can wheel you cocktails (that you make and place on the robot). Only funny news rocket fuel like RadioShack could guarantee that it will not match last year’s earnings, and watch its share price soar.

The fake news regarding RadioShack is surprisingly close to the real story, as the Onion reports CEO Julian Day’s fake theories as to why the company continues to exist:

One of Day's theories about RadioShack's continued solvency involves wedding DJs, emergency cord replacement, and off-brand wireless telephones. Another theory entails countless RadioShack gift cards that sit unredeemed in their recipients' wallets. Day has even conjectured that the store is "still coasting on" an enormous fortune made from remote-control toy cars in the mid-1970s.

Even RadioShack CEO Can't Figure Out How RadioShack Still In Business – [The Onion]
Ahead of the Bell: RadioShack Job Cuts – [Yahoo! Finance]

Image via Gawker

Yesterday’s Week in Review paid homage to Silent Tuesday with a piece on the apparent drug du jour and your crippling, crippling addiction to it: the BlackBerry. It’s not meth, but according to the Times, that doesn’t mean it won’t cause tooth decay—or worse. The findings are somewhat stunning (made all the more compelling by the Singles allusions), and there’s a generous sprinkling of quotes by MD’s and PhD’s and DDS’s but we felt it was missing a little authenticity. You know, that feeling that the article was not only extensively researched but partially written on the floor of an inner-city meth lab CrackBerry den; we just didn’t sense that. So we—you—are going to do the dirty work the Times couldn’t. What follows are a few questions we think could’ve really helped shine just a bit more light on the epidemic. Send us your answers and this afternoon (tomorrow morning, whenever), we’ll reprint the best (we’ll also send them to NYT writer, Matt Ritchel, because he may want to do a follow-up). And because we know you kids sometimes need incentives, there will be a special treat for the top three respondents, as determined by us. We’re not asking you to shoot up, but if that helps the creative process, don’t let us (or your company’s provincial house rules) stand in the way.

As of last Friday, Asia has a new richest woman, and she’s completely alive. Yang Huiyan, the daughter of Yang Guoqiang, founder of Guangdong property developer Country Garden Holdings Co., is now worth more than twice the formerly living Nina Wang, who left her $4.2bn to feng shui proponent Chan Chun-cheun. Guoqiang gave his Country Garden shares to Huiyan in 2005, giving her around 60% ownership of the company worth about $9bn after Friday’s IPO. According to the extremely reliable and complete accounts in Chinese media, Guoqiang started out as a poor farmer in the city of Foshan. He moved to construction work and married a bricklayer. Then he moved to real estate in the early 1990s and grew a billion dollar corporation. It's just that easy. We couldn’t find any pictures of Huiyan, so imagine her father, shown here, with a wig.

Country Garden raised $1.6bn in its IPO on the Hong Kong Stock Exchange, about as much as Google in 2004. Morgan Stanley and UBS were involved in the deal.

China Adds Billionaires With I.P.O. – [DealBook]
Woman tops rich list after IPO – [ChinaDaily]

Two months ago we reported that Viacom’s executives and lawyers were in London negotiating a deal to buy LastFM, the social music network. Although the deal has still no been announced, it is still going to happen, a reliable source told DealBreaker on Friday.* The purchase price is said to be $450 million.

Viacom has been expanding its online presence, notably entering into a revenue sharing deal with the Joost video service. Our source says that the LastFM deal is part of this strategy.

* Yes, this conversation took place in a bar on Friday night. But we’re told that we talk about our nightlife an awful lot, especially on Monday mornings. So we’re experimenting with toning down some of the atmospherics and reporting these stories straight, without the allusions to popular music or references to the pursuit of women and cocktails.

Last week several people batted around theories about what it meant when Henry Kravis let Goldman Sachs play the role of the dog that didn’t bark in his remarks about private equity competition from investment banks.

Dana Cimilluca of Deal Journal figured that Kravis was conveying an animus against Goldman.

At a conference in New York yesterday, the buyout king was asked how he felt about competition from Goldman Sachs Group, Morgan Stanley and other investment banks (those two were specifically mentioned in the question). His answer, according to Bloomberg: Morgan Stanley and Merrill Lynch have “done this extremely well.” No mention of Goldman in the response, according to Bloomberg. Ouch!

It’s long been rumored that Goldman Sachs hasn’t been on the greatest terms with Kohlberg Kravis Roberts, and Wall Street’s most profitable bank has been invading KKR’s turf by raising ever larger buyout funds of its own.

We spoke to a person familiar with the thinking inside of KKR this weekend who to us that “the fued rumor is overplayed.” His read was simpler: Kravis just doesn’t think Goldman’s all that good at the private equity business.

“PIA is almost an after-thought. Their top guys aren’t into it. You don’t go to Goldman to do private equity. You wind up there,” he said.

He did say that all this could change with Goldman's new buyout fund. "But it hasn't changed yet," he said.

KKR’s Kravis Disses Goldman [Deal Journal]

Hedge fund political giving continues to climb, the Washington Post reports this morning. The post runs down the connections of a number of presidential candidates to hedge funds, mostly by adding up how much money candidates have received from hedge fund employees.

The candidate receiving the most money from the employees of a single hedge fund is a man you might not have known was even running for president. Senator Christopher Dodd has collected $175,000 from SAC Capital employees for his run for the White House. While Dodd is hardly a favorite to win his party’s nomination—much less actually get elected President—he has two advantages on his side: he is the Senator from Connecticut, where a lot of hedge funds have their offices, and he is the chairman of the Banking Committee, a position he has used to block legislation that would impose additional regulations on hedge funds.

The other favorite candidates of hedge funds are better known: former New York mayor Rudolph Giuliani, New York Senator Hillary Clinton, and former democratic vice-presidential nominee and Senator from North Carolina, John Edwards. Fortress Investment group makes up the largest single corporate donor to the campaign of John Edwards—probably because he went to work there as a consultant after the failure of the 2004 Kerry-Edwards presidential campaign.

Why have hedge funds started getting more involved in politics? For some this is a sign that the industry is “maturing” or becoming more responsible and involved in democratic politics. For more cynical observers, it seems like hedge funds are trying to buy influence to ward off regulations.

But those folks aren’t cynical enough for some students of the relationship between politicians and hedge funds. The uber-cynics argue that the would-be cynics have it backwards: the threats of regulation were intended to force hedge funds to donate more to politicians and buy the services of lobbyists.

“Actually, they're being threatened with regulation so they would form PACs and otherwise get organized,” Larry Ribstein of Ideoblog says. He points to a letter to the editors of the Wall Street Journal from Andy Morriss:

Politicians target an unorganized but wealthy industry by holding hearings, calling for regulatory action, proposing legislation, and so forth. Alarmed, the industry organizes interest groups and begins making contributions to the politicians. Miraculously, most of the threatened regulations then vanish from the agenda, leaving the politicians richer and the industry poorer but wiser. Whenever a new round of contributions is needed, another round of hearings on the latest issue can be scheduled.

