$$$ Deals: Trash Is on Top of the Heap
In our M&A Roundup for the week ended June 29, big Allied Waste sale to Republic Services leads to a doubling of deal volume, although private equity recedes. [CFO.com]

$$$ Merrill concerns reignite Bloomberg speculation [MarketWatch]

$$$ Daniel James [WallStrip]

Yahoo filed its preliminary proxy statement today in an effort to win over its shareholders for the upcoming August 1st board meeting,

Within its 32 pages, the presentation outlines: 1) the failed Microsoft acquisition and why Microsoft was inconsistent, 2) the downside of a partial search agreement with Microsoft, 3) the benefits of the Google partnership, 4) Yahoo’s plan for the future, and 5) also makes a case that Carl Icahn hurts the performances of companies he has recently been involved with and that his board slate is not the answer.

Yahoo cites two separate occasions (May 17 and June 8), where they asked Microsoft if they wanted a full company acquisition, and Microsoft said no. Additionally, Yahoo believes that the partial search agreement does not benefit the company “financially or strategically and is based on flawed assumptions.”

The claim that Microsoft was “unresponsive and inconsistent,” with regards to making a deal is rather accurate. We are well aware of the see-sawing of Ballmer and Co. as they kept switching positions on the deal. The presentation gives a nice overview of the timeline of events on page 8.

Yahoo addresses each aspect of the hybrid search deal with Microsoft, concluding that it does not improve cash flow and cedes too much control. The $1 billion upfront is taxable and Yahoo believes that Microsoft’s cost savings and revenue benefits are far too optimistic and unrealistic. They also make the claim that they are unprotected competitively at the end of the ten year search agreement.

The plan for the future is discussed starting on page 17 of the presentation. Yahoo believes that its unique assets, like its content properties, Yahoo! News, Sports, and Finance, make it a “must buy” for advertisers. They want to better position themselves to link search and display together, and the presentation also mentions cloud computing, the next step towards “Web 3.0.”

The recent reorganization within Yahoo’s management ranks is their effort to support these core strategies.

By far the most interesting part of the presentation is Yahoo’s attack on Carl Icahn, charted out on page 28. Take a look; there are a lot more red arrows than green ones. Yahoo makes the case that Icahn has hurt shareholders of companies he has been involved with in the past year, as stock prices have plunged. At the same time, is it Carl who is hurting the price or is it the company that is battling him and underperforming?

It will be interesting to see Icahn’s response to Yahoo playing offense here. On Friday, he indicated he would comment on Yahoo and its management. So far, the only update on his blog today is his responses to a few commenters’ remarks regarding his previous rants on corporate America.

You can take a look at the full presentation here.

— Yacrosoft correspondent Travis

August Busch IV, the 43-year-old CEO of Anheuser-Busch, announced his counterattack against InBev’s now-hostile offer during a Friday conference call with investors and analysts. Kaiser August pitched an expansion of Anheuser’s cost-cutting program, Blue Ocean, to make $1 billion in cuts by 2010, twice its original target and including job buyouts or layoffs for up to 1300 employees, or 15% of Anheuser’s workforce. “We need to break from a conservative culture,” the young Kaiser reported, but gave no word on whether shareholders also needed to break from conservative management.

Busch argued that Anheuser’s current management “can achieve independently” the value of InBev’s bid and has planned the cuts for some time. Setting aside skepticism about the timing and originality of the plan, he has his work cut out for him in convincing shareholders that Anheuser can trim its fat more efficiently than InBev. Busch contends that an already-entrenched management team can deliver better results because of their familiarity with the terrain; previous attempts by conservative, family-controlled enterprises in similar situations have had mixed results at best. Carlos Brito, by contrast, speaks of “unleashing that to the world” when he refers to Budweiser, capturing the hyper-aggressive national spirit of the Belgians.

August IV initially said that InBev could remove all the directors at will, but asked at the end of the call, “Can we correct my statement” before announcing that Anheuser would challenge this point in Delaware’s Chancery Court. Chances for peace look slim; one beverage consultant remarked “InBev is a very aggressive company. They don’t take no for an answer.”

-senior Anheuser-Habsburg-Busch correspondent Andrew

Whether you’re looking for employment or just ass in the vicinity of Grand Central, take note: a male temp’ing tipster informs us that “there are high grade women to be found in Barclays’ investment bank.” And no, we did not send one of our interns to a temp agency so that he might sample the offerings at the various banks around town for your benefit, though now that I mention it, that’s not such a bad idea.

I don’t know how many of you had signed up to hear Erin Callan’s “insights on both the mitigation of risk during volatile market conditions as well as the outlook for Lehman and the industry” tonight at 6:15 but FYI, the event has been cancelled.

What transpired in the 4 hours since Count Vikula hacked into our system and shut this place down?

— Massage enthusiast Jeffrey Epstein pleaded guilty to paying underage girls to awkwardly stand by while he jerked off into a towel. He was sentenced to 18 months in prison, plus a year of house arrest, and will be given the official title of sex offender. Adding insult to injury is the news that he will definitely not have the scratch to take up with the prosts, at least not with the same vigor, following the hard time. Epstein lost $57 million as “Major Investor No.1” in the Bear Stearns hedge funds.

— Vanity Fair/Bear blamed CNBC, where “there is simply no adult supervision,” for BSC going down, and also claimed that a group of hedge fund managers celebrated the collapse at a breakfast the following Sunday morning during which they “planned a similar assault on Lehman” for the following week BUT FAILED TO TELL US WHAT THEY ATE.

— We received cloak and dagger emails from a few of you about “something happening at Lehman.”

— Carney, as one of you guessed, staged a Free Epstein rally, topless, while I watched one of the best “It’s Always Sunny In Philadelphia” episodes ever, “Charlie Wants An Abortion.” If you haven’t seen it, stop what you’re doing and rectify that now. My favorite part is this little bit of dialogue (looking for a clip) between Mac and Meg, a pro-lifer he’s trying to bed, at an abortion clinic protest:

We’re still going through the Vanity Fair article on Bear which blames, among others, Citadel, SAC Capital, and Goldman Sachs for bringing down the 85 year-old firm. But before we start pointing fingers, let’s take a second to note the one party writer Bryan Burrough doesn’t think had a hand in blowing the place to smithereens. And in fact, if I may be so bold as to read between the lines, seems to applaud for coming to BSC’s rescue, albeit too late.

So where do Wall Street’s movers and shakers spend their summers? Everyone knows that the Hamptons is a favorite. Private equity billionaires Henry Kravis and Pete Peterson have places on the east end of Long Island, as do George Soros and oil heir David Koch. Other bold-face names (at least, Wall Street bold-face names) include Mary Meeker, the Morgan Stanley stock analyst, short-seller Jim Chanos and Citigroup executive Sallie Krawcheck.

But what about other summer getaways popular with Wall Street executives? Forbes has a rundown today of who summers in Aspen, Sun Valley, Connecticut’s Litchfield and Nantucket.

Citi CEO Vikram Pandit sent out a memo congratulating the troops on completing the second quarter last night; not successfully, per se, just in general. I’m paraphrasing but something like “It’s June 30 and we’re still here,” which you have to admit is an accomplishment worth highlighting. He then went on note that while big C has “the right Strategy, Structure, and Talent,” rather conveniently, “none of that matters.” The only thing that matters, Count Vikula wrote, “is our Culture— our heritage, our people,” and preserving the legacy of Citi now, so that when this thing goes down (and see me about placing bets later), it’ll be gone but not forgotten. To that end, Vik would like you to take a few hours or weeks to write down your favorite memories of Citi. Do you think fondly of the gazillions in writedowns C’s taken in the last couple days? Or would you like to get more personal, and perhaps discuss the 40 lashings you received after getting caught napping at the desk, post new motto? No story is too meaningless. And while sharing it probably won’t make Citi “the best company in the world,” as Count Vikula jokes later in the memo, or even profitable, it will be a big waste of your time. And that’s what this is all about, isn’t it?

So how did Wall Street convince all those corporate treasurers to invest the cash holdings of their companies in disastrous auction rate securities? A new study shows that more than 85 percent thought that Wall Street firms would bail out the market if it failed, according to this morning’s Financial Times.

Nearly 70 per cent of corporate treasurers who bought auction-rate securities said dealer support was implied. A full 17 per cent of the treasurers said that they were “told explicitly that the investment bank would ensure that the auctions would not fail.”

For years, the firms selling auction rate securities did support the market by buying excess securities, guaranteeing the auctions would not fail. When scrambling to increase balance sheet capital earlier this year, nearly every firm on Wall Street that had sold the products decided to let the auctions fail. Since then issuers have been forced to bail out those securities paying the highest interest rates, while investors with those paying the lowest interest rates have simply been unable to access their funds.

Auction-rate securities ‘implied support’ [Financial Times]

Phil Gramm gave his first political interview in years to Stephen Moore in the Wall Street Journal’s weekend edition. The interview is clearly meant to reassure conservative voters about Republican presidential candidate John McCain. What separates McCain from Obama, Moore writes, is that although neither of them know much about economics, “McCain has the good sense to know where to turn to for first-rate advice.”

Gramm was something of a hero to a lot of conservative activists. He cut his teeth as a Reagan Democrat in the House of Representatives, championing Ronald Reagan’s tax cuts in the early eighties. Later he switched allegiances to the Republican party and got elected to the Senate. With the GOP victories in 1994, Gramm became the chairman of the powerful banking committee. Moore writes that he played a “decisive role in nearly every fiscal conservative victory in the 1980s and 1990s.”

But that was then and this is now. Gramm is now 65 years old, and he vanished from the political stage six years ago when he took a high-rolling investment banking job at UBS. So what does Gramm offer voters now?

Don’t Forget the Middle People (NYT)
Wherever you go, it’s always about the middle class. In the election, you rarely hear talk about the actual, real poor. Maybe you fight vaguely against poverty or something, but that’s about it. It’s all middle class all the time. Seems that even in Hollywood, where the actors are mulling a strike, they’re making their complaints about the industry’s “middle class”. And they got the NYT to explain how third tier actors are having a tough go of it these days, for all sorts of reasons. Some will sound really familiar: like outsourcing voiceover work overseas. Then there’s the attack on cheap, substitute goods: too much reality TV programming!

Falling Prices Grip Major Stock Markets Around the World (NYT)
Great news: world markets are just as bad as the US ones. That’s great in the sense that we shouldn’t feel too bad about slipping back into bear market territories after one of the worst June’s of all time. Also good news: June is almost over, so we can get back to starting to go up again.

Property Insurers Confront Rising Catastrophe Losses (WSJ)
All this flooding in the midwest: what’s it costing the insurers? Recent catastrophe claims are totaling $5 billion, and total for the year stand at 8.9 billion which is close to the entire loss for 2007. It could pretty much guarantee that the industry sees an underwriting loss for the year, though perhaps that not in the bag just yet.

Volatility Drops Most Since 2001 as Dollar Fall Slows (Bloomberg)
Everytime oil spikes another $5, you hear a lot of fretting about the continued decline in the dollar. But apparently that’s really slowing down. One index of currency volatility has dropped severely as the pace of the dollar’s declines have slowed. Anyway, the point this article is trying to make is that the deceleration of the dollar’s decline may avoid severe forms of intervention, such as government’s stepping in and buying or selling.

$$$ Roses Aren’t Green for Bulls [Portfolio]

$$$ More Bear Stearns Indictments Ahead? [NPR]

$$$ Natus Medical, Inc. (BABY) [WallStrip]

The sky is falling. And it’s raining shares of almost every company on the Dow all the way down into the storm gutter. Maybe it’s time you started looking for a new job. We spent part of the afternoon combing through our Career Center in search of the most interesting jobs. There are dozens to choose from, all categorized according to specialization. But today we thought maybe our friends over at Lehman Brothers could use a little extra help. So here’s our Job of The Week.

If you are worried that Lehman might be repeating the same mistakes as last time, as in re-upping their leverage ratio, then perhaps you could lend a hand and apply to be a VP in their Global Equity Risk Management team. The fraternal order of Lehman wants identify, report, monitor and analyze key market risks. Don’t make them try to do this on their own anymore.

Earlier this week, Angelo Mozilo told Countrywide shareholders that Bank of America will “reap the benefits of what we have sowed.” At the time, this was the greatest veiled threat we had ever heard. This morning, Citi CEO Vikram Pandit one-upped His Orangeness. And just to make sure everyone saw it (the one-upping of Moz and the actual threat itself) Lil’ Vik stuck the the thing in an op-ed for the Journal (it’s like he’s playing to us, isn’t it?).

