$$$ Move to the other City [TBP]

$$$ Timothy Sykes wrote his book on how he made his millions. Have you read it and what did you think of it?

Who the fuck is Timothy Sykes? [WSF]

$$$ Who needs a job? [craigslist]

$$$ GD [WS]

New York Times business columnist Joe Nocera is unambiguous about his pick.

Although Lehman has been the number one rated equity research shop (again, according to Institutional Investor), that just shows how flawed such ratings are. Everybody on Wall Street knows that Sanford Bernstein does by far the best equity research on the Street. It tends to hire former industry players like Brad Hintz, who was once Lehman Brothers' chief financial officer, to cover the industries they were once part of. Mr. Hintz; Craig Moffett, the lead telecommunications and cable analyst; Mr. Sacconaghi, who is the technology axe; and a raft of others give Bernstein's research a depth -- an intelligence, really -- that no other firm can match.

So who do you think is the best research shop? We'll take nominations in comments and put up a poll once we have enough suitable candidates.

So it turns out that John McCain picked Tina Fey Alaska governor Sarah Palin as his running mate.

"Sarah Palin" is probably the most searched for name on the internet right now. In the minutes after news of her selection spread, popular websites like the Drudge Report went down. The reason for this is relatively simple: most of us don't know anything about this woman who John McCain wants to be his running mate.

The one thing we do know is that she's been a strong proponent of drilling in the Alaska National Wildlife Reserve and wants to see more off-shore drilling. In fact, she's said that McCain, who opposed drilling in ANWR, is "wrong on that issue." It certainly seems that Republicans are lining themselves up as the party of greater oil supplies.

After the jump, we present a CNBC segment with Palin advocating drilling in ANWR.

Anyone need a job? You'd think the matter of canning 1,500 employees yesterday would've meant LEH not being up for much in the way of new hires for a while but you'd think wrong. They are back in the saddle and eager to have you and yours, Thursday afternoon's gutting having created more than enough space to stretch your shit out. The following listing was added this morning to a certain b-school's jobs board. Act now, before they go under.

The application of a bat wing. Hearing Pauly Shore telling you to get your life together. Having the last 18 months' losses amount to 25 percent of your profits for the last 36 years.

Merrill Losses Wipe Away Long Time Profits [FT]

No American parent has ever looked at their son or daughter and said, "You know, I hope you one day end up being Vice President". And yet, for all the lack of glamour the vice presidency has in the public mind, speculation over who will be chosen by a presidential candidate to be a running mate is the Olympic decathlon of talking heads, political pundits, and guys posting on blogs from their basements at 2am.

But how does this process even happen? Why do people like Katherine Sebelius or Tim Pawlenty get their names mentioned as potential running mates but people like Steve Rothman or Dave Heineman get passed over like yesterday's lunchmeat? And does any of it give us an idea of how the candidate on the top of the ticket will govern?

To get some answers, we sent asked Dan Gerstein, someone who has a lot of familiarity with a vice presidential campaign. Gerstein worked with Senator Joe Lieberman for a decade and was Lieberman's national spokesman for the 2000 VP campaign. He was also the brains behind Lieberman's successful re-election in the heated 2006 Senate race in Connecticut. Gerstein was written several op-ed pieces for the Wall Street Journal (including this one on Wednesday) and appears on MSNBC, Fox News, and NY1. Gerstein now supports Barack Obama for President though Lieberman was considered to be one of the top contenders as John McCain's running mate.

PartyGaming poker slowdown prompts downgrades (Reuters)
This year's slowdown in Las Vegas casinos was easy to see coming: Casinos aren't really gambling houses anymore, they're resorts, and resorts are vulnerable to economic cycles. But maybe people are, wait for it, in a less gambling mood. PartyGaming, the European online casino, says poker is soft. As in, people are playing it less. As in they're board of it (maybe). Or maybe they're just tired of losing. Or maybe televised poker is in decline, and fewer people imagine themselves to be the second coming of Doyle Brunson. Anyway, something to watch.