Hedge-Fund Ties Help Edwards Campaign [Washington Post]
Rent Extraction [Cafe Hayek]

Barclays Agrees to Buy ABN Amro in $91 Billion Deal (Dealbook)
It may not be the last chapter of the story, but the two sides would certainly like it to be, as Barclays bank has announced the purchase of ABN Amro, in a whopping $91 billion deal. Assuming it all goes through, the new concern will be the fifth largest in the world Of course, the assumption that it will go through is just that. In fact, a counter bid is expected, with RBS likely to play the role of spoiler. In fact, while mergers often boost the stock market (for a day), European shares actually sagged on the news, ostensibly on fears that a major bidding war would drag down financial shares.

U.S. Food Safety Strained by Imports (AP)
The continuing poisoned pet food brouhaha has taken a new turn over the past several days. What started off as an issue at one slow-growth, private label company from Canada has turned into a major international issue, with some pointing the blame at China. Not only are they blaming China, but there's some conjecture that the whole thing may have been intentional. Naturally, some are wondering how we can have confidence in the food supply for humans if the pet food supply is so easily compromised. Could this little incident precipitate a major protectionist backlash? After all, we can tolerate cheap electronics from China, but probably not poison. As long as the issue does stay confined to pets, we're probably ok, but if it makes the big leap, then get ready for all hell to break loose.

Gender Pay Gap in U.S. Starts Right After College, Study Says (Bloomberg)
The work and wages of men and women seems to be a hot topic once again these days. Despite the fact that these discussions are always dripping with politics, they tend to be fairly interesting, in part because they run the whole gamut of academic disciplines (economics, education studies, gender stuff, politics). A new study out, that's sure to get a lot of attention, claims that the pay gap for men and women appears immediately out of college, and that it persists (and widens), even when controlling for things like career choices and family situation. The conclusion, then, is that the pay gap is almost certainly the result of discrimination. But, there seems to be something amiss here. Apparently, women engineers are paid more than their male counterparts (at least according to the study), which is so counterintuitive (particularly if you assume that discrimination is a major factor in wages), that it's virtually impossible to reconcile the fact with the overall study. What's more, the makers of the study say that the key to reversing this gap is for women to go into more technical careers after college. But, then, if this were to reverse the gap, doesn't this suggest that the issue is not one of discrimination, but of personal choice? So, we're left as confused as ever.

UAW Group, Tracinda Discuss Bids for Chrysler (WSJ)
There were reports last week that Kerkorian's Tracinda group was not one of the favored parties to take Chrysler off of Daimler's hands. But, it must have enough of a shot so that the UAW feels its worth meeting with to discuss stuff. You have to figure that the union is pretty terrified of seeing Chrysler come under the control of an investment firm. They're not used to dealing with these guys. They're used to dealing with car guys Remember, car CEOs have to meet with the President from time to time, so they have an image to keep up. Somehow, we'd bet that Kirk Kerkorian will never get a White House invite. Meanwhile, the UAW also plans to meet with Daimler management to discuss the current state of negotiations, so hopefully something will leak from that.

$$$ Predictions of the Year 2000 from The Ladies Home Journal of December 1900 [YorkTownHistory.org]

$$$ What Cosmetologists Can Teach Wall Street [Deal Journal]

$$$ Chystia Freeland, you just made the list.

Rumors that we’d seen an announcement today that the Jefferies Group would be acquired by Mass Mutual seem to have gone nowhere. The stock has been more or less flat all day, dipping slightly below where it closed. The chatter about the acquisition has ceased.

We’d say that this is a definite sign that nothing is happening, and that this was all just rumor. But we have a feeling that the reason we aren’t hearing from our Jefferies rumor-mongers is that they all sneaked out of work early to enjoy the first beautiful day in New York City in living memory.

The House of Representatives approved Barney Frank’s “Say on Pay” bill this afternoon. The bill would give public-company shareholders annual non-binding votes on executive salaries.

The supporters of the bill make no bones about viewing it as a way to stem the rise in executive pay. Opponents point out that ordinary shareholders will often lack an incentive to vote on the measures, and will be unlikely to have the relevant information to decide on the appropriateness of executive pay. The executive compensation elections will most likely be controlled by self-interested special interests who do not necessarily share the interests or incentives of the broader shareholding public, opponents say. Studies into public ignorance have revealed to electorates are usually characterized by large groups of relatively ignorant and apathetic votes who wind up ceding control to smaller, doctrinaire and self-interests cliques. Some opponents raise the specter of union controlled pension funds using its voting power to win union concessions from management.

But those opponents aren’t opposing enough, perhaps because they aren’t listening closely enough to Barney Frank. Frank has made it very clear that this is an incremental step toward a measure that would make shareholder votes on executive compensation binding. Just this morning on Squawk Box, he told Carl Quintanilla that if corporate board’s don’t follow the results of these supposedly non-binding votes, then Congress might just have to make them binding.

“I don’t think boards of directors are going to ignore people,” Barney Frank said. “If we try this out and it turns out there is a widespread pattern of boards ignoring shareholder votes the we will probably change it.”

So the shareholder votes are non-binding unless boards don’t let the outcomes bind them. That’s some kind of non-binding provision.

On the positive side, Blackstone's IPO is looking even more attractive.

House OKs Bill to Give Investors Say on Executive Pay [Bloomberg]
Shareholder Say on Pay [CNBC]

In other "say on pay" news, the sisters of St. Scholastica Monastery are back in the habit this proxy season. Sister Susan Mika is director of corporate responsibility of the St. Scholastica Monastery near San Antonio. Yes, monasteries have directors of corporate responsibility. The nuns are having an active proxy season this year (you read that correctly), taking on issues from executive compensation at Coca-Cola to the year’s most penitent legumes grown by Cargill. Sister Susan is pushing a “say on pay” shareholder resolution at Coke that would require a direct shareholder vote to approve executive compensation. The nuns own $25k worth of Coke stock, which gives them a 0.0000002% stake in the company, or at least enough to take issue with Neville Isdell’s $250k travel budget. This is $250k that can’t come from Isdell's $26mm annual take-home pay.

The nuns have an active history of fighting for various corporate reforms, historically lobbying for everything from wage hikes at Alcoa to the elimination of genetically modified crops at DuPont. Other organizations are following suit, from BusinessWeek:

Coke isn't the only company facing shareholder resolutions for "say on pay" provisions. This year, a total of 60 such shareholder measures have been filed at public companies—up from seven a year ago. The proposals have been pushed by an unusual group of activists, from the Benedictine Sisters to the American Federation of State, County & Municipal Employees (AFSCME) to Walden Asset Management, a socially responsible investing firm. This week, at least three other companies face "say on pay" votes: Citigroup (C), U.S. Bancorp (USB), and Wachovia (WB).

Sisters on a Mission at Coke – [BusinessWeek]

AQR may be the next fund to IPO, according to the Financial Times:

AQR Capital Management, one of the world’s biggest hedge funds, is strongly considering an initial public offering, according to people familiar with the matter.

An offering by AQR, which manages nearly $35bn, would follow the successful float in February of Fortress Investment Group, the first major US hedge fund and private equity firm to go public. It also oversees about $35bn. Blackstone, the giant private equity group, also filed for an IPO last month.