In the U.S., we recently saw the unprecedented opening of the Federal Reserve discount window to nonbanks. By definition, unprecedented events set a precedent. And regardless of whether that window is officially opened or closed, the market now assumes that it will be open if necessary on an ad hoc basis.— Vikram Pandit

Below are subsequent graphs that were excised by the Citi PR department:

Worn out by another ugly week in the markets? Don’t worry, you still have time to sign up for BeachComber, DealBreaker’s summertime email-only special newsletter. Even if you missed the first edition last week, by now you’ve probably heard DealBreaker launched a weekly newsletter focused on escaping work and engaging in leisure, especially in the Hamptons. Every Friday afternoon we’ll update you on the expected weather, traffic and parties you’ll be encountering in the East Egg of the twenty-first century. We might throw in a couple of links to business stories too.

The second edition of BeachComber will published over email in a few minutes. Sign up below by simply entering your email address. It’s free!

(Also, if there’s anything you’d like to see—such as league tables for nightclubs, Further Lane party invitation origami—let us know. We’ll be happy to oblige.)

Yesterday the fixed income group at Lehman gathered in an auditorium at their midtown headquarters for a “town hall meeting,” according to two people who attended the meeting. Most of the meeting was filled with the kind of rah-rah talk that has become common on Wall Street as firms try to boost morale amid layoffs and loss-making quarters. But one bullet point on the presentation stuck out to those at the meeting. It asked a simple question: “How Are We Going To Get Paid?”

It’s an important question at Lehman Brothers. Historically, the compensation expenses at Lehman Brothers has varied by a few decimal points around 50% of net revenues. And although Lehman’s compensation ratio has typically been higher than it’s Wall Street rivals, it’s now at historically unprecedented—and financially unsustainable—levels. Lehman paid out $2.3 billion in the second quarter of this year, up from $1.8 billion for the same period last year. Revenues, as everyone knows, went into negative territory, with Lehman booking a negative $700 million.

At the end of the meeting one of the attendees pointed out that the bullet point question about how Lehman will be able to pay it’s employees was never really answered.

MER London is said to have laid off 20 percent of its first years today. Three months severance, no bonus. Makes five minutes in Citi’s JO&C’ing room look pretty good, doesn’t it?

Last year, Merrill Lynch’s John Thain was the highest paid chief executive at a public company in the North East corridor stretching from Washington DC to Boston, according to the Associated Press.

Thain took over as CEO and chairman of Merrill in December, after record-breaking losses forced Stan O’Neal out of the corner office. According to the AP study, Thain took home $83 million in salary, bonus, benefits and perks last year. Although Thain only joined Merrill Lynch in December and was paid a base salary of $57,000, his compensation was boosted by a $15 million cash signing bonus, plus restricted stock and stock options, that Merrill paid to him when he agreed to leave the New York Stock Exchange. Much of that compensation, however, is tied up in incentive pay that Thain won’t be able to access for several years. And those options won’t do him much good if Merrill’s stock price doesn’t recover.

Lloyd Blankfein, the chief of Goldman Sachs, and Morgan Stanley’s John Mack also made the list of top earner. The rest of the list is after the jump.

Citi first-years got numbers this morning and they’re “so bad” that everyone’s been granted a ten minute nap under their desk plus five minutes of alone time in the “jerk off and cry” room. 1st tier got 65, 2nd got 53, 3rd got 25. Our tipster was unsure about the remaing two levels though we’ve got our guesses. Fourth tier’s prize is one of those gigantic coupon books. Fifth tier’s prize is you’re fired.

Bonuses at LEH are down 100 percent.

Wachovia bonuses came out today and apparently they are down 50 percent (top first year analysts got 90k in 2007).

But this time it’s serious. ‘Member those sweet limited edition BSC playing cards we told you about the other day? Commemorating Ace Greenberg’s March 8, 1999 50th anniversary with the firm? Bearing his face and money shot of the trademark bowtie? Ringing any bells? Anyway, it was the absolute best piece of Bear memorabilia on the auction block, second only to the wiccan CEO’s Little Book Of Magic. Which is why some twerp (who outbid us) put up $61 in exchange for the deck. Now, however, said twerp informs us that the seller “is MIA, and hence we can’t complete the deal. He/she was also selling a Bear Stearns football, which we also bid on and won. Needless to say we are more than mildly annoyed at not having our hands on these.”

Earlier: Highest Bidder Will Also Receive 2 20-Minute Magic Lessons, On The House

JP Morgan Chase didn’t waste much time stripping the name Bear Stearns off of the building at 383 Madison. And now they are “leveling” the prices at the cafeteria to make the prices match those at JP Morgan. But we need details! What’s going up in price? What’s going down? Are the hamburgers now subprime?

Microsoft Seeks Path Beyond the Gates Legacy (NYT)
Today is Bill Gates last day as a full-time employee of Microsoft, so all week there’s been plenty of writing about what it means. We have no idea what it means. He’ll still be the Chairman of Microsoft, so realistically, expect to see the words “Bill Gates” and “Microsoft” together a lot, even if he doesn’t draw a bi-monthly salary. If we were gates, we’d start a web startup. That’d really shock the hell out of everyone You know, go out, hire a team, raise $500k in seed money. Get the fire back. He’s only in his 50s, so this whole retirement/philanthropy thing seems a little early, no?

Oil climbs to record above $141 in Asia (AP)
We’re still like $60 away from $200 oil, but it’s really in the bag, isn’t it? When is someone going to come out with that oil $300 note? And when is the economy going to grind to a standing stop as has been promised.

Global Oil-Supply Worries Fuel Debate in Saudi Arabia (WSJ)
After the clock hits 12:00 today, and you start going into slack mode for the weekend, you might want to check out this front pager in WSJ, about two Saudi oil execs on opposite sides of the peak oil debate. Seriously, so much of this debate has been cold, theoretical and, well, geological. Finally, a human face or two.

FriendFinder Networks IPO delayed as developers mutiny (ValleyWag)
This is some pure rumormongering from ValleyWag, which is fine, cause they put it in their ‘RumorMonger’ category, and besides, without rumors there wouldn’t be news. Anyway, we’ve been excited about the ‘FriendFinder’ IPO, cause it’s actually the Penthouse IPO. And we’ve been lusting after that S-1 since we first heard that it might get filed. What are their margins? We can’t wait to find out!?. Anyway, apparently things aren’t going great operationally, though ValleyWag extrapolates and predicts problems with the IPO, which looks like a bit of a leap, unless we’re missing something.

Oil costs force P&G to rethink supply network (FT)
Story we’ve been hearing more and more about: logistics operations getting redesigned to be less reliant on cross-global transport. Quick! Someone needs to write an “End of Globalization” book. Not that there aren’t already a million books that basically have that name.

Anheuser-Busch’s board called InBev’s offer “financially inadequate” after markets closed today, ending two weeks of silence with a unanimous rejection for Carlos Brito’s company. The Belgian/Brazilian brewer had already fired the first hostile shot across the bow of Anheuser, announcing this afternoon that they filed suit in Delaware to confirm that Anheuser’s entire board of directors can be removed without cause.

While the Journal’s David Kesmodel undersells the fireworks to come by referring to the “possible takeover battle” looming, his colleague Heidi Moore is more helpful: “the charm offensive is over and InBev is ready for war.” Moore describes Brito as “the diplomatic, silent assassin of deal making,” the suave Brazilian counterpart to Steve Ballmer’s portrayal of Maxwell Smart (or FEMA). The belligerent language throughout Moore’s article is particularly entertaining since instead of being the victim, it’s the Belgian company that is pouncing on an unprepared and largely defenseless target.

$$$ Rumors Of HSBC Buying UBS Scare Connecticut [Greenwich Time]

$$$ An epic Bill Gates e-mail rant [SeattlePi]

$$$ TimTV 2.0 [TimSykes]

$$$ Interactive Investment Banking League Tables

Bank of America announced this afternoon that three percent of its employees will indeed “reap the benefits of what [Countrywide] has sowed.” About 7,500 jobs will be eliminated over the next two years, beginning in the third quarter.

Bank of America to cut 7,500 jobs [Reuters]

Today, Yahoo announced their fourth reorganization in the past 18 months, creating three new teams that will report to President Sue Decker in an effort to centralize upper management and perhaps placate shareholders angry at Decker and Yang for recent missteps.

Ash Patel is moving from the Platforms & Infrastructure group to lead an audience products division, while Hilary Schneider from the Global Partner Solutions group will be in charge of the newly created US regional division. Additionally, an insights strategy team was created, although Yahoo has yet to name its leader.

Kara Swisher at All Things Digital reports that a new idea is being pushed by dissident Yahoo investors, who now want Microsoft to buy one-third of Yahoo at $30-$32 a share. Carl Icahn is rumored to be one of those investors backing the idea.

If this plan does come to fruition and Microsoft is able to gain control, Yahoo will be forced to pay $250 million to Google for backing out of their search deal.

— Yacrosoft correspondent Travis

Late last year, an 18,000 square foot Bridgehampton house suffered the humiliation of foreclosure, an indignity that’s supposed to be reserved for Ed McMansions in California. Adding insult to injury is the news that the home, which features 8 bedrooms, 9 ½ baths, a pond, elevator and “flower-cutting room,” all set on 4-acres, has just seen its asking price reduced from $27 million to $19.5 million. The only thing that could possibly make this sad situation even worse is if Lenny Dykstra is able to successfully sell his Thousand Oaks home for the delusional price of $24,950,000 (i.e. 33% more than what he bought it for less than a year ago) before this place goes (which might actually happen, considering Nails is throwing in some deal-clinching extras, such as his “Discarded Dips of Distinction,” a collection of chewing tobacco from the great moments of one illustrious career, tastefully encased in a white gold-flecked display case). The silver linging? John Paulson, now shorting the individual mortgages of down-on-luck friends in the Hamptons, is going to make a killing on this one.

$19.5 Million Hamptons Mansion In Foreclosure [WSJ]

Mozilo, his dark bronze skin contrasting sharply with his white hair and shirt…

Earlier: JPMBSPNC? Stearns Morgan Mutual? Bearpont Morgan Banc?

Countrywide CEO Angelo Mozilo nearly started crying at the last CFC shareholder meeting. The salty discharge was overshadowed, comedy-wise, however, by the Moz’s promise— and he actually said this— that Bank of America “will reap the benefits of what we have sowed.” If that is not the greatest veiled threat EVER uttered, I don’t know what is. And you know he wanted to continue with something like, say, “Those suckers don’t even have a clue what they’re in for. Seriously, the long-term effects, merely taking lawsuits into account, will be not unlike having a scalding hot poker violently inserted where the sun don’t shine. [pauses for effect] They might as well have bought an asbestos company. In fact? Probably would’ve been better off doing so. Honestly, though, this deal is like getting a very expensive answer to the question, ‘what does it feel like to be ass-raped for an eternity?’ [shakes head at the thought] Anway, I see we have leaf cookies today, is that new? Man, I’m going to miss this shit.”

At Countrywide’s End, an Emotional CEO [BusinessWeek]

As we reported earlier today, CEO August Busch IV and his board plan to turn down InBev’s $65/share bid for Anheuser-Busch. The Budweiser brewer, which has ignored the offer for the past two weeks, will formally reject the courtship of Carlos Brito while announcing its own strategic plan.

Anheuser-Busch will cut at least $500 million in costs, largely in marketing, and is considering the sale of its Busch Gardens parks. The cuts to be proposed will largely mirror those planned by InBev, and Busch will have to make a tough but critical sell since Anheuser has practically no takeover defenses.

Warren Buffett, whose 4.9% stake in Anheuser is larger than the Busch family’s, chatted with Becky Quick yesterday to deny reports that he had an opinion about the merger, let alone that he had met with August Busch in St. Louis. Buffett remains publicly an agnostic about the offer, calling the upcoming fight “an interesting spectator sport.”

August Busch earlier made a proposal to acquire Modelo Group as a means to make Anheuser too big for InBev to swallow. Anheuser already owns a majority of the Mexican brewer behind swill-grade Corona, but the controlling stake is in the hands of Antonino Fernandez, the ninety -year-old patriarch whose family runs Modelo. Modelo has reportedly refused any talk of surrendering control and has twisted the knife by talking with InBev behind Bud’s back; American news reports have shifted their description of Modelo from “Mexican partner” to “fiercely nationalistic.”

Matt Blunt, governor of Missouri, and both of the state’s senators have made a bipartisan plea for an antitrust review to block the sale. DealBreaker’s on-site research at Anheuser’s St. Louis brewery discovered that Budweiser gained its light-tasting rice-and-barley mix from World War I rationing. While this exonerates Anheuser from the charge of chintzing out on the mix, it further discredits the merits of political meddling in beer and lets us blame Woodrow Wilson for the sorry state of American lager.

-Negra Modelo aficionado Andrew

I’ve got some upsetting news to share: a bunch of white collar criminals in-training have suffered a serious setback, their dreams of one day ripping off other people for sport and possibly—if cards were played correctly— serving time, shattered to pieces.