GM says automakers deserve $50 billion in federal loans: report (Reuters)
Ostensibly the money will be used for alt-energy research. Or at least fuel efficiency. That Detroit would want these Federal loans is totally predictable. In fact we've seen a lot of folks chattering about just this in the last few days. Judging by the political rhetoric we've heard from both candidates, this certainly sounds like something the next President could accept.

Microsoft to Acquire Greenfield Online Including Its European Subsidiary Ciao, a Leading European Price Comparison and Shopping Site
Interesting deal: MIcrosoft is buying Greenfield Online and then selling of Greenfield's core business: online surveys. Instead they're mainly buying it for Greenfield's European comparison search business. Not clear who they're selling the surveys business to.

Worker Assets Shrink at Fannie and Freddie (NYT)
Kind of obvious: Workers at Fannie and Freddie have seen their savings take a major hit. That's how' it's been at plenty of other major financial firms since the industry went into its downdraft. But the article starts off this way: "Fannie Mae's workers had $116 million in the employee stock ownership plan at the end of 2006. Today, it's more like $17.5 million. Ouch." That's a big drop, but, um... $116 million in 2006? That a very tiny sliver of the company owned by the employees. Granted it's not a bank like Bear Stearns or Lehman, but maybe it'd be better if employees had a little more skin in the game. Then again, more evidence that these ostensibly private corporations are more akin to gummint bureaus than anything else. And of course, high levels of employee ownership hasn't really done wonders anywhere else lately.

Growing Cynicism Around Going Green (PC World)
More evidence dribbles in that Green is not in. This time it's about "green" energy-efficient IT. There have also been reports of Priuses (Prii, har!) becoming available. And somewhere else we read that green branding was losing its effectiveness. Just some stuff to watch out for.

$$$ Virgin Airlines Offers "Entourage Experience" For Closeted Junior Investment [PSI]

$$$ Is The Long Arm of the Crab Extending to Overland Waste? [LoSC]

$$$ Russian Roulette [NYP]

Reuters has now chimed in on the Lehman Brothers layoff rumors, saying 1,200 folks will lose their jobs. This puts them right between the New York Times estimate of 1,500 and the Bloomberg story putting the number at 1,000.

(Also, this is weird: the Reuters story is timestamped 8:53 PM but it's up now.)

Have you picked up your copy of "Damn It Feels Good To Be A Banker?" It's the book by Amit Chatwani, who is better known as the proprietor of the Leveraged Sellout blog. A couple of weeks back we ran an excerpt of the book, which is written in the voice of an egomaniacal banker that will be familiar to LSO readers.

As DealBook's Andrew Ross Sorkin pointed out, it's like a blast from the last deal boom. There are no layoffs, no bank failures, just ballers, bottles and babes. "If you can get over the juvenile humor and some cringe-worthy moments, you can transport yourself back to pre-2007. It might make you smile at the beach this week," Sorkin wrote.

And now Chatwani has produced a video to accompany the book. It's an epic hip-hop battle between a consultant and an investment banker. After the jump, watch the suits and the khakis throw down.

A San-Fransisco based hedge fund manager inspired by Goldman senior exec-cum-landscape architect Mark Spilker's arbitrary and unilateral decision last year to cut down neighbor Jim Chanos's shrubs is going downtown. Derek Webb, who runs quant shop Web Capital Management, was found guilty of vandalism for taking it upon himself to trim the trees at a state park adjacent to his vacation home, after officials caught him, I shit you not, hacking away at branches with a chainsaw. Like Spilker, Webb claims he was merely trying to make the path more user friendly. Unlike Spilker, who mostly got off for the crime, Webb has been sentenced to five days in prison. Though we're sure Chanos has long moved on from the incident, we personally wouldn't mind seeing the Webb ruling setting a retroactive precedent and Spilker spending a couple days in the big house, as it would teach him a lesson about entitlement, and undoubtedly be hilarious, for all involved (especially the first year dispatched for conjugal visits).

Hedgie Gets Jail Time For Trimming Trees [FINalternatives]

Relax. Steve Jobs is not dead even though you might have read his obituary yesterday on Bloomberg. The financial news service was updating its obituary on Jobs and accidentally published it on its wires.

