$$$ Deals: The Fords in India's Future
In our M&A Roundup for the week ended March 30, there's still a pulse if one looks at certain markets — not just Indian firm Tata Motors buying Jaguar and Land Rover, but also in a credit-card deal and a blank-check acquisition. [CFO.com]

$$$ DON'T FORGET: For the Love of White Horse and Tiger, tonight, 9 PM! [CNBC]

$$$ CLARCOR Inc. (CLC) [WallStrip]

This May, the University of Texas Press will publish a book by Robert Auerbach, called “Deception and Abuse at the Fed: Henry B. Gonzalez Battles Alan Greenspan’s Bank.” In it, Auerbach questions the legitimacy of Greenspan’s Ph.D. thesis from NYU, implying that the paper was “obtained in a few months with little more rigor than a matchbook-cover art degree,” and that were you or I ever privy to reading the thing, it would be plainly evident that Greenspan was blowing the half the degree-granting faculty. Luckily for Greenspan, that’ll probably never happen, because, according to Auerbach, New York University is in cahoots with the former fed chairman to keep Auerbach/other interested parties from every laying eyes on that puppy (Auerbach says NYU’s provost, David McLaughlin, claims that dissertations from the 1970s were not placed in the library, and therefore unavailable, which Auerbach doesn’t buy FOR A SECOND).

Obviously this whole thing is making Bernanke tweak his nipples in delight, and our sources in Washington tell us he’s taken to walking around town with his paper tucked under his arm, replying with feigned innocence when people ask what it is, “Oh just the musty old thesis. Needed to check something; still holds up pretty well. See: Benjy Bernanke, MIT Class of 79.” We’ll do an extended review of the book when it officially comes out, but from the unedited copy we were able to get our hands on today, here’s the other shit Greenspan doesn’t want you to know about that you can likely expect to read, barring any major rewrites.

Auerbach alleges that :

1. Greenspan hasn’t read any of Ayn Rand's books.

2. All of his addresses to Congress involved typing a speech at a third-grade level then using Microsoft's thesaurus to replace every single word with the most fancy-sounding substitute -- even if he didn't know what it meant.

3. It is a lie of the highest order that Greenspan conducts 80% of his business out of the tub; the author claims “evidentiary proof” that “all the magic happens on the can.”

4. His basement wall is littered with photos of, articles by and home addresses of "infidels I must exterminate," including Robert Auerbach, Jim Grant, Bill Fleckenstein, and Alan Abelson.

5. BG has 20/20 vision and wears the glasses to “look smart.”

6. He never dated Barbara Walters. Actually briefly dated Geraldo Rivera (then Jerry Rivers) during his late-70s “experimental phase,” and Phyllis Diller for the better half of the 1980s.

7. He lies about his age. He is really only 42.

8. Greenspan inflated his resume credentials; actually spent most of the 1960s and early 1970s running "Easy Al's Used Cars" in Dubuque, Iowa.

9. During undergrad his source of income was from peddling phony tips on penny stocks, then cleaning up shorting them, and working as a phone sex operator. The book goes into graphic detail, noting that Greenspan was known for his unique style, telling callers things like, “At this juncture you should feel your labia minora becoming engorged. (Since retiring, Greenspan has apparently fired the phone line back up, to much success. $3.99/minute, call 203-890-2000)

Dr. Greenspan's Amazing Invisible Thesis [Barron's]

Susan Krakower sits, stands, perches, then paces the length of her windowless office. A crease deepens down the center of her forehead. In two hours "Fast Money" airs, and something's not right. The show she created isn't moving fast enough in its second segment, and that's a problem. "I want the trades - get right to it!" she explains. Tonight she's trying something new. It's a quick interlude she dreamed up the previous morning after watching her 7-year-old son's favorite TV programs, Nickelodeon's "iCarly" and "Drake and Josh," which rely on graphics to move the narrative. When the show airs, she'll head downstairs to the control room to swap a new, 15-second sound and visual effect in place of a riff by host Dylan Ratigan.

CNBC feels your pain... [Fortune]

Treasury Secretary Hank Paulson’s “blueprint” for revamping the financial regulatory system is already coming under fire from powerful agency heads. As early as Friday, even before the details of the plan were widely-known, the plan was lambasted by John Reich, the director of the Office of Thrift Supervision, which oversees the savings and loan industry. Immediately after Paulson’s speech this morning, Commodity Futures Trading Commission big shot Bart Chilton released a colorful and blisteringly critical statement describing the plan as “moving boxes around in Washington DC.”

Paulson’s plan would combine the Securities and Exchange Commission, which regulates equities and debt markets, with the Commodity Futures Trading Commission, which that regulates the exchanges trading commodities and financial futures. The two commissions have very different regulatory approaches, with the SEC favoring direct regulation and a rules-based approach and the CFTC favoring a principles based approach that relies heavily on self-regulation by commodities and futures exchanges. SEC head Chris Cox has been described as being disposed to supporting the plan.

After the jump, we delve into the dirty, metaphor-strewn past of the CFTC commissioner.