Goldman Sachs cut its second quarter earning estimates for Citigroup and Merrill Lynch today, predicting that the banks will incur $8.9 billion and $4.2 billion in writedowns, respectively, earning them a place on Goldman’s “conviction sell” list. Way more important recommendation not included in analyst William Tanoma’s formal note, but reported by CNBC’s Darren Rovell to an in-denial Erin Burnett just now? “Conviction sell on the purple cow.” That is right, suck it Williams.

Citigroup, Merrill Estimates Lowered by Analysts [Bloomberg]

Despite having just changed the name on the front door of 383 Madison to reflect the newly formed JPMorgan Cayne, Jamie Dimon is said to be itching for one more big buy, having not yet conquered his substance abuse problem. Supposedly of interest to the JPM CEO are Washington Mutual and SunTrust and, to a lesser extent, PNC Bank, Wachovia, and US Bancorp, for reasons that include concern about future access to the Fed’s discount window and a kinky desire to have virtually no white space left on his business card. The Post said it was unclear if there’ve been any “formal discussions” regarding an acquisition, or merely “casual CEO-level dialogues,” along the lines of “Hey, what if we bought you?” “Hah, that’d be funny” “Yeah, it would” “Yeah…you wanna go bowling?” “Yeah, two shakes.”

Earlier: Bearpont Morgovia?

Call It JPMor-Gan [NYP]

We’ve written a lot about how Ralph Cioffi and Matthew Tannin seem to have had the misfortune of being assigned the role of fall guys for the collapse of Bear Stearns, an event in which they arguably played a minor and peripheral role. But this morning a report from National Public Radio reveals that it is far worse than that. The Feds wanted to arrest some Wall Street guys at the same time they announced the prosecutions of a bunch of mortgage originators. They were intent on arresting the guys, not letting them surrender, and perp-walking them for the photo-op. Even worse, they targeted the Bear guys because the fact that the firm had already collapsed meant the arrests wouldn’t roil the market.

Justice isn’t blind. It’s watching the markets.

How the Bear Stearns Fraud Case Unfolded [NPR]

The consensus at a meeting in Saudi Arabia over the past weekend linked the you-deserve-what-you-get wisdom of the bestselling and thoroughly obnoxious book The Secret with the rise in oil prices. OPEC basically told Americans and Brits that all their whiney Doomsday speak paired with US dollar woes, rather than a production shortage was to blame for the spike in crude costs.

The meeting, which hosted top oil producers and heads of state (including British heart-throb Gordon Brown), was held at the bikini-deficient port town of Jeddah and was a chance for Saudi royals to show they truly give a shit about the state of the world’s light, sweet crude while sharing in favorite pastimes such as reclining and drinking coffee.

Despite hippy-dippy appeals to stop talking about it so much, the Saudis agreed to appease our oil-grubbing fingers, and pledged to increase output by a paltry 200,000 barrels a day (barely enough for our riding mower).

—by Senior Middle East correspondent Jessica Olien.

Federal prosecutors are investing whether Ralph Cioffi and Matthew Tannin misled not only investors but also their lenders and counterparties.

BusinessWeek reports that Ben Campbell’s office, the Brooklyn-based Eastern District, is considering further charges against the two former Bear Stearns hedge fund managers, who currently face both criminal and civil charges.

Anheuser to Reject InBev Offer (NYT)
Not surprising: The great American, hero of a legend of a company Anheuser-Busch plans to formally reject a buyout offer from an invading, European company that wants to rob our beer making heritage. Seriously, let’s step back. Of all the buyouts to get huffy about, this has to be the silliest. C’mon: They’re a beer company. Beer is for getting people smashed and then they do stupid stuff. Not that we’re above that, but to get all red-white-and-blue over it really just plain silly. Plus, good news: the beer isn’t going away. They’re not going to keep it from us. Related: we recently had a Budweiser in a bottle shaped like a bowling pin. Awesome!?

Tribune Co. may sell buildings to pay off debt (Newsday)
As the business has deteriorated faster than he expected, Sam Zell, CEO and owner of Tribune, has been forced to shed assets faster than he might’ve liked. So far it’s mainly been papers, though he’s selling the Chicago Cubs, too. And he might sell the Tribune Tower next. It’s dicey. On the one hand, if he is making a bet on the future of newspapers (in some form) then he can’t keep selling off papers. On the other hand, assets like the Cubs and the headquarters are probably the company’s only assets that aren’t spiraling downard in value.

Adelphia founder and son’s prison terms cut (Reuters)
A small morsel of good news for the Rigases, the father and son pair from cable firm Adelphi spending years in the cooler. Both got a couple years shaved off their sentences after a conviction of one of their counts was overturned. But they’re both still looking at years in jail, so it’s small solace. Too bad they’re not alcoholics (as far as we know), since we’ve heard that you can get another year shaved off for entering a treatment program for that in prison.

He Drives This Game-Show Vehicle (WSJ)
! Like everyone else we know, we’re pretty much addicted to Cash Cab, the show where you get picked up by a cab and answer trivia questions for money along the ride. And like almost everyone we know, we haven’t ever had a chance to go on the show, but we want to. Anyway, WSJ takes a look at the show and its host, comedian Ben Bailey. One interesting factoid: Bailey actually has a taxi license. That’s cool. But we’re still a little skeptical of the show’s premise that riders have totally no idea what they’re about to get into. Yes, yes, it claims it, but the whole thing is too well staged to work out so perfectly. But we haven’t yet cracked the nut on that one, and this article offers us no help. Commenters?

$$$ Putting Out Efficiency [LoSC]

$$$ Jim Chanos’s new spread [Observer]

$$$ James Hong [WallStrip]

Paul Kedrosky sparked a heated debate when he suggested we shouldn’t trust analysts who don’t own the stocks they rate as “buys” or short their “sells.” Evan Newmark at DealJournal chimed in with a similar thought: “A better way to instill investor confidence in analyst picks would be for them to bet their own money, either pro or con.” Felix Salmon bucks the trend today by arguing that (1) analysts are irrelevant because institutional investors ignore analysts’ buy/sell recommendations, (2) owning or being short the stocks would introduce bias into analysis and (3) analysts aren’t any good at picking stocks, so encouraging them to own their picks wouldn’t improve things.

We’re still outside observers in this debate but we notice that Felix’s first and last points might be ameliorated by analysts buying and selling in accordance with their picks. Institutional investors might be more inclined to follow stock picks of analysts if they knew the analysts were incentivized to pick correctly because they had skin in the came. And analysts might get better if they stood to gain and lose based on the quality of their picks.

The guy who started all this, Kedrosky, has a much longer response here.

With a share price that has reached as low as $3.35 recently, it is probably too late to short severely troubled electronics chain Circuit City.

However, those who are stuck with shares of this rapidly declining company are surely looking to the heavens above and davening for a sale.

Investor Mark Wattles, founder of Hollywood Video and owner of a 6.5% stake in Circuit City, is one of those praying. He has taken recent steps that have allowed him to successfully install three of his five nominees to the board of directors. Wattles has claimed that there is one interested party in buying the chain and that an announcement will be made “within four weeks.”

The God-I-Daven-To^TM, aka Carl Icahn, backed Blockbuster when it offered $6 a share to buy the company in April. However, at first, Circuit City rebuffed attempts. Under intense criticism and pressure from shareholders in recent weeks, management has finally allowed Blockbuster to examine its finances and has also hired Goldman Sachs to help it explore a sale.

Carl, blog update please?

—Senior electronics correspondent Travis

Eliot Spitzer can’t get a break. Not only did the top New York court give him the smackdown to his case against Grasso today, now he’s being blamed for unsafe sex. We didn’t read this conversation between the dirty girl at Jezebel and the dirty girl at NY Intel all that closely (it’s maybe unsafe for work), but we’re pretty sure it means that Eliot Spitzer is to blame for New Yorkers avoiding condoms. There’s a nice analogy for the phrase “When France sneezes, all of Europe catches cold” but we’ll leave it to you to spell it out.

Bonus: They say they’ve got the secret to Spitzer’s “dangerous” kink.

We’re all for unrelenting mockery of the Citi that never sleeps. That much should be obvious. But can we get a ruling on how much longer the story about Dollar Dominatrix Meredith Whitney downgrading the C in October is allowed to be discussed before we move on to more recent anecdotal evidence of the ‘group earning its You Suck recommendation, like CEO Vikram Pandit taking naps in the handicapped bathroom when that sort of behavior is expressly forbidden? The most recent instance, from the August issue of Bloomberg Markets Magazine, is actually not so painful in its rehashing of the tale, partially because it brings up a good point: Deutsche Bank’s Mike Mayo, and not Whitney, was actually the first to downgrade Citi, though she’s the one who’s gotten all the glory (attention she professes to “love”). But mostly because it brings up this:

As everyone expected, the Federal Reserve’s Open Market Committee decided not to change interest rates. Everyone’s focus will be on the statement accompanying the decision. It’s a nuanced statement that definitely emphasizes the danger of inflation over than the danger of recession. Downside risks to growth have “diminished” while upside risks of inflation have “increased.” Household spending is “firming.” There was one dissenter, Richard Fisher, who would have raised rates now. The language regarding Financial markets remains unchanged: they’re under “considerable stress.”

Our takeaway: On the one hand, the statement at least shows that the Fed is well-situated in the reality based community. On the other, Bernanke is going all Greenspan. Interest rates are going up but no one knows exactly when. Leans earlier rather than later, maybe as early as September. With Barack Obama blowing away John McCain in the polls, the Fed probably doesn’t have to worry about raising rates before the election. If the election looks inevitable anyway, you don’t worry about influencing its outcome. This should be a positive for the dollar’s strength since it shows that the Euro isn’t the only currency looking toward higher interest rates.

But what do we know? Give us your interpretation in comments. Full statement after the jump.

The source telling TechCrunch that Yahoo and Microsoft are talking about a full buyout again “must have been drunk” says Silicon Alley Insider’s Henry Blodget.

Instead, his source seems to indicate that Yahoo and Microsoft are discussing a search deal, as reported by CNBC and the WSJ earlier.

Yesterday, speculation sent Yahoo shares up as high as $23.71; however, the stock is hovering near its opening price so far today.

— Yacrosoft correspondent Travis

A little book of magic from our wiccan CEO.

Yet again, Warren Buffett has gone the fuck out of his way to awkwardly marry aberrant sex fetish with folksy business wisdom. In response to a question about what makes people want to sell their companies to him, Buffet said:

You can sell it to Berkshire, and we’ll put it in the Metropolitan Museum; it’ll have a wing all by itself; it’ll be there forever. Or you can sell it to some porn shop operator, and he’ll take the painting and he’ll make the boobs a little bigger and he’ll stick it up in the window, and some other guy will come along in a raincoat, and he’ll buy it.

California’s attorney general has filed a lawsuit accusing mortgage lender Countrywide of viewing “borrowers as nothing more than the means for producing more loans.” Even worse, they exploited “the American dream of homeownership and then sold its mortgages for huge profits on the secondary market,” California attorney general Edmund G. Brown said in a statement.

Let’s just handcuff the invisible hand and be done with it.

Also, here’s Larry Ribstein on the Illinois suit, which similarly accuses Countrywide of “allegedly making profits from loaning money even if the money was not repaid.”

California Files Lawsuit Saying Countrywide Used Deceptive Ads [Wall Street Journal]

Perhaps the highest profile Wall Street case brought by then New York Attorney General Eliot Spitzer continues to unravel. The New York Court of Appeals, New York state’s highest court, this morning issued a ruling upholding a lower court decision in Spitzer’s lawsuit over the compensation paid to former New York Stock Exchange CEO Richard Grasso. The lower court ruling had tossed out four of six claims filed against Grasso. This morning’s decision puts those claims to rest permanently.

The ruling will likely make it more difficult to challenge Grasso’s compensation package, reported Charlie Gasparino, who broke the story on CNBC this morning.

Spencer Morgan examines the uniquely colorful and rapidly vanishing culture of Bear Stearns in a today’s New York Observer. You know how it goes: scrappy, poor-smart and desperate-for-riches, flying coach, no paper-clips, buy your own pen, sit in a folding chair. “The Bear mentality was defined by being not like the other banks,” an analyst trader tells Morgan. “They prided themselves on being working-class men, the outsiders, the outlaws of the banking world.”

But Morgan also turns up some very important insights into the mind of Ralph Cioffi, the hedge fund manager who was recently indicted for his role in the collapse of two Bear Stearns hedge funds last summer. It turns out that maybe the guy was a little too good of a salesman.

More after the jump.

Want to be the most popular guy on the beach this June/July/August? Might we suggest purchasing this Bear Stearns Asset Management beach towel and watching the ladies swarm? Add a couple cases of Mike’s HL and it won’t even be fair.

Last night we were drinking wine in Central Park. The New York Philharmonic was playing “Purple Haze” for their encore, and we’d had enough wine that we didn’t mind chatting over the music. The topic of our conversation was how Lehman Brothers had managed to improve the reputations of rumor mongers and short-sellers by consistently proving them right. It was only a matter of time before Lehman Brothers’ insistence that its finance were in fine shape and the reality that it was raising money in the capital markets to shore up its balance sheet would meet each other in court, we pointed out.