Hedge fund AQR considering flotation – [Financial Times]

The winner of Nina Wang’s $4.2bn estate is businessman and walking nomenclatural permutation Chan Chun-cheun (nickname “Chon”). Nina Wang is Asia’s richest dead woman and widow of prominent chemical mogul Teddy Wang, who was kidnapped in 1990 and never seen again. The estate debate is likely to continue, as the stewards of Wang’s charitable trust are still claiming that Wang wanted the money to go to charity. From Yahoo (China):

The day after her funeral two wills [Wang] allegedly wrote in 2002 and 2006 were published separately in Next Magazine and its sister Apple Daily publication. The 2002 document said Wang's fortune would go to her charitable trust. But the later version named her personal fortune teller, Chan Chun-chuen, as the beneficiary.

Chan’s Dickensian lawyer Jonathan Midgely claims Chan is the sole beneficiary of Wang's estate, primarily because Chan ‘understood Wang’s personal philosophy,’ which Midgely comments, “was no Critique of Pure Reason, that’s for sure.” Instead, Wang’s personal philosophy was set it, and forget it feng shui, which is “the Chinese belief that a person's luck and health can be improved by the positioning of items to channel natural energy.” The positioning of $4.2bn in assets can indeed improve luck and health, whereas the jury’s still out on sand and smooth rocks.

This is not the first time Nina Wang has been involved in estate matters. After her husband Teddy was formally declared dead in 1999, there was doubt as to the beneficiary of Teddy's estate, due to rumors of Nina's infidelity that circulated before Teddy's kidnapping.

The picture (see more here), or the world's most amazing shaggin' wagon, is from Wang’s blowout Catholic funeral on April 18, decorated by celebrity florist James Wong.

Wang's riches 'for feng shui man' – [BBC]
Lavish funeral planned for stingy Hong Kong tycoon – [The Nation]

There is no peace in the Valleywag after the site reported a rumor that Weblogs founder Jason Calacanis, now with Sequoia Capital, is trying to nab nappy headed hoedown patron Don Imus to start a web media network.

Calcanis’ reply:

100% false.

I've never listened to Imus, never spoken to Imus, and have no interest in being in business with the man.

Really dude... come on.

In other news, Dead Horse Media is in acquisition talks with IACI, Elizabeth Spiers writes Socialite Rank and Citi is buying Deutsche Bank.

Blog mogul wooing Don Imus? - [Valleywag]

It might take a little while to get used to a guy in a referee outfit selling you a pair of shoes at Johnston & Murphy, but Foot Locker has made a $1.2bn bid for fellow footwear retailer Genesco. Foot Locker bid $46 a share but may have to up its offer since Genesco’s (NYSE: GCO) share price has spiked 13% to over $49. Foot Locker (NYSE: FL) is up almost 4% today. Foot Locker is about 4 times larger than Genesco in terms of revenue, and owns about twice as many stores. The move would strategically reduce Foot Locker’s dependence on athletic footwear and diversify its customer base across a wider demographic range. This is because Genesco owns a series of insanely “targeted” retail chains, with websites plucked from the hall of bad marketing clichés. You can check out each site individually here. A probing look into the brands of Genesco:

Journeys – Like a bad report card, Journeys embodies “An Attitude You Can Wear.” Journeys uses “Fashion savvy and merchandising science [Quaaludes and a dart board] to keep in step with the fast-paced footwear [Nikes, but oooooold Nikes] and accessories [gonorrhea] market for 13-to-22 [8-12] year old men and women… The Journeys store is more than a retail environment [for nickel bags]; it's an extension of the customer's lifestyle [vocational prep school]. From cool lighting [can you smoke halogen?] to in-store television monitors [the future is here!] playing fresh content and the latest music videos [Fergie doing a version of Alanis' "My Humps"], to employees whose lifestyle [different because they're slightly older but the same because they live with their parents] and self-image [those board shorts don't make you look fat] match their customers'..."

Journeys Kidz – Because your Pull-Ups need to be connected by a chain to your overalls. Sellz “big kidz shoes in little kidz sizes,” and a complete line of Tony Hawk Condomz, “prophylacticz for kidz who want to have zex.”

Johnston & Murphy – “Continues [we'll stay relevant if we wish it] to appeal to successful, affluent men [who can’t afford a real pair of shoes] with a broad array of footwear and accessories [I can’t believe it’s not pleather!] appropriate for professional working environments [that love harness comes in a size 8].” The site emphasizes the fact that J&M has locations in 10 airports and a branch next to an Orange Julius at the King of Prussia Mall.

Lids – Like a shoe you wear on your head, Linds headwear is perfect for people who casually wear Under Armour, carry around aluminum bats and commit petty theft in convenience stores.

Underground Station – Had a long day on the Underground Railroad? Get off at the Underground Station, yo! If you want to laugh uncontrollably at how old white men in suits define black people, read our marketing materials. The definition these days apparently is: “A brand-conscious consumer with a high-fashion mindset who values cutting-edge styles and the latest brands,” and someone who is “culturally diverse” and “urban.”

Dockers Footwear – Portly white consumer, if you made a wrong turn and ended up in Underground Station, we’re sorry, but now you’re home. “Dockers Footwear fills another important niche [the "I could get laid on a cable car at any time" niche] by offering men aged 30 to 55 [a place to park their man-FUPA] superior styling, quality and value in moderately priced casual fashion.”

Foot Locker Makes $1.2 Billion Offer for Genesco – [Bloomberg]

Is the Citigroup acquisition of Deutsche Bank AG back on? Shares of Germany's biggest bank saw as much as six percent gain today (they're up 4.7% right now), and the rumor is everywhere. There were talks of an acquisition three years ago but they fell apart over fears of political fall-out.

Update: Bloomberg's on the story.

First the confirmation that the rumor is driving up the share price:

"We heard a rumor Citigroup might bid for Deutsche Bank,'' said Joerg Treptow, a trader at M.M. Warburg & Co. KGaA in Hamburg. "This is boosting the shares today.''

Next the analyst who is skeptical about the rumor.

"I place very little credibility on this speculation,'' said Jon Peace, an analyst at Fox-Pitt Kelton Ltd in London. Integrating the banks' investment-banking units would be "very costly," and Citigroup could expand consumer banking in Germany through other banks, he said.

Deutsche Bank Shares Surge on Takeover Speculation [Bloomberg]

We often here the complaint that Wall Street is becoming too dominated by ivy-league type students who made the best grades, score well on aptitude tests and wield impressive quantitative skills. There's a fear that the financial community has become very good at rewarding the ability to succeed in routine-driven organizations to the detriment of the more entrepreneurial personalities. Or maybe its just that the old, dumb guys with the nice offices are scared by all those smart kids in the cubicles.

In the video above real estate empress Barbara Corcoran leaves no doubt about where she stands: the personality type that makes good grades makes for a bad entrepreneur. "I think the kids that are lousy at school in the end become the best entrepreneurs because they didn't succeed at a model that was dictated by the whole society we live in," she tells CNBC's Erin Burnett.