I love every aspect of this quaint tale about Canadian hedge fund manager Matthew MacIsaac (MM Asset Management) facing cocaine charges (he was arrested at the end of a six-week investigation known as Project White Rabbit, at a club called the Comfort Zone; the damning bit of a evidence from a “rival” manager that MacIsaac is building a new house with his and her sinks in the master bath) but here’s what I love most: the fact that MacIsaac apparently attempted to “explain” the $600 in his pocket to the police officers on the raid by saying, “I’m a hedge fund manager.” A little bit because (and I could be wrong) I’m pretty sure it’s not illegal to have cash in your pocket, so it sounds like MM folded like a cheap suit even Thain* wouldn’t be caught dead wearing, and a lot a bit because in my mind, it’s the new default excuse everyone can use, for any situation with even the hint of consequence. Just imagine yourself to be one of your favorite hedge fund managers, and respond as they would -- as in the examples below.

Officer: Did you just litter, pal?
Leon Cooperman: Yes, but officer, I can explain: I'm a hedge fund manager.

Officer: Sir, this is a peaceful demonstration. We don't allow people to immolate themselves to protest eating meat.
Dan Loeb: First off, fuck you and your animal-clogged arteries. And b., I answer to a higher authority—I’m a hedge fund manager. [Douses himself in lamp oil and lights a match.]

Angry Shareholders: Did you just lose our company $100 billion in shareholder capital?
Jim Cayne: It's OK, I'm Big Daddy Cayn--I mean, I'm a hedge fund manager.

Barnes and Nobles employee: Did you just take that book in the bathroom with you?
Larry Robbins: Yeah, and I was in there for a while, too but don’t worry about it: I’m a hedge fund manager.

Guard: There's no smoking in the museum, pal.
Jim Simons: Oh, it's all right, buddy. I'm a hedge fund manager.

David Spade: Melted chocolate inside the dash, that really ups the resale value.
Steve Cohen: I think you're going to be okay here because I deep fried the chocolate then coated it with caramelized sugar, thereby creating a hard candy shell. Plus, I’m a hedge fund manager.

Hedge fund manager faces cocaine charge [Globe And Mail]

*He looks like a cheap Midwesterner.

We’re going to have a lot to say about the costs of Treasury Secretary Hank Paulson’s Blueprint for a Modernized Financial Regulatory Structure. Before that, however, it’s worth noting that there is little to admire about our current financial regulatory structure. Largely a product of the financial crises of the past, the structure was unwieldy, arguably created a bureaucratic structure at odds with the constitutional framework of our Republic and tended to serve the interest of the very financial institutions it sought to regulate at the expense of individual investors and the broader public. The array of regulatory bodies we live with were largely “captured” by the securities and banking industry, although “capture” is probably the wrong term because it implies that they were independent at some point. Many were built to serve the interests of Wall Street, so no capture was necessary.

The best that can be said about the current system is that we have years of experience with it. We understand how it operates, how it fails and what its strengths are. This is a conservative point but one that needs to be made: regulatory innovation inevitably leads to “unintended consequences” and unanticipated costs. At the very minimum, the costs of adjusting to a new regulatory structure need to be taken into account. We may not be risking our lives and sacred honor by declaring the need to dissolve the longstanding financial regulatory bonds, but we may be risking our fortunes.

That said, we’re headed deep into the details of this bold new world Paulson has proposed. The Treasury has released a cheat sheet here. But if you are really ambitious, follow us into the 212 page blueprint. We welcome your insight, of course, in the comments below or via email to tips@dealbreaker.com.

Female bankers in London are taking pole-dancing exercise classes. This would be “scandalous” if suburban housewives across the country, who’ve been taking these classes as well as “cardio strip tease” et al. at their local gyms for at least the past five years, hadn’t beaten them to the punch. At this point, everyone knows how to swing 'round one of these things and it's no longer going to give you a leg up at work. Now, what would be interesting, and probably a more marketable skill? If some of these ladies (and/or gentlemen) would have the brass to attend the pole-smoking classes from the same instructor later that evening. Who knows? These services could come in handy at some I-banks unable to meet margin calls.

Pole-Dancing Classes Lure Eager Women Bankers in City of London [Bloomberg]

There’s an outrageous article in Crain’s today about executive perks. Apparently senior management at some banks get to fly on the corporate jet. Others have their country club tabs picked up by the company. A few—VERNON JORDAN, LAZARD LTD, SHAME HIM IN THE STREETS—even get their apartments paid for, at up to $24,000 a month. Crazy, isn’t it? No, it’s not crazy. What’s crazy is that everyone—author, shareholder activists, Tim Robbins and Susan Sarandon-- still fails to get it. If I agree to run one of these things, I want to plied with gifts at every turn. This job is really hard and I’m very sensitive and the suggestion that I’m not worth tons of freebies plays on the deep insecurity I attempt to mask with a self-righteous attitude and shameless bravado. That makes me unhappy and you know what happens when I’m not happy—I destroy billions in shareholder capital (I might do that anyway, but without the gifts the threat is more imminent).

Plus, the notion that shouldering my basic costs of living is a “gift” is absolutely absurd. That’s a basic requirement of your job in keeping me comfortable enough to work. I never, EVER, would’ve taken this gig if I thought I would be asked to pay for wherever I happen to rest my head. It's extremely demeaning. Know what I would consider a “gift” and something I’d even think about standing before shareholders and fighting for? Free access to the Olsen twins, which I hear Goldman has no problem subsidizing for LB, though, as this video shows, he made be getting duped.