But you know what? We’re behind the times. Class action lawyers work fast and the first shareholder suit has already been brought on behalf of Lehman’s shareholders. The ;awsuit names as defendants four high ranking officials: chief executive Richard Fuld, risk management head Christopher O’Meara, former president Joseph Gregory and former chief financial officer Erin Callan.

Shareholder sues Lehman Brothers [BBC]

Where did the Clintons go after it became clear they wouldn’t be headed to the White House next year? To the Hamptons, of course. Last week the Clintons too up residence in the bungalow of private equity titan Thomas H. Lee. Chelsea is said to have done a bit of shopping at J.Crew and A Little of What You Fancy.

Exotic Clinton Getaway in East Hampton [Daily Intel]

Like many of the former Bear Stearns workers not currently employed, erstwhile CEO Alan Schwartz will be taking the summer off to plot his next career move. (Things are slightly different for Schwartz in that he has actual job offers, but whatevs.) Supposedly he’s deciding between staying with the newly formed Bearpont Morgan Chase, where the slot for a “We are drowning in liquidity” guy remains unfilled, or heading over to private equity, possibly with Kohlberg Kravis Roberts. According to the Post, Schwartz has told friends that he’s being “judicious” about the decision, though that quote was surely taken out of context and has less to do with Big Al’s career trajectory than a late season summer share, having missed the deadline to join Jimmy Cayne at bridge camp.

Bear’s Schwartz To Mull Bids Over Summer [NYP]

Illinois Plans to Sue Countrywide, CEO (WSJ)
This is just the beginning of the legal fun we’ll have… Illinois (where we might have gone to school K-8th grade) is suing Countrywide and its CEO, citing deceptive marketing practices in the sale of mortgages, ultimately wreaking havoc on the state. Just cause we’re board of making the same argument on this stuff over and over, we’re going to skip making a point altogether. That being said, this seems a little crazy: “Ms. Madigan says she is asking that all Countrywide loans originated using “unfair and deceptive” practices be rescinded or modified in some way, even if Countrywide has to repurchase the loans.” If that’s successful, it pretty much compels every other state to follow suit.

Barclays to Raise $8.9 Billion to Shore Up Capital (Bloomberg)
Add it to your spreadsheet. You’ll never guess that investors included Temasek (Singapore), Qatar, China and Japan.

Monet fetches record $80.5m (Reuters)
We’ll try to save the art market analysis for Felix Salmon, but it doesn’t look like he’s commented on this one yet. Anyway, some painting of water lilies took in over $80 million, almost double what had been expected. Altogether, Christies’ “meet the impressionists” night took in $284 million, over a quarter of a billion dollars. We don’t really know what any of this means, but just in general hard not to see it as a continued healthy sign. Tomorrow morning, we can find some more hard analysis other than what’s going on in our mind: “that’s, um, a lot of money.”

Approval Is Near for Bill to Help U.S. Homeowners (NYT)
Just in case Illinois can’t single-handedly turn the housing crisis around, have no fear. Congress is on it. Here’s the key chunk of what the bill looks like: “The centerpiece of the Senate package is a rescue-refinancing plan aimed at stemming the tide of more than 8,000 new foreclosures a day that lenders are filing across the country. The plan would allow distressed borrowers and their lenders to stem losses by allowing qualified owners to refinance into more affordable, 30-year fixed-rate loans with a federal guarantee. The legislation would also provide benefits for first-time buyers, who would receive a refundable tax credit of up to $8,000, or 10 percent of the value of a home, on purchases of unoccupied housing. “

$$$ Who Killed The Economy? [Portfolio]

$$$ Welcome to Flight 666 [IdeoBlog]

$$$ Summer Internship Don’ts [Mergers and Inquisitions]

$$$ Who really knows how many bankers are unemployed? [TheDeal]

$$$ Wall Street Analyst Immortalized with New Opera [1-2]

Like two high schoolers anxious about whether the other one actually likes them, Yahoo and Microsoft continue to spark rumors about their off-and-on negotiations. Everyone, except the traders themselves, returned from lunch to see Yahoo shares spike upwards by almost $3 in a matter of minutes.

Michael Arrington at TechCrunch reports that a full buyout is back on. The site cites “multiple sources” on both sides, but in maddening high school style, they are scanty with actual details. More tipsters chime in to say that Microsoft is still a bidder for the whole of Yahoo if the price is right, which is news only in terms of shutting down CNBC’s account.

Corporate loan agreements are being drafted to include an express provision allowing lenders to transfer their loans to the Federal Reserve, a loan expert tells DealBreaker. The Fed has been accepting a much broader range of collateral in exchange for short-term loans through what is known as Fed “repos.” In a repo, dealers bid on borrowing money versus various types of general collateral.

The new provisions seem to anticipate the possibility that banks might use corporate loans in repos, accessing cash from the Fed in exchange for the credits. In the past the assignment provisions of loan agreements that governed transfers typically did not expressly permit transfer to the Fed. Instead, they permitted assignment to others commercial banks, insurance companies, investment or mutual funds or other entity that is an “accredited investor” under securities laws. The new provision illustrates the ever more pervasive role the Fed has in the current credit markets.

Morgan Stanley is said to be cutting back on its b-school tuition reimbursement, from 100 percent to 10k a year. “Sucks for those of us working through 10k/quarter part-time programs,” said our tipster who just wants to learn, damn it. “This sets me back 50k or so. There goes the last of my loyalty to the company.”

Goldman Sach’s flagship fund—i.e. the central showcase for the unbridled abnormal genius that is Goldman Sachs Asset Management— Global Alpha, which lost more money last year than almost any other major hedge fund, is back in the game. According to Bloomberg, GA rose about 19 percent through mid-June, after a 40 percent drop in 2007.

While the costs of Sarbanes-Oxley continue to mount, the law’s defenders enjoy claiming that it has performed the vital job of restoring investor confidence in the wake of the corporate scandals. No doubt those defenders will be heartened by a new study that shows that 62 percent of corporate executives agree that the law strengthened public and investor trust in corporate America.

After the jump, find out what this isn’t such good news.

The bill to that has been derided as the “Bank of America bailout” is pushing forward on Capitol Hill. This morning the bill got the sixty votes needed to limit debate, ending any possibility for a filibuster against it.

A vote on the bill, which may actually have been written by Bank of America lobbyists, is expected as early as tomorrow. It will likely pass the Senate. President George Bush has vowed to veto the bill.

The bill would create a multi-billion dollar mortgage refinancing fund, providing a huge financial windfall to mortgage lenders with risky loans. Countrywide, the nation’s largest mortgage lender, was recently acquired by Bank of America. Banking committee chairman Chris Dodd, who sponsored the bill, has come under fire for accepting sweetheart loans from Countrywide. Bank of America executives have recently contributed tens of thousands of dollars to his campaign fund.

But you know what? That old saw about watching laws getting made doesn’t apply. This isn’t like watching sausages getting made. Not at all. It’s more like watching their post-digestion disposal.

Perhaps you’ve already seen him walking up and down Park these last couple days and are well aware of his plight, but Joshua Persky, the guy wearing a sandwich board proclaiming his education and current career goals (“experienced MIT grad for hire”), needs a job. The non-practicing investment banker, most recently with Houlihan Lokey, has been out of work for the last six months and, not having had any success with head hunters or calling in favors with friends, will be passing out resumes to random midtown passersby during lunch hour all this week.

We spoke with Persky briefly just now and while he did not offer up any references who could speak to the quality of his work (fishy), he did give us his job history (2 years at Houlihan Lokey, 2 years in commercial banking at Fortis Capital, 4 years in business development for a satellite network communications company, a decade or so doing technical writing, a year on the AMEX floor as an assistant options trader), a number (917-650-8700) and e-mail (joshuapersky@hotmail.com) where you, potential job-giver, can reach him. Perhaps it’s the fact that a grown man is being reduced to working the streets, or that he has a wife and FIVE children to support (who are moving back to her hometown of Nebraska when their lease runs out this month), but this is just depressing the hell out of us, even worse than Sad Kermit (SFW, unless your employer has a problem with a Muppet shooting heroin or blowing Rowlf for money, in which case, quit).

Can Lehman be trusted with more leverage? Charles Morris, a lawyer and former banker who wrote “The Trillion Dollar Meltdown: Easy Money, High Rollers and the Great Credit Crash,” says that Lehman is using its new equity to re-up it’s leverage ratio in chase of double digit returns. The problem is that they don’t seem to have learned from their earlier failures, according to Morris.

“So why believe Lehman now?” Morris writes. “A couple of months ago, after all, Fuld was telling the world that Lehman didn’t need any more equity, only to find himself scrambling madly for new equity just before the quarter’s close to avoid joining Bear Stearns in the display rack of pickled corpses of former firms.”

Wall St. Still Hasn’t Learned [Washington Independent]

One of the great secrets of our success here at DealBreaker is our readers. We have the brightest, wittiest and best informed commenters on the web who help keep our recent comments page always fresh. And our tipsters—often people we have never met who reach out to us through email and phone calls—have helped us break stories and get the insider angle on stories where everyone else is simply re-writing the press release.

Of course you know that you can email us at tips@dealbreaker.com or calls us at 212-334-1871 with your office gossip, bonus rumors, misbehaving banker snap shots, true-life stories of work gone bad, deal news, trading desk follies, market movements, promotions and firings, and whatever else happens to be on your mind.

But you may not know that there are two more ways to send us tips. You can now contact us via instant messaging. Our AIM screenname is TheDealBreakers. But sometimes you need that extra-measure of security—or rather, to avoid those extra measures of security from the folks who might be monitoring your computer usage. So we also have a DealBreaker tips text message account. Send your text tips to 973-495-0177.

As always, you can rest assured that we will keep your identity confidential. Thanks!

Despite everything we’ve learned about the importance of down payments to home buyers repaying their loans, no money down mortgages continue to be made. In today’s Wall Street Journal, Nick Timiraos describes how the no money down mortgages survive because sellers and some lenders have found a way to game the system.

Here’s how it works. To get a loan backed by the Federal Housing Administration, home buyers are required to put down at least 3% of the purchase price. Sellers and some private lenders have found a way around this system by forming non-profit organizations that fund the minimum down-payment. In effect, sellers are taking a 3% haircut in order to allow buyers to get a subsidized loan.

The problem is that these non-profit buyers haven’t really put down any equity, making them far more likely to default. Lenders modeling likely default rates based on downpayments will underestimate the likelihood of these loans defaulting. In short, lenders may be in for a lot more pain than they expect.

One scary implication: our already devastated housing market may actually be artificially inflated by these no money down loans. That is, without this subterfuge prices would be even lower.

U.S.-Backed Mortgage Program Fuels Risks [Wall Street Journal]

Larry Kudlow, “huge fan of Carly Simon.”

Yesterday we said a Christmas card signed by alpha-generator extraordinaire Ralph Cioffi was the best item being auctioned off on eBay. Like Goldman Sachs, which self-flagellated Monday over a May 5 recommendation for investors to add to U.S. financial and consumer stocks, we just want to tell you how clearly, deeply, almost catastrophically wrong we were. The BEST item up for grabs, which we will have no qualms fighting dirty for, is a sealed deck of limited edition Bear Stearns playing cards, commemorating Ace Greenberg’s March 8, 1999 50th anniversary, bearing his face and a money shot of the trademark bowtie.

Related: Hey Kids, You Wanna See A Card Trick?

Unemployment got ya down? Perhaps this little bit of perspective from DealBook will make you feel better about no longer having a reason to stay on top of personal hygiene— you are not alone! Wall Street’s been laying people off for years! If you can get it together to put pants on this morning, walk over to your bank of choice, and loiter around the lobby for a bit. You’ll easily be able to find someone who was alive and working in the 70s/80s more than happy to regale you with a tale about a string of months twenty years ago when he had an excuse to pump the breaks on showering/shaving every day. You’ll feel better right quick. Or, alternatively, if masochism is more your style, and you really want to feel the pain rather numb it, allow BDSM practitioner Andrew Ross Sorkin to shove a heel up your ass. According to ARS, “It is unclear where the bottom…will be…but [it is] getting worse with each passing day.”

A History Of Wall Street Layoffs [DealBook]

The Case-Shiller home-price index fell in all twenty metro regions studied, the first time the index has measured a decline on a year over year basis in every market. The average decline in April was 15.3%, setting the record for the largest drop since the launch of the index in 2000. If there’s a bright spot in this news it is in Charlotte and Dallas. Despite being down since last year, these two cities are now enjoying a second month of recovery. Boston, Chicago, Cleveland, Denver; Portland, Oregon and Seattle also saw a bit of recovery. Las Vegas and Miami, however, continue their freefall.