So, is this a problem for finance? Too many A students and not enough C students? Or is the real problem too many Ken Griffin style quants and not enough Leon Black philosophy majors? Or has the market got the mix just right? We'd like to hear from you. Leave your response in comments below.

Merrill Lynch has teamed with former VC of Paramount Robert Friedman and Summit Entertainment to form Summit Entertainment LLC. The $1bn entity hopes to finance and distribute 12 feature films per year, making it the first major distribution focused PE entity in Hollywood.

Merrill has been trying to fund anything that walks in Hollywood these days, including production companies Paramount, Marvel, Montecito and Cold Spring Pictures. Merrill will also most likely have to pony up millions to Tom Cruise's United Artists because it couldn't find anyone batty enough to go in with Cruise on the equity portion of a $500mm financing package.

Merrill Goes for Summit in Hollywood – [DealBook]

Goldman Sachs used to be in an almost unique position on Wall Street, running a full-fledged private equity business that competed with many of its clients for acquisitions. Conflicts were "managed" rather than avoided. (For those of you who don't know, conflicts are managed the same way romantic relationships are managed: you tell the other party involved that you understand, it will all be okay, there's no need to leave, but you aren't ready for a fully-committed, monogamous relationship yet.)

Most Wall Street banks weren't quite so bold. They would make equity investments when partnered with clients but concern over conflicts and alienating clients kept them from lighting out on their own. After years of watching Goldman Sachs slip the binds of the Gordian Knot of conflicts, it seems now that the knot has been permanently untied.

A major change has now quietly swept Wall Street. A some point, about the time when the Blackstone Group’s $15.6 billion fund became a $20.6 billion fund and Goldman neared a $20 billion fund, the script was rewritten. What was once an agonizing business decision — should we compete against our clients? — has become an accepted business practice.

The reason is simple. Wall Street banks cannot resist the lure of the private equity cash machine, so that the challenge, as the executive went on to say, is not to avoid conflicts but to manage them. Roughly translated that means: We refuse to leave money on the table or in someone’s pocket, even if that someone is a client.

We’ll admit, though, that our favorite part of the piece was the lede, where Times writer Jenny Anderson talks to a senior Wall Street executive “early one recent morning” about conflicts of interest while still in her “fuzzy slippers.” What else was Jenny wearing? She leaves that to our imaginations.

A Tilt in Wall Street’s Pursuit of Private Equity [New York Times]

Last night we made a brief appearance on one of our favorite CNBC shows, On The Money, and spent a bit of time talking about the Big Idea of spinning off Goldman's trading and hedge fund business.

In the first part of the segment host Melissa Francis asked CNBC's Charlie Gasparino about possible big bank deals in light of the stellar performance of JP Morgan Chase. You know how these things work. A company reports numbers like the one's the JP Morgan Chase did this week and the investment bankers come out of the woodwork with pitchbooks at the ready. There will be pressure to do deals, to start making acquisitions. The question is whether chief executive Jamie Dimon will give in to the seduction of the dealmakers or whether he'll continue to abstain.

Gasparino's convinced that Dimon won't start building JP Morgan Chase into an empire of acquisitions. The most talked about deal on the street, an acquisition of Bear Stearns, would be too expensive, Gasparino says. We agreed, mostly because we think will be hard for the bank to find a bank or financial services company that is beating JP Morgan Chase in an area that the bank is interested in growing. (Although we're ready to hear from you if you've got likely targets. Leave a comment or send an email to tips@dealbreaker.com.)

At the end of the segment we turned to the Big Idea. Since we first published the Big Idea, we've talked to investment bankers who think that spinning off the hedge fund and trading business might be a good way for Goldman Sachs to realize the value of the business it built up. Goldman doesn't seem to get full credit on Wall Street for its hedge fund and trading operations, in part because Goldman's disclosures about these groups is somewhat opaque. A serious danger faced by Goldman is that its top traders might look elsewhere for a big payday.

And that's where the Vikram Pandit factor comes in. When he was at Morgan Stanley, Vikram made decent coin but nothing that would make headlines or build multi-generational empires of wealth. He left to found his own hedge fund, and one year later sold it to Citigroup for a rumored $600 million. That has to have a lot of people, not just at Goldman Sachs, scratching their heads and doing some quick math about the risks and rewards of striking out on their own. We're hearing from investment bankers who have talked to people insider the firm that Goldman could face pressure to spin-off its trading and hedge fund business in order to realize the value of the business before its guys start to defect or strike out on their own.

Perhaps the strongest case against this idea rests on four factors. First, breaking-up and spinning-off runs contrary to the current orthodoxy on Wall Street, where the banks have been acquiring hedge funds and building private equity businesses. There's the value of the Goldman Sachs name, which communicates an undiminished elite status. There's the knowledge within Goldman that the larger firms needs its trading business, and it will be loathe to let it go under any circumstances. And, perhaps most importantly, there's Goldman's share price, which is now trading at its 52-week high. Everyone with equity has been getting a raise for the past several weeks. That's no doubt dampening the urge to split.

Banking on Big [CNBC]

Nacchio convicted on 19 of 42 counts (BusinessWeek)
Just in case you missed it, yesterday evening jurors in the Joe Nacchio case came back with a guilty verdict on 19 of the 42 counts. That's slightly less than half, but it doesn't really work that way. Nacchio could be in prison for a long time, so the fact that he was acquitted of most of the charges doesn't mean zilch. Honestly, we wonder what it means when jurors come back with a mixed verdict like this. If we had to guess, we'd guess that they feel compelled to deliver a few not-guilties just so that they look like they were paying attention. Each guilty could conceivably carry a term of 10 years, though it's doubtful he'll get a 190-year sentence. Your over/under?

Google profit soars over the estimates (SF Chronicle)
Just a few days after Yahoo's poor earnings, Google announced sales growth of 66% and earnings growth of 69%. Not bad. After the news, the stock rose modestly, indicating that Google's results were basically what people expected. In other words, investors have set a damn high hurdle for the company, and if at some point it can't keep delivering such tremendous growth (seems inevitable), the company may get punished.

Supervalu raises forecast; shares jump (MarketWatch)
Hey WallStrip! Do you guys take requests? We've always been intrigued by Supervalu, a company that basically strives to be the Dollar Store of grocery stores. They're small format stores that have a complete range of items, many of them private label. They're big in urban areas, and most importantly (for WallStrip, that is) they're at an all time high as the business model seems to be clicking. What do you say?

H&R Block to Sell Option One Mortgage to Cerberus (Bloomberg)
H&R Block has agreed to sell its subprime mortgage business to Cerberus. Is it just us or has every attempt made by H&R Block to diversify away from taxes been a failure? At some point, if we recall, the company bought an asset manager, which had all these race-related complaints or lawsuits against it -- the details are hazy in our mind. This sort of seems like the great move from dumb to smart money here. As Tom Kirkendall spotted the other day, actual losses from subprime assets aren't as bad as you'd think, given all of the scare talk.

$$$ It’s never to early to start the bonus rumor mill turning again. [Portfolio]

$$$ How did those Friedman, Fleischer & Lowe guys get in on the Sallie Mae buyout anyway? [DealBook]

$$$ Why Planet Out is going down. [Queerty.com]

$$$ DealBreaker will make an appearance on CNBC's On The Money, airing tonight at 7 P.M. [CNBC]

$$$ WallStrip gets all "buckets" on us.