"It was momentarily posted on the external wire, in error, and immediately deleted (within thirty seconds)," a spokeswoman for Bloomberg told DealBreaker.

It's not likely many were fooled into thinking the head of Apple was dead. It was full of blank spaces marked "TK" and "XXXX." The obituary contains notes on who to contact for comments on the death of Jobs. Named are Steve Wozniak, Larry Ellison, Al Gore, Bill Gates and Eric Schmidt, among others. So now Jobs knows who he should suck up to if he wants them to say nice things about him when he's dead.

The subheads tell you most of what you need to know. The first is appealingly morbid: "Time Is Limited." The rest read: "Change the World" "Mac" "Reality Distortion Field" "Sugared Water" "`Toy Story' Success" "Back to Apple" "We're Back" "Backdated Options" "Common Bug" "Great Work." Gotta love that sequence of back, back, backdaing, bug, RIP. (Gawker posted the whole thing here.)

Just in case this happens again, we suggest you check here for updates on the vitality of Jobs before trading.

The story also contains a canned explanation of the likely drop in Apple's stock. After the jump, read why the stock drop "is no surprise to investors and analysts."

For the last two weeks we've been hearing rumors of layoffs at Lehman. Last week people at Lehman were saying that layoffs were expected to come this week, before the Labor Day holiday. Now Bloomberg is reporting that "people familiar with the matter" estimate that Lehman will cut as many as 1,000 jobs. The good news is that Bloomberg's sources say the Lehmanites will hold on to their jobs for a little longer, at least until Lehman announces its third-quarter financial results.

Why would Lehman hold off? We're told that Lehman is afraid of sending out signals about the size of its losses ahead of the third-quarter financials. The idea is that if the layoffs cut deeper than expected, investors may assume that they reflect bigger than expected losses. Better to announce the news all at once.

Update: The New York Times says 1500 employees, or nearly 6 percent of its work force, will get the axe before the third-quarter results are in.

Lehman Said to Be Poised to Eliminate as Many as 1,000 Jobs [Bloomberg]

Speaking of reasons you should asked to be fired: it wasn't included in the recent treatise on how a ban on color copies will make up for zillions in losses, but the paper at Citi's 390 Greenwich Street "mysteriously went from went from double to single ply last week." Not to give Vikram any ideas (yeah, he's a reader), but can we get some guesstimates on how long it'll be before C goes BYOTP?

Earlier: Cost Cutting At Citi All Part Of Master Plan But Not The One You Think

According to a well-caffeinated incoming analyst at Bearpont Morgan Chase, Jamie Dimon's henchmen in HR fired at least a handful of new hires for falling asleep during training to make up for last year's overhiring.

Dealbreaker commenter 1-2 has been fired from his job at a gilded bulge bracket, for his side gig as the proprietor of the 1-2 Knockout blog. Unsolicited advice to all: call in sick, and don't give them a reason to fire you.

Related: Citi To Return To Profitability One Fired Blogger At A Time

Are we headed back to the old New York City of Travis Bickle the Taxicab Driver and Lolitish Jodie Foster? That might seem impossible to many of you who never experienced the old New York. But when Wall Street ran into problems in the seventies, things very quickly deteriorated for the rest of the city. After the jump, the BreakingViews crew looks at some dark possibilities.

The Wall Street Journal reports that Lehman Brothers recently apologized to clients for ripping off parts of a Sanford Bernstein research report without attribution back in March. In a note sent last week, the bank admitted that the research in a paper on the semiconductor industry "closely resembled" that of analyst Toni Sacconaghi. A Bernstein spokesman told the Journal the firm "greatly appreciated the letter," which both informed clients of the plagiarism and begged for Bernstein's forgiveness. So it's all water under the bridge now but clearly this is the kind of stuff we have to look forward to. You know as well as I do that if Lehman weren't currently in a shitstorm of its own making, it wouldn't be apologizing to anyone. They'd be dicks about the Bernstein thing, just because they could. Now that they've changed their ticker to TNB (The Next Bear), and no one wants to be associated with them, they're going on a bender, apologizing for everything, even shit that wasn't their fault. Over the next couple weeks, watch out for:

- An official apology to Einhorny for registering the address 'meddling bastard' (all one word), at Yahoo dot com, adding his signature to the bottom and sending out 2 AM emails extolling the virtues of barnyard animals.