At the heart of the indictment of former Bear Stearns hedge fund managers Matthew Tannin and Ralph Cioffi is an email exchange in which Tannin questioned the performance of the funds. Federal prosecutors are treating those those emails as the smoking gun in the case against them, saying the men privately knew the funds were in trouble while they publicly reassured investors that the funds were healthy. At least one former prosecutors has described the email exchange between the two men as “dumbfounding.”

Of course, the exchange could also be read as exculpatory. As far as we can tell, the emails detail a discussion about fund performance and strategy and do not discuss attempts to deceive investors. The junior Tannin was nervous. His boss Cioffi instructs him to hold steady. These are the kind of frank and open discussions investors should hope occurs between those entrusted to manage their money. But this case seems likely to make those discussions too dangerous to hold.

The prosecution of these two Bear Stearns executives offers a bad lesson for Wall Street: If you have doubts about your strategy or returns, never put it in an email.

Two former executives at Bear Stearns have landed top positions at two very different banks. Michael Solender, who was Bear’s general counsel, has been hired by Washington Mutual as chief legal officer. He was one of a number of Bear executives who sold a number of shares in December, three months before the firm cratered. His shares were sold for around $89 per share, well above the $10 shareholders received for each share when Bear was acquired by JP Morgan Chase.

Modern Bank, a New York private bank catering to the wealthy, has named Jeff Lane as its chief executive. A money manager who briefly served head of Bear’s asset-management unit, the sixty-six year old Lane was hired by Bear in June 2007 to replace Richard Marin after two hedge funds managed by Bear collapsed. Lane had previously been CEO of Neuberger Berman until 2003, when Lehman Brothers bought the mutual fund company. At Lehman he was a vice chairman but after Lehman hired George Walker, President George Bush’s second cousin, in May 2006 as head of asset management, including the Neuberger Berman business, Lane was thought to have felt sidelined.

Ex-Bear Stearns GC Resurfaces at Lender WaMu [Law.com]
Modern Bank names former Bear exec as CEO [Wall Street Journal]

GM Slates Sweeping Rebates As Toyota Closes In on No. 1 (WSJ)
A couple things to note here… first is that GM is still “on the verge” of no longer being #1. Hats off to ‘em. They’ve been “on the verge” of no longer being #1 forever, so that’s an accomplishment. Also, the company is going to start offering big rebates. Why not just slash the price directly? Remember how much coverage they got for their employee-pricing scheme? That was seen as a great boon, even though it was just a gimmick. They kept that up for a long time and cleared out some inventory, which was good. And then they went back to rebates. If you’ve been a longtime reader of the site, you know we talked about this a lot early days. Some things never change. Actually, that’s really true. Props to MarketBeat for a nice chart of GM since 1971. The stock has now returned to levels not seen since 1975. Sucks to lose 33 years.

Toyota May Cut Sales Goal as U.S. Truck Demand Slumps (Bloomberg)
Meanwhile it’s not like Toyota is somehow immune from the whole thing. In fact their woes (aging workforce, model, factories, maturity) has been well documented. And the company says it may cut expectations on weak US truck demand. You know the drill: consumers want those slight, fuel efficient cars that made Toyota so popular and desired to begin with.

NYSE Euronext beats LSE to Doha deal (FT)
NYSE is paying $250 million for a 25 percent stake in the Doha (Qatar) stock exchange. By our math that values the exchange at around $1 billion. Evidently, the NYSE was in a bidding war for the chunk, going up against LSE and the Deuche Borse, cause you know everyone wants a piece of that scene. With any luck, the Qatar government won’t bring up national security issues at the prospect of a foreign purchaser making such a big buy of one of their key financial institutions.

At Google, Slow Growth in News Site (NYT)
This sounds about right… Google News, once lauded as the future of online news, has grown stale, and traffic is pretty flat. We used to read it all the time, now we hardly go there anymore. It’s pretty ugly, and there’s something to be said for human editing. The robot only does so well. Not that it’s a huge deal either way, though it confirms something about Google, which is that they’re still looking for a big non-search moneymaker, or really any big non-search hit. Google News seemed like it was going to be big, but it hasn’t been. Perhaps because of skittishness and legal issues with the newspapers, they haven’t put as much time/money/effort into this as they’d have needed to to make it work.

$$$ Deals: Private Equity Back in the Hunt
In our M&A Roundup for the week ended June 22, Blackstone, Carlyle, and Bain reappear among the buyers — although transactions sizes are smaller than in the glory days. [CFO.com]

$$$ Goldman Sachs self-flagellates over “clearly wrong” call. [Bloomberg]

$$$ The sicko behind Fashion Meets Finance [Gawker]

$$$ How much is Cioffi’s 8 year-old business card worth? [BV]

A reader breathlessly informs us that he just spotted former Merrill CEO Stan O’Neal on the corner of 55th and Park, “working it,” presumably not in the call-girl sense though one never knows (especially with the high-class hookerss, who just look like well-dressed civilians). “He had his jacket slung over his shoulder, with his finger through the loop, looking pretty slick and talking on his cell. Guess the firing agreed with him.”

Oh hell yes, my friends. Oh hell yes. Fuck business cards (unless they belong to egret-lover Sam Israel, whose b-card criminally only sold for $61). A Bear Stearns Christmas card signed by alpha-generator extraordinaire Ralph Cioffi is being auctioned off on eBay. Bidding is up to $26. To put things in perspective, this would set you back 13 shares of BSC, at the time JPM was hilariously going to buy it for $2. Not that we don’t want this thing for ourselves, but we sense some stiff competition in Jamie Dimon, whose feelings for Cioffi, instrumental in removing one of the key Jenga pieces from this bitch, and allowing JPM to buy it on the cheap, run deep. He’ll likely also be playing dirty when it comes to scoring a signed grav-bong being auctioned by a seller who goes by the name of BigJCaCay. (Typically, these “little pieces of history” have been offered up by third parties, but in a sharp departure from his demonstrated business acumen of late, someone who once held a senior position at the firm has been tearfully parting ways with his most precious possessions. For example, a favorite roach clip is predicted to go for at least a few ten-spots, even half of which BJCC is in no position to be turning down.)


Ralph Cioffi Signed Bear Stearns Hedge Fund Xmas Card [eBay]

Homeownership is overrated and the government went too far in pushing it on the American people, Paul Krugman writes in today’s New York Times. He suggests it’s time for America to “drop the obsession with ownership.”

We couldn’t agree more. Four months ago we wrote: “The social engineering program entitled the ‘ownership society’ has failed and ought to be abandoned.”

Since nobody here seems to have a clue, let’s if Ryanair CEO Michael O’Leary has any ideas:

With the troubling environment of the financial world lately one must be prepared. The job market is flooded, and who knows when the next Bear Stearns will show itself. Jobs are in jeopardy and new ones are not easy to find. So one must begin to prepare for the worst. Money could soon be very tight and with that the wild men of finance might have to make some changes in their lifestyles. What are some of those possible changes in lifestyle that might be experienced? Well let’s start with leisure time.

It turns out that the housing bailout bill really is “exactly what Bank of America and Countrywide wanted.” A memorandum dated March 11, 2008 has surfaced, and it seems to support the idea that BofA essentially wrote the bailout section of the bill. “Almost all of BofA’s preferences are mirrored in the Dodd-Shelby legislation,” Stephen Spruiell writes.

The BofA document even offers tips on how to manipulate the public’s reaction to the bill: “We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bail-out of the bond market.”

This news should hurt the bill’s chances. It has already been tainted by news that its most prominent supporter, senate banking committee chairman Chris Dodd, received massive campaign donations from Bank of America executives and sweetheart loans from Countrywide. The president has to veto the bill on the grounds that it would “unfairly benefit lenders who made bad loans.”

BofA-Scripted Bank Bailout Looks Awfully Similar to Dodd-Drafted Housing Bill [The Corner]

As you, but not Yahoo!, know, George Carlin died yesterday. In his role as Kennedy Center chair, Steve Schwarzman said of Carlin, who was named the winner of the Mark Twain Prize for American Humor, “…[he] not only made us laugh, but he made us think.” While you might be quick to say, “Obviously not too hard, Crabs, because Carlin spent most of his career railing against, among other things, the myriad bull shit ways people like you’ve gotten rich,” it seems the late comedian was able to penetrate Crabby, conspicuous in his lack of golf playing, on at least one issue:

SEC chair Christopher Cox missed the 5am conference call when Ben Bernanke and Hank Paulson decided that the Fed would lend funds to rescue Bear Stearns from bankruptcy, the Wall Street Journal reports on today’s front page. The call’s time changed and no one bothered to tell Cox, who didn’t know until he came into the office a few hours later.

Last week, former Bear Stearns hedge fund manager Matthew Tannin found himself sitting in a Brooklyn jail cell, charged with defrauding investors in a collapsed hedge fund. The University of San Francisco law school graduate was quickly released on bail, of course. And friends say he’s been pouring his energies into training for a triathlon.

But things are looking up! On Sunday, someone put his Bear Stearns business card up for auction on Ebay. After an initial price of just 99 cents, the card was quickly bid up to twenty dollars. The top bid is now $20.50. Bidding is set to close on Friday. The card lists Tannin’s employer as “Bear Stearns High-Grade Structured Credit Strategies, LP”—the now infamously awkward name of the hedge fund he warned his boss, Ralph Cioffi, would collapse even as they continued to ensure investors of its health. Presumably Tannin’s got loads of these things in his desk drawers, so perhaps by selectively releasing them he can raise money to cover part of his legal expenses.

Natasha Archdale is a genius. The London-based artist, who charges up to $30,000 per piece, allows her clients, the majority of whom work in the financial industry, to purport masturbatory feelings for loved ones while craftily hiding their true agenda, that being masturbatory feelings for themselves.

Those mourning the loss of racy comedian George Carlin this morning will be glad to know that it’s not too late to get tickets to Carlin’s “Live comedy,” according to Yahoo.

Okay, you can’t really catch Carlin live anymore. But this morning Yahoo pages carried the awkward juxtaposition of the news of Carlin’s death with advertisements to “Save on tickets for Carlin’s live comedy.” Well, yes. We’re sure those tickets are very cheap now.

(Click image for larger version.)

New York’s City Council is backing a plan to raise a $200 million per year tax on the investment income of hedge fund managers and private equity partners. Such a tax increase would have to be approved by lawmakers in Albany, but the council’s support makes it more likely to garner approval there, the New York Sun is reporting.

The new tax is meant to repair holes in the city’s budget, created in part by the downturn on Wall Street. As layoffs pile up and bonuses expectations diminish, the city is facing a dramatic fall in revenue. Of course, raising taxes on hedge fund managers and private equity partners is likely to drive them out of the city, according to critics.

The move is part of a broader push by lawmakers from Albany to Washington DC to tax “carried interest” as income rather than capital gains. Currently the city taxes management fees they at the 4% unincorporated business tax but that tax currently does not cover “carried interest.”

At least one group can expect to benefit from this tax threat: owners of commercial real estate and their agents in Connecticut.

Council Gets Set To Press a Tax on Hedge Funds [New York Sun]

I hope everyone all had restful weekends and came back ready to work. And by work, I mean come up with challenges harder than eating four egg McMuffins, sans egg, in nearly an hour for your interns and selves to compete in. If the brains aren’t yet in think mode, see if this early morning submission inspires anything:

Here’s a pretty hideous injustice, the broader economic implications of which are yet unknown, though they most certainly will be dire: Barbara Walters, whose autobiography Audition details, among other things, her sometimes simultaneous doing of Alan Greenspan and Ace Greenberg, has left out any mention of the former Fed chair and the former Bear chair in the book’s audio version. That’s right, the (best!) chapter, entitled “Special Men in My Life,” is skipped over completely. According to BaWa’s publisher, Random House, the omission is due to time constraints, though that strikes as us a bold-faced lie. While one gets the sense that Greenberg is staving off the tears by keeping busy with his new job at JPMorgan, magic tricks and dog shows, Greenspan, whose retirement gig consists of feeding his own ego [8:00 am scan the papers for mentions, 8:45 am Google self, including nicknames, 9:30 am preserve legacy by making sure no one listens to Bernanke**], is clearly not taking the slap in the face in stride. Will he invoke the Law of Return and bring it back to Walters three-fold (“You leave me out of the audio component? I release the sex tape in high-def”)? We’ll just have to wait and see.

Earlier: Barbara Walters Has Done 80 Percent Of Wall Street’s Living Dinosaurs

Barbara Walters’ Memoir: The No-Sex Edition [Time]

**all performed from bathtub

Another golden age for Wall Street has passed. Without a doubt, man on Wall Street will continue to beat on toward the glowing green light but their backs are against the tide these days, and the currents are getting strong. Lower leverage, higher capital requirements, tighter credit markets and the near certainty of increased regulations will likely make it harder for Wall Streeters to make the kind of fortunes the street has spun off in recent years.