A key question in the liability of brokerages in the failure of the auctions for auction rate securities is what customers were told about the risks of the products they bought. The brokerages now claim they properly warned customers about the products, and that they never considered them cash or cash equivalent. Most individual brokers we've spoken to off the record say that this is very inaccurate, and every retail customer we've spoken to (including some who are friends and family of DealBreaker editors) say they bought these securities with the understanding that they were "highly liquid" or "cash equivalents."

So what did the brokerages tell retail customers? There were lots of disclosure documents that say a variety of confusing things but almost none of them reveal the risk of systemic and perhaps permanent auction failures for the auction rate preferred securities that pay low interest rates even after auction failure. And, as the screen shot of a ARPS customer online account above reveals, the brokerages did, in fact, take actions that encouraged customers to regard the ARPS as cash. This account comes from a Merrill Lynch customer account. (Click on image for a bigger version.)

It's often been said that we're in the worst financial crisis since the 1930s. So perhaps its no surprise that we seem on the verge of the biggest financial regulatory overhaul since the Great Depression. But we certainly didn't expect anything this sweeping to come out of the Bush administration. We clearly underestimated these guys. Talk about shock and awe.

But we're getting ahead of ourselves. Over the weekend Treasury Secretary Hank Paulson released the outline of his controversial and sweeping a plan to overhaul financial regulation. He would eliminate thed SEC, FDIC, CFTC, OTS and OCC. And after dumping out this bowl of alphabet soup, he would fill it right back up again with the Prudential Financial Regulatory Agency , the Conduct of Business Regulatory Agency, the Federal Insurance Guarantee Corporation and the Corporate Finance Regulator. It's going to take some time to digest these changes.

Later this morning, Paulson will give a speech about this plan. In the meantime, the plan is already coming under criticism. Barney Frank worries that the plan may take too much power away from states, particularly (from what we've been lead to understand) in the area of regulating insurance. Larry Ribstein worries that the new, more concentrated structure of regulation could result in losing significant flexibility in financial innovation.

"On this latter point, consider that the CFTC's replacement, CBRA is likely to be less accommodating," Ribstein writes. He adds that "with one regulatory agency we’re likely to get fewer new financial products."

We're going to hold back for now, as we attempt to work through what's known about the plan. Let's see what Paulson has to say. More later today.

Paulson Plan Begins Battle Over How To Police Market
Paulson's big bang [Ideoblog]

Lehman Sues Japan Firm, Claiming $350 Million Fraud (WSJ)
There's a million ways to lose money. Here's one of the more interesting ones we've been paying attention to. Lehman claims that employees of a Japanese firm fraudulently bilked Lehman out of $350 million. Their method of action: using official company documentation to suggest that it was behind a hospital refurbishment funding project. Turns out the Japanese company Marubeni Corp had no idea about it. So now Lehman is suing for its cash back. Whether they get it back or not, you have to figure that Lehman's counterparty (so to speak) in this fraud, must've had a damn good idea about how this whole process works to pull something like this off.

Citizen Huff (NYT)
The redhot Huffington Post continues to make the media rounds, jumping form the New Yorker to the New York Times for its latest glowing profile. Actually, it started even earlier when some (possibly dubious) numbers came out that the site was bigger than Drudge. It helps that it's election season and there's an added hook to write about a politically-oriented site. But really. Financially, the site expects revenues between $6-$10 million this year, on what sounds like breakeven profits. Oh, and they found some guy to say it was worth $200 million.

Aloha Airlines Halting Passenger Service (AP)
We've long been in the "more bankruptcies" camp when it comes to airlines, hoping that they'll lead to more gates/opportunities for interesting upstarts. That being said, seeing as we're not too big on the intra-Hawaii island-hopping scene, it's hard to get real excited about the end of Aloha Airlines. After 60 years, the company recently declared bankruptcy, and now it's shutting down operations for good.

HUD Secretary Expected to Quit (WSJ)
There's something about HUD secretaries. Always seemingly getting up to no good. Yesterday we couldn't have named our current one, but today we know his name is Alphonso Jackson and he's expected to quit amidst some vague allegations of wrongdoing. The Journal describes this as a blow to Bush's attempt to fix the housing mess. Eh, somehow we doubt that this position isn't so crucial to the situation.

UBS Falls After Reports It May Have to Raise Capital (Bloomberg)
Having already raised about $13 billion earlier this year, UBS may have to double dip in the guacamole. As it gets set to report another wave of writedowns, analysts say it will have to go back and raise more money, possibly as much as another $15 billion. Overnight, shares fell around 4 percent on the report.

$$$ Jewish Lessons for Bear Stearns [Mixed Multitudes]

$$$ Obituaries: CYGT aka The Stock That Killed My Hedge Fund [TS]

$$$ When Will It Be Safe To Be Long Asian Dudes? [LoSC]

$$$ (WMT) [WallStrip]

Regulatory Rethink
By CHARLES SCHUMER (With
March 28, 2008; Page A13

The sudden collapse of Bear Stearns was a shock to our financial systemmeans I can now bash the Bush administration and all it stands for without even using the word "Bush" anymore. This is a huge plus since it makes all the guys in the Senate lounge giggle. and It was also a wake-up call to anyone who believed our financial house was in good order. Last week we Democrats looked into beheld the glory of a financial abyss, glowing political opportunity and the Federal Reserve acted too swiftly and appropriately to prevent permit a potentially much broader failure of the financial system and a legislative mandate the likes of which Democrats haven't even had so much as a whiff of Since the New Deal. Unfortunately, The Fed's actions appear, at least for the moment, to have provided some much needed breathing room to the markets.

