$$$ Furry Fund [FINalternatives]

$$$ Elitist for Same [Craigslist]

$$$ The Khaki Letter [LoSC]

$$$ Charges of Insider Trading for a Wall Street Luminary [New York Times]

We're sorry you are still in the office and not already plowing through your third mojito and sailing away for blackout island. We'd at least like to bring you the good news that the roads are still clear and you won't spend the first five hours after leaving the office stuck on the LIE inhaling exhaust.

We'd like to but we can't. According to Traffic.Com, you are totally screwed. The traffic jam on either side of midtown tunnel is completely jammed. So it looks like it is either the LIRR or another Friday night in your usual Friday night haunts, except that they'll be weirdly abandoned. There won't even be any girls out tonight because instead of going to some place where they might actually meet a man, they'll all be seeing some film about girls looking for men.

You're probably better off staying in town anyway. It's going to be cold and windy all weekend. Isolated thunderstorms in the morning will become severe in the afternoon. They're even talking about hail. Good luck.

-- Mortgage industry

-- Epidermis (his own and all those employees forced to take meeting in the Suntan Chambers)

-- Bear Stearns

-- Bees

-- Chihuahua

Killer Bees and the Housing Crisis [USNews]
Couple cites vacant home in fatal bee attack on dog [Tuscon Citizen]

The Shake Shack in Madison Square Park is open for business, and we've already heard reports of summer interns at Credit Suisse standing on the long lines to get burgers and fries for lunch.

This reminds us of the perennial question: who has the best lunch time eating options in finance? Credit Suisse's offices, located on the east side of Madison Square Park, make it a clear nominee simply because the superb shake shack is located there. Please leave your other nominations in comments.

Carl Icahn got the go ahead from the Federal Trade Commission to scoop up huge amounts of Yahoo stock. Icahn owns around 10 million Yahoo shares now, and has options to acquire another 49 million. He said he's seeking clearance from the FTC to buy up to $2.5 billion of the stock.

In our not-so-free market, you need the FTC's approval to make stock purchases worth $63 million or more.

In other news, we just noticed that Jerry Yang and Steve Ballmer apparently played golf together last weekend. They may or may not have chatted about a deal but probably not the straight-up acquisition that Icahn wants. Icahn, of course, hates executives who play golf. Is there any chance that Ballmer and Yang arranged the meeting over golf to piss off Icahn?

Icahn gets antitrust go-ahead for Yahoo stock buy [Yahoo--heh]

Here's a slightly unorthodox idea we've been tossing around, should you sense an impending foreclosure situation on your home. Why not burn the place down? The worst that happens is you get stuck with a pile of money from the insurance company. And what a pity that would be. If it's good enough for 50 cent, it's good enough for you.

As we pointed out the other day, a rift has developed on Wall Street over whether access to funds from the Federal Reserve is worth the price of increased regulation. Lehman Brothers is reportedly willing to accept the regulation while Goldman Sachs is said to oppose it, and is willing to give up access to the new Fed facility if necessary. Tim Carney, who writes for the Washington Examiner and is the brother of one of DealBreaker's editors, takes a look at why the investment banks have split over the issue.

These companies' financial situations give a hint. Goldman, in its most recent quarterly report, showed a positive gross profit, as it had for the years 2007 and 2006. Lehman, meanwhile, posted a $6.6 billion gross loss last quarter.

Goldman, like the whole financial sector, has plenty of headaches, but thanks in part to its correct bet on the housing slowdown and credit crunch, it is thriving compared with its competitors. Subsidized loans will help Goldman, but the weaker sisters in the industry need them more. Regulations may stabilize Goldman's position, but they will keep Goldman from improving that position.

Deal or no deal? [Washington Examiner]

As regular readers know, we've got a thing for Wall Street history. So we're really glad that the kids over at Portfolio put together a wonderful interactive feature detailing what happened to some of the once powerful and now vanished Wall Street firms.

Tim Sykes has gone and gotten himself an (online) TV show. Some of you may be disappointed to hear that LiveStock is not a situation comedy revolving around one city boy's attempt to run a farm, with hilarious hijinx along the way that include "accidental" sex with horses and the like. However, I think you still might enjoy LS, which the host describes as being "like Mad Money," with him in front of a green screen taking questions which you can ask in real time. For those who'd like to be more passive participants, consider making it an ancillary component of the Vending Machine Challenge. Whoever eats all 35 items and keeps them down while watching this show wins. Good luck to all.

The grounding of Silverjet brings to mind a question George Anders asked the other day in the Wall Street Journal: why doesn't the airline industry do more to hedge its oil exposure? Without appropriate hedging, airlines are pretty much always speculating on the price of oil.

With oil near $130 a barrel, why does Southwest Airlines stand alone in the airline industry in its aggressive use of hedging to keep fuel costs under control? Southwest has locked in more than 70% of its jet-fuel requirements this year at a price equivalent to $51 a barrel for crude oil. By contrast, other big carriers have hedged 30% or less of their fuel needs this year. Those carriers generally expect to pay the equivalent of $85 to $100 per barrel of oil under their hedging programs.

Anders' column suggest the answer might be frequent management changes in the industry. With such regular turnover in the top ranks, the airlines just lack management experience to deal with price changes. Law professor Larry Ribstein has some even more complicated explanations, including the possibility that airline management are concerned about putting complex hedges into their disclosures for fear of triggering memories of Enron. Worse, management may run the risk of Sarbanes-Oxley legal liability if they inadequately disclose their hedges. Perhaps its safer not to hedge.
Why Rivals Don't Copy Southwest's Hedging [Wall Street Journal]

Apparently Deloitte's securitization group, known for being big fans of the mortgage, asset backed and CDO stuff, was "gutted" yesterday afternoon.

Silverjet, the U.K. airline which flew exclusively business class flights, is permanently grounded. It has run out of cash after it failed to secure $5 million in emergency funding, Bloomberg is reporting. Founded 16 months ago at the peak of the credit fueled financial boom, the airline fell victim to falling demand for trans-Atlantic business travel and rising fuel costs.

It's a rough time for airlines. More than a dozen have collapsed in the past six months as oil prices skyrocketed. The industry may report $40 billion in combined losses this year, according to Bloomberg.

In an ironic twist, the last Silverjet flight took off from oil-rich Dubai today.

(Silverjet was, at some point, a DealBreaker sponsor.)

I've got some news and you're not going to like it. Yesterday's attempt by FTN analyst Tim, to eat one of every item in his office's vending machine, was a failure. By 5 pm, T-bone had only consumed 27 snacks, leaving behind two bags of Lays, two bags of Doritos, Funyons, Fritos, Ruffles, and one of those cheese snack situations (you know, with the plastic paddle). Some are saying, in his defense, that the challenge was actually "much harder than you'd think--like drinking a gallon of milk in an hour or something." Others (me) are saying, not in his defense, you had the whole damn day! It's a lot of food and, yes, the combination of cheese puffs with anything is slightly sickening but Jesus! I'm more sickened by the fact that an ex-frat boy can't consume a measly 35 items in 8 hours. Has he no pride? What was the thought process here? Yeah, maybe it was going to hurt, but how in the hell do you let yourself stop eight items short? How do you look that bag of Fritos in the eye and say "No, I can't," let alone your colleagues?

Here's what-- you people need to redeem this kid. I want every single firm on Wall Street to nominate one of its employees (interns count) to eat one of every item in the vending machine. Then, send us his/her time. We will post the results by the end of the day. The winner will receive a cheesesteak, a cheesecake, and an inscribed golden vomit bag (which you won't need because this isn't even that hard). In the meantime, I'm going to see if we can find out what Charlie Gasparino thinks of this weak show. It might seem like he's the only one we've been hitting up for quotes these last couple days but try and tell me you care about anyone else's opinion but his when it comes to bench pressing and food eating contests.

What was it that prompted JP Morgan cheif Jamie Dimon to call Citigroup's Vikram Pandit a jerk? Apparently Pandit was asking how the deal to buy Bear Stearns would affect the risk to Bear's trading partners on certain long-term contracts. This was a crucial issue because many of Bear's counter-parties had been unwinding contracts for fear the investment bank might collapse. As part of the deal, JP Morgan had put in place a durable guarantee that it hoped send a very strong signal that would stop the run on Bear.

But for some reason the Pandit's question irked Mr. Dimon. "Stop being such a jerk," he told Pandit. A little over a week later, JP Morgan would attempt to get out of the guarantee and unnamed sources started saying that JP Morgan never meant to enter into it to begin with.

We always thought that helping wealthy people avoid taxes was what Swiss banks were supposed to do. But it turns out that the government doesn't agree. And now they've turned one of the Swiss gnomes into an informant.

Bradley Birkenfeld, who worked for UBS's private banking division, is expected to plead guilty at a hearing on June 9th. Specifically, he'll admit to helping a real-estate mogul evade taxes. Earlier Birkenfeld had pleaded not guilty after he was indicted as part of the US government's probe into whether UBS helped clients evade taxes.

Birkenfeld guilty plea is probably a signal that he is helping prosecutors identify other UBS customers who hid assets to escape paying taxes. In other news, if you are a UBS client with lots of secret money stashed away in the Alps, you might want to reschedule your New York City shopping trip.

Former UBS Banker to Plead Guilty in U.S. Tax Case [Bloomberg]

Probably our favorite part of yesterday's final installment of the Wall Street Journal's three-part series on the destruction of Bear Stearns is an exchange that takes place between JP Morgan Chase CEO Jamie Dimon and Citigroup CEO Vikram Pandit.

As you probably know, Dimon was the heir apparent to ascend to the top of Citigroup after serving for years as the right-hand man of banking empire building Sandy Weil. At the last moment, however, he was forced out of the bank and the top spot was handed to Citigroup's lawyer. Fast forward a few years and Dimon gets to run Citigroup's rival, JP Morgan, and that uppity lawyer is forced to resign in disgrace. Pandit is summoned up to take over Citi.

And, after the jump, here's Dimon hazing the new kid on the Wall Street CEO block.

Yesterday we spent quite a bit of time explaining why the loophole legend probably isn't true. Now it seems that traders connected with the deal are lending support to this argument, saying that the notion that JP Morgan Chase's strong guarantee of Bear Stearns liabilities was an oversight was concocted ex post facto.

"It was well known by bankers at JPM during that first weekend of negotiating that a guarantee was being baked into the deal," an anonymous trader tells a Queens based reporter who maintains the GreenFieldsOfTheMind blog. "No idea what the conversations were at the highest levels but from the way it was described to me it did not sound like an oversight/loophole. Only after the fact was it talked about that way."

The Loophole Legend [GFOTM]

Regulators Step Up Probes Of Trading in Oil Markets (WSJ)
So the war on speculators continues to heat up. With oil in the general $130 range, it just has to be traders that are to blame. And now the CFTC, not usually known as a particularly aggressive or powerful regulator body is on the case, looking out for all the folks getting ready for summer driving season. But as the article points out, there are still some people out there who believe the price has something to do with supply and demand and not nefarious traders.

Courts Reject Two Major Vioxx Verdicts (NYT)
It's been a really long time since we've heard anything about the Vioxx verdicts. Last we checkek in, Merck was still solidly winning in court, and since we reflexively side with the big corporation, we weren't complaining. The latest: An appealrs court in Texas overturned a big chunk of one of the company's defeats, though they'll still have to lay out some cash. So even their losses aren't as big as they first seemed. And the $4.85 million that they will pay out covers 100,000 people, so on a person-by-person basis, it's not really all that much.

Shopping for Unrestricted Free Agents (The Wages of Wins)
We're looking forward to our Pistons evening the score tonight and can't get basketball off the brain. Thankfully, since the Pistons are consistently good, we don't have to worry about them scratching for talent in places where it's hard to find. But for other teams, this makes an important read, as it's basically an economic discussion of the free agent market. Check it out if you're a basketball GM.