The National Bureau of Economic Research (NBER) has found that women and men, at least in Europe and the US, work about the same number of hours in a week. In the US, men only work 4 more minutes a day than women on average. Not that you can’t be infinitely productive in four minutes (at least that’s what I tell my partners myself), but any random tally of minor daily events makes that figure a virtual push.

In terms of how time is spent, many of the nuclear family sitcom stereotypes hold true – men spend more time at work and more time watching the tube while women do more housework and sleep more.

The goal of the study was to try and find out why Americans work harder than Europeans, and whether the notion of the “double burden,” or the fact that women work twice as hard as men because of housework, was true. Many of the female subjects’ complaints that they have less spare time than their male counterparts are explained by the increased hours spent in the sack.

Equality does appear to correlate with prosperity, despite Bess Levin’s findings in Waziristan. From the NBER researchers:

There appears to be a link between the work gap between men and women and how rich a country is. The smaller the gap, the richer the GDP per person. Equality appears to pay.

What about finance? Do male and female analysts work the same 100 hour weeks at a bank? Do MDs of both sexes make equally ridiculous requests before getting on the same 5:15pm train to Greenwich?

Women comprise 42% of the total workforce (age 16 and over) in “management, business and financial operations occupations” (i.e. – finance-type stuff) according to a November 2006 NBER study on Women in the Labor Force (see the data here).

Finance may me a more male-centered occupation, but it is not that much more of a male-centered professional choice. Out of the total women in the labor force, 13.2% decide to go into finance-type stuff. This isn’t that far off the 15.5% of men in the labor force who make the same decision. With a nearly equal percentage of aspirants, it seems that no sex has a monopoly on a passion for finance-type stuff, or at least winging it until b-school or a sugar daddy/momma comes along.

Now, it’s up to DealBreaker readers to decide:

Do men or women work harder? – [BBC]

Tudor Investment Corp has given birth to the first political-action committee created by a hedge fund, Brody Mullins and Kara Scannell of the Wall Street Journal reported this morning. It’s called "Tudor Investment Corporation PAC For Responsible Government."

The Journal’s reporters do a great job of telling the real story of what is going on here: the politicians are going after hedge funds for money because that’s where the money is. As the growing assets under hedge fund managers and the wealth of their managers has garnered the attention of the press, hedge funds have faced what Mullins and Scannell describe as “increasing scrutiny from policy makers.” In other words, the shakedown is on.

With $16.1 billion in assets under management, Tudor is the ninth-largest hedge fund, according to Institutional Investor, an industry trade publication. Fund officials declined to talk publicly about the new "Tudor Investment Corporation PAC For Responsible Government," which filed papers with the Federal Election Commission last month. But one executive, who spoke on condition of anonymity, said the committee was formed in part to help executives deflect the surge in fund-raising requests.

"It's an easy way for them to say 'no' or to politely decline those requests," said the executive of the Greenwich, Conn., company. "This is a way for people to say, 'Sorry, we have a PAC, so I'll pass along your request to the PAC.' "

For some reason, economists like to use the term “rent seeking” to describe the activities of special interests seeking favors from the government. But the term fits much better for the actions of politicians seeking to separate wealthy citizens and businesses from their earnings. Hedge fund managers only live in this country. The politicians are the landlords. And they think it's about time the hedge funds started paying rent.

In a democracy, forming PACs and hiring lobbyists is referred to as a sign that an industry is maturing.

Hedge Funds Coming of Age Politically [Wall Street Journal]

Earlier on DealBreaker:
Hedge Funds Not Giving Enough To Politicians, Politicians Surprisingly Determined To Change That [3.13.07]
As It Turns Out, Talk of Increased Hedge Fund Regulation Increases Hedge Fund Political Donations [9.18.06]

DealBreaker today hired a new contributing editor by acquiring his blog, SuperMogul.

New York-based DealBreaker.com, the world’s premier online Wall Street tabloid, said it had reached a definitive agreement to purchase SuperMogul, which it described as a “highly regarded website, published in blog format, aimed at an elite readership of c-level executives and people who want to read about that kind of person.”

The financial terms were not disclosed.

DealBreaker said the deal would close immediately and traffic to SuperMogul would redirect to DealBreaker’s main site.

SuperMogul’s editor, Keith Hahn, escaped an Ivy covered ivory tower only to land in a bulge-bracket financial institution which swore its bulge was 100% natural and not artificially augmented by thousands of meaningless acquisitions and/or a pair of wool socks. After re-enacting the first season of Prison Break, Hahn ended up in Private Equity, which, despite misleading nomenclature, did not give Keith the desired privacy to play Spider Solitaire in a totally uninterrupted manner.

Earlier this year Hahn was a guest editor at DealBreaker when editor-in-chief John Carney was on leave following a surprising change in traffic patterns on Manhattan’s Lower East Side. “Cars stopped stopping for pedestrians in cross-walks with green lights,” Carney explained. “I was caught off-guard.”

Carney refused to disclose the financial terms of the deal but described the sums involved as “vast and unholy.”

“This makes that pretty Citi deal to buy Pandit the bandit look like chump change,” he said.

Carney went on to describe the buyout of SuperMogul as “hostile in a friendly way.” He said the combined sites would be able to take advantage of "synergies, energies, silos, buckets, all that good stuff."

One analyst described his remarks as “demented,” noting that SuperMogul was already owned by DealBreaker’s parent company. “I don’t think you can do a hostile takeover of a non-publicly traded website your company already owns,” said Brock Fantasia.

“They’re just jealous of our innovative M&A stylings, yo,” Carney said.

Hahn joins Bess Levin as a contributing editor of the site.

Does anyone know why you can't get a Wii these days? There doesn't seem to be any major production drama, yet many children remain chubby, dormant and with fully functioning elbows. The strange case of the missing Wii is taken by guest Freakonomics blogger Paul Kimmelman. Is this a deliberate maneuver on Nintendo's part or even worse (gasp!) a conspiracy? Here's a summary of the mystery puzzle muzzle, using the five issues Kimmelman raises:

1. Nintendo's manufacturing lull is inexplicable. There are no known parts shortages. There hasn't been a major production ramp by the first quarter of the console's release, which is rare. It's no secret that Nintendo is particularly coquettish about its hardware releases, and after two strikes with the strategy (N64 and GameCube), it finally paid off by creating buzz and a secondary market price spike with the Wii. Then again, perhaps vital Wii parts have been scattered across 8 distant lands, guarded by 8 fearsome creatures, overseen by 3 various forms of an evil presence, or large turtle.

2. Retailers like the hordes of kids dragging their parents to stores to check out Wii-vailability. This results in a lot of, "If we can't get a Wii, we might as well get a box set of the Beastmaster trilogy," purchases. In other words, Best Buy and Target are greasing the plumber's palm.

More after the jump...