But we are by no means out of the woods race when it comes to the long-term prospects for a complete, legislative assimilation of the health of ourfinancial system, or of our economy more broadly. We need to rethink the regulatory framework that governs our financial system.

Nobody leaves 'til we get there!

Our stylish friends at Guest of A Guest have discovered the latest fashion trend sweeping the sophisticated nooks of New York City. The discovery came at an art opening in Soho.

While we saw the usual sartorial pieces of cocktail dresses, hats and bow ties, it was this dapper little vest from the Bear Stearn’s spring ‘08 line that was the true hit. We suggest snatching up these puppies now, as the designer has taken a permanent retirement. Their worth will be sure to appreciate in value in fiscal years to come.

Texas lawyer Joe Jamail is the lead lawyer for Clear Channel, which has sued the banks that are trying to back out of financing the acquisition of Clear Channel by a pair of private equity firms. Clear Channel claims the banks hesitation amounts to tortious interference with the acquisition agreement. Although there’s little—or perhaps no—precedent for this kind of case, the banks being sued have reason to be afraid.

You see, Jamail famously won a $10 billion verdict for Pennzoil in a tortious interference suit in against Texaco. Pennzoil had agreed buy Getty Oil in 1984, but Texaco swept in and bought Getty before the deal had closed. The massive award forced Texaco into bankruptcy. At the time it was the largest judgment in American history.

Pennzoil wound up collecting only $3 billion after Carl C. Icahn, who was Texaco's largest shareholder, helped negotiate a settlement with Jamail. Before the settlement, the two sides spent years battling each other. “The fight has been punctuated by thousands of hours of fruitless negotiations, legal wranglings, dashed hopes and charges by executives of both companies accusing the other side of greed, arrogance and duplicity,” the New York Times said in 1987.

So how did Icahn resolve things with Jamail? After the jump, Icahn reveals all in a standup performance at Carolines Comedy Club in 2003.

Surprising: shares of BSC are down nearly five percent since Rabbi Cayne sold his stock. Not surprising: A would-be incoming analyst in Bear Stearns’ equities department writes to tell us he’s been informed the services of he and his brethren are no longer required (and to inquire about openings at DealBreaker. Just one: Hahn's job). Cheer up BSC shareholders/BSC employee who never was-- you didn't have a worse week than this guy:

The usual midtown haunts of Bear Stearns “worker bees” are a little haunted these days. It’s easier to get a pint of Guinness during happy hour at Maggie's Place, but Fiona and Nick seem a little lonelier. It seems the collapse of Bear has depressed not only Jimmy Cayne’s net worth but the libational spirits of his underlings as well.

Spencer Morgan of the New York Observer infiltrated Connolly’s, the forty-seventh street Irish bar that plays home to Black 47 on Saturday nights and once hosted a lot of Bear Stearns regulars.

“On an average night there would be between 20 and 30 Bear guys,” said a 23-year-old Bear man we’ll call Tommy. He works on the investment banking side and has been a Connolly’s regular since he started at Bear a year ago. He said that on Friday, March 14, when it was pretty clear that the bank was heading south, and fast, more than 100 Bear employees, mostly men, gathered among the mahogany, rich leather and lighted green clover leaves of the bar.

“Bear! Bear! Bear!” they chanted as they downed their shots, recalled the young man. “Everyone was trying to keep hope alive.”

“They’re coming less, these last weeks,” said the compact bartender in an Irish brogue Monday night, when the Bear stock was being valued at between $4 and $10, depending on the appetite of JPMorgan. The figure was being displayed on several flat screens tuned in to CNBC’s Kudlow & Company. “I think a lot of them are nervous now. It’s a sad thing; a lot of them are older guys with retirement plans, and now this, you know?”

Bear Naked Gentlemen [Observer]

March 28--

845 AD : (Ragnar Lodbrok: Extortion, Interstate Flight) Ragnar Lodbrok is paid 7,000 pounds of silver by Charles the Bald to leave Paris and take his pesky Viking hoard with him.

1834 AD : (Andrew Jackson: Bank Fraud, Embezzlement, Money Laundering, Counterfeiting) The Senate censures Andrew Jackson for defunding the Second Bank of the United States. A year before, being outwardly hostile to the concept of a national bank, he had diverted the capital to local and state banks. Injecting, one might say, a little liquidity into the system. State banks were in the annoying habit of printing their own currency in 1833, itself a bit of a issue, but combined with the lack of a hard-currency reserve (gold or silver), which most banks did not hold in quantity, the resulting inflation was ruinous. Jackson tried to stem the tide by requiring government land purchases to be paid for in hard currency (again, gold or silver) but this only served to boost the demand for the coins from state banks, which, unable to satisfy the demand owing to their low or non-existent reserves, then collapsed. The result was the Panic of 1837 and the years of economic ruin that followed. Jackson expunged the censure once his allies took the Senate again a short time later.

Ironic, no?

2002 AD : (Multiple Defendants: Securities Fraud, Tax Fraud, Bank Fraud) Enron is given 90 days to turn over documents to Federal Investigators. Most don't turn up.