First a TV Series, Then Off to Jail (NYT)
Arguably this isn't financial news, but we still get excited about great displays of American capitalism... the rapper TI, who is evidently going to jail at some point, will be filming a reality show for MTV all about his final days before being sent to the cooler. He's also working on a new album. And though we haven't heard anyone doing this gimmick in a while, we hope he guests on someone else's album via phone from prison, where he'll be for just one year.

$$$ "Greenwich is not immune from the larger economic problems that we're facing" [LATimes]

$$$ Rating The Online Financial Sections At The Top 25 Newspapers [24/7 Wall Street]

$$$ CEO of the decade [1-2]

$$$ Blame it on Cayne [TheDeal]

$$$ BSC art [BreakingViews]

Ian "Oyster Boy" Roncoroni, you've got competition! We've just been informed that some analyst at FTN is currently taking a stab at "the famed vending machine challenge" which we've actually never heard of but is apparently all the rage (have you all been taking part in these competitions on the sly?). He has until 5 pm today to eat one of everything in the vending machine. His progress as of 4:15: 26 items down. Will he go into diabetic shock before the day is done? Stay tuned.

Is oil overpriced compared to gold?

That's what cantankerous trader/real estate entrepreneur/ blogger/dj Lawrence Lewitinn argues in this piece in PopSerious, a hipster group blog more prone to features about puppies, fashion, and what commodities to bake with rather than money, finance, and what commodities to trade. Lewitinn maintains that since April, the ratio of barrels of oil to ounces of gold has gone from a five-year average of about 9.5-to-1 down to 7-to-1 and that the trade to make is to go long December gold and short December oil until that ratio goes back to at least 9-to-1.

We're sure there's more to this but we were distracted by pictures of contributors who are far better looking than Lawrence.

Black Gold (And How You Might Make Money Off of Speculators' Stupidity) [Popserious]

What role did the government play in setting the price for JP Morgan Chase's acquisition of Bear Stearns? The big story in today's Wall Street Journal indicates that regulators may have misled lawmakers on this question.

Asked by a reporter whether to believe rumors that he wanted to take [Expedia] private, Barry Diller replied: "I wouldn't." He went on: "I am so suspect of current markets and the hedge funds and momentum selling/buying. I think there is a plot behind everything."

The last chapter of Kate Kelly's Wall Street Journal epic on the decline and fall of Bear Stearns tells us that the "hurried deal" to keep Bear Stearns out of bankruptcy included a "loophole" that gave Bear Stearns investors leverage to seek a higher price. By now this story of the loophole is well-known, thanks in part to a New York Times front page story that first reported it. In time this story is likely to harden into conventional wisdom, especially now that it's been endorsed by both the Times and the Journal.

Unfortunately, the story probably isn't true.

Last night at the "All Things D" conference sponsored by the Wall Street Journal, Rupert Murdoch told attendees that Democrat Barack Obama will win the presidential election by capturing the key swing state Ohio and that activist shareholder Carl Icahn will lose his proxy fight to take over Yahoo. He also said the US economy face tough times for the next 18 months.

Details after the jump.

This is the last time we're going to write about the spin class fracas today unless another hilarious detail emerges in which case, all bets are off. Earlier we wondered aloud whether or not it was possible for one man (Christopher Carter) to not only throw another man (Stuart Sugarman) and his bike into a wall, but lift man y bike over his head for a few seconds seconds, or however long it takes to shout "F you" before tossing the duo across the room.

While you debated amongst yourselves, we questioned an expert. A professional. An authority on the matter of going postal while working out and possibly juicing. A guy who takes lifting so seriously the people at Myoplex are considering making him their spokesman. A bro who realizes that in order to effectively expose one's veins to colleagues' leering delight after a pec whaling session, one must be properly attired in Champion sweatshirts with the sleeves cut off. A broheim who takes no greater pride than that derived from the musky, pheromone-concentrated odor he emits while working out. A brohamster who is not afraid to scare children in the gym's BowFlex-adjacent playroom by howling 'Ba Fungool!' after every rep. Charlie Gasparino. Here's what he had to say, re: is it possible?

Stuart "You Go Girl" Sugarman is now claiming not only that Christopher "I'll Show You Roid Rage" Carter threw him and his bike into a wall, but that Carter was strong enough to hold the rider (who by his own estimation weighs 200 lbs) and the ride (150 lbs) over his head for several seconds, look up at him and shout, "F you," which we'd normally spell out but in this case get the distinct impression we're dealing with two guys who substitute 'eff' for 'fuck' in the middle of a fight taking place in a spin class comprised mostly of women at an Equinox gym on the Upper East Side. I don't care who you think is at fault in this situation (I'm actually inclined to think it's a draw. People who work out audibly should be shot but damaging sheetrock is a little intense). I just want to know--is this feat of strength even possible? I suppose in instances like these you have to suspend disbelief, but this sounds like a demonstration of superhuman strength made up by a guy wearing a fake neck brace. Obviously, I'm going to see if we can find out what Charlie Gasparino thinks. In the meantime, discuss amongst yourselves.

Grunt And Center [NYP]

We brought back the greatest spinning class fracas story ever told yesterday, the one with the guy getting thrown off his bike by a fellow rider for pumping himself up with affirmations like "You go girl" throughout the session, because awesomely, it made its way into an actual courtroom this week, where it will be decided whether or not it's a crime to assault people who audibly work out. Nothing is funnier than two middle aged men getting indignant in a spinning class, and this heretofore unheard detail, while seemingly minor, is really the piece de resistance of tale. According to testimony from Dr. Sherri Sandel, a lucky, lucky, lucky lady who was in the spin class, after Christopher Carter (the thrower) told Stuart Sugarman (the throwee) to shut up initially, Sugarman responded, "Make me."

Grunting in East Side Gym Class Leads to Hospital, and to Court [NYT]

That sure was quick. We're told the Bear Stearns shareholder meeting is over, and the acquisition by JP Morgan has been approved. The meeting began at 10 am this morning.

Bear Stearns chairman Jimmy Cayne, who has already sold all his shares and so didn't even get to vote at the meeting, presided over the meeting. We're told he said something about Bear being "acquired by a first class firm."

The deal is expected to close before midnight Friday.

Update: From the WSJ's reporting.

Alan Schwartz, Bear's CEO, [Turns out it was Cayne who] made a brief statement: "It's a sad day but we'll get through it, and we may be better off for it ... The company that is taking us over, or is merging with us, is a first-class company. ... That which doesn't kill you makes you stronger. By now we all must be Hercules. ... We ran into a hurricane.... There's no anger; there's simply remorse."

Mr. SchwartzMr. Cayne said he "personally" apologized, saying he was "sorry that it happened. Words alone can't describe the pain that I feel."

The end of Bear Stearns is rapidly approaching. Shareholders will be voting to approve the acquisition by JP Morgan Chase this morning. On Monday the deal is expected to close, and Bear Stearns will likely vanish from Wall Street.

But just because the fabled Wall Street bond house will be gone doesn't mean it will be forgotten. A slew of memorabilia and knick-knacks bearing the investment bank's name has hit Ebay. In all, 29 Bear Stearns-related items were available on eBay as of late Wednesday afternoon, Aaron Elstein at Crain's reports.

Bear items for sale on eBay include a stress ball for 99 cents imprinted with the words--which now seem prophetic--"little things, big impacts!" The sour home loans that helped bring down the firm are given their due in a coffee cup that reads Bear Stearns Residential Mortgage. The cup is being offered at $1.99, though shipping is another $8.50.

For those with a taste for the finer things, one eBay seller is offering some bar tools with Bear's name on it. The seller says the bottle-opener, corkscrew, wine-stopper and thermometer were given to clients at a health care conference sponsored by the bank. The bidding is at $150, shipping included.

Bear Stearns memorabilia up for grabs on eBay [Crain's]
Bear Stearns items on Ebay [Ebay.com]

Wall Street's chiefs are divided on the presidential election, according to DealScape.

The Federal Election Commission's records show that Hillary Clinton received campaign donations from JP Morgan Chase chief Jamie Dimon, Morgan Stanley chief John Mack and Goldman Sachs chief Lloyd Blankfein. John McCain received support from Merrill Lynch's John Thain. Dick Fuld of Lehman Brother's is hedging his bets, supporting McCain and Clinton, as well as Barack Obama.

Citigroup's Vikram Pandit didn't contribute to any of the campaigns.

What does this tell us about the political acumen of Wall Street's top men? Find out after the jump.

Bear Stearns Neared Collapse Twice in Frenzied Last Days (WSJ)
Well we're a little sad this is coming to an end... in all seriousness, knowing the third installment would be up when we opened our computer today helped us wake up to to the Opening Bell -- always a difficult chore. This one is all about those last couple of days, which was of course covered in the famous "A guard lay out a buffet spread" article from March. No mention of whether they ordered Chinese food th time (why re-open old wounds?) but a good timeline of how JPM's bid came down, and the reaction (none too pleased) at Bear Stearns. Anyway, a lot more good stuff in there, though obviously you'll check it out.

Sears Holdings Reports First Quarter Results and Increased Share Repurchase Authorization
Even before you crack into an earnings report, it's usually a little ominous when the headline trumpets an upcoming share repurchase -- which is usually just designed to soften the blow of bad news. Though we're not sure why it has that effect. When the market is selling, do you want your company spending its own money on its own stock? Anyway, the company that Cramer once compared to Berkshire Hathaway ('you have to buy just one share!') reported a net loss from the quarter, a decline in revenue amid a "difficult economic environment and intense competition for consumer business." We've no doubt that that's true. The comps were particularly terrible: "For the quarter, Sears Domestic's comparable store sales declined 9.8% while Kmart's comparable store sales declined 7.1%."

Spam spam spam: Sales of Spam rise as consumers look to trim food costs (Star Tribune)
Courtesy of Barry... Now you've got to take Spam seriously. Not the email kind but the food kind. The spiced ham that comes in a can. It is, as an economist would suspect, an inferior substitute good, the demand for which rises when the established good gets too expensive. But of course the Spam also rises: "The price of Spam is up too, with the average 12 oz. can costing about $2.62. That's an increase of 17 cents, or nearly 7 percent, from the same time last year." For what it's worth, here's the chart for Hormel.

High Oil Prices Eroding Asian Manufacturing Advantage (Research Recap)
The actual cost of shipping stuff across the world doesn't get brought up too much, probably because in recent history it's just not that big of a chunk of an item's cost. But with these high oil prices we've heard so much about, that may be changing. At least a report from CIBC predicts as such.

$$$ Jimmy Cayne becomes "The Annotated Bear" [AM NY]

$$$ ForeclosureTV [USNews]

$$$ With Bold Steps, Fed Chief Quiets Some Criticism [NYT]

$$$ UBS advises tax evasion staff to say out of the US [FT]

Kate Kelly's Pulitzer-fodder describes how Pimco, the most famous bond fund in the world, told Bear Stearns on December 21st, 2007 that it wanted to immediately unwind several billion dollars of trades it had agreed to with Bear. But what she doesn't say is that Pimco wasn't alone. Other customers also began fleeing. And, in many ways, the December actions by Bear's customers and counter-parties eerily foreshadowed its final days.

HSBC supposedly just laid off its entire New York correlation desk. Word is their London counterpart is "probably soon to follow." If you run into a bunch of sad looking kids tonight saying/spelling out entire phrases that would normally be reduced to acronyms, buy them a drink. They're probably unemployed.

In related news, Bank of America is paying David Sambol, the Pestilence to Angelo Mozilo's Plague, $28 million to walk away.

When JP Morgan Chase's deeply discounted purchase of Bear Stearns was first announced, many asked about whether the deal included the Bear Stearns headquarters, an enormous building situated on prime midtown Manhattan Madison Avenue real-estate. As it turned out, JP Morgan did get the building. But, in order to spare the feelings of Bear Stearns investors and employees, they've decided to wait a few weeks before tearing the Bear name off the building and replacing it with their own, Aaron Elstein of Crain's reports.

The name on the building will likely be all that remains of the legendary Wall Street institution after tomorrows shareholder vote, which is pretty much a lock to approve the deal. It's possible Bear Stearns' tiny brokerage unit, which doesn't overlap with existing JP Morgan business, could retain the name, but even that is doubtful.

"The name generally will go away," says a J.P. Morgan insider. "What kind of brand value does Bear Stearns have at this point, anyway?"

J.P. Morgan to bid goodbye to the Bear moniker [Crains]

Lawyers in the two dozen or so proposed class action suits filed in connection with the failure of the auction rate securities markets may be "unable to prove their clients lost money or collect fees for themselves," writes Bloomberg's Thom Weidlich. We're not so sure the defendant broker-dealers and issuers in these cases should be so confident.