Vonage warned yesterday that it’s troubles with Verizon have it teetering on the edge of bankruptcy, more or less prompting everyone in the world who doesn’t own stock in the company to say “we told you so.” Even as Vonage went public last year, skeptical observers and short sellers have been tearing into the company’s prospects. Until now, Vonage management’s statements have made it sound like they were born with rose-tinted glasses in their mouths.

Since the initial public offering, Vonage’s shares have dropped more than 80 percent. They are locked in a life-or-death patent infringement case against Verizon.

Over at the Motley Fool, Dave Mock greets the news with mock-shock and horror.

Absolutely stunned. That was my reaction to Internet telephony provider Vonageadmitting in its recent 10-K filing that it could be forced into bankruptcy at the behest of legal attacks from the likes of rival Verizon Communications. Who would have thought it could end like this?

We actually dropped Vonage, more or less, from DealBreaker commentary sometime last year. Our graphic--representing Vonage screwed on crack, toast, and in a freefall--was simply too cluttered to keep up with the company's bad news.

Vonage 10-K [SEC]

No Surprise From Vonage [Motley Fool]

Tom Hudson’s Pirate Capital continues to blaze ahead with the best proxy fight innovation since the poison pill was invented—proxy swag! Today they’re offering Aquilla, Inc. shareholders pins featuring the face of Aquila chief executive Rick Green. Using a specially designed website called Bad Acquila Deal The Pirates have been leveling cannon fire against Aquila’s plan to sell itself to Great Plains Energy, arrrrhg-uing (sorry) that the sale price is too low and the process flawed.

The Rick Green Button [Bad Aquilla Deal]

Earlier on DealBreaker:
Pirates Get Webby [4.5.07]
A Very Special Opportunity [4.5.07]
Free Gift With Purchase [4.5.07]
The Very Special Opportunity Is Over [4.9.07]

Don’t be alarmed – Bess Levin is set to return to DealBreaker in full capacity on Monday.

She is currently on assignment in the mountainous region of North Waziristan, having been chased out of South Waziristan by a particularly conservative fat-tailed sheep indigenous to the area. Levin is currently profiling the burgeoning detritus market along the Tochi River (her take away so far: “bullish on shale, skeptical of pumice’s recent gains”) as part of our new “Markets Gone Wild” feature.

Levin took Steve “Where’s His Other Hand” Schwarzman to be her male guardian, as Waziri tribes require a male to oversee every household, tent and small mound in the region. Levin is enjoying her first extended assignment, Schwarzman’s DS Lite and North Waziristan’s convenient open border with the Khost province of Afghanistan, where you can buy fireworks and go to strip clubs when you’re 18.

In much less significant news, I will be returning to DealBreaker full-time, after my hiatus trapped under a giant (ok, so not that giant) mogul.

Second time's the charm for once bankrupt local wireless provider MetroPCS (PCS), which had to cancel its initial IPO plans in 2004 because of pesky accounting issues. The $1bn+ MetroPCS IPO today, however, stands as the largest US telco IPO of the 21st century. Let's wish it a better fate than Vonage.

Despite a slightly down day in the market, the MetroPCS IPO priced at $23, well above its target range of $19-$21. The stock is currently up over 15% to around the mid $26 range. The 50 million shares in the IPO are poised to raise well over the targeted $1.15bn in proceeds for the company. Shares of MetroPCS’ primary comparable, Leap Wireless (LEAP) are down slightly at $75 a share.

The big names on the S-1 are Bear Stearns, Banc of America Securities, Merrill Lynch and Morgan Stanley while the tiny names are UBS, Thomas Weisel, Wachovia and Raymond James. Goldman and JPMorgan are written in invisible ink.

The risk factors section of the S-1 is nearly 20 pages long, and always contains that jarring first risk, usually along the lines of “A meteor may hit the earth and our company will inevitably fail because everything we do is questionable.” In this case, it’s the rather direct, “Our business strategy may not succeed in the long term.” Fair enough, but some “risky” highlights:

-Along with current wireless, VoIP and MVNO (mobile virtual network operators (the Boosts and Virgin Mobiles of the world) providers, MetroPCS faces emerging competition from WiMax and 700MHz band next-gen networks in development from the Googles of the world.

-Spectrum, spectrum, spectrum. As more companies want it and bid on it, spectrum is increasingly expensive, and MetroPCS can be outbid by the big boys in the future. The company had to raise $1.6bn last time it acquired significant spectrum rights, to gain access to the NY, Las Vegas, Phili and Boston metro areas, which was an insta-leverage pop of over 4x. Although Adj. EBITDA has grown an average of 40% over the past two years, future acquisitions of spectrum, and fully developing the areas within the current domain the company paid for, may require raising money that places significant leverage on the company (although the $1.15bn+ raised in the IPO won’t hurt). Some good news for margins – the % increase in ARPU (Avg. Revenue Per User) is outpacing the % increase in CPU (cost per user). Since 2006, ARPU increased by 4.5%, while CPU increased by 3.6%.

One of the things that jumped out while looking through the S-1 is that MetroPCS is still waiting to fully realize growth from its “expansion markets,” which created a near $100mm negative hit to EBITDA in 2006. Penetration of MetroPCS expansion markets, which include Tampa/Sarasota, Dallas/Ft. Worth, Detroit, Los Angeles, Orlando and portions of northern Florida has been met with assorted legal stroppiness from Leap, as well as other local players.

MetroPCS marks first IPO of '07 to top $1 bln – [MarketWatch]
Metro PCS S-1 [SEC]
Telecom: Up From The IPO Ashes – [BusinessWeek]

Cerberus Capital Management is pulling out of talks to buy bankrupt autoparts maker Delphi Corp, Jalopnik’s Ray Wert reports this morning. The private equity group is still interested in buying Delphi but not until after it emerges from Chapter 11. Earlier this week it had been reported that talks between Cerberus and Delphi’s management had hit a “snag.” Delphi has been having trouble with the United Auto Workers union, which earlier this week announced it was rejecting plans for wage cuts for new workers at the company.

From Jalopnik:

That's right, the private money-making fund is withdrawing from a deal to buy Delphi Corp. and help pull the little bugger out of Chapter 11 reorganization. Delphi claims Cerberus is pulling out over differences over Delphi's future value. Cerberus claims -- well, they ain't claiming anything other than that they might still play with Delphi when it finally does leave Chapter 11 -- but one wonders whether the deal's being killed because of an inability for Cerberus to get concessions out of the UAW, inflexibility and ineffectiveness of management or because they're saving their bank for the big prize -- the Chrysler Group. Who knows?

A quick conversation over text-messaging to a DealBreaker source in who is familiar with the Chrysler buyout bidding agrees with Jalopnik’s speculation—Cerberus might not want to rile the union with tough talk at Delphi at a time when it is aiming to buy Chrysler, a deal that will most likely require union support. The UAW has already been flexing its muscles in sale of Chrysler, suggesting that perhaps Chrysler should remain under the Daimler umbrella.

Update:Delphi confirms that Cerberus is out.

The Delphi Rhythm Method: Cerberus Pulls Out Early [Jalopnik]

An anonymous reader unexpectedly found himself riding home in a cab with Jim Cramer. Kind of.