A blast from the past. So to speak. With echos in the present:

Citigroup said Wednesday that it would pay $1.66 billion to the Enron Bankruptcy Estate, which represents creditors of Enron, the energy trader that engineered one of the biggest U.S. corporate frauds. With a trial scheduled for next month, Citigroup was the last of 11 financial institutions to resolve claims going back to 2003.

Citigroup settles with Enron creditors. [International Herald Tribune]

Equity Q. Private is the author of Going Private and a Guest Editor at DealBreaker.com

The unbiased, neutrally independent American Coalition for Ethanol (it is worth a visit just to absorb- or be absorbed by- the simply eerie animations on the website, but don't forget to check out the "all about ethanol" stuff too. Ethanol 101 is an invaluable source of the latest bullshit, biofuel jargon guaranteed to get the undergarments off of that hottie with the clipboard that you have been oggling since crashing the Democratic fundraiser) released a report earlier this week revealing that Ethanol might save consumers money.

Of course, we only bring it up as a way of talking about the far more interesting publications of Robert "Ethanol Is The Largest Scam In Our Nation's History" Bryce. Seriously, you can't fail to appreciate titles like "Gusher of Lies," especially when they are accompanied by subtitles like "The Dangerous Delusions of Energy Independence." Or perhaps, "Pipe Dreams," paired with "Greed, Ego, and the Death of Enron."

Either way, I think I'll buy corn futures.

Lobby Says Ethanol Helping Reduce Gasoline Costs [Research Recap]

Equity Q. Private is the author of Going Private and a Guest Editor at DealBreaker.com

From: employeediscountnews@citi.com

To: employeediscountnews@citi.com

Sent: Friday, March 28, 2008 10:29 AM

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Ancient joke: What's the difference between god and Larry Ellison?
Ancient answer: God doesn't think he's Larry Ellison.

The list of people who take more flak than Larry Ellison for being rich is pretty short. But, then, Larry Ellison works very hard at maintaining and inspiring hatred. His efforts are so ceaseless, one might almost think he revels in the vitriol. Actually, we like to think that his divine metabolism absorbs energy, not only from the seething hatred of the mere mortals he enslavesemploys, but all of humankind.

It would be easy to chalk his abrasiveness to childhood trauma (born to a 19 year old, unwed Jewish mother, sent away to live with his aunt and uncle, etc. etc.) but it is so pervasive, it is just much cattier to attribute it to a sort of perverse pleasure.

There was that thing with the aircraft noise. After being cited repeatedly by the city of San Jose for noise violations stemming from his insistence that he could take off and land his Gulfstream whenever he damn well pleased, he simply sued the city for an exemption (a suit which, after record legal fees, he won).

And that time when he offered to "donate, as in free" the software to create the largest Big Brother database in the world along with a national ID program. (He didn't mention that Oracle planned to charge significant "maintenance fees").

And when accused of insider trading after dumping $1 billion in Oracle stock? He donated $100 million to charity in lieu of paying a fine. (The little detail that it was to his own charitable foundation seems to have attracted little notice until after the settlement was final). We'll let you guess if he claimed a deduction.

Oh, he pledged $115 million to Harvard- but decided he didn't want to pay- and so he didn't.

And now, he is stealing from school children. The cad!

The Oracle chairman, who is the fourteenth richest person in the world, recently had the value of his 23-acre Woodside, Calif., home reassessed from $173 million to about $70 million. That dropped his annual tax bill by more than a million dollars. The biggest loser: Local schools that depend on tax revenue for the lion’s share of their budgets, according to the Almanac.

The Portola Valley School District, for one, will lose an estimated $250,000 to $300,000 a year as a direct result of the Ellison reassessment, Tim Hanretty, the district’s assistant superintendent, tells the Business Technology Blog. That’s a healthy chunk of the district’s $11 million annual budget, and Hanretty tells us the district will have to lay off about six of its 100 or so employees to make ends meet. The cuts won’t come in the classroom, but in administrative and facilities positions.

Count on Larry Ellison to make subprime work for him, at the expense of helpless school children.

Ok, so the headline is a bit of a stretch. But he's been asking for it for years! (Even his Wall Street Journal "hedcut" is unflattering).

Yes yes, what a jackass. (Admit it, you want to be Larry Ellison).

Larry Ellison’s Tax Cut Breaks School’s Budget [WSJ]

Equity Q. Private is the author of Going Private and a Guest Editor at DealBreaker.com

...with his newfound faith in Judaism, and stoner ways, is Jimmy Cayne not:

In the past weeks, together with his wife, Patricia Cayne, who is a student of Jewish religious traditions, Mr. Cayne has spent considerable time searching for comparable events in religious history to see what lessons can be learned from the collapse of his firm, said a person who has spoken to him recently.

Shocked into an inconsolable state, Presidential Candidate Hillary Clinton feared out loud yesterday that injecting liquidity into the economy might reduce the United States to the economic level of post 1990s Japan.

We might be drifting into a Japanese-like situation. I don't think we can work our way out of the problems we're in in the broad-based economy with monetary policy alone. I think the Japanese tried that and tried and tried that.

Liquidity isn't the answer, you see. Instead, we have to use liquidity.

Details after the jump.

Judge says ex-Bear exec can't join Morgan Stanley (Reuters)
A judge has ruled that an ex-Bear exec can't take up work at Morgan Stanley, because, argued Bear itself, the just-resigned executive hadn't given the proper 90 days notice. The 20-year old vet just quit Bear 10 days ago, so the question seemed to be: in times of extreme chaos and uncertainty, do the normal rules about this apply? Apparently in this guy's case, the answer was yes.