Find out why after the jump.

Kate Kelly isn't the only one giving us an early preview of (what's got to be) her forthcoming book on Bear Stearns! For his latest Trader Monthly column, out today, CNBC's Charlie Gasparino hops aboard the J-Cay train, for a little look-see at what we hope in our heart of heart's will be titled When Mooks Fail.

One spoiler, in particular, is quite disappointing. While we'll still certainly read the free galley, the reality that, barring a miracle wherein Cayne scrapes the funds together to start using again, WMF won't contain a chapter detailing the dynamic duo's weekly hot boxing sessions, is a very bitter pill to swallow. We imagine our sadness is on par with the BSC employees whose life savings' went up in smoke 'cause someone was having too much fun at bridge camp to make it into work. Perhaps worse. Sayeth the destroyer of dreams:

And now an update on the greatest story ever told. Does everyone remember the spinning class brouhaha that took place last August at an Equinox gym on the Upper East Side? The answer should be a resounding "hell fuck yeah," but for those of you who (shamefully) need a refresher, the deal is this: hedge fund manager Stuart Sugarman got himself thrown against a wall by fellow rider and Maxim Investments Group broker Christopher Carter, who'd taken issue with the fact that Sugarman was pumping himself up by "loudly" grunting, commenting, "Great song!" and yelling, "You go, girl," throughout class. Carter apparently first asked Sugarman to "quiet down," then told him to "shut the fuck up," then threatened "If you don't shut the fuck up I'm going to get off my bike," and finally, after being told by Sugarman to "stop being a baby," made good on the promise and took it one step further, dismounting and throwing Sugar and his Schwinn against the wall, leaving a hole in the sheetrock. Sugarman alleges that as a result, he suffered a concussion and a herniated disc, not to mention a sustained fear of group exercise.

Now the wild rumpus has made it to a courtroom, where your tax dollars are deciding whether or not it's a crime to assault people who audibly work out. The prosecutor, Brigid Harrington, while conceding that Sugarman was being annoying as fuck, obviously says yes. Defense attorney Michael Farkas, charges that Sugarman's "bellicose attitude caused the trouble," and that the battering was warranted. We'll keep you posted.

NYC broker on trial for spin class fracas [UPI]

The second installment of Kate Kelly's 3-part series on the destruction of Bear Stearns answered many questions. Among them: which clients pulled out in the days prior to the intervention (notably, a little shop called RenTec), where did Jamie Dimon celebrate his 52nd birthday (Avra, a Greek restaurant on East 48th street) and does Alan "Ace" Greenberg perform magic tricks (yes).

But it also raised so many more! The most important one, noted by a commenter earlier this morning, being: "What of that Dunkin' Donuts order? Did the bankers on the sixth floor who were heard considering ordering breakfast from the purveyor of the deep-fried pieces of dough ever pull the trigger? DID THEY?" The article does not say. But a little investigative journalism on the part of DB today found that the answer is yes. According to a source familiar with the matter, "They did [place the order]--coffee and donuts, which they were actually eating and drinking when the high-five worthy email [containing the draft of a news release announcing that the bank had agreed to provide Bear Stearns with financing "as necessary" for up to 28 days] appeared."

Ever since the Federal Reserve began allowing investment banks access to a special borrowing facility, there have been predictions and calls for the Fed to start regulating investment banks. Now it seems the investment banks are split about whether access to the emergency window is worth the price of new regulations.

More after the jump.

Is the staff of the Securities and Exchange Commission pursuing its own activist agenda without adequate supervision by agency heads?

Many SEC observers were caught off guard yesterday when the New York Times broke the news that the SEC has been requiring major US corporations to include shareholder proposals supporting universal healthcare in official proxy materials. This seemed to be a departure from many recent decisions by the SEC's commissioners restraining or rejecting innovative regulations favored by special interest shareholder groups. Why had the SEC suddenly embraced this radical rule favoring proposals on political issues only indirectly tied to corporate governance?

The answer may lie in the disarray at the top ranks of the SEC.

More on the SEC staff's activist lark after the jump.

In light of unprecedented government interference in the shark market, please disregard yesterday afternoon's tip. DO NOT stock up on the particularly toothy fish, which are losing value by the second, thanks to the proposal of a new regulation intended to increase the population off the coast of Central Florida. For those of you already in too deep to reverse your position, do yourself and your investment a favor, by taking a cue from you-know-who, sharpening his harpoon as we speak

Shark Attacks Likely To Rise As Number Of Sharks Increases [WFTV]

Citadel has stolen yet another one of Jamie Dimon's toy soldiers. Bill King is the third member of JPMorgan's investment bank management committee to resign this week to join Ken Griffin in Chi-town, as the hedge fund's head of securitized products, overseeing mortgage securities, asset-backed securities, and collateralized debt obligations. Dimon is said to be upset about the loss, but coming to grips with the fact that when your guys are the only ones who've "figured these things out" to the extent that trillions aren't lost, they're going to be in high demand (notice Thain's team is fully intact). Anyway, start dusting off those resumes.

Senior JPMorgan Exec To Join Citadel [TSC]

Amid the turmoil, Alan "Ace" Greenberg, Bear Stearns's 80-year-old former boss, attempted to break the tension in a lighter way. Wearing his trademark bow tie, Mr. Greenberg, who still trades, performed magic tricks to amuse colleagues.

What the Journal doesn't tell us, is that Old Man Greenberg did this every day just prior to the close for the last thirty years, at which time, traders would give him spare change "just to go away," which, little known fact, was part of his plan in the first place. Also, for years, colleagues would hire him as a clown for their children's birthday parties out of pity. In the beginning Jimmy Cayne would come along as an assistant, but he scared the kids and was dropped from the act pretty early on, without flourish.

Fear, Rumors Touched Off Fatal Run on Bear Stearns [WSJ]

Will tighter restrictions on seasonal workers create a shortage of nannies and resort workers? The US has tightened up on the number of visa's it hands out, and now the folks over at the Economist are worried that this could create a shortage of foreign workers. This strikes some folks as a potential calamity, although we're not so sure. If the government's restrictions are creating a shortage, you'd expect this to boost the price of seasonal labor, luring more American teenagers and college kids back into the market.

But will a shortage result from the lack of seasonal work visas? We're not so sure. With the economy plummeting toward a recession--if not already knee-deep in one--we'd expect the demand for resort workers and nannies to decline. What's more, the supply of foreign workers eager to fill jobs in the US might also be declining due to the decline of the dollar relative to most foreign currencies.

In short, there might not be any shortage of foreign nannies. And even if there is, it's possible the dollar rather than immigration policy might be to blame. This should be easy to test but we notice a reluctance on the part of economists to actually test things about immigration rather than just applaud it.

Where have all the nannies gone? [Economist]

LG, Haier May Bid for GE Appliances Unit, Immelt Says (Bloomberg)
Jeff Immelt says the sale of the appliance biz will be a "long process" and that Haier and LG are both obvious candidates. But he few out a few dark horses as well, such as Controladora Mabe SA and Turkey's Arcelik A.S. We'll admit to not having heard of either of those. It sounds like there were a few more, and he said they were all almost out of the US. That's not surprising. Ultimately, we think we're going to have to go with Haier, given its size, (presumable) financial heft, and interest in getting a known brand in the US market.

D: Gates and Ballmer Post-Game Wrap (TechTraderDaily)
The big news in the tech world is that Bill Gates and Steve Ballmer sat down for an interview together at the D conference, which is put on by the Wall Street Journal, which is part of Dow Jones, which owns Barron's, which is where the excellent Eric Savitz blogs about technology. Savitz liveblogged the interview and then sussed out a few key takeaways in this post. On Yahoo (which is what everyone wants to hear about), he says no new ground was really broken, which jibes with what we've read elsewhere.

In Housing, the Strong Turn Weak (NYT)
BTW, did you catch those Case-Schiller numbers yesterday on housing? Yikes. Even Drudge ran a screamer on those for awhile, which is all ya need to know. NYT follows up the data with a fuller exposition. Here's one take from a pro: "'It's like eating beyond your stomach's capacity,' said Ronald J. Peltier, the chief executive of Home Services of America, which owns real estate brokerage firms across the country. 'We have huge indigestion.'" Lovely. Just Lovely. Anyway, if you're looking to buy this might be a good time... though only if you're not too concerned about the potential for more price drops.

Fear, Rumors Touched Off Fatal Run on Bear Stearns (WSJ)
Say what you will about it, we're really enjoying this series on Bear Stearns. Certainly props are due to Kate Kelly. Anyway, here's part II. Favorite line from this one: "Just a few blocks away on East 48th Street, Mr. Dimon, the J.P. Morgan CEO, was celebrating his birthday with his family at the Greek restaurant Avra. The banker, who could be painfully blunt, was annoyed when his cellphone rang. It was reserved only for immediate family and business emergencies. Reluctantly, he picked up."

$$$ Deals: A Little Geography Lesson
In our M&A Roundup for the week ended May 25, no deal tops $1b, but smaller transactions touch all corners of the globe -- mostly with U.S. interests on top. [CFO.com]

$$$ "EBITDA!" Taylor screamed in a last ditch effort, craning his neck to increase his range. But it was no use. Incredulous, he stared down at his hands in disbelief. He slapped them together, hoping for some sparks. Had he forgotten how to do the magic? The girl was now long gone--Banking had given him a set of cheat codes to the game of life, but they no longer seemed to be working. [Leveraged Sell-Out]

$$$ Citigroup's Investment Bank, at Least, Never Sleeps [DealJournal]

$$$ Consumer confidence at new lows: Here are 6 things to be happy about, By Jim Cramer [NewsGroper]

$$$ The Investment Banking Summer Intern Success Guide [M&I]

$$$ TimTV [Mogulus]

Periodically, we like to check in and see how the tiny, personal investments of our favorite rich boys are doing. They have P&L departments to let them know, for example, how their bets on Anheuser-Busch are turning out, but who's tracking, for example, Paul Tudor Jones' gamble on moon boots*? DealBreaker. Though they don't speak of if publicly, we're confident the big guys think of us as their unofficial P&L division for very minor acquisition. The bad news is that Larry Robbins' investment in boy-band memorabilia is doing so hot. The good news is that shark attacks are up and the shark population is going down. You know what that means--big money for S-b C.

Perhaps now he'll finally take the plunge and submerge the entire trading floor in formaldehyde to make room for the new fish Hirst is working on, which actually serves two purposes: 1. It'll increase his stake in these cash cows, which have quadrupled in value since they started ramping up the attacks on people 2. It'll weed out those who can make money only under conditions in which their lungs aren't filled with H₂CO, and those who can make money at all times.

Shark Attacks on the Rise [AP]
Surge in fatal shark attacks blamed on global warming [Guardian]
Shark Attacks off Mexico's Pacific Coast Worst in 30 years [TransWorldNews]
Sharks swim closer to extinction [BBC]

*FWIW, PTJ's bet on subprime doesn't even come close to his (multi-million dollar) wager on moon boots, the demand for which has skyrocketed following a seminal scene in The Forty Year Old Virigin.

The most jarring Bear Stearns story of the day isn't in Kate Kelly's amazing piece of reporting. It's on National Public Radio, of all place. Today they are telling the story of a woman called Tracy Warren, who worked for a quality-control contractor that reviewed subprime loans for investment banks before they were sold off on Wall Street.

Warren says her biggest client was Bear Stearns. But more importantly, she says that her supervisors at Watterson-Prime, a company which performed loan audits for investment banks, regularly ignored her warnings.

"The QC reviewer who reviewed our kicks would say, 'Well, I thought it had merit.' And it was like 'What?' Their credit score was below 580. And if it was an income verification, a lot of times they weren't making the income. And it was like, 'What kind of merit could you have determined?' And they were like, 'Oh, it's fine. Don't worry about it.'"

She says that about 75 percent of loans that should have been rejected were still put into the pool and sold to investment banks. Ladies and gentlemen, aim your lawsuits here.

Auditor: Supervisors Covered Up Risky Loans [NPR]

Update: Tanta at Calculated Risk wonder if Warren simply didn't understand that different mortgage pools involved different types and levels of risk.