- Late night calls attempting to get back in the good graces of Joe Gregory and Erin Callan

- Mea culpa fruit baskets to the two Coreys for ruining their careers

- A public apology and year's supply of Junior's cheesecake to SAC for getting in the way of the HFs plan to take them down, and foiling the plot to go 2 for 2*

Lehman's 'Mea Culpa' [WSJ]

*That's Lehman talking, not me. Personally I love SAC, and Einhorny, as well.

Could the DC Circuit which held that the Sarbanes-Oxley accounting board didn't infringe on constitutional separation of powers rules have been sending a signal to Congress to fix the law? That's what law professor Larry Ribstein thinks might have been going on.

[T]he DC Circuit figured that by upholding SOX with a strong dissent, it might be sending a message to Congress to amend to eliminate the problem. The court thereby avoids the chaos that would have ensued under the alternative holding of declaring the PCAOB unconstitutional. Because SOX lacks a severability clause, the effect of that would be to invalidate all of SOX and throw the whole thing back to Congress.

That's right. With out a severability clause, Sarbanes-Oxley might be completely struck down by a court finding fault with even a minor part of the law. As we explained earlier this week, the creation of the Public Company Accounting Oversight Board may be in trouble if the issue reaches the court, which could put the whole of SOX in jeopardy.

Sears Holdings Reports Second Quarter Results
It's always fun to check in on our favorite hedge fund/retailer that posts weak earnings every three months... Not surprisingly, earnings were down pretty sharp, over 50 percent, due to the economy and just general stuff. The good news: Sears is making progress on getting its inventory down, and it expects higher EBITDA in the second half of the year. It's actually getting boring talking about these guys. And yes, we realize it's not a hedge fund.

China and Iraq Reach $3 Billion Oil Service Deal (NYT)
Huh. A big state-owned Chinese oil company has reached a $3 billion deal to service an oil field. It's the Ahdab oil field for those of you keeping track at home. That's great and all, but you have to wonder whether it was worth liberating Iraq from the clutches of an evil dictator only to see these oil deals to go other countries. You know?

Gold: The alternative retail investment (FT Alphaville)
Awesome: Apparently in vogue they're flogging some kind of gold-tipped fur, kind of as an investment or something. Or maybe a hedge. You know, it's one of those classic 'signs of a top' that will make for a perfect anecdote in a book, if gold is near it's top. If not, it's just an amusing story.

The monetary density of things (Evil Mad Scientist)
Speaking of gold and valuable stuff, we totally haven't been able to get enough of this blog post we came across, which looks at the value of 1 Lb. of various items, from zinc, to peacock feathers, to Marijuana, to saffron, to anti-matter (1 Lb=$26 Quadrillion). Seriously we could just stare at it all day. One interesting note: A pound of dimes is=a pound of quarter=$20. Others we've shown this to are amused by the fact that a gram of cocaine is worth $50, and that a $50 bill weighs a gram.

$$$ "Paying $11 million to never hear from your father-in-law again is a great deal"-- Steve Schwarzman [NG]

$$$ Fannie, Freddie and the Low-Risk-Investment Myth [Deal Journal]

$$$ Free coffee from Portfolio tomorrow at 30 Wall Street from 7-10 am.

$$$ An Interest Rate What? [Crossing Wall Street]

If you're thinking that now might be a good time to get off Wall Street and lay low by applying to business school, you aren't alone. Applications to business schools are booming. "It's the second-largest year-over-year surge in applications to full-time programs since 2002, and the highest level of increase in five years," Business Week reports.

The sharpest increase is in mid-tier business schools. Penn State's Smeal College of Business, saw a 39% increase in applications, for instance. But even MIT's Sloan School of Management and NYU's Stern School of Business saw double digit increases in application volume.