Citi Continues Leadership Overhaul (WSJ)
New hire at Citi: Terri Dial, who currently runs Lloyd's retail banking unit in the UK, is expected to be brought on the consumer business under Vikram Pandit. More broadly, the company is expected to break down lines on a more regional basis, allowing its operations to be more in tune with the local culture and business climate.

Neeleman to leave JetBlue for Brazilian start-up? (Today in the Sky)
For some reason, this rumor is getting reignited, even though it's old: jetBlue founder and erstwhile CEO David Neeleman may go to Brazil and start a new airline there. Presumably something like the jetBlue of Brazil. So far there's nothing official, though apparently he is discussing his future as chairman of jetBlue -- obviously if he jetted down to Brazil to launch a new airline, he probably wouldn't have time to attend many board meetings. (Update: As a commenter points out, this story appears to be official) Anyway, we're all for it. We've heard the civil aviation sector in Brazil could use some improvement...

Is China Really No. 1 in Internet Users? (The Numbers Guy)
Maybe not. Carl Bialik, as he's prone to do, is able to poke a few holes in the side of the can, so that some light can get through. Some issues: the US survey only surveyed people with landline, which, given the demographics and all has to be skewing. Then there are people who have internet access, but who haven't used it in the last month (though really, that can't account for to many people). And then there's the fact that stats out of China can only be relied on so much -- sort of like stats for health and literacy out of Cuba. You're going to believe those?

Weber Says ECB Will Raise Interest Rates `If Needed' (Bloomberg)
Those stalwart inflation fighters at the ECB won't be changing their tune any time soon. With most of the world still preoccupied about liquidity and cash availability and stuff like that, an ECB member is still warning that rate increases could be coming if inflation looks like it's becoming an issue. Yeah, they really believe in this price stability thing.

$$$ How Does the Fed Have the Legal Authority to Bail out Bear? [The Conglomerate]

$$$ The real victims: wives, interior decorators, Martignettis [NYP]

$$$ Proxy Firm Backs John Mack, Mostly [DealBook]

$$$ Citigroup sued over auction rate securities [Reuters]

Davis' lawyer said his client, who is said to have serviced former Governor Eliot Spitzer, is a former hedge-fund worker.

And There He Ho's Again [NYP]

Jimmy Cayne is done with Bear. He filed his walking-papers with the Securities and Exchange Commission, the chairman and former chief executive of Bear revealed he had sold 5,612,922 shares at $10.84. Another 45,000 were sold by his wife. That position represents almost all of Cayne’s holdings in Bear, although he may still have options for more shares.

This should put an end to talk that a group of large shareholders might seek another buyer. Cayne was rumored to have talked with Joe Lewis, who owns over 9% of the company, about finding another bidder. But that was before JP Morgan Chase raised its price tag from $2 to $10 a share.

In another news, a reliable source tells us that Cayne was actually punched by another Bear executive in the company gym last week. We haven’t even tried to confirm that one.

Update: BSC sinking fast in after hours trading.

Cayne's SEC Filing [SEC.gov]

Over at our sibling site Above the Law, editor David Lat wonders, “Is the difference between a banker and a lawyer access to orifices?" based on the assertion by dominatrix Mistress Victoria X that “finance guys usually want things in their asses,” whereas lawyers do not. This got me wondering:

Goldman Sachs has agreed with its clients’ assessment of Global Equity Opportunities, which is that the fund is, how to put this, a big fucking failure. The bank has taken back $1.8 billion of the $2 billion it used to bail the fund out last summer, which was GS’s effort to say to investors, “Hey, guys, this fund is good. To prove it to you, we’re going to stick our own coin in it as well and pray to god we don't lose too much.”

But damn those smartass clients, they didn’t fall for it, and continued to ask for their money back. Which made Goldman think, “Hey, maybe they’re on to something?” and follow in suit. The other big name brought in to stick a guarantee on the box, Eli Broad, has pulled the $1 billion he put up as well. The fund is now down to $1.2 billion in net assets, from $5 billion at the start of August.

Goldman Reclaims Most Of $2bn Rescue Funds [FT]

This is the one we’ve been waiting for, people: on Monday, March 31, CNBC will air For The Love of Money: The Death of Seth Tobias, a one-hour documentary that will tell the “real” story of the Circle T founder’s death by drowning, with the added value of grainy reenactments, dramatic b-roll, voiceovers and talking heads. I’m so excited I don’t even care that the premise, “How far will people go for the love of money?” is way off base. (For the record, let's get one thing straight: murder or accidental drowning, ST's downfall had nothing to do with a love of money. CNBC should man up and give the show it's proper name: "For the Love of Cock and Coke." Help me out on this one, Charlie.)