Apparently, CNBC is now available on the backseat televisions of some taxis. And last night our loyal reader got in just as Jim Cramer instructed viewers on how to prepare for market corrections. So, of course, he sent in the camera phone picture you see to the left.

We love this sort of thing. In fact, we'd love to hear from you any time you spot a financial bold name. Camera phone pictures are appreciated but not strictly necessary. Email to tips@dealbreaker.com. Thanks!

The banking world is rife with takeover and acquisition talk Yesterday a new rumor added to the cacophony of chatter about JP Morgan Chase getting into the acquisition game , private equity eyeing financial services firms, and the ongoing bidding war for ABN Amro. The newest rumor is that the Jeffries Group may be acquired, possibly by MassMutual.

Reuter’s quotes an options guy on the rumors.

"There is a rumor that MassMutual will make a bid for Jefferies Group between now and Friday," said William Lefkowitz, an options strategist at brokerage firm vFinance Investments in New York.

In recent months, the options market and rumor mill has been a surprisingly accurate predictor of buyouts. In fact, the accuracy of the options markets at predicting takeover announcements has prompted some to worry that insider-trading has become widespread. At the Dow Jones’ Wall Street Journal’s Deal Journal (which, we guess, might be called DJ WSJ WJ but we’ll stick with Deal Journal), the boys have begun to wonder if it might be smart to assume that all takeover rumors are true.

We spoke briefly to someone insider Jeffries who told us that the rumor was on everyone’s lips at the mid-sized bank.

“Everyone’s joking about how we might be working for an insurance company by the end of the week,” he told us.

Mass Mutual is shorthand for Massachusetts Mutual Life Insurance Company.

Jefferies shares, options up on takeover talk [Reuters]

Earlier this week we ran into an old friend who has been trading financial stocks for several years. We were in a small bar a few steps down from street level. The wall paper was a deep red, the furniture included antique looking couches, and faux-gas lamps lit the place dimly. It was the sort of place a Victorian era vampire might feel comfortable sipping absinthe while he hunted his next victim.

“It’s not that you’re wrong on Citi,” our trader friend told us. “It’s that you’re right. But everyone agrees you’re right. This is a broken company.”

“But you’re buying it?” we asked.

“Of course. I wouldn’t give Chuck Prince more than a year,” he said, referring to the chief executive of the financial giant. “And whoever replaces him won’t have any loyalty to the structure. None of the top guys have the sort of stake in it that Chuck has to Sandy.”

Prior to becoming chief executive, Prince had worked as the bank’s top lawyer under former chief executive Sanford Weill. It was during this era that Weill had built the bank into a behemoth through mergers and acquisitions. Prince has vigorously resisted calls to fundamentally reform the bank by spinning off business. Several of the top executives at Citigroup have been recently hired from outside the bank and lack the personal ties to the Weill build-up that some feel have led to Prince’s resistance to change.

“The next boss is going to start spinning things off. None of this reduction through attrition business. He’ll make his mark by remaking the bank in a leaner, meaner image. Get out from under the shadow of Sandy. And then you’ll see the stock climb,” the trader continued. “I’m buying this thing now because I think once the rumors of Prince’s retirement get out, the stock is going to start to climb.”

He twirled the olive in the bottom of his empty martini glass and scanned the room. A trio of girls were sitting by the window. They were too far from where we sat at the bar for us to overhear their conversation. We doubted they were discussing the fate of banking chief executives.

He gestured to the barteneder for another round.

“Let’s go say hello,” he suggested. He nodded toward the girls. A smile came across his face. His bright eyes sparkled. For a brief moment we thought we saw fangs where his incisors should be. A trick of the light, no doubt.

UAW leader to DCX: Keep Chrysler (Detroit Free Press)
UAW president Ron Gettelfinger is making the case to Daimler that it should just keep its Chrysler unit, instead of selling it to another party as planned. It's not hard to see why the union would have its stance. If Chrysler were to fall into the lap of another car company, there would be redundancies out the wazoo. And you can only imagine the type of scorched-earth tactics that a private equity shop would be willing to use to cut costs. Meanwhile, Gettelfinger seems to have missed out on the entire history of DaimlerChrysler because he sees a lot of "synergies" between the two sides of the company. Maybe he's been asleep for the past 9 years.

Democrats Seek Shareholder Voting on Executive Pay (NYT)
The Democrats, many of whom probably read the New York Times this weekend, have come up with the brilliant idea that shareholders should be able to vote on issues of executive pay. That sounds bad, but it looks like the vote would be non-binding, so it really doesn't make much of a difference (hmm, the Dems are really into non-binding votes these days, aren't they?). Actually, we think the bill could have real merit. No, we haven't gone completely off the reservation, just hear us out. Suppose shareholders were given the option of registering the pleasure or displeasure with executive pay packages, what do you think would happen? Obviously, the Democrats must think that there would be a wave of displeasure voiced and that companies would get the message. The more likely scenario, however, would be for shareholders to respond with total ennui. Fact is, most of 'em just wouldn't care very much. For all the talk about shareholder activism and such, most shareholders can't be bothered to give a damn, even major institutions. So it might blunt some of the criticism over executive pay (which is really an issue that should only affect shareholders) if the shareholders themselves don't care.

HP keeps PC market lead over Dell in 1Q (AFX)
A couple of years ago, this headline would've looked like a total joke, maybe something from the onion. But although the two companies are close, HP continues to hold on to its market share lead over Dell, by about 4%. In the US, Dell maintains a very slight lead, despite HP getting Jay-Z to endorse its products. The weird thing is that every time we go to a coffee shop to get our work done, 90% of the people in there are typing a way on Macs, so we'd have assumed that Apple's getting 90%, with the others fighting for the scraps. Must be our selection bias.

China growth sparks overheating fears (Fin24)
The Chinese economy grew by 11% in the last quarter, once again inducing concerns about overheating. This really doesn't make sense though; wasn't the government going to do something about this? What about those interest rate moves, or foreign exchange regulations? What about tighter lending standards? We were sure that the government was really going to slow down growth last time it promised to. This time, though, they'll really do it.

$$$ The Blackberry Monologues [Going Private]

$$$ More Dirty, Teasing IPO Talk From Carlyle [DealBook]

$$$ 1987 vs. 2007: Dana Vachon Meets Oliver Stone [Portfolio’s Spottings]

$$$ As Goldman Sachs tells us every earnings call, the key to successful banking is staying flexible. [FunnyorDie.com]

$$$ Lindsay Campbell is looking for a “penetrating weapon.”

The Blackstone Group’s accounting methods are under further scrutiny today. The Wall Street reported on the first page of it’s C section that Blackstone plans to book estimated future gains from investments as current revenues. Under the plans disclosed in the filings for its public offering, Blackstone would book the present value of fees it expects to receive on its investments at the time the investment is made. If the expected fees increased, the firm could book additional fees prior to the receipt of any actual revenue from the sale of the investment.