Sagging Economy Boosting B-School Programs [Business Week]

"Rob Levin has touched virtually every part of this company," CEO Dan Mudd said.

Fannie Mae CEO Dan Mudd Announces Management Restructuring to Drive Capital Management and Credit Loss Reduction Plan [Fannie Mae]

We've always wanted to be friends with Blackstone co-founder Pete Peterson because he's sure to have some side-splitting tales about watching Steve Schwarzman try to masturbate and/or sleep in a water bed, two activities which, anatomically speaking, are damn near impossible for SS to do. The whole him being loaded thing was secondary, and besides, who's to say he's not one of those super cheap billionaires who insists on dividing up the bill according to what each person ate when out to dinner with friends? Recent news, apparently. The Observer's Max Abelson reports that Peterson just bought his pal Leslie Gelb a little apartment on East 69th Street and there was nothing in it for PP. Wasn't anything too flashy, just a $3,040,000 co-op, but he knew living in squalor would make Gelb and the family happy.

"It's perfect for them," Mr. Peterson said. "It's not a large apartment--has kind of a small dinning room and a small living room, and I don't know whether there are two bedrooms or three but they're rather small. ... What I really like is that they like it."

What a Mensch! Pete Peterson Buys Pal Les Gelb a $3 M. Co-op [The Observer]

New Wachovia CEO Robert Steel vowed to turn things around at the bank and he was not kidding. He started with morale boosting pep rallies and marshmallow tower building competitions, and now he's moved on to a not even necessary capital raise that, while probably dilutive to current shareholders, is sure to wow the crowds with Bobby's out of the box thinking, no doubt honed during his time at Goldman Sachs.

Florida-based BankUnited Financial Corp (huge in the option ARM biz in South FL) is down 83 percent YTD. The Office of Thrift Supervision, it's hilariously named regulator, may lower its capital rating. The humidity in Miami is unbearable this time of year. All signs point to fail. David Bishop, however, refuses to come out and say it. The Stifel Nicolaus analyst instead downgraded the firm to sell and danced around the whole thing, writing that the "viability of the bank is increasingly fraying...[and while it] may yet be successful in finding private equity capital to forestall additional regulatory sanctions, we believe there is a good enough chance that this will not come to pass." It's unclear whether Bishop has a longstanding history of not JUST SAYING IT: YOU WILL FAIL, or if his skittishness is a recent phenomenon having something to do with the bank down the road suing everyone's favorite woodland creature for having the pair to do just that.

Related: BankAtlantic Sues Bové

Stifel cuts BankUnited to sell on capital concerns [Reuters]

The topic: FNM and FRE merger. And: Should Bernanke shave it off?

*PLEASE NOTE: In case you did not get it from the headline, this is a rumor. Our sources, while credible, aren't even sure it's true. They received it as a rumor and we pass it on to you as the same. It could be totally false, it could be totally true. Who knows? It's all relative.

**Except for the bit about Bernanke. That debate is actually happening.

Sovereign Bank, which is based in Philadelphia, recently sent out a letter to customers disclosing that the bank owns large amounts of preferred stock issued by Fannie Mae and Freddie Mac. At least one customer in New Jersey reacted to the letter by running to the bank and withdrawing her deposits. We know this because we overheard her tell her friends this story in a barber shop this morning.

Even without sparking bank runs, the shares of many regional banks are suffering because of the risk that they will have to writedown their holdings of Fannie and Freddie preferred. Felix Salmon at Portfolio asks the obvious question: "what on earth were these regional banks doing holding the GSEs' preferred stock in the first place?"

It turns out that banking regulations and tax rules encouraged banks to buy Freddie and Fannie preferred stock. Regulators require to banks to maintain a capital cushion against losses on loans. This capital requirement can be met by holding cash or cash equivalents and certain investments that were considered relatively risk-free. The preferred stock of Fannie and Freddie was one of the highest yielding investments banks were allowed to hold to meet capital requirements, according to a person familiar with the matter.