From the preview, which we’ve watched many, many times this morning, here’s what we can expect: an absolutely WASTED Mark Haines offering his 2-cents on the guy, the widow’s 991 call, and shots of the pool where Tobias went down for the dirt nap (it’s not at all as I pictured it all those times I closed my eyes and reflected on that fateful night). From our wildest fantasies, here’s what we’re hoping for: footage of Andrew Ross Sorkin interviewing the management at Cupid’s, the gay club where Tobias’s stripper-boyfriend Tiger worked; a clip of Tiger dancing in a thong (plus the logical extensions: clip of Billy Ash dancing in a thong, clip of Seth Tobias dancing in a thong, clip of Mark Haines dancing in a thong); the recipe for the Ambien-laced pasta alla vodka Filomena Tobias supposedly used to drug her husband; and face time with personal assistant Billy Ash, AKA Mr. Madam the Ft. Lauderdale-based gay pimp (insofar that he is both gay and a pimp) who claims Tobias had a drug and alcohol addiction, and was murdered by his wife. Billy Ash. So. Much. Billy. Ash.

(As an aside: I don't want to sound snarky about the tragic death of a hedge fund manager (although we could stand to lose a few more -- market pruning and all), but the notion of CNBC trying to muster up the gravitas to do this story justice is a rich comic vein. Like the Mouseketeers performing I, Claudius. Anyway, can't wait for Monday.)

Seth Tobias Preview [CNBC]
CNBC Presents "For the Love of Money: The Death of Seth Tobias" [CNBC]

The action in Lehman Brothers is more evidence about how unsteady markets are these days. Shares of Lehman Brothers fell nearly 10 percent early this morning. The rumor spread that the bank would make an announcement this morning, and many assumed (or encouraged others to assume) that it was going to announce more write-downs. This sparked rumors that Lehman Brothers could see a Bear Stearns-style run on the bank, with customers and counterparties bailing out. Options traders started snapping up puts, and shortly afterward the shares plunged.

"Much like the bets in the options market that predicted Bear's demise (please refer to my prior posts that pointed these out before the institution's near collapse), traders are betting that Lehman may be facing the same situation soon, in the next 22 days," the Mock the Market blog explains. "Nearly every out of the money put has traded furiously today, with a particular emphasis on the ap 20's, which have changed hands nearly 10,000 times today with several hours remaining in the trading day."

Lehman spokeswoman called the rumors "totally unfounded" and even blamed short sellers for spreading rumors. The market seems to have bought this line, pushing the stock back from its lows. Some are skeptical, however, noting that Bear Stearns made similar noises even as it plunged toward bankruptcy. Companies love blaming shorts and claiming that they are pushing down stock with rumors, but there's seldom any hard evidence of this. The media allows companies to get away with these claims without ever demanding that they substantiate the claim. Lehman's no exception.

"There are a lot of rumors in the marketplace that are totally unfounded. We are suspicious that the rumors are being promulgated by short sellers of our stock that have an economic self interest," Kerrie Cohen, a spokeswoman for Lehman Brothers, said.

We know that the rumors weren't completely unfounded. Lehman did issue a press release today. Only it wasn't about losses. Instead Lehman announced that Mark Bourgeois had been hired as the new co-head of global institutional distribution. (That's an awesome banker name, by the way. Bourgeois.)

Don't get too worked up about the temporary restraining order issued by a Texas court today against the bank syndicate that is balking at funding Bain and Thomas H. Lee's buyout of Clear Channel. Sure, shares of Clear Channel jumped more than 10% on the news and they're probably high-fiving themselves over this quick win. The order purports to require the banks to fund the acquisition but it won't do any such thing.

If you aren't familiar with the way courts issue TROs, you might not realize that the orders are often issued without the restrained party even getting a hearing before the court. Here the banks weren't represented, according to media reports. One of the key terms here is "temporary." The restraining order won't actually force a funding, which would be far more permanent. What is likely to happen is that the banks will voluntarily waive the funding deadlines in the commitment letter, removing the urgency required to get a TRO.

The most succinct summary of the decision comes from our own Joe Weisenthal, who also writes for Paid Contenet. (Frankly, the time stamp on this item worries us. We thought posting Opening Bell at 7:30 every morning was rough. This went up at 4:23 am. When do you sleep Joe?. Update: As a commenter pointed out, the 4:23 am time stamp is PST, which means it went up at 7:23 am for people who don't live three hours behind the rest of us. But that only deepens the mystery of Joe Dubs productivity, since Opening Bell was posted just one minute earlier this morning. Whatever Joe's on in the mornings, we'll take two please.)

Judge Awards Temporary Restraining Order Against Banks In Clear Channel Case [PaidContent]

Speaking of dominatrices, Meredith Whitney has been quite the busy bee: the analyst voted most likely to stick a heel up your ass spread the love-hate usually reserved for Citi yesterday afternoon to Merrill Lynch and UBS. Whitney estimated that the firms will report writedowns of $6 billion and $11.1 billion, respectively, this quarter. In the new note, published late Wednesday, Mistress W wrote that fourth quarter results will be a “rude awakening,” except to the management who’s known about the losses for a while but chose not to say anything.