In some sense this accounting method will allow Blackstone to present the capital markets with a picture of itself that more closely resembles its own internal perspective. Private equity firms have made tremendous gains in recent years, in part because they have longer time-horizons than the average stock holder. By employing what accountants call “fair value” accounting, Blackstone hopes it will be able to meet market expectations for smooth current revenues while maintaining its traditionally longer term outlook.

But some look at this as gaming the system, and fear that Blackstone can use “fair value” accounting to deceive capital markets. One investment banker we spoke to called it “Back to the Future Accounting” because it allows the firm to capture gains from the future and bring them into the present, if only on paper.

The Wall Street Journal goes so far as to bring up the dreaded E-word: “This method once was used by many companies, most notably Enron Corp., and led accounting rule makers a few years back to ban firms from booking immediate gains from certain transactions that didn't trade in active markets.” And just in case you miss the point, the Journal quotes three experts who disapprove of Blackstone’s accounting choice. Only one expert in favor of fair value accounting is quoted. (Although the paper notes that "fair value" is officially approved and that Blackstone refused to comment for the story.)

Blackstone Tests Fairness of Using 'Fair Value' Rule [Wall Street Journal]

Earlier on DealBreaker: Blackstone Delving Into Black-Scholes Book-Keeping [3.30.07]

It's funny because it's true.

To be honest, if the headline involves Katie Couric we’re probably not reading the story. That’s why we skipped Page Six’s scoop on Katie Couric’s new “boy toy” Brooks Perlin. But we shouldn’t have. The thirty-three year old Perlin is a three-time hedge fund washout, according to the Sixers.

Not only has Perlin worked for three Connecticut-based hedge funds in the last five years, he hasn't had a full-time job since September, a source told the Post's Marianne Garvey. He last worked at Keel Capital Management in Stamford but left to start a Queens-based company that creates environmentally friendly, green-building products. Before that, the spin-class-obsessed triathlete worked for a short time at both Pequot Capital Management and Grange Park, a hedge fund that's now closed..

The Sixers also note that Perlin has a history of dating older women so it may be slightly inappropriate to apply the “urban cougar” label to her. After all, cougars are predators and Couric may just be aging prey. But we have to admit we enjoyed underthecounter's extended metaphor: "Dangerous animals stalk all corners of Wall Street. Tiger Cubs come to mind, and although Chase Coleman might be hitting the ball out of the park, not all Tiger Cubs are quite so fearsome. The latest big hunt on the Street involves a cougar."

Note to UTC: next time include sharks, dogs, hogs, cows, vultures and John Mack.

Preying on Wall Street(ers) [underthecounter]
Couric's Guy Quick To Switch [Page Six]

Former Duke University lacrosse captain David Evans has landed a job at Morgan Stanley, Deal Journal reports. Evans was one of the Duke lacrosse players victimized by false accusations of a rape that never happened.*

From Deal Journal:

Now Evans has gained the trust of Morgan Stanley Chief Executive John Mack, a Duke alum and trustee (class of ‘68) who went to bat for Evans after serious questions were raised about the case against he and his two former teammates.

Evans now has landed one of the most prestigious jobs on Wall Street, Deal Journal has learned. Morgan Stanley has hired Evans, who graduated in May 2006, as part of its analyst program. Landing a plum job — which is paying well into the six-figure range these days — has to be a satisfying end to a bitter sequence of events for Evans since the rape allegations surfaced in March 2006.

The 24-year-old Maryland native had a job lined up at J.P. Morgan Chase’s investment bank that was rescinded in the wake of his May 2006 indictment, with the bank telling him it probably wasn’t the best time to be starting a new job. After he was cleared recently, J.P. Morgan came back to Evans and made a new offer, which he declined.

Also: a self-serving district attorney who will likely be disbarred for his conduct in the case, a gullible media, faculty and university administration all too eager to believe a story about privileged whites abusing a poor African American woman and a public culture too willing to accept verdict first trial by publicity.

Accused Former Duke Lax Player Lands Morgan Stanley Job [Deal Journal]

If the world seems a little bit brighter today that might be because you’re sitting somewhere near David Bonderman. The head of Texas Pacific Group is there in his suit—maybe it’s that wide-lapelled, sack-ish green number he likes to wear—his tie twisted, its front resting against his chest and its seam showing. (He’s not a slob but being Bonderman means having more on your mind than whether or not your tie rests just so.) And he’s probably smiling wide enough to throw light in a RIM blackout-sized radius. (Read: the whole western hemisphere.)

Texas power giant TXU Corp. has just announced that it is proceeding with plans to be bought out by Bonderman’s firm and Kohlberg Kravis & Roberts. Bonderman never really doubted the deal would go through but he had to smile when he got the news that with two weeks left in its “go-shop” period to look for other buyers, TXU was throwing in the towel and taking his bid. There was never much chance that serious rival bids would emerge for TXU. All those stories about Bonderman’s connections to the environmental groups supporting the buyouts, about behind the scenes deals with Texas lawmakers and regulators, no doubt sent the message to other private equity shops that
the fix was in. These guys had this deal wrapped up. No one else had the connections.

If that weren’t enough to stymie the ambitions of the Steve Schwarzman’s and Leon Black’s of the world, there were all the stories about resistance to the deal from greens, lawmakers and regulators. Who would want to step into that mess? The more trouble the TPG-KKR bid had, the less attractive the deal seemed to competitors. Worse was better.

In a sense it was all a bluff because the logic behind the TXU buyout has always been deceptively simple. The management of the power company had made itself too many enemies in Texas to succeed. It was partly bad public relations, partly a failure to build the right relationships, and partly an inevitable cost of running a power company in an age of rising energy prices, sprawling suburbs and growing environmental concerns. The management had become toxic.

A new management—under new owners—stood a chance to make the company work simply by not being the old guys. It was—it is—really that simple. The plan was to get rich by being someone else. In this case, by being David Bonderman.

TXU receives no superior offer and sticks with KKR [Reuters]

Investment bankers preparing bank buyout pitches in the wake of the announcement that Sallie Mae will be taken private by a syndicate of private equity firms and banks, says Greg Zuckerman in this morning’s “Heard on the Street” column.

“Even as the coffers of private-equity firms have bulged in recent years, Wall Street has always assumed that buyout specialists would be wary of certain industries, such as financial services,” Zuckerman writes.

But the deal to take Sallie Mae private—and especially the fact that Blackstone also bid on Sallie Mae—seems to have revealed that private equity firms may have an appetite for financial-services companies and even banks. Possible targets include KeyCorp, Countrywide Financial Corp., CIT Group Inc. and iStar Financial Inc, according to Zuckerman.

One reason banks were long seen as “off limits” to private equity was the concern that regulators might not approve such deals. “Banks are heavily regulated deposit franchises that hold the savings of individuals, so regulators might be unwilling to allow a buyout firm to make a leveraged purchase,” Zuckerman writes.

But as private equity firms such as Blackstone have grown and become more diversified—some are starting to look more like full-fledged investment banks than pure buyout shops—bank regulators may be more tolerant of buyouts in this area. What’s more, private equity firms seem to have grown keenly interested in purchasing companies in heavily regulated sectors such as power utilities and highways.

Has Sallie Deal Put Banks In Play for Private Equity? [Wall Street Journal]