Société Générale shareholders, still not over the months-old rogue trading scandal, told Chairman Daniel Bouton that he'd "turned the bank into a casino," demanded his resignation and booed his every word at today's annual general meeting. Apparently Bouton's power point presentation, which showed that over an 8-year period, SocGen shares had remained among the best in the sector, did little to ease the crowd's anger, probably because the 8-year period was from 1971-1979. It's all very dramatic, exponentially more so if you imagine it going down in French. Meanwhile, Reuters notes that "a mile or two away from the shareholder meeting," Kerviel, who went MIA for several days following the scandal, "looked calm and relaxed as he posed exclusively for Reuters Pictures and Television," taking a cue from his newfound spiritual leader, Eliot Spitzer's prostitute (she's teaching classes at the Learning Annex now).

SocGen Chairman Booed Over Kerviel Affair [Reuters via NYT]

If this is the new Wall Street Journal, BRING.IT.ON. The Batman-looking cartoons plunked down in the middle of an A1 article are definitely something we will wholeheartedly get behind. Some suggestion to take things to the next level:

a. Drop the pretense. Lose the text and make it one long comic strip

b. You need a hero god damn it! It might seem like there aren't any in this story but there must be a wronged mortgage trader who tried to alert the higher ups as to the shit that was going down, perhaps? Whatever. Use creative license. Make it revolve around that guy coming back from the dead and seeking vengeance.

c. To clearly delineate the bad guys, put a paunchy Jimmy Cayne in an ill-fitting Riddler Suit (we'd do it but we don't have the budget (/can't draw)).

d. End on a cliff hanger. Riddler Cayne should say something like "This is the last day of our acquaintance. I will meet you later in somebody's office," as inspired by Sinead O'Connor. Maniacal laughter before he jumps out the window, etc. Maybe have his dealer waiting with the engine running on Vanderbilt. Your call.

Lost Opportunities Haunt Final Days of Bear Stearns [WSJ]

HF people: you guys are supposedly so great at finding 'alternative' ways to make money. Somebody figure out a way to monetize the singular awesomeness that is this guy and come hell or high water, we will get you the capital to start your own shop and leverage this shit to the hilt. ( Note to readers: None of you will ever do anything as cool as this.).

Man admits having sex with 1,000 cars [Telegraph]

They made zillions shorting anything having to do with subprime and the housing industry* and now they're investing the money they won betting those suckers would fail, earning the title of "unexpected saviors." Reuters reports that many hedge funds are helping keep U.S. home builders out of bankruptcy court until buyers return, offering operating cash or long-term equity financing, as well as purchasing distressed land. Tiger Global Management has taken a 3.55 million share stake in Standard Pacific Corp, and several other unnamed but "notable" funds are following in suit, hoping to profit when the real estate market picks up again.

While Reuters may be christening these guys the next Mother Theresa, you should not be fooled by their charity. In reality, these stone cold bastards are spending a few shekels now to prop up these poor, unfortunate housing stocks until they rally, and when they do, will short these pigs to death one more time.

Struggling home builders find unexpected saviors [Reuters]

*Rumor has it Paulson was scouring regional newspapers about individuals getting foreclosed, and calling the local banks to see if he could get liquidity to short their bank accounts individually.

Obviously the story everyone is talking about today is Kate Kelly's report, The Fall of Bear Stearns. As the first of three parts, its clear that the Wall Street Journal is aiming at writing the defining post-mortem report on the collapsed Wall Street legend. It's a great story, well-written that repeats some of the essential things that bear repeating--card playing, pot smoking, hedges funds collapsing--and it's even illustrated with helpful cartoons.

But let's face it: this thing is really long. If you haven't read it already, you're probably too busy to get through the whole thing. What's worse, there are two more installments coming. You'll never catch up! Think about how embarrassing this will be at the bar after work or over cocktails in Water Mill.

Don't worry, DealBreaker is here for you. Throughout the week, we'll be cutting the story down into small digestible bits. First up, the would-be cash injections that failed!

We've been sitting on this story because we didn't want to rain on the comeback parade Brian Hunter's been enjoying at the Peak Ridge Commodity Volatility & Fallen Heroes Shot at Redemption Fund, and Nick Maounis had quite nearly completed the assembly of his pussy posse, so there was that, but we can't in good faith wait any longer: on Wednesday, a federal judge denied a motion by Amaranth Associates and its erstwhile golden boy B. Hunter, to dismiss charges brought by the Commodity Futures Trading Commission which said something about AA and BH attempting to manipulate the natural gas markets, and then lying to the NYMEX to cover up the botched mission. At the heart of the matter, the CFTC claims, are a series of instant messages between Hunter, Matthew Donohoe, other Amaranth employees and a trader at another firm, that supposedly "reveal [an] intent to manipulate prices." You can find them here.

Personally, all I see are a bunch of "hahas," instances of experimental grammar and, most offensively, "LOLs." Are these transgressions emblematic of one's trading acumen/criminality? I'm not sure. If they are, however, these guys are going down.

Hunter's attorney, Michael Kim of Kobre & Kim LLP, told Reuters Friday, "When the case is fully examined, we are confident that Brian Hunter will be vindicated." Kim (fictitiously) added, "Or, he will hang himself in his cell. Could go either way."

Judge Denies Amaranth, Hunter Motion to Dismiss [Reuters]

If you walk by Bear Stearns Madison Avenue headquarters tomorrow, you might catch a glimpse of former chief executive Jimmy Cayne on the street.

Unfortunately, we're not privy to Cayne's personal schedule. Rather, we know that Geoffrey Raymond, Wall Street's most important artist, will be displaying his latest masterpiece, a portrait of Cayne, outside the headquarters at 383 Madison. He'll be asking people passing by to annotate the painting with their thoughts about Bear Stearns and its former leadership.

In the past, Raymond has created similar portraits of Lloyd Blankfein, James Cramer (twice), Eliot Spitzer and Erin Burnett. He first came to DealBreaker's attention when he appeared outside of the New York Stock Exchange with a portrait of former NYSE head Dick Grasso.

Earlier: Our previous commentary on Raymond's paintings.
Elsewhere: Raymond's personal website, The Year of Magical Painting.

As Opening Bell mentioned this morning, shareholder democracy took a turn for the weird recently when the Securities and Exchange Commission began telling major public corporations that they would have to subsidize shareholder proposals urging the company to take a lobbying position in favor of universal health care. Boeing, General Motors, United Technologies, Wendy's International and Xcel Energy have all received word from the SEC that they'll have to include these shareholder proposals in the official proxy materials, according to the New York Times.

After the jump, we explain why these proposals are useless, at best, unduly costly and possibly dangerous. Also: a law professor explains better ways to handle these things.

Kirk Wright, the hedge fund manager convicted of 47 counts of fraud and money laundering, whose clients included pro football players and his mother, and who faced as much as 710 years in prison plus a fine of up to $16 million, committed suicide in his jail cell on Saturday. Betty Honey, an investigator with the Fulton County Medical Examiner's office, said Wright hanged himself, and that no foul play is suspected. Obviously, this is extremely sad for all involved, even those of us just reading/writing about the event. Moving forward, so we (family, friends, strangers with candy) don't have to experience this sort of pain again, anyone awaiting sentencing (Moz?) should take his/her cue from convicted tax evader, Wesley Snipes.

Bloomberg sums up the total job losses from recent rounds of layoffs. The report comes with bad news and worse news. The bad news is that the job cuts add up to 3.3 percent of employees at 28 firms. The worse news: more are on the way.

That's significantly less than the market slump from 2000 to 2003, when 17 percent of banking and securities jobs in New York were wiped out, data from the Bureau of Labor Statistics show. Given the record-breaking losses of the past year -- banks and brokers have taken $383 billion of writedowns and credit losses -- some economic forecasters and industry veterans expect the number of dismissals to increase.

The departures of two senior Bear Stearns executives from JP Morgan Chase may signal problems with the value of the Bear Stearns mortgage portfolio. Over the weekend Henny Sender of the Financial Times reported that Jeff Mayer and Craig Overlander, the two men who had been in charge of the fixed income arm of Bear Stearns and were named vice-chairman of JP Morgan's investment bank shortly after the acquisition of Bear was announced, were headed out the door.

Sender's report cites "question" about the value of the mortgage book, and is written in a weird negative way. The men are leaving for reasons "not exclusively" related to the mortgage book. Which apparently means "but pretty much" related to the mortgage book. At least that seems to be the favorite read of most people watching the move.

Bear duo quit new JPMorgan jobs [Financial Times]

At the end of last week we saw something of a bear run at Lehman Brothers, with traders pushing the stock down 6.2% on Friday. Options traders bought heavily in out of the money puts, including some heavy buying in some really far out of the money options that bet the stock will drop at least another ten dollars.

This morning both Bank of America and Sanford Berstein slashed their earnings estimates for Lehman. Many investors now expect Lehman to post a loss for the quarter. The price of default protection on Lehman debt blew out to 246 basis points.

Some are now saying that Lehman will have to engage in another round of capital raising to shore up its balance sheet and reassure investors that it won't face a liquidity crisis. At the more extreme end of the bearish outlook, some are saying that Lehman might already be talking to the Federal Reserve about emergency measures.

"With the sinking dollar, my bet is that these guys are already talking to the Fed in a similar bailout that was fashioned for Bear Stearns," an anonymous market watcher tells Christopher Cruden, the founder of Swiss hedge fund Insch Capital Management.

That's some pretty wild speculation coming from a totally unknown source. But these are wild times, and unknown sources have made some pretty spectacular and spectacularly right calls in recent months. We just thought we'd pass it along.

Update: A spokesman for Lehman categorically denied the wild speculation.

Recession still likely in US, says Greenspan (FT)
So Greenspan says there's a better than 50 percent chance of a recession in the US. That's fine, the sage is certainly entitled to offer up his opinion to the Financial Times whenever he likes. Here's the question though: What's he doing about it? No, not in terms of stopping it, but in terms of profiting from it. Is he, for example, buying recession contracts on Intrade at $.40? He should be. Or is he just talking and advising and consulting and generally making more money by pontificating than by acting? Just asking.

Lost Opportunities Haunt Final Days of Bear Stearns (WSJ)
This is kind of the equivalent of the "Blog-Post Confidential" story in the NYT Magazine this weekend, except its Tuesday morning in the WSJ and its about Bear Stearns. But it's sure to get a lot of buzz, even if it is, in a sense, "history". The basic premise: Bear Stearns had plenty of opportunities to save itself before going down in flames, but for one reason or another it missed each one -- often due to management misgivings. For those who insist on seeing every downfall as somehow Shakespearean, this should be some good fodder.

Vodafone CEO to step down; company back to profit (AP)
Arun Sarin, the longtime boss of global telecom giant Vodafone is stepping down. As for why? Well: "(I) felt the timing was right to hand over as the company is in a good position strategically." At least officially, there's nothing overly interesting to interpret about the story. Sarin will be replaced by his lieutenant Vittorio Colao.

LG Looking at GE Appliance Unit (WSJ)
So, which East Asian manufacturer will buy GE's appliance unit? That's really the big question. LG? Check, could happen, according to its CEO who says they're looking at the unit. Hitachi? Nope, not interested according to its CEO. But who knows what can be done at the right price. Haier? Yes, apparently they've made a bid. Are we forgetting anyone?

$$$ A reaction to this. [craigslist]

$$$ Maxine Waters Threatens to Nationalize Oil Companies [CWS]

$$$ ESPN Ultimate Remote [1-2]

$$$ In the mood to overcompensate? [TSC]

For most of those who have summer rentals in the Hamptons, this weekend marks the official start of the summer. The summer season has begun, with the roads out to East Egg already getting jammed.

But if you totally forgot to set up a summer share, you're in luck. It's not too late. Our friends over at Gridskipper report that there are a lot of properties in the Hamptons still available:

A cursory search this morning on various brokerage websites shows the following rental availability in East Hampton alone: Prudential Douglas Elliman, 1,481 listings; Corcoran, 768 listings; and Brown Harris Stevens, 671 listings. Counting for some overlap, that's still a serious glut.