Not surprisingly, some Wall Street veterans are deciding that the risks and opportunity costs aren’t worth the diminished rewards under the new math. This is sparking what Rob Cox of BreakingViews describes as a new trend: leaving Wall Street. He gives examples of two powerful men who have traded in pin-stripes for tweeds. The head of Goldman Sachs asset management, Edward Forst is leaving Goldman to become Harvard University’s executive vice-president. Citigroup M&A boss Frank Yeary is reportedly leaving to become vice-chancellor at his alma mater, the University of California at Berkeley.

New Wall Street Fad: Quit while ahead [Breaking Views]

Citigroup to Cut 10% of Investment Banking Jobs (WSJ)
Readers: you’ll have to make sure we’re on it first if it’s true. The paper said last night that Citi would be cutting up to 10 percent of its 65,000 positions as early as today. It sounds like the bank basically confirmed the report to the paper, as a spokesman said: “Citi indicated earlier this year that it would be resizing this business in response to market conditions and as part of our ongoing re-engineering efforts.” It’s Vikram Pandit’s ‘bold steps’ no doubt. From the report: “Entire trading desks in New York and other cities are expected to be eliminated. And unlike Citigroup’s other recent reductions, this round will feature layoffs of dozens of senior managing directors, the people said.”

Bunge to Buy Corn Products In $4.4 Billion Food Merger (WSJ)
A big ag deal, though frankly we’re surprised that Corn Products is only a $4.4 billion company. Given its business and name and everything, we’d have expected it to be in the teens at least. Despite the boom in business for both companies, their shares had taken a dip due to the fierce Iowa flooding. Nonetheless, Bunge is increased its earnings forecast for the coming year. We don’t see any huge symbolism or meaning behind this deal (readers?) certainly it’s not as a big of a signal as that Russian fertilizer billionaire buying Donal Trump’s mansion.

Obama, McCain Channel Clinton, Bush Legacies on Economy, Taxes (Bloomberg)
Bloomberg says McCain and Obama are channeling the economic policies of Bush and Clinton. Why could this be? Perhaps because neither is that creative with respect to economic thinking, and both Clinton and Bush and McCain and Obama are pretty much conventional party pols with conventional dogma. Democrats: Yup, they favor higher taxes for the wealthy and subsidies for behaviors for the middle class which they like. Repubs: Lower taxes, maybe some lip service towards lower spending. Really, if they’re channeling, it’s mainly because they haven’t really thought of anything new.

Zimbabwe’s MDC Quits Runoff; Pressure on Africa Grows (Bloomberg)
In case your keeping tabs. This article pegs the latest inflation figure out of Zimbabwe at 350,000 percent.

$$$ I can’t even host a blog on Yahoo!— Carl Ichan [NewsGroper]

$$$Internal Memo Leaks: Then Vs. Now (2006 Vs. 2008) [The Stalwart]

$$$ Callaway [1-2]

With no new posts today so far, billionaire dollar big boy Carl Icahn’s blog is off to a rather bland start. Where are his diatribes against Yahoo? Are the lawyers curbing Carl’s tongue?

We’re getting a bit worried. What if Carl doesn’t live up to all our hopes and dreams?
The standard rants about everything that is wrong with Corporate America are accurate, but we would prefer Carl to wax poetic about why Yahoo management is destroying the company’s future prospects and stock price. Doesn’t he at least owe all his hedge fund buddies who piled into Yahoo after he made his move a bit more color on this? Where are his thoughts on the mass departure of Yahoo executives?

We say give the lawyers the finger, throw all caution to the wind, and tell us what you really think, Carl.

—by senior Carl Icahn stalker Travis

Of course you remember that territastic party thrown two weeks ago for Wall Streeters who want to meet Fashionistas and vice versa. But do you remember Prescott Hahn, the self-styled hedge fund manager who was photographed by the New York Post with two allegedly fashionable girls? The intrepid investigative team at Gawker did some digging, and it turns out he’s not a hedge fund manager at all.

First clue: his card lists his job as “hedge fund manager.”

The Fake Hedgie Who’s Conning New York Fashionistas [Gawker]

Worn out by an ugly day in the markets? Don’t worry, you still have time to sign up for BeachComber, DealBreaker’s summertime email-only special newsletter. If you missed the big news earlier this week, DealBreaker is launching a weekly newsletter focused on escaping work and engaging in leisure. Every Friday afternoon we’ll update you on the expected weather, traffic and parties you’ll be encountering in the East Egg of the twenty-first century. We might throw in a couple of links to business stories too.

The first edition of BeachComber will published over email in a few minutes. Sign up below by simply entering your email address. It’s free!

(Also, if there’s anything you’d like to see—such as league tables for nightclubs, Further Lane party invitation origami—let us know. We’ll be happy to oblige.)

According to Charlie Gasparino, the Dimon may be interested in buying Wachovia.

The other day we asked you to please, for the love of god, start coming up with some food challenges for your interns (or selves) to compete in, the purposes of which would be amusement for all, a good use of your time, and an effective way of establishing rank. While we love the initiative exhibited by Bank of America this morning, the overall execution of their mission left something to be desired. I’m going to tell you about it now so that we can learn from BoA’s mistakes (which might date back to HR’s intern screening process) and strive to do better in next time (though, as I think you’ll soon agree, it would be damn near impossible to do worse).

Last evening, a bunch of analysts from one group decided that their two interns would compete in an Egg McMuffin eating challenge. It wasn’t until about an hour later that one of the plebes spoke up and said he would “get sick” if he ate eggs, so extra cheese was added in their place. This was a harbinger of the lamery that was to come.

This morning the interns were each given five McMuffins to race to complete, with a maximum of thirty minutes to finish. This proved too difficult. They were then granted an extra ten minutes. Again, failure. Finally, it was decided that the first to successfully ingest four would win.

Are you ready for what the winning time was? I mean, really ready? ‘Cause unless you’ve got a vomit bag, I don’t think you’re adequately prepared.

We’re snacking this morning on the delicious irony that Merrill Lynch’s stock is getting hammered by rumors that it will announce new losses from Alt-A mortgages on the same day that analysts at Merrill Lynch cut their earnings outlooks for several large regional banks, and predicted dividend cuts from Bank of American and Wachovia. It’s credit crunch for breakfast!

Citigroup has just learned that hell hath no fury like a chafed Dick. Yesterday, CFO Gary Crittenden popped in on a little gathering run by Deutsche Bank’s Mike Mayo. While breaking bread and shooting the shit with a couple of buy-siders, Crittenden casually mentioned that the banking behemoth (gettin’ smaller every day though!) would probably have some sort of writedowns related to leveraged loans and bond insurers in the second quarter. All-smay oblem-pray. It appears the Critter may have flaked on the rule about disclosing material information to everyone at the same time. You know, the whole Reg. FD thing. And apparently Punk Ziegel analyst Dick Bove—not invited to the klatch— wasn’t prepared to issue him a pass one this one. So you know what Bove did about it? Went circus-freak crazy and put out a report wherein he rained righteous indignation down on Lil’ Vik and the Critter’s ass. Sayeth Dick:

Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin were indicted on charges of conspiracy, securities fraud, and wire fraud this week. Prosecutors are focusing on statements they made reassuring investors about the financial condition of their hedge fund even as it collapsed. Now professor of law at New York University points out that a former Bear Stearns CEO, Jimmy Cayne, told investors the bank had no liquidity issues. A few days later the securities firm was on the verge of bankruptcy and had to be rescued by an emergency acquisition and intervention by the Federal Reserve.

“He could be in deep trouble,” Harry First tells the New York Sun.

U.S. Sees Crime in the Credit Crisis [New York Sun]

The Post reports that the marginally more successful, slightly less tax-evading Swiss bank in town plans to distribute a handful of pink slips in investment banking, probably around the time it mentions a sizable writedown with its second quarter earnings, though the “exact timing could not be learned.” The cuts are said to cover high-yield sales and trading as well as leveraged loans, and hack away at “muscle, not just fat.”

CREDIT SUISSE HEADS BACK TO THE CHOPPING BLOCK [NYP]

Matt Piper, the thirty-six year old trader accused of mismarking his book, may have lost nearly $120 for Morgan Stanley. But, even more stunning, he owns an embarrassing dog!

“A picture on social networking website Facebook showed him walking his dog, a daschund called Valerie,” London’s Times reports.

Yahoo Plans Revamp Amid Losses (WSJ)
The rats have been fleeing the ship. Sorry if that comes of bad, it’s just the cheapest metaphor we could think of. This is an unusual moment in corporate history, something we don’t see very often. High profile Yahoo executives are fleeing the company in droves. It seems to be on the order of three or four per day, and word is that the company has a “sweeping reorg” in the works. Btw: Try Googling “Yahoo” and “sweeping reorg” (42,900) and see how many hits you get. One thing to consider though. At most companies, these sub C-level executives just aren’t that well known, so even if they leave, they leave kind of anonymously. At Yahoo, where every tech blogger worth their salt has the company org chart committed to memory, all this turmoil gets an unual amount of play.

Schwarzman’s `Perfectly Timed’ IPO Means Long Wait for Holders (Bloomberg)
Kind of hard to believe how the world has changed since Blackstone came public last year. No need to rehash, and no need to remind that the company’s stock is, well, down since it’s IPO price. But man, if there were ever a single situation in which (in retrospect) the public looks like fools for buying that the smart money are selling, this would be it. of course, that’s just a device for historians, but still, that will be the narrative.

Russian Billionaire Part of Record Deal For Trump Mansion (WSJ)
You know we hate to use the B-word, but sorry, this totally calls for an ag bubble alert. What more symbolism could we need than a Russian fertilizer billionaire paying $100 million for a Palm Beach mansion owned by US real estate billionaire (?) Donal Trump. Seriously.

EU to lift sanctions on Cuba (AP)
To be honest, we’re surprise that the EU ever had diplomatic sanctions against Cuba. For one thing, the EUs love to flout the US’ desires, so this was always an obvious way to tell us to shove it. And beyond that, the sanctions are kind of dumb and ineffective, so it makes pefect sense to drop them, even without an ulterior motive. Evidently though, the diplomatic (which doesn’t appear to be the same thing as trade sanctions) sanctions weren’t really enforced, and we more symbolic to begin with. Still.

Fugitive’s Girlfriend Is Charged (NYT)
Oh, so he’s not dead? The girlfriend of Samuel Israel III has been arrested on charges of helping the ex-hedge fund manager escape justice. That’s got to be a tough spot for her. Cause realistically, we’d probably help out someone too that was about to be incarcerated for two decades. Now she faces up to 10 years in prison. Imagine if they just get her, and not him. That’d suck. Oh, and her occupation is “decorator”.

Busting Phil Hellmuth — Day 2, continued (World Series of Poker Blog)
Courtesy of Paul Kedrosky, I’ve been reading this blog, written by a trader and hedge fund guy, as part of my World Series of Poker reading. It’s pretty enjoyable sharp, well written, funny, and from the perspective one of those faces you occasionally see on an ESPN broadcast, but about whom the commentators know little. Anyway, here’s a very cool anecdote about busting Phil Hellmuth out of a tournament.

$$$ The Fake Hedgie Who’s Conning New York Fashionistas [Gawker]

$$$ Merger Arbs: The Hexion-Huntsman Horror Show

$$$ Apple Orchard [GP]

$$$Tonight on CNBC’s “Kudlow & Company” Ken Langone will explain why we need a recession ASAP!

So, apparently Carl Icahn has made six posts already on his blog, dating back to June 12th, even though the site was not even up yet. Impressive. Where’d he procure that time machine?

Icahn has already hit a broad range of topics ranging from his fierce opposition to “poison pills” to the myth of corporate democracy.

He seems to love using the word “absurdity,” as three of the titles of his posts include the word: “Absurdity of the Corporate Board Elections,” “Absurdity of the Staggered Board,” and finally, “Absurdity of the Poison Pill.”

That’s a lot of absurd things in Corporate America.

Icahn puts forth a lot of ideas to improve what he believes are hindrances to shareholders’ rights, including the elimination of poison pills and staggered boards. He calls the way that CEOs today actually become CEOs a “survival of the unfittest.”

Icahn declares, “allow[ing] entrenched corporate interest to sustain this anti-shareholder regime is outrageous.” Another great line: “It is the top level management that hangs like an albatross around the company’s neck.”

Well said, Carl. Keep the material coming.

Corporate Democracy Is A Myth [Icahn Report]

— Senior Icahn chronicler Travis

Wachovia was rumored to have begun laying off employees in its Charlotte investment bank yesterday afternoon, and apparently the cannings have spilled over into today. What’s taking so long? The only explanation we can come up with is that, having heard about Goldman and its ante-upping approach to firings, the higher-ups at WB realize they needed to get creative if they’re ever going to crack the top five in Layoff League Tables. According to someone familiar with the proceedings, the head of IB sent out an email this morning saying that “if you are there after 4:30, you are okay.” And if you’re asked to go investigate a suspicious noise, or lose your virginity during the film? Not okay! Oh, and severance is supposedly 4-5 months salary plus full bonus.