Merrill, UBS Outlooks Slashed By Oppenheimer [Reuters via NYT]

Here’s some terrible news sure to send you into a downward spiral ending on cold tiles of the Bear Stearns’s fourteenth floor men’s room, pants around your ankles and shotgun in hand (which, for some people—non-senior BSC executives—would be considered a bad thing): Jeffrey Epstein accuser, Maximilian Cordero, has broken it off with boyfriend/lawyer/blogger William Unroch. Cordero, for those who might have unconscionably forgotten, is the aspiring model who claims billionaire massage enthusiast Jeffrey Epstein lured her underage self into his den of iniquity on the promise that he and his friends would help her with her career, and maybe even get her into the Victoria’s Secret catalog if Cordero would only “be nice to him,” which, in Epstein-speak, translates to standing around awkwardly while he jerked off into a towel. Cordero’s also the one (alleged) victim, that we know of, who has the distinction of being born a man (having pulled a fast one on Epstein by taking hormone pills since she was sixteen, displaying a rack that impressed many a DealBreaker reader, and using the nickname Max, which could really go either way). No one knows what goes on behind closed doors, but hazarding a guess, we’re thinking it’s a distinct possibility that things started to go south for the couple when it was revealed that Cordero might’ve been over 18 at the time of her run in with Epstein, a fact that slightly undermines the case and the millions of dollars the couple was hoping to gain. That sort of disappointment would put a strain on any relationship, even those not involving trannies, purple vibrators and old men and their toupees. Cordero’s new lawyer is Jonathan Lenoir.

Major Twist In 'Minor' Sex Suit [NYP]

Phil Schoonover was pretty sure it would be a bad idea to sell Circuit City. At least that's what he told Reuters back in February.

Schoonover came over to Circuit City three years ago from rival Best Buy, to increasingly underwhelming investor enthusiasm. Of course, by the time Schoonover was talking to Reuters, Mark Wattles, head of Wattles Capital Management had disclosed a 6.5% stake in the retailer along with a vague warning that he might press for a sale, or buy more stock, or both, or neither. This had the effect of turning some heads. Wattles owns a controlling interest in Ultimate Acquisition Partners, that, in turn, owns Ultimate Electronics, and that owns 32 consumer electronics stores.

Back in February, Circuit City quickly and aggressively moved to expand its borrowing, a fairly transparent anti-takeover move, even given the company's deteriorating cash position. For a company that had a very limited debt profile, this was unusual. Circuit City's credit line was blown out by $800 million for a total of $1.3 billion with an option to tack on another $300 million whenever they liked. Not bad for a company that earlier that month had a mere $49.7 million outstanding against their credit facility, held nearly $500 million in cash, and commanded sales of only $2.9 billion.

It is probably fair to say that Wattle was irritated by the move. Wattle Capital Management announced on February 25 that they were nominating a slate for five seats on Circuit City's 12 person board.

Schoonover (Swoonover?) responded with a cost-cutting plan (which presumably would reduce the need for Circuit City to take on $1.3 billion in debt) and the prospect of selling some or all of Circuit City's Canadian stores. To say that few people were impressed might even be generous.

Since then, the plot has thickened. Wattles turned up the heat and proposed a total sweep of Circuit City's board on February 29th. Circuit City, desperate to look like they were in control of matters, quickly showed the door to Steven Pappas the Company's "Small Store President," and Peter Weedfald the Chief Marketing Officer. Circuit City had dropped $6 million in bonuses back in December to retain 10 Vice Presidents and another $3 million to retain Executive Vice presidents, including Pappas and Weedfald. Circuit City then declared a $0.04 dividend last week. Too little, too late as the firm now faces being replaced in the S&P 500 by Philip Morris on March 28th. How humiliating. And disastrous for the stock price, as the shares were quickly dumped by institutions holding S&P 500 mirroring portfolios. Firms like Wellington Management and TCW Group turned nearly 20% of the shares over by themselves.

Who stepped in? D.E. Shaw & Co., HBK Investments, Royal Capital Management, and Wattles. The activists are closing in, so you might not want to sell any of the executive corps employment insurance.

Activists Circle Circuit City
[WSJ - Heard on the Street]

Hey all you sad Bears—this ought to cheer you up: Manhattan’s preeminent dominatrix, Mistress Victoria X is slashing prices! The S&M professional is offering a session discount of $10/hour (originally $2/hour but she increased the markdown after JPMorgan increased their bid) for a variety of scenarios sure to get your minds off the week you took it up the tailpipe (‘cause MVX is not proffering anal). On the menu: domestic service training, spanking combined with verbal chastising, cane stroking, interrogation and master/slave roleplay. Added value: Miss X knows a little bit about subprime. You might actually learn something!

In which I give back to the community [Miss Victoria X]
Surprise, Bear Stearns guys like it up the ass [ValleyWag]

Auction rate securities, including the auction rate preferred securities that remain frozen and often pay low interest rates capped at low levels, were sold to retail customers (including some investors close to DealBreaker staffers) by retail brokers. A key question in the lawsuits that have been filed against Merrill Lynch and Morgan Stanley, among others, is what the retail brokers told customers about the the securities they sold.

At least at one firm, we know that asset managers were told that they were to regard the securities as "cash equivalents" because the auctions had not failed for decades. Indeed, it seems that some brokers were given a "script" that urged the so sell these as "cash equivalent" or akin to "money market funds" or "highly liquid" securities.

We know this because brokers and others in wealth management groups have told us. But we'd like to see training materials that spell this out. It will be an important indicator about whether the firms themselves were selling the auction rate securities based on misleading marketing or whether, as some firms are already whispering, it was just a few overeager rogue brokers who oversold the auction rate securities. If the retail brokers were provided with misleading sales materials, they should not be blamed.

Merrill Lynch, for instance, seems to admit the auction rate securities were sold as equivalent to money market type securities in some of its documents. "Auction rate securities have generally been issued as either bonds or preferred stock and are designed to serve as 'money market-type instruments,'" Merrill says in a document describing auction rate securities on its website.

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