Hamptons Rental Watch: It's a Renters' Market [Gridskipper]

I feel like there are precious few things you guys like debating more than "what neighborhood contains the highest concentration of douchebags." Carney tells me this isn't the proper venue for discussing auto-erotic asphyxiation or Chipwich vs. Choco Taco: Which Is Superior?, so we'll go with the other one: bonuses. The following spreadsheet (for IBD) has apparently been floating around. The numbers are all over the place and seem highly unrealistic but who knows. My apathy over whether or not these projections have any basis in reality whatsoever probably has to do with the fact that my annual take home doesn't even beat a Wachovia first-year's but the upside is that I'm done for the day! Have a good weekend, bitches!

Despite the happy headline reading "Auction-Rate Securities: How to Get Unstuck: you probably can't get unstuck. The secondary market for auction-rate securities has all but dried up as the issuers facing the highest interest rates have refinanced. By the time you get to the end of this Business Week story you'll find the sad tale of John Tierney, who was told by Smith Barney that he couldn't sell his auction-rate securities.

In other news, investors in auction rate securities have filed a suit against Goldman Sachs. The lawyers representing the investors say "Goldman Sachs misrepresented the securities as cash alternatives, which turned out to b"e liquid solely because of artificial manipulation of the auction market.

Auction-Rate Securities: How to Get Unstuck [Business Week]

We've said it before: the tag "rogue trader" just gets attached to traders who lose money. When they are making money, they are superstars. Now the news is that Societe Generale trader Jerome Kerviel probably did not act alone.

Reuters is reporting that Kerviel may have had "internal help when he built up massive share market bets that led to a record trading loss, a report published by the French bank said on Friday."

The report says SocGen was ridden with weak supervision and poor control systems. But you already knew that.

SocGen trader may have had help: internal report [Reuters]

Would you recognize the place if *hadn't* breached its agreement to give 383 Madison LLC, the proprietor of the property, the right to make the first offer on the building, before entering into a contract that provided JPMorgan an irrevocable option to purchase the building, regardless of whether or not the deal to create Bearpont Morgan Chase goes through? I submit you would not.* Also, hilariously, JPM has been named a defendant in the suit. Will they be dragged into the mêlée brewing between BSC and Vermont Teddy Bear, the manufacturer of the surprisingly popular "BSC Bear"? Stay tuned!

Bear Stearns Is Sued Over Option To Sell Its Headquarters [CNN Money]

*I can say that because we sent free food to several of BSC's finest this afternoon.

Early reviews of the 2007 vintage of Subprime, Alt-A and Prime Jumbo residential mortage-backed securities indicate it will be the worst ever in terms of delinquencies, judging from Standard & Poor's latest assessment.

As of the April 2008 distribution date, total delinquencies for subprime RMBS transactions were 36.79%, 37.11%, and 25.87% of the current aggregate pool balances for the 2005, 2006, and 2007 vintages, respectively. This is an increase of approximately 2% for the 2005 vintage, 4% for 2006, and 6% for 2007 when compared with March 2008 according to S&P.

Ratings agencies are all too happy to please debt issuers by switching out analysts who don't understand that their job is to be "responsive" to the issuers, The Wall Street Journal reports. Although the Journal describes the practice as "infrequent," DealBreaker's sources disagree.

"This happens a lot more than the article lets on," one former employee at a ratings agency says.

At Request of Bond Issuers or Bankers, Credit-Rating Firms Switch Analysts [Wall Street Journal]

CNBC anchors are debating the definition of a "metrosexual" amongst themselves. (Hint: not what Joe Kernen thinks it is-- "a guy who lives on the Upper East Side.")

Okay so we're just going to put this out there with the disclaimer that it sounds ca-ray-ssay but it's come from several horses' mouths so perhaps there's some truth to the rumor. I certainly hope not, as I highly doubt our sandwich welfare program could feed this many pieholes. Believe it, don't, whatever, it's a three-day weekend. Supposedly Bearpont Morgan Chase has cut 50 percent of first year analysts and 50 percent of IBD entirely. Severance is 2.5 months salary plus full bonus given out in July.

Hundreds of investors packed into the Time Warner Center on Wednesday for the annual Ira W. Sohn Investment Research Conference. Our invitation must have been lost in the mail. Anyway, Reuters got the invitation and has a good rundown of who went and what they said.

*Bill Ackman, Pershing Square Capital: Wendy's International (WEN.N: Quote, Profile, Research), which has agreed to be bought by Nelson Peltz's Triarc Cos (TRY.N: Quote, Profile, Research), the Arby's restaurants owner. "We own all we can, a share less than the poison pill," said Ackman.

*Bill Miller, Legg Mason Capital Capital Management: buy AES Corp (AES.N: Quote, Profile, Research), Freddie Mac (FRE.N: Quote, Profile, Research) and Health Net (HNT.N: Quote, Profile, Research), which he hopes will merge with Aetna (AET.N: Quote, Profile, Research), which the fund also holds.

*David Einhorn, Greenlight Capital: sell Lehman Brothers (LEH.N: Quote, Profile, Research) short, because they haven't written down structured investments enough. see separate story [N22503654]

*Chris Hohn, Children's Investment Fund: support his firm's proxy battle at railroad company CSX Inc (CSX.N: Quote, Profile, Research).

*Richard Pzena, Pzena Investment Management: buy Citigroup Inc (C.N: Quote, Profile, Research). "This is classic value. There is lots of stress. When we come out of this, the upside is huge."

*Bill Browder, Hermitage Capital: buy Aldar Properties Co ALDR.AD, the largest Abu Dhabi real estate developer. "Abu Dhabi is the richest country in the world and this is the cheapest real estate company in the world."

Stock picks from Sohn Investment conference [Reuters]

Gap boosts 1Q profit on tight cost management (AP)
Barring some sort of shocking return of cargo pants and ill-fitting jeans, this'll be the only way The Gap actually performs well. Profits at the SF-based retailer actually jumped 40 percent on account of cost controls, though the top-line dipped. The economy didn't help, but we're sure the selection of clothing at the store (where it's always '93: nostalgia for more profitable days, or did they can all the designers after that year?) didn't help either.

Myanmar Says It Is Open to All Aid (WSJ)
Wow, a major step for the Myanmar government, which is practically flinging its doors open to the outside world, allowing any and all aid workers to come in and assist the cyclone-stricken nation. Hard to say what prompted this bout of radical neoliberalism (weeks after the original disaster struck), but it's obviously a radical step.

http://quote.yahoo.com/
Hey, what the hell is the deal here? We've been getting error messages for two days whenever we jump over to quote.yahoo.com, which always used to work in the past. Sure, we can go to finance.yahoo.com and get the same thing, but when you're used to typing something in, then you're used to typing it in. Any ideas? And is anyone else getting the same error?

Beat Cops (WSJ)
Perhaps you heard: The Wall St. Journal officially said yesterday that it would leave Wall St. for greener pastures uptown. Some critics will lazily call this symbolic. Too cheap. Anyway, how can you say the paper is straying from what made it great. Awesome article on how a lot of up and coming ultimate fighters are cops. One of them even defeated Kimbo Slice.

Citi's Weill admits flaw in 2003 succession (FT)
Ex-Citi CEO Sandy Weill says it was a mistake not to hold a tournament among his possible replacement, saying it was wrong to have just handed the job over to Chuck Prince. And in other news, Weill still believes in the company's "universal banking model". So just to get things clear: Building up Citi's business model isn't the problem: it all just goes back to how they chose the successor (and presumably who they chose, though he didn't specifically say that in this interview).

$$$ Yahoo Annual Meeting Delayed; Preliminary Proxy Filed [PaidContent]

$$$ Currency for the Blind [TheBigPicture]

$$$ I'm a 28 year old hedge fund guy, living in Greenwich. I was supposed to be going to Paris with my girlfriend for memorial day weekend, but I caught her cheating on me and now the trip's obviously off. I'm still going, and am looking for some company. [craigslist]

Reporters and editors at The Wall Street Journal, Barron's, Marketwatch and Dow Jones Newswires received an email this afternoon telling them that they'll likely be moving up to the News Corp headquarters in midtown next year.

While some media watchers will no doubt bemoan the move as further endangering the independence of the Journal, our informal survey says the newsroom is divided on the move. The so-called "Park Slope lefty" contingent dreads the move, partly because it will lengthen the commute from Brooklyn. The "Westchester family" contingent welcomes it as it brings them closer to Grand Central Station.

WSJ, Dow Jones, Marketwatch, Barron's to move to Manhattan in 2009 [Talking Biz News]

S&P PLACES MOODY'S CORP. 'A-1' SHORT-TERM RTG ON WATCH NEGATIVE-- Bloomberg

It's been a bloodbath! Everyone else is dead! They were told to wait for Fitch at the warehouse! After the carnage they wrought, there's no one left to destroy but each other! Who will survive this last shootout? No one! They all die in the end! Cue Harry Nilsson's 'Coconut!'

Bill Miller, the Legg Mason fund manager who controls 5.4 percent of Yahoo, wants to see Microsoft buy the company. Halfway measures--such as a joint venture --don't interest him.

That would seem to put him squarely in Icahn's camp. But Miller's still being coy, saying he's undecided on how he'll vote in the proxy fight.

Legg's Miller undecided on Icahn's Yahoo slate [Retuers]

Late last night the Quebec Court of Appeal put the kibosh on biggest buyout of all time, ruing that the sale of Bell Canada to a consortium of buyers led by the Ontario Teachers' Pension Plan is unfair to bondholders. The deal was already under pressure from lenders who were balking at providing financing, demanding tough debt covenants and high interest rates.

Andrew Willis of the Globe and Mail's Streetwise Blog points out that the Chinese walls at the investment banks working on the deal has produced a very strange result: the banks advising on the deal are the same ones who brought the lawsuit that now has placed it in peril.

Find out what happened after the jump.

Some of you may recall that several weeks ago, after hearing about a stunning feat accomplished by Ian Roncoroni, an energy OTC options broker with Power Merchants Group (Oyster Boy ate 244 Oysters in 1 hour at Ulysses), we rewarded the boy with a very special delivery: a Delmonico's cheesesteak, on us. Despite some minor bumps in the road early on (Ronco took nearly twelve hours to thank us for the treat), overall, we enjoyed the tingly good feeling derived from sending roasted animal carcass slathered with processed cheesestuff to a random financial services hack we'd never met. It conveniently assuaged the guilt we sometimes feel for our unrelenting mockery of you people.

To recapture that feeling and to demonstrate that, despite anecdotal evidence to the contrary, we love you idiots, we decided to send a delicious sandwich to randomly selected analysts/associates/traders/CEOs/fund managers of our choosing each week, starting in mid-May. We called it The Sandwich Fairy (TSF). So far, it's gone quite well, and the lucky recipients seem to enjoy the free food. That is not to say the initiative has gone off hitch-free. Some of you, it seems, are unfamiliar with the concept of how one receives food that has been sent to them. Just so that we don't have another unfortunate incident like the one that took place earlier this week at Sredit Cuisse, here are some helpful tips to keep in mind moving forward.

-- If you get a call that there's a cheesesteak delivery for you in the lobby from a place called Shorty's, it's not a bomb

-- Or a practical joke

-- It's, how to put this, a cheesesteak. A CHEESESTEAK. And not a synthetic, half-assed NYC simulacrum of a cheesesteak. But a real, honest-to-Rocky Philly cheesesteak. Wiz/wit. So good it's worth JO'ing while crying over because you miss it when it's gone. (The proprietor of said establishment, a Philly guy and former Wall Streeter named Evan, is awesome enough to foot the bill for DB's TSF needs, as the cost of three months' worth of sammie deliveries runs higher than you-know-who's annual take-home.)

-- Now, here's the thing with cheesesteaks: though they are magically delicious, they don't yet have the ability to walk themselves up to your desk. You will have to go downstairs and pick them (yes, them: we have been sending several, so you can share with your friends) up

-- Another thing about cheesesteaks: they don't have the best shelf life. GO GET THEM NOW.

-- Nominating a friend for one and want it to be a surprise? Maybe hint that at some point in the week they'll be getting a delivery around lunchtime, so that we don't have then get in touch with another DealBreakerette who happens to work in the same building to pick up the delivery, and your friend is left cheesesteak-less.