Earlier: Layoffs Watch ‘08: Wachovia

Chris Dodd, the US senator who introduced the mortgage bailout bill this week, has received approximately $70,000 in campaign contributions from Bank of America in the last year-and-a-half, Tim Carney reports in the Washington Examiner.* The mortgage bill would allow banks such as Bank of America and mortgage lenders like Countrywide, which BofA is in the process of acquiring, to push their worst performing loans onto government agencies. It is such a give away to mortgage laden banks that it is being mocked by Republican staffers as “the Bank of America bill on steroids.”

Dodd, of course, chairs the senate’s banking committee. It may seem obvious that the banking committee chairman would receive lots of money from one of the nation’s largest banks. But it wasn’t always so. Richard Shelby, who headed the banking committee while Republicans controlled the senate, received only $7,000 from Bank of America employees during his four-year chairmanship. When the going was good, no one needed to own a senator.

But these are difficult times for banks, especially banks buying the nations largest home lender. And so Bank of America has opened up its coffers to buy a little influence on Capitol Hill.

Bank of America PAC money behind Dodd’s Countrywide loan

*Full disclosure: Blah, blah, blah. You already guessed it.

As you know, Bear Stearns former hedge fund managers Ralph Cioffi and Matthew Tannin were arrested this morning. The dream team was charged with securities fraud for telling clients in the pair of BSC funds created to invest in that can’t miss asset class, subprime mortgages, that nothing was fucked last year when in reality, that wasn’t exactly the case.

According to the indictment, in an email to a member of his team at the end of March 2007, Tannin wrote, “[b]elieve it or not— I’ve been able to convince people to add more money.” Clearly, Tannin was shocked by this turn of events, as he well should have been. But what’s shocking is not the fact that people didn’t necessarily understand that subprime was toxic sludge, but that they didn’t see Bear’s “we’re trying too hard” oversell of this stuff and go, “Whoa, wait just one minute.” I’m not intimately familiar with the jargon used in formal pitches to investors but “we have some awesome opportunities,” which is what indictment records state Cioffi instructed brokers to tell clients, strikes me as something that would be a tip-off run for your lives. Seriously, they might as well have gone with, “this shit kicks ass” or “you bitches will thank me in the morning” or “all other funds suck balls in comparison to ours.” On a related noted, if forthcoming testimony doesn’t reveal they did, I plan using those pitches verbatim when I open my own place in 5-10.

Ex-Bear Stearns managers charged with fraud [Reuters]
Behind The Scenes Of Bear’s Fund Meltdown [DealBook]

As noted earlier, gay pimp Billy Ash got married on Tuesday. Despite Filomena Tobias’s absence, it was reportedly a beautiful wedding, and Mr. and Mr. Ash are now enjoying a romantic honeymoon in Paris. But who is the other half of this Palm Beach power couple? Ash, that dirty, dirty tease, only told us his husband is “an on-camera weather guy who use to be a big deal on Wall Street, and yes, he’s Jewish and worth a bundle.” We literally have no idea who this catch could possibly be but trust that at least one of you can figure it out. So stop what you’re doing, and get on it. I don’t think I need to say it but just to be clear— this takes precedence over all other matters today.

We’re still obsessing over the Feds perp-walking former Bear Stearns’ executive Ralph Cioffi and Matt Tannin in order to inflict as much damage as possible on the two men. But it didn’t start with Bear. Since the beginning of March, the FBI has arrested over 400 people in a sting dubbed “Operation Malicious Mortgage.” On just one day, yesterday, sixty people, including real estate players in Chicago, Miami and Houston.

In other news, the Justice Department also is expected to ask Congress for more money to help combat mortgage fraud.

Hundreds swept up in mortgage fraud arrests [Associated Press]

Biogen Idec Inc. shareholders voted down Carl Icahn’s proposed candidates for the board, according to initial counts by the company. Icahn, who felt that Biogen’s attempt to sell itself last December was “flawed,” wanted the biotechnology company to cut costs and improve research and employee morale.

Icahn found little support for his board, as major proxy adviser firms indicated that he had “failed to prove the sale process was mismanaged.”

On a side (yet equally important) note, icahnreport.com seems to have “launched,” though at present, the site is password protected. We look forward to hearing Icahn’s thoughts on today’s news.

—by Guest Carl Icahn lecturer Travis

Remember when we asked for the identity of the Morgan Stanley trader accused of mismarking his book to the tune of $120 million? Morgan Stanley, which has been investigating the situation since last month, declined to name the trader, saying it is not yet clear whether the mismark was an error or fraud.

But London’s newspapers have been more forthcoming. The Evening Standard identifies the trader as a certain Matthew Piper, who is said to be in his late thirties.

Morgan Stanley Suspends Trader After $120m Gaff [HereIsTheCity]

While Lehman Brothers attempted to put on a strong face at the height of foreboding rumors about its financial condition and criticism from short selling hedge fund managers, inside the firm nerves were stretched to the breaking point. Far from feeling like would-be masters of the universe, Lehmanites were struggling to contain their feelings of fear and desperation. At one point, tears were shed.

“I was reading these stories and crying at my desk,” a young associate who was drinking at a small bar on the lower east side last night.

She was not alone. From fixed income traders to equity analysts, Lehman Brothers employees report that two weeks ago the firm was, well, emotional.

“You’d get on the elevator and it was like you could cut the tension with a knife,” a longtime Lehman vet told DealBreaker.

Lehman employees exhibit a high degree of sentimental attachment to their firm, an attachment they say was only strengthened by recent difficulties. “I think we all kind of pulled together,” said the associate. She then turned back to the bar and ordered a couple of shots.

“For Lehman,” she said as our glasses clinked together.

Morgan Stanley announced that it suspended a senior fixed income trader on its London trading floor after discovering he had marked up positions on his books by $120 million. Morgan Stanley has told the Financial Services Authority and begun an internal investigation. They say that while the $120 million is not material to their financial results, they disclosed the misdeed and investigation to send a clear message of “zero tolerance” for such shenanigans.

All well and good we suppose. But they didn’t go far enough. We want to know who this mismarking trader was. Send your guesses to tips@dealbreaker.com or leave a comment below.

Morgan Stanley suspends London dealer [Guardian]

Bear Stearns former hedge fund managers Ralph Cioffi and Matthew Tannin were both arrested on criminal charges this morning for their pivotal roles in the whole telling investors the subprime funds were a-okay when in reality…well, you know. One would think being in charge of the two ridiculously-named and damn near impossible say three times fast entities—High Grade Structured Credit Strategies Fund and High Grade Structured Credit Strategies Enhanced Leverage Fund— would be punishment enough but apparently, not so much.

Here’s Ralph being escorted to federal court in Brooklyn:

[via Bloomberg]

And here’s Matthew, patiently waiting his turn for the same:

[via Bloomberg]

Meanwhile, in another part of town:

I know I speak for all of us when I say it feels so good to be back on gay pimp Billy Ash’s radar. In his latest communication, Ash informs us that he didn’t just land any old shlubb of a husband earlier this week but a real catch. The nuptials were fabulous, as to be expected, in spite of the fact that “the gold digging, 4 time married, whore Filomena” did not accept the role Ash so very graciously offered her as flower girl but what can you do? Fucking Palm Beach widows and their inconsistent notions of gratitude. Anyway, as Billy-boy, in an uncharacteristic state of lucidity notes, “life goes on,” and when you’re spending the week in Paris with an “on-camera weather guy who use to be a big deal on Wall Street,” who’s Jewish and “worth a bundle,” there’s not much to complain about, not even the unavenged death of an old friend. Full e-mail after the jump.

According to a JPM chippy, these are the officials numbers for Jamie Dimon’s bankers across the pond:

First year analysts: 16,000 - 35,000 GBP (USD $31,300 - $68,500)

Second year analysts: 18,000 - 44,000 GBP (USD $35,200 - $86,000)

Third year analysts: 35,000 - 60,000 GBP (USD $68,500 - $117,500)

Last week we pointed out a feature in Marie Claire magazine in which CNBC anchor Becky Quick posed as a “Fashion Expert” telling a twenty-something bond trading girl how to dress for Wall Street.

We couldn’t help but notice that it seems Becky offers a veiled insult at one of her fellow CNBC anchors when she says: “Don’t [wear] bright colors, you’ll stand out at the stock exchange and not in a good way.”

After the jump, check out who at CNBC stands out in that way.

Prosecutors in Bear Case Focus In on Email (WSJ)
A good rule of thumb: never send email. It’s just not worth it. Never write anything down at all if you can. Keep it all in your head, or if you must write it on pen and paper, so it’s not easily searchable. That’s our advice, anyway. The Journal sheds a little bit more light on the witch hunt investigation into the Bear Stearns hedge fund collapse. We already knew that supposedly there was a disconnect between the public statements of the managers and their private emails, but this goes into a bit more depth on what happened, and the timeline.. Anyway, you can judge whether you think this looks bad. It really doesn’t look that ridiculous to us, but we’re biased. Also, indictments might come today on this.

The Catch Phrase Is ‘à La Carte’ as Airlines Push Additional Fees (NYT)
Finally, the airlines are getting on message. Ever since the first airline announced its $15 per-bag fee, we’ve said they’ve been going about this all wrong. It’s not about extra fees, it’s about lower prices for those without bags, or it’s about breaking down the airline experience into distinct things that the customer can buy, achieving a greater world of granularity (Wall St. analysts should like the granularity tip, too). Anyway, says the NYT, now they’re trying to pitch it as a la carte pricing. Bravo. Charge ‘em for bags. Charge ‘em for paper tickets. Charge ‘em for headphones and in-flight biscotti. It’s all optional and a la carte once you’ve bought the flight.

Shell shuts down Nigerian oil field after attack (AP)
Just curious… is the most common news story over the past several years? A Nigerian oil field attack is kind of like news of a drought or a price war in memory chips. Basically a universal constant. Oh, and apparently oil rose on the attack. Of course.

Regional Shares Snap Winning Run On Credit Concerns and Oil’s Rise (WSJ)
Rought night in Asia, China in particular. The Shanghai Index fell over 7 percent, while several others like Japan and Thailand fell 2-3 percent. Why? Who knows. The article says something about the fund raising at Fifth Third Bancorp. But to be totally honest, we’d be surprised if Asian traders really got that worked up about a bank in Ohio raising some fresh capital. Maybe though.

$$$ It Trades at Only 6x 2020 Earnings [LoSC]

$$$ Morgan Stanley’s Trading Surprises [DealBook]

$$$ Ted Rheingold [WallStrip]

Carl Icahn might finally start blogging! One hundred and thirty eight days (thanks NY Post!) after declaring his entrance into the blogosphere, but producing no content on icahnreport.com, Icahn says he will go live starting tomorrow, Reuters reporter Dane Hamilton reports.

Icahn plans to “[offer] up anecdotes and a running commentary on what he describes as the desultory state of corporate governance in America.”

Of course, we will have complete coverage of his blogging here! Get psyched. And let’s all hope that the Icahn blog’s past performance does not guarantee future results. Right now the Icahn report is a generic Go Daddy page.

So you’re a first year and just got laid off, excuse me, finished your course load early. Not much left to do but pack up your shit and mosey on out of there, right? Wrong, you unimaginative fucks. First, you need to gather the e-mail address every single client, colleague, superior, family member, frat brother, and journalist you’ve ever encountered or thought about encountering in the last decade. Second, you need to fill out the form letter that follows (not that you aren’t all special in your own way, but minimal variation is necessary, and I’m not paid enough to work on a case per case basis. If you’d like something one of a kind, it’s going to cost extra).

Anyway, the letter. It serves multiple functions: first, it violates your employer in the most gruesome fashion in front of clients and other interested parties. Second, you “leverage” your experience to make yourself sound better than you are (if your three months on Wall Street have taught you anything, it should be that leverage offers handy short-term gains. Dick Fuld knows what we’re talkin’ about here). And third, it will amuse us, which is this only solace I take from this hellish Siberia of financial journalism. Please, when you send said letter, I implore you, stick us on the BCC (unless you’ve got a pair bigger than Oyster Boy’s, in which case, feel free to add us as your legal adviser at the bottom).

Chris Dodd, the Democratic chairman of the Senate banking committee, admitted yesterday that he received a home loan as part of the program for friends and family of Countrywide chief executive Angelo Mozilo.

Dodd, who has sponsored a mortgage bailout bill that creates $300 billion in new taxpayer liabilities and allows mortgage lenders such as Countrywide to fob off their worst performing loans onto the Federal Housing Administration, insisted he had not been told that he would receive favorable loan terms.

But in the course of this confession, Dodd embarrassed himself by admitting that despite being the chairman of the banking committee, he doesn’t know what mortgage interests are. “I don’t know what the rates are today,” he said.

Video after the jump.