Consequences for failing to follow the above will result in the following: the next time you go down to get your Seamless order, there'll be enough food to feed all of the Bear Stearns employees who can no longer afford to feed themselves, and it'll be on you.

Bloomberg new has gone especially gloomy lately. On Tuesday it was the really, really long expose on counterparty risk in credit default swaps. Today Mark Pittman follows up on variable interest entities, the ugly step child of the off-balance sheet special purpose vehicles that Enron made infamous.

We wrote about these way back in February, when people were first waking up to the fact that banks had undisclosed exposure to mortgage backed securities held by VIEs. Now lawmakers, regulators and accounting standards people are considering rules that would prevent off-balance-sheet treatment for VIEs.

Bloomberg highlights one short-lived VIE with a particularly unfortunate name. Launched by Citigroup just as the mortgage market was collapsing, the $2.5 billion entity known as Bonifacius Ltd was loaded up with subprime mortgages. Six months later it was dead. Bonifacius, as our readers with classics degrees undoubtedly know, was named called "the last of the Romans" by historian Edward Gibbon, author of The Decline And Fall Of The Roman Empire. Bonifacius "fought and died for a fading empire."

Citigroup's `Last Roman' CDO Shows Enron Accounting [Bloomberg]

In our more contrarian moods we like to point out to people that a real housing crisis would involve mass homelessness rather than a surplus of homes pushing down housing values. And when we get really cranky we go all generational war about it: "Well, this just means we'll get to buy those baby boomers' houses for less."

We didn't realize we were channeling a former head of the Federal Deposit Insurance Corp. After the jump, read William Isaac from today's Wall Street Journal on why you should stop worrying and learn to love the housing crash.

Earlier today we were pointed in the direction of Dickipedia.org and our initial thought: fantastic. As its name would suggest, it's a site based on the Wikipedia model, but confined to entries on people who are dicks. What fun! We've long kept running tallies of the various dicks we know in our mind, so to put it down on the internet was the next logical step we hadn't yet had the initiative to take. There's only one very glaring problem. Specifically, an omission that cannot be overlooked.

Self-styled shareholder superman Carl Icahn says Barack Obama would be a "terrible" president, Bloomberg reports. His election, backed by a filibuster proof majority in the Senate, would lead to runaway legislation, higher interest rates and accelerating inflation, Icahn told a conference of investors last night.

"I don't normally get involved in politics, but this time I am," Icahn said. "I don't think Obama really understands economics."

Does this mean Larry Kudlow was right?

Carl Icahn Says Obama Would Be a 'Terrible' President for U.S. [Bloomberg]

It seems like all we ever hear about is what a nice guy Jamie Dimon is, and how he's a "giant among midgets" and his souvlaki is out of this world, but the direction he's taking Bearpont Morgan Chase** is deeply disturbing and very much brings his judgment into question.

Not two weeks ago JPMorgan's head of Latin American Credit, along with four MD's and one ED were laid off for reasons related to "cost cutting and expenses." Today we're told that a JPM director paid a visit to 383 Madison this morning to fire all but two analysts from Bear's Latam Research division, telling the peasants, "As you probably realize, we cannot take you on and as you may or may not be aware, JPMorgan decided to keep the headcount the same as before the merger. So now, you are free to look for other jobs." Obviously we knew that there would be (severance-saddled) victims in this whole thing but the fact that Jamie Dimon can't spare a few pesos to keep the group which inspired "Project Awesome" (the fictional Latam division of the fictional JS Spencer bank which spent most of its time chilling in Cabo with the odd Brazilian mention in Dana Vachon's Mergers and Acquisitions) fully intact is a hard pill to swallow and quite nearly criminal. To Dimon's credit, however, he apparently was instrumental in coming up with the line, "You are free to look for other jobs," which was inspired. (Especially after he asked everyone to stay put for the last several months and requested that other banks hold off on hiring Bear employees until he could decide who would be getting fired.)

*It's funnier than "vivan."
**Not yet official, just in the hopper. Also under consideration: JPMorgan Cayne, the reasoning being that "this whole thing would never have happened without JC's inspired management of Bear."

Citigroup might want to rethink its insomniac slogan. Although the "Citi Never Sleeps" slogan is meant to convey a sense of never-ending vigilance, a new study shows that sleep deprivation leads to a loss of attentiveness and interferes with visual processing.

The study, which will be published in the Journal of Neuroscience, shows that losing only one night's sleep has a dramatic effect on the brain, making it prone to short, sudden shutdowns. The study suggests that sleep-deprived people alternate between periods of near-normal brain function and dramatic lapses in attention and visual processing.

"It's as though it is both asleep and awake and they are switching between each other very rapidly," said David Dinges of the University of Pennsylvania School of Medicine. "Imagine you are sitting in a room watching a movie with the lights on. In a stable brain, the lights stay on all the time. In a sleepy brain, the lights suddenly go off."

Losing just one night's sleep makes brain prone to 'sudden shutdowns' [Evening Standard]

Please, God, for the love of watching Cody Willard pass out after one chug let the tip we just received be true. Supposedly, Bloomberg TV has challenged Fox Business to a "drink off." One unnamed anchor who recently moved from BTV to FBN believes (and I dare you to read this line without peeing your pants), "We have some hard core mo'fos up in here--could be quite a challenge." No idea who said that (though Sandra Smith and Brian Sullivan are among those who jumped ship), or where/when this thing is taking place but we will keep you abreast of the situation and be distributing Team Cavuto t-shirts (at cost), this much I promise you. (Don't particularly like the guy, just have our money on the fact that he's in it to win it and has no qualms about playing dirty.)

We're told that layoffs began yesterday in the structured leverage finance group at JP Morgan. Yesterday heads rolled among the senior staff. Today junior people are feeling the axe-man's blade, according to a source familiar with the matter.

Did we ever find out what it was that disgraced former New York governor Eliot Spitzer wanted from his hookers that made the folks running the prostitution ring warn girls about his "dangerous" desires? We can't remember. But Emily Gould spent 36 hours watching Sex and the City, and now she might have an idea.

OMG. You guys! Microsoft chief Steve Ballmer totally had to scramble (heh) for cover when a protester wearing a shirt reading "Microsoft = corruption" started hurling eggs at him. Video after the jump.

(We meant to post this yesterday but got distracted by the big fight about women on Wall Street. An intern has been executed for this oversight.)

On slow summer afternoons in the DealBreaker bunker we like to play a game we call "Market Movers." The point is to come up with a one or two sentence explanation for broad market movements. Whoever comes up with the most ridiculous yet vaguely plausible explanation wins.

Yesterday's winning entry in Market Movers was a bit lengthy but so ridiculous that it ended the game entirely.

One of the things we've learned during the Democratic primary battle is that Hillary's victories are bullish for stocks and Obama's wins are bearish.

The clearest example was Hillary's massive West Virginia victory. Stocks opened strong the following day. But after Obama's big North Carolina win, a night he nearly carried Indiana, stocks opened way down.

Even though Hillary clocked Obama in Kentucky, since Obama took Oregon convincingly, he really carried last night's elections and now stands on the verge of gaining the Democratic nomination. Not surprisingly, stocks opened down 80 points this morning.

So who was the genius who came up with the nonsense that the market moves because of the Oregon primary while discounting the Kentucky primary? Amazingly, it was Larry Kudlow, who doesn't even work at DealBreaker. We were going to send him an email congratulating him on the win until we realized that he wasn't playing Market Movers at all. He was being absolutely sincere.

Stocks Don't Like Obama [NRO]

We're surprised as you are to hear ourselves parroting New York senator Charles Schumer but that's what it's come to: the truly shocking thing about yesterday's Financial Times report on Moody's screwing up the ratings on complex debt derivatives is that it took Moody's nearly a year to fix the problem after it was discovered.

"The ratings inaccuracies that were disclosed are deeply troubling," Schumer wrote in a letter sent to the Securities and Exchange Commission yesterday. "However, the fact that Moody's only downgraded these incorrectly rated products in January of 2008, nearly a full year after they became aware of the problem, is much worse, and is indicative of a culture of shirking responsibility that must end."

Moody's says it has employed Sullivan & Cromwell, the white shoe law firm right next door to Goldman Sachs, to conduct an external review. That's wonderful but, again, why did it take a report from the Financial Times to prompt the review?

Moody's launches review in wake of errors [Financial Times]

Understanding and Outrage From Air Travelers (NYT)
It's been interesting to hear the reactions from travelers and folks we've talked to about AA's new policy of charging $15 to check a bag on a plane. You can probably guess, but we like it. The problem though is how they positioned it. They should've just said anyone who doesn't check their bag will get $15 knocked off the ticket price (of course, at the same time, raising all ticket prices across the board by $15). On the other hand, while that would've come off as less outrageous, perhaps their headline fairs would then look too expensive, compare to their peers, kind of like the way cable and wireless operators like to make the headline number low, before tacking on all kinds of charges. Anyway, we will like the idea either way, and we wouldn't be shocked to see others follow suit.

High gas prices drive farmer to switch to mules (AP)
Obviously, this link comes courtesy of Drudge. Notice the headline is "farmer" not "farmers". Yes, one farmer in McMinnville, TN found it economical to buy a pair of mules rather than some gas guzzling farm equipment. That's our economy today folks. Well, that's one little anecdote in today's interesting economy.

Bush tests Cuba by easing embargo (FT)
Bush is obviously in the "reclaiming whatever's left of his Presidency" stage of his Presidency. Regardless of what happens to the economy, or how things play out in Iraq, he will go down as the President that allowed people to send mobile phones, as gifts, to Cuba. Presumably this is some little overture to Cuba with Castro I having stepped down, but really, given the destabilizing power of communications technology, shouldn't this have been done ages ago?

UBS to Sell Shares at 31% Discount in Rights Offer (Bloomberg)
Get 'em while you can. UBS is selling shares at a 31 percent discount, so it can take on another $15.1 billion in cash. And current investors will have the right to buy 7 new shares for every 20 that they own, so it's very democratic... not some sweetheart sale to a well-connected investor. Meanwhile, several folks noted an interesting data point yesterday, that the financials are no longer the biggest sector in the S&P 500. It's now tech. Not sure what that means

$$$ How to Increase the Value of Yahoo! [LoSC]

$$$ Oil's a Witch: Burn Her! [1-2]

$$$ Pfizer (PFE) and Bristol Myers Squibb Co. (BMY) [WallStrip]

The Charlotte Observer has a heartwarming story today about Carolinas wide receiver and Morgan Stanley client Steve Smith finding a concurrent career as a financial planning intern at the global investment firm. A few years ago he started reading some books about investing and then on a whim asked his financial adviser if he could get some hands-on experience in the off-season. Though rather unorthodox--the only similar example that comes to mind is Bear Stearns' internship program for individuals currently serving time--the request was granted. "So far it's been unbelievable," Smith says.

We expect to hear that, inspired by Smith's ancillary career pursuit, Morgan Stanley CEO John Mack has decided to scale back on his duties at the bank this summer to pursue his dream of making the Panthers' roster as a walk-on defensive tackle this August within the week.

Smith scores gig as finances intern [The Charlotte Observer]

So Microsoft chief executive Steve Ballmer says the company is not looking to buy Yahoo. They're talking about other stuff that might "create value" or some such. It's pretty much what we learned on Sunday, when Microsoft and Yahoo disclosed that they were in negotiations.

Is a buyout really off the table? The market doesn't seem to think so. Shares are down a bit today but not by what you'd expect them to drop if the buyout was really done. Perhaps Ballmer is just sticking to the script, playing hardball to get a better price for Yahoo.

Still, this can't make Carl Icahn and the rest of his hedge fund cohort happy. (Then again, he's still up about $120 million, which would keep us happy.)

Microsoft Not Bidding to Buy Yahoo: CEO Ballmer [Reuters via ABC News]

Are we in for another round of write-offs from Wall Street? That's what Susanne Craig argues in the Wall Street Journal's "Heard On The Street" column today. This time the losses are coming from a rebound in the mortgage markets. Banks that had shorted mortgages to hedge their long exposures are now finding their shorts have become "counter-productive."

The worst off, Craig writes, is Lehman Brothers, which is looking at write-downs of somewhere between $1.5 billion and $2 billion. That eats up almost half the $4 billon of capital Lehman was forced to raise when rumors spread that the bank might face a crisis. Morgan Stanley is a distant second, with less than half that amount expected.

Trouble Hid in the Hedges [Wall Street Journal]

As it turns out, our robot overlords are destroying human civilization.

Moody's awarded incorrect triple-A ratings to billions of dollars worth of a type of complex debt product due to a bug in its computer models, a Financial Times investigation has discovered.

Internal Moody's documents seen by the FT show that some senior staff within the credit agency knew early in 2007 that products rated the previous year had received top-notch triple A ratings and that, after a computer coding error was corrected, their ratings should have been up to four notches lower.

Simple question: If a computer bug is Moody's excuse, why did these things get triple A ratings from Standard & Poor's also?

CPDOs expose ratings flaw at Moody's[Financial Times]

Alpha Magazine published its annual ranking of the world's largest hedge funds today. Not many shockers (as a group they grew by thirty five percent, JPMorgan is still number one), but here are the takeaways:

There's no question that the United States is a nation of financial illiterates, and that this contributed to the decisions of millions of Americans to run up credit-card debts, buy houses they couldn't afford, purchase college educations they can't pay for. But does it follow from our widespread illiteracy that education would help us avoid those mistakes?

With thousands of Bear Stearns employees losing their jobs and thousands more bearing ill-will toward their soon to be former employer, you might suppose that their wouldn't be much demand for Bear Stearns memorabilia. But you'd be wrong.

Shirts, hats, coffee mugs and umbrellas with the firm's Bear logo sold "like hotcakes" in the sale held in Bear Stearns second floor cafeteria, according to Mark DeCambre. Staff lined up to purchase the goods. Some of this might be nostalgia for the storied Wall Street institution that is expected to meet it's final end when JP Morgan Chase wraps up its acquisition of Bear Stearns in early June. But we've noticed a definite uptick in Bear Stearns items on Ebay, suggesting that some Bear employees might have more pecuniary interests in mind.

Bear Holds Fire Sale [New York Post]
Earlier: Our Self-Respect: Priceless, Bear Stearns: Suddenly Now Stylish

I don't think any of you really comprehend how hard it is to be Angelo Mozilo. A typical day for the Countrywide CEO will include being given shit because a bunch of deadbeats couldn't get it together to make the payments on mortgages he convinced them to take out, having to justify his barely adequate compensation, and being forced to replace the bulbs on his in-house tanning bed because the guy from Mystic Tan said he'd be there between 9 and 3 PM and it's 3:35 and daddy "needs to get his burn on now, god damn it." So when he gets an email from a homeowner seeking guidance, and said homeowner has the audacity to borrow language from LoanSafe.org, a coaching service for troubled borrowers, well, he (entirely justifiably) snaps. Daniel Bailey wrote (to Big Moz and various other senior Countrywide execs):

The irony of the failure of some of Wall Street's biggest institutions to manage risk properly is that the consolidation of banks and brokerages--which many cite as exacerbating the crisis--is likely to accelerate. Indeed, it already has, with JP Morgan Chase swallowing Bear Stearns. Increased regulations and government oversight, which increases the overhead costs of compliance, are likely to increase the pressure to consolidate.

But shouldn't it be the other way around? Shouldn't the government begin to wonder what can be done so that the failure of a single bank or brokerage doesn't necessitate extraordinary government intervention? In a new essay in the Washington Independent Jonathan Macey, a professor at Yale Law School, argues that the government should use antitrust laws to break-up "too big to fail" banks.

After the jump, Macey's plan and why it won't work.

That's the insider tip from Bloomberg today, which is ramping up its scat coverage by the minute (I'm guessing they polled their readers and found that fecal matter is all the rage on Wall Street. Tomorrow's story: How Does CNBC's Charlie Gasparino Stay Regular? Hint: Metamucil omelettes). Very important investigative journalism has revealed that a man or woman's commute will be less pleasant in a seat bathroom-adjacent than in one less proximate to the commode. And here's the craziest part--this matter of smells doesn't just affect commuters going in and out of New Jersey but those living or working in the more prestigious zip codes located on the North side of the Long Island Sound.

"You never want to sit anywhere near the bathroom, which has constant odor issues," said Andrew DeVries of Stamford, Connecticut, an analyst with CreditSights in New York and Nobel Prize hopeful. Apparently new cars being rolled out late next year will sport lavatories with waste storage tanks located farther from passengers. Until then let's all do our part to make the commute a little fresher, by making a stop at Steve Cohen's house before boarding the train.

Traders Get Better Whiff Riding 5:09 to Greenwich [Bloomberg]

The announcement last night that key Murdoch aide Robert J. Thomson, who had been charged with selecting the next top editor of The Wall Street Journal , had pulled a Dick Cheney and selected himself, will have many speculating about the future of the Journal.

But why speculate when the evidence is right on the front page of the Wall Street Journal? Today's front page shows that the worst fears of Journal watchers--turning the Journal into the New York Post or even the Sun--haven't come to pass. But there does seem to be a shift in focus. Newspapers communicate their image of what is important with their front pages. And the front page story is a prized win for reporters, conveying prestige among colleagues. A few months ago the news desk at the Journal was split between general news and business news, and business news seems to be losing some of its grip on the paper.

Take a look at what's on the Journal's front page. Today there are six stories. The top billing is giving to the story of Ted Kennedy's brain tumor. The two other above the fold stories are about the quake in China and the US military. Below the fold we have a story about doping scandals in the Olympics. Of these, only the military story--they plan to use more alternate fuels--has a solid business angle. The rest are general news stories. Murdoch, who is said to favor more general news more prominently placed in the Journal, must be pleased.

The "What's News" section continues to lead with business and finance news shorts. For now.

From the files of the "maybe we never should've gotten into this in the first place" department: the RMBS group at the S&P has supposedly informed the would-be incoming Associate MBA class that their services are no longer required. Additionally, a "bunch" of research assistants, "some" MDs and one director have been downgraded from "career watch negative" to "dismissed."

SAC Capital founder Steve Cohen wins.

Previously: Area Man Threatens To Out-Toilet Stevie Cohen.
Also: Greenwich's Outrageous Fortunes, Greenwich: The New Newport, Only Tackier & Nerdier.

P&Z rejects Simmons Lane mansion plan [Greenwich Time]

Wall Street's "huge and persistent" gender gap continues to befuddle the best laid plans for achieve something at least approximating gender equality in finance. We're supposedly far beyond the days of rank harassment and sexism, yet women continue to underperform--earning less, leaving more and less frequently rising to the top of their banks and brokerages--when compared to men. This continues despite of some truly incredible efforts on the parts of Wall Street institutions to recruit, retain and promote women.

"The most annoying thing about all of this is that it strikes against the idea of a meritocracy. We're always taught that if you work hard and have a good education, you can transcend everything. Why is progress at a standstill?" Heidi Moore of the Wall Street Journal asked recently.

After the jump, we explore the age old question: What do women want?

Oil rises above $130 for first time (AP)
Call up the Guinness Book, baby. It's a brand new record for oil! $130, not so bad. Yesterday T. Boon Pickens said he sees oil at $150, which from here is jut not that much. And those superspike theories, $200, etc.? Really not that much of a move from here if you think about it.

Greenberg May Face Civil Charges (WSJ)
All this stuff about Hank Greenberg riding back to the rescue of AIG might be a little premature. Apparently the SEC still might have it out for the guy, even after all this time, and a relative amount of vindication. He was sent a "Wells" notice from the SEC last Friday, and he remains unaffected. Certainly not out of the woods yet.

2008 Democratic Presidential Nominee (Intrade)
He apparently clinched the elected delegate majority last night, but Obama is only trading at $.93 on the dollar. Given the absolute, ironclad certainty so many pundits seem to have that this will be his nomination period, we wonder why he's trading so low. Also an interesting chart: check out the one about whether the US economy will dip into a recession this year. It had been trading in the mid $.70s earlier this year, but has plummeted by over 50 percent.

Wall Street Journal Editor Named (NYT)
After the last guy resigned (ha!) Rupert Murdoch has made his temporary replacement the full-time one, announcing that Robert J. Thompson, former top editor at the Times of London, will be made editor at WSJ. Actually, our favorite report on the matter came from WSJ itself, which reads so awkwardly when it looks inward.

$$$ Latrell Sprewell vs. Jose Canseco: Battle Of The Home Foreclosure [US News]

$$$ Yahoo! Clusterf*ck Notes [1-2]

$$$ New York's Most Expensive Burger [PocketChangeNYC]

$$$ Wall Street Takes on the Darfur Crisis [DealJournal]

Do you want 2 Van Halen tickets for this Friday's rescheduled show? Get in touch, before P.T. Jones sees this and snags them!

GE Commercial Finance apparently cut 500 employees today. Our tipster, who was one of the victims, had just moved over from Bear a year ago thinking he could "ride out the downcycle." Just think-- had he gone the other way, he would've still (probably) been out of a job, but could've scored some sweet BSC swag, at a deep discount.

Today's must-read story is Bloomberg's David Evans on counterparty risk in the credit default swap market. The credit default swap market is the focal point for a lot of fear these days. It's lightly regulated, non-transparent and there's thought to be lots of trading on inside information in the market. Rising defaults, particularly in riskier so-called "high yield" debt (also known as "junk bonds"), now has many people worried that credit default swap market could be worse than subprime. Yves Smith describes it as "a disaster in the making."

The credit-default-swap market has been untested until now because there's been a steady decline in global default rates in high-yield debt since 2002. The default rate in January 2002, when the swap market was valued at $1.5 trillion, was 10.7 percent, according to Moody's Investors Service.

Since then, defaults globally have dropped to 1.5 percent, as of March. The rating companies say the tide is turning on defaults.

Fitch Ratings reported in July 2007 that 40 percent of CDS protection sold worldwide is on companies or securities that are rated below investment grade, up from 8 percent in 2002.

Many large institutional investors and banks have bought credit default swaps from counter-parties, often hedge funds, without adequate knowledge of financial position of the seller. Many sellers might be unable to pay, particularly if defaults cascade, with many coming at once. When defaults ramp up and those investors try to collect on the insurance policies they bought, they are likely to discover that many investors cannot afford to pay.

Andrea Cicione, a London-based senior credit strategist at BNP Paribas SA, estimates that hedge funds that will be unable to pay banks for credit default swaps tied to at least $35 billion in defaults. That's his conservative estimate. He also says the uncollectables could go as high as $150 billion.

That's pretty scary, we'll agree. Of course, there has been a lot of fear and loathing about credit default swaps for quite some time. Not too long ago the complaint was that the lack of transparency was creating opportunities for insider trading. Evans' story is admirable because it ties the risks of the CDS with the media's favorite financial villain, hedge funds. With all the losses coming from Wall Street titans like Bear and Citi, it's been hard to blame the hedge funds for creating "systemic risk." But it looks like that trade is back on.

Also, we can't talk about credit default swaps without remembering our favorite version of the old "you have two cows" joke.

Hedge Funds in Swaps Face Peril With Rising Junk Bond Defaults [Bloomberg]

Trouble in hedge fund land. Greenwich residents are terrified that would-be new neighbor, Russian millionaire Valery Kogan, will make them look bad (read: poor) by building a proposed 54,000 square foot mansion with two wings, "extensive" subterranean space, and room for up to 300 guests, which will clearly dwarf their own homes, relative shacks compared to the behemoth.

Though they claim their protests are merely matters of (a) taste ("`It looks like they want to duplicate the Winter Palace here in Greenwich,'' said Leslie McElwreath. ``It'll be an eyesore.''), (b) safety ("This is a road where our kids learn to ride bikes, rollerblade, and people take walks,'' said Morris Sachs, a trader at Brevan Howard.) and (c) not being summarily drowned while taking part in a pissing contest (``This is going to be a palace on a postage stamp,'' Charles Lee said. ``It's too much."), those intimately familiar with the gastrointestinal habits of SAC Capital Founder Steve Cohen know better.