A third option for settling the proxy battle between Carl Icahn and Yahoo has emerged in recent days, as investors have proposed electing a “hybrid board” at the shareholder meeting on August 1st. Shareholder Eric Jackson, of Ironfire Capital, believes that the best course of action is to vote for four of Icahn’s selections, while retaining five others from the current board.

Jackson is directly trying to address larger shareholders like Legg Mason and Capital Research Management, who, to this point, have yet to announce their views on the board situation.

At the same time, DealBook reports that some investors are still backing the entire Icahn contingent, as Mark Nelson of Mithras Capital has said, “”We believe a truly independent board is what’s needed at Yahoo and not one that has these obviously deep and emotional connections to the company.”

Whatever the case may be, the stock has not seen any significant uptick despite the announced alliance with Google last week, signaling investors are not fully satisfied with the current situation.

— Senior Yacahn correspondent Travis

It’s been 600 days since the Enron Task Force disbanded after former Enron CEO Jeff Skilling received his sentence of 24 years in prison. As part of the wider commemorations of the anniversary, it was thought timely to check “Where Are They Now?” for a group characterized as a “huge success” and whom even the Coolidge Republicans of the Bancroft-era Wall Street Journal editorial pages said had “a good record overall.”

The Justice Department’s massive effort resulted in several dozen convictions or plea bargains, most of which have been upheld, and its breadth included Arthur Andersen and the London bankers known as the NatWest Three. In the light of unclear GAAP rules on Enron, the Task Force achieved regulation by prosecutorial deterrence.

More after the jump.

A grand jury is expected today indict two former Bear Stearns hedge fund managers on securities fraud charges. Charlie Gasparino broke the news on CNBC, saying that the indictments of Ralph Cioffi and Matthew Tennen are likely to be announced tomorrow. Cioffi and Tannin will likely be arrested if they do not turn themselves in to the FBI.

Investigators allege that the two fund managers misled investors, instilling a false confidence in the prospects of the hedge funds even after it became clear to the managers that they were in trouble due to exposure to mortgage backed securities. The collapse of the two funds was s foreshadowing of the broader credit crisis that engulfed Wall Street. But because Cioffi and Tennen were the first, they apparently lost the criminal prosecution lottery and so must be made to suffer.

Bear Stearns Fund Managers Likely to be Indicted [CNBC]

[click to view]

And now, because all of this population restructuring talk is getting depressing, a little treat. Many of you will recognize it as porn, but we assure you it’s 100 percent safe for work.

Bloomberg reports that former Citi CEO Chuck Prince has been hideously forced to cut the asking price of his Greenwich, Connecticut house, which is now entering its sixth month on the market, to $5.85 million. The price tag is still about a million more than what Prince bought the Tudor for in 2003, but $300,000 less than he was hoping to score from some sucker in ‘08. This is maddening to all of us but stewing about the injustice isn’t going to get us anywhere. We’ve got to think, god damn it, think.

Apparently Wachovia is laying off “a lot of” its Charlotte industrial group this morning. According to someone familiar with the proceedings, “all conference rooms on that floor have been booked, and boxes of Kleenex are on hand.” Will the presiding MDs pick up the gauntlet thrown down by the pioneers at GS? Probably not but here’s hoping.

You still have time to sign up for BeachComber, DealBreaker’s summertime email-only special edition. If you missed the big news yesterday, DealBreaker is launching a weekly newsletter focused on escaping work and engaging in leisure. This summer, BeachComber will be focused on the Hamptons and your trip out there. Every Friday afternoon we’ll update you on the expected weather, traffic and parties you’ll be encountering in the East Egg of the twenty-first century. We might throw in a couple of links to business stories too.

For now, BeachComber will only be available by email. Sign up below by simply entering your email address. It’s free! First issue comes out this Friday.

(Also, if there’s anything you’d like to see—such as league tables for nightclubs, Further Lane party invitation origami—let us know. We’ll be happy to oblige.)

‘Member that story from two minutes ago about Goldman Sachs telling first years whose services are no longer required at the firm that they’re not being fired, they’re just graduating early from an “accelerated one-year analyst program” they’d secretly been taking part in? We just received a little more color on the revolutionary approach, from a young alum, who notes:

“At one point I actually though the MD was going to say, ‘Congratulations!’” which we can obviously all agree would have been awesome.

San Diego real estate has been some of the hardest hit in the housing slump. But now that the California Supreme Court has cleared the way for gay marriage, the gays might be coming to fix everything.

That, at least, is what one California real estate company is hoping. Luke Mullins, who pens some of the most interesting dispatches on the housing market, reports today that a San Diego realty firm is pitching discounts meant to attract gays looking to take advantage of the same sex marriage law. To get married in California, you need to be a resident, so out-of-state gay couples might consider buying a home to establish residency. [Editors note: Turns out there is no residency requirement in California. Apparently real estate agents are just hoping that the gays can’t read the law.] And now they can even have their wedding paid for out of the real estate agent’s commission!

Details after the jump.

It’s going to be a great day and let me tell you why: Page Six reports that not-dead former hedge fund manager Samuel Israel believed in time travel and before the hours got crazy over at his Ponzi-scheme, spent nights and weekends building his very own Delorean. According to a trader who worked with Israel in the mid-90’s, Sammy-boy “brought two of my friends from Wall Street into his basement and showed them the contraption [which he said he working on for the government].” We’re not even going to run a poll asking you to pinpoint exactly where the industry’s biggest M*A*S*H fan shipped off to, because it’s patently obvious. A time and place where the interspecies love between a man and an egret is accepted.

Fled To Past [NYP]

Corporate America has been perfecting ways of talking around awkward things like mass firings and layoffs. But it can’t lay a glove on Wall Street, where double-speak is not just a way of life, it’s an earnings strategy.

Take Goldman Sachs, Wall Street’s gold standard investment bank. Despite beating its peers in performance, profits are down at Goldman and layoffs are underway. Many of those who lose their jobs will be junior bankers, called analysts, who typically serve a two year term before going on to business school or moving on to other jobs.

Goldman is letting many of its first year analysts go but they aren’t describing this as getting fired. So first year analysts who are being fired after just one year are told that the have been placed into the “accelerated one-year analyst program,” according to people familiar with the matter. It’s like skipping a grade! Well, except that you get expelled from school after you get accelerated!

Goldman Sachs could not immediately comment on this story. But we’ll update you if they do!

In an era when we’ve all come to expect surprise results from investment banks, Morgan Stanley handed over some completely unsurprising results this morning. The earnings per share, at 95 cents, were just about in line with expectations. (Although what that means in when the highest analyst prediction was twice the lowest is unclear.) John Mack, Chairman and CEO, issued a statement telling us that things that you know were down and the things most competitors are getting right were done right at Morgan Stanley also. In short, fixed income and asset management sucked. Prime brokerage and equity derivatives did well. Also, they have a “world-class international franchise.” So everything will be alright then.

Lehman Brothers chief executive Dick Fuld may be ousted from his position, according to senior executives at the securities firm. Fuld’s perceived resistance to selling Lehman Brothers is prompting executives within his firm to wonder if he will have to be removed if the firm is to be sold, a move seen as increasingly required by the downturn on Wall Street.

On Monday Fuld participated in his firm’s earnings call announcing a quarterly loss. While the detailed discussion of Lehman’s financial position quieted many critics, Fuld was widely perceived to be resistant to selling his firm. But there are many at Lehman who are unsure that the firm can prosper independently.

In order to diminish risk from turbulent markets, Lehman dramatically lowered its leverage in the past few months. While this should limit losses, it is also seen as limiting Lehman’s upside. This morning on CNBC Charlie Gasparino reported that a large investor and senior executives inside of Lehman are convinced that the firm must either get acquired by a larger partner or dramatically shrink in size. Senior executives who spoke with DealBreaker have said there is growing concern that Fuld’s commitment to Lehman’s independence might be foreclosing the sale option.

The growing caucus of dissenters to Fuld’s reign at Lehman apparently remains a minority view. But people familiar with the matter say that the dissenting view will likely grow if it becomes clear that Lehman must either sell or shrink.

RBS issues global stock and credit crash alert (Telegraph)
Let it not be said that the only folks who peddle crazy rumors and end of the world fear and bloggers and hedge funds. Apparently some analyst at RBS is advising clients to brace for a major global crash in the next three months. Inflation meanwhile will paralyze central banks. Of course, this is a report from Telegraph’s Ambrose Evans Pritchard, who’s pretty fond of peddling these stories himself, so we can’t vouch for certain that he’s characterizing the RBS report completely accurately. But evidently the report did use the phrase: “all the chickens come home to roost.” Speaking of Pritchard, one of Europe’s most prominent Clinton haters back in the day, he must be pretty upset that Hillary is out. (via FT Alphaville)

Spielberg, India Firm Near Deal to Ally With DreamWorks (WSJ)
Steven Spielberg is going to sidle up next to Indian conglomerate Reliance for some film financing. Apparently Dreamworks and the company will launch some new venture, replacing the company’s past relationship with Viacom. Hopefully this means larger casts for Spielberg movies, more dancing and more music, though we’re not sure that Reliance will have any creative input.

Bill Promotes Universal College Loans (NYT)
The hangover from dreams of universal homeownership came on pretty fast. How long before we experience the same thing when it comes to college education. We were actually pretty enthused that lenders might start limiting what colleges they give loans for. It sounded like the market at work. But a new law from two Democratic Senators would put the kibosh on this, demanding that any student loan lender participating in a federal system would have to give out loans, regardless of which school was chosen. There goes the market at work.

LinkedIn Gets $53 Million Infusion (WSJ)
If you’re not in a “serious” line of work, you might not get much value out of business networking site LinkedIn. We, for example, fall into that category. But apparently if you do real work it has some value. Anyway, the company raised raised a cool $53 million in a late round lead by Bain, along with some others. It values the company at $1 billion, which is pretty sweet. Management claims that it’s doing $100 million in revenue and that’s already profitable. The big question: IPO? Not yet. Expect to see some more growth and acquisitions before then. But really, if there’s one “social networking” company that could probably do an IPO in the next year or so, LInkedIn would probably be it.

$$$ iBanker [1-2]

$$$ “Forbes The Latest Victim In Randall Lane’s Web Of Deceit Or Why Trader Monthly aka Doubledown Media Is Failing” [Tim Sykes]

$$$ Greg Ip has midlife crisis, leaves WSJ for The Economist [Reuters]

It gives me no pleasure to inform you that at 8 am this morning, Anthony G, the Hungry Barbarian, completed his Hamptons Challenge (one week in his Hamptons backyard during which he could not buy or be given food, and was only allowed to ingest what he caught with his own two hands). I’m upset about this because 1. I lost $20 and 2. He didn’t eat anything “weird,” like an armadillo or a domesticated cat or a low flying egret. Nevertheless, congratulations, Tony. To the rest of you—let’s start stepping things up. The oysters and the vending machine contest were good but we’ve got a whole summer ahead of us and, gainfully employed or not, loads of time on all of our hands. I want you all to start submitting ideas now. Quants—you’re weird and out of the box thinkers. Get creative. Traders—you’re dumb and known for vulgar habits. Base your challenges on sheer volume alone.

It’s summertime and the living is easy. To make life even easier, however, DealBreaker is launching a weekly newsletter focused on escaping work and engaging in leisure. This summer, BeachComber will be focused on the Hamptons and your trip out there. Every Friday afternoon we’ll update you on the expected weather, traffic and parties you’ll be encountering in the East Egg of the twenty-first century. We might throw in a couple of links to business stories too.

For now, BeachComber will only be available by email. Sign up below by simply entering your email address. It’s free! First issue comes out this Friday.

(Also, if there’s anything you’d like to see—such as league tables for nightclubs, Further Lane party invitation origami—let us know. We’ll be happy to oblige.)

And despite settling, will not retract prior allegations of murder by pasta, according to their lawyer, James Pressly. I think we all know who should be weighing in at this time but, unfortunately, he’s otherwise engaged (ceremony and reception pics TK, provided someone accepts the part of ring bearer he’s so graciously been offered).

Tobias Brothers Retract Reported Retraction [FINalternatives]

The U.S. Marshals Service is still hot on the trail of Sam Israel III, the convicted former hedge fund manger who no one believes committed suicide. A wanted poster from last week noted that the industry’s biggest M*A*S*H fan has two tattoos, one on his left arm and one on his hip. Today brings word that the arm ink is that of a bird, though it doesn’t say what kind. Those of you on (fake) suicide watch, however, will recall that Israel’s business card also had a bird on it. Not being ordained ornithologists ourselves, at the time, we guessed it was a pelican. Oh how wrong we were. Luckily, one of you dabbles in bird porn and did not give us a free pass. To the guy who dressed me down with the comment, “egret [bitch]…it’s an egret…[get it fucking right, you stupid whore],” please come forward and dazzle us with further displays of your intellectual plumage. Completely sincerely: you are (intentionally or unintentionally) the funnie