Though never stated outright, the real problem with Kogan's house is that it is slated to contain 26 toilets. And though it has many, many WC's, Steve Cohen's home does not have 26. Were Kogan to start building without making some edits first, he would not only be embarrassing Cohen in his own domain, he would be breaking a law, which the residents quoted by Bloomberg are trying to uphold. Section 182, clause 17 of the Greenwich town code clearly states that "no home shall exceed the number of waste-removal stations as are found at Casa Cohen."

Interestingly enough, Cohen, who is not cited in the article, is said to have zero problem with any other aspect of Kogan's dream home. "He could build a domicile three times the size of Stevie's, with 40 master bedrooms to Steve's 2, 16 refrigerators to Steve's 12, and 2 ice rink's to Steve's 1," a friend of a friend of a friend told DealBreaker. "It's the toilets he cares about. Just the toilets."

Empathizing with the big guy, CNBC on-air editor Charlie Gasparino commented* that he "fully understands where Cohen's coming from." Pausing momentarily to enjoy a paper-thin slice of salami he'd cut moments earlier on the deli meat slicer he'd won in a bet with his local butcher, Gasparino added, "Bathrooms are extremely important to me. I live in a studio, but it's got 4 cans. And I think that because so much of my identity is tied to my obsession with being 'regular,' I'd probably feel threatened if the guy next door had 5. I know it sounds crazy, but it'd be like I was less of a man or something."

Anyway. This is a private matter that doesn't really involve us, per se, and hopefully it'll be resolved shortly. But obviously you're all dying to know, "just how many toilets does Cohen's house have?" We're going to tell you, but not just yet. First, you're going to guess. The first person to correctly get it will receive our heartfelt congratulations via email. But that's not all. You'll also receive two free tickets to a hockey game taking place at Cohen's backyard rink. On June 6 the BG will taken on a team comprised of his young children's friends and his least favorite SAC employees. The home team (SC) plays perched atop a Zamboni made from repurposed monster truck parts that gets to shoot out pucks at random, with a glassed-in Pope-mobile-like top in place of a mask. The away team (kids + staff) are issued Soviet-era gear, never win, and are forced to put on a Disney on Ice show of Cohen's choosing following the game. Last year was Aladdin. This year is anyone's guess.

Third Point LLC, the $5.7 billion hedge fund run by acid penned yoga enthusiast Dan Loeb, is getting into the Yahoo acquisition trade, Reuter's great Dane Hamilton is reporting. The fund has accumulated a stake of over 5 million shares, and may build a 10 million share stake. At the end of March, Third Point held only 1 million shares.

Texas oil legend T. Boone Pickens revealed this morning that he owns 10 million Yahoo, and plans to vote them in support of Carl Icahn. Paulson & Co, another large hedge fund that is bursting with funds after making a killing last year shorting subprime, disclosed last week that it holds 50 million shares and is supporting the Icahn move. Capital Research owns 85 million shares and Legg-Mason owns 83 million. Both are thought to favor a deal to sell Yahoo to Microsoft.

Third Point backs Icahn in Yahoo fight [Yahoo]

ARS-ED is a new weekly feature on what we're learning from Andrew Ross Sorkin's weekly column, DealBook, in the New York Times.

It was about a year and a half ago when we first saw New York Times hotshot Andrew Ross Sorkin in the same room as Carl Icahn. They were on a panel together at some midtown club, discussing exactly what you'd expect Sorkin--who runs DealBook for the Times and is the paper's top M&A reporter (and is rumored to be in the running to take the top editorial job at the Wall Street Journal)--and Icahn to discuss: deals, CEOs and money.

(After the jump, more on what we learned at that panel and what we learned this week from Sorkin.)

It's been kept pretty hush hush up until now and even we at DealBreaker weren't sure how to broach the subject so we're just going to come out and say it: starting in June, a sport only spoken about behind closed doors will take Wall Street by storm, and the competition among participating banks will be fierce. And, even though it's against league rules to solicit tips from professionals, as this picture would suggest, the cheaters at Goldman will have a leg up on the competition.

We suggested last week that Oppenheimer analyst and erstwhile Citi hater Meredith Whitney had grown tired of Panditville. Her last report, in which she concluded, "We wish [Citi's] management team all the best in their ambitious endeavors, but we fear [it] is past the point of fixing," seemed to imply that her interest in relentlessly defecating all over the C was waning, and that she'd be scaling back her life's work, perhaps to devote more time and energy to hawking her husband's liquid Viagra. But we never thought for a second we were on to something. Then lo and behold:

As you know, Blackstone CEO Steve Schwarzman recently donated $100 million to the New York Public Library and as a gesture of thanks, the institution is renaming the place after him. And that's making some people very angry, or as angry as people who don't raise their voices in private, whose body temperatures hover around 73.5 degrees Fahrenheit, and who remain contained within their personal Cheeveresque hells will allow themselves to get.

The latest deal to come under pressure from the credit crunch is the acquisition of the giant Canadian telecom company Bell Canada by a consortium led by the Ontario Teachers' Pension Plan. The deal that was billed as "the biggest leveraged buyout of all time" now faces pressure from the banks that have committed financing to the deal, according to reports. One executive involved in the negotiations has told The New York Times that the Bell Canada is "Clear Channel, the sequel," referring to the leveraged buyout that was almost scuttled when banks threatened to walk away from financing commitments until the sellers agreed to a lower price.

The group led by the Ontario Teachers' Pension Plan beat out private equity firms Kohlberg Kravis Roberts and Cerberus Capital in the auction for Bell Canada back when the going private mania was in full swing. That winning group includes Toronto-Dominion Bank, Providence Equity Partners, Madison Dearborn Partners and Merrill Lynch Global Private Equity.

Citigroup, Deutsche Bank and Royal Bank of Scotland all committed financing to the deal. But last week they began to balk, demanding tough debt covenants and higher interest rates. Sources say the terms look like they were designed to force a renegotiation of the deal.

Bell Canada and the Ontario Teachers' Pension Fund are holding firm for now, saying that they intend to hold the banks to their original lending terms.Shares of Bell Canada have dropped on the bet that, at best, shareholders will be forced to take a lower price. The deal was expected to close in June.

Shares of Bell Canada Drop as a Buyout Deal Unravels [New York Times]

Goldman Sachs, Morgan Stanley and UBS said this morning that they have agreed to share their "dark pools," the trading arenas used by institutional investors seeking to trade large blocks of stocks without alerting the broader market about such moves. All of the major investment banks operate dark pools, with Goldman Sachs widely thought to be the industry leader.

Dark pools have been criticized as sapping transparency from the market, perhaps making pricing less efficient and certainly creating more uncertainty about the actual volume of shares trading hands. Large trading orders are broken into smaller pieces and matched to other orders by computers. Traditionally this has been done internally within each individual bank. Under the plan announced today, Goldman, UBS and Morgan Stanley will allow for the secretive trading to take place between their clients. The pools are Goldman's Sigma X, Morgan Stanley's MS POOL and UBS's PIN ATS.

The move threatens to take business away from the public stock exchanges and furthers consolidation in the brokerage industry, as the large investment banks with many clients are obviously best positioned to employ dark pools. Dark pools now account for some 10 percent of equities trading in the United States, and more than 20% of all trades in New York Stock Exchange-listed stocks.

Goldman, UBS and Morgan Stanley agree on dark pools [Reuters]

Home Depot reports 1Q profit drop (AP)
You can't blame 'em for having a weak quarter: they are called Home Depot after all, and it doesn't get much worse than homes. But apparently if you factor out a big one-time charge (conveniently) they beat earnings estimates by $.04. The charge was related to the closure of 15 stores (over or under 7, the number of those closures in Arizona, SoCal and Florida?), as well as eliminating 50 stores from the pipeline (ok). Also good: revenue of $17.9 billion, beat estimates of $17.6 billion. Thank you analysts for not setting the bar too high.

U.S. Raises Forecast for Food Prices (WSJ)
You know. We bought groceries last night and they did seem pretty expensive. Normally, we don't notice that stuff. Everyone else moans about how food prices, but if you don't have five mouths to feed, then you don't pay such close attention. But in reality, yeah, things are started to tick up a bit in grocery receipts. Another major food issue: where are the peaches!? Is anyone else in the city noticing that their local grocery chains are pitifully peach free? What's the deal? Is it something to do with bees?

Microsoft Sees Yahoo Being Split in New Offer (WSJ)
This is becoming an exercise in game theory. Seriously, just try to take a step back and parse everyone's motivation. Yahoo threatened to get into bed with Google to avoid the wrath of Microsoft. Icahn bought into Yahoo to push it closer together with Microsoft. Now Yahoo might be talking with Microsoft again to avoid Icahn. On the other hand, Microsoft's newest proposal wouldn't necessarily satisfy Icahn, as it would involve breaking up Yahoo, and only a targeted investment -- the main point it seems is... preventing Yahoo-Google from happening, an idea that only came about after Microsoft proposed Microsoft-Yahoo. Maybe everyone should just take a week off. We'd certainly like that.

[NAR Forecast] You Can't Make This Up (Matrix)
It's been awhile since we've checked in on the National Association of Realtors, the famous cheerleaders of the housing economy. A couple year sago (boy, we've been doing this too long) when the NAR started to change their tune -- just slightly -- we wondered if the housing market had bottomed. Ha! But really, they haven't changed their tune that much as our friend Jonathan Miller points out. Instead, they still stick to their core competency: taking whatever facts they like and making whatever argument they like out of 'em.

$$$ Deals: The Blockbuster Is Back
In our M&A Roundup for the week ended May 18, four deals top $2.5 billion, with HP-EDS and the sale of defense contractor DRS topping the list. [CFO.com]

$$$ Gotti loan shark gets shaken down in USA Commercial Mortgage bankruptcy [TheDeal]

$$$ Brinks Co. (BCO) [WallStrip]

The Wall Street Journal ran a profile over the weekend of Erin Callan, the 42-year old chief financial officer of Lehman Brothers, just in time for the six months semi-versary of her promotion to the c-suite. Many on Wall Street were skeptical of Callan stepping into the role. She started out with several strikes against her: she started her career as a lawyer, she has very little formal hardcore financial accounting experience and her frequent appearances on television had led many to suspect she was more of an extremely well-paid spokesperson than a hands-on executive. Oh, and there's this whole women-on-Wall Street thing too.

More after the jump.

Most of the $37 million in investments for which UBS agreed to reimburse Massachusetts municipalities last week came from one small office within UBS known as the Flynn Financial Group, named for the group's head, 42 year old Timothy P. Flynn, the Boston Globe is reporting.

Flynn, who grew up in western Massachusetts, has built a business of advising small-town local New England governments on investments and cash-mangement.

"He is UBS in Massachusetts," one local treasurer tells the Globe.

With Flynn acting as an advisor, many local treasurers bought auction-rate securities. After the market for these securities went into deep-freeze, Massachusetts attorney general Martha Coakley argued that the investments were barred under state laws which require localities to invest cash only in the safest investments. Last week, as part of its settlement with the attorney general, UBS agreed that the investments were illegal.

Perhaps surprisingly, the local treasurers are defending the decision to investment in auction rate securities and Flynn's advice. Some even seem to have understood the market for auction rate securities well-enough to pull out before the auctions began to fail. Others, however, found that their cash was trapped in the suddenly illiquid securities. They may have been misled when UBS labeled the securities "cash management" products.

Tim Flynn couldn't be reached for comment.

Same broker tied investors to UBS [Boston Globe]

Charlie Gasparino reports that Citi, having just realized that expenses are "now" getting out of control, is looking for creative ways to cut costs, stat. Supposedly, mid-level employees may be told over the next couple weeks that as part of a new and exciting compensation formula, they'll get to keep their jobs but not receive bonuses. Also, pay will no longer be salaried but hourly, which actually isn't that bad a deal, considering employees of the 'group are now required to work 24 hours a day. Vikram Pandit remains psyched about the company's prospects, and so should you.

Pandit Tightens Purse Strings [CNBC]

I know everyone still working at Bear Stearns is super busy these days but see if you can find a few free minutes tomorrow or Wednesday to pop on down to the cafeteria. Seriously, I realize that business is through the roof right now, what with all the bond trading you're doing and your hedge funds making more money that you know what to do with, and you probably barely even have time to stop for lunch let alone shop but really, YOU DON'T WANT TO MISS THIS. Also, dead serious about the cash only-- Bear's got enough problems holding too much bad debt already.