Tax rules also made holding the preferred stock of Fannie and Freddie attractive. The tax code allows banks to exclude 70 percent of the dividends received on preferred stock from taxable income. The Fannie and Freddie preferred historically paid a high dividend, making this even more attractive.

Tommy Kim, 27, formerly of UBS, for example, logged 37 days of snowboarding in 2008 after being fired last January. "When I got laid off, it was like, hallelujah," he said.

After the snow melted, he came back to New York, where "I went paint-balling," Mr. Kim said. "I went to Six Flags." Now: "I stay up late, wake up late, go to the beach a lot. I play a lot of video games when I can't find people to hang out with."

Recently, Mr. Kim turned his attention to organizing his vast music collection and playing DJ gigs around town, including a Saturday party at the Brooklyn Museum and a few weddings (he was a well-known DJ during his undergrad days at Dartmouth). He's also taking break-dancing classes. And he built himself a new computer, just for the hell of it. Looked up the instructions online, bought the parts, et voilà!

And his job search? "I'm kind of looking," Mr. Kim said. "I decided last week maybe I should be more proactive." It's hard to get worked up, though, because "President Bush extended unemployment by another 13 weeks!" That's $405 a week on top of the "generous" UBS severance.

Bumped Bankers Go Bonkers [Observer]

Good news and bad news. The good news: it's time to start talkin' bonuses again. It's been a while, so this feels great. The bad news: a gaggle of Goldman Sachs employees in Equity and Equity Derivatives will not be purchasing those second homes they've had their eyes on this year. We're told GS is guiding comp down by about thirty percent, which probably means the great performers will be flat and the bottom third-- the least Sachy of the bunch-- will get hit by forty percent or so. While our default is to get irate about this sort of stuff, relative to the non-existent bonuses that'll likely be dolled out by the other banks, it's really not that big a deal.

Kind of a big D however, is that Goldman Sachs IS GOING UNDER, and we're only slightly exaggerating. According to the bearer of bad bonus news, "they are having a terrible year and the past month has seen business in many divisions-- Eq and ED especially-- grind to a halt. While that typically happens in August, I know for a fact that other dealers have not seen that dramatic of a drop off."

It seems not everyone knows how to get in touch with us. It couldn't be easier! 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 if you are worried that the SEC might subpoena your emails, 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.

Here's a creative way of sending tips that users recently discovered: take a photo with your phone and send it to us on the tips line or to tips@dealbreaker.com. It's a great way to send firm memos without leaving any trace that can be found by your employer!

You may think that no one is interested in reading about how bad the food is in your cafeteria or how slow the internet connection is at your desk. Stop thinking that. We're interested! We want to know everything! From the most trivial matters, like Goldman's FaceBook ban, to the biggest trades, DealBreaker is a full-service gossip and news service. Tell us what you know and leave the editorial judgments up to us.

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

Lehman Brothers has narrowed the bidding on its asset management business to three private equity firms -- Kohlberg Kravis Roberts, Hellman & Friedman and Bain Capital, according to the Financial Times. Blackstone and Carlyle are out of the running.

Private equity groups in running for Lehman unit [Financial Times]

Heineken first-half profit climbs 35% (MarketWatch)
Breathe... Heineken turned in a solid quarter. People are still drinking alocohol. The world's third biggest brewer said revenue was up 17 percent, though only 7 percent on a comparable basis. Two good trends for the company: Consumers are going for higher end brews (presumably because everyone is in one of those phases where they look down on cheap beers) and the company is able to pass along costs. No doubt hops prices are expensive, given the global absence hops producers we talked about yesterday.

The Hillary Moment (WSJ)
How about we just go back to the same well as yesterday and make a joke about how Hillary must've done a good job, because stock markets are up, and the markets obviously fear an Obama Presidency, because he doesn't believe in low-tax, pro-growth policies, like McCain does. Actually, it was a solid speech as long as you ignore any of the, you know, substance.

Oil rises above $117 on concerns about Gustav (AP)
You know the free fall in oil is done when you see stuff like this. Ok, maybe traders don't really care at all about hurricane Gustav -- entirely possible. But these small bumps in prices are a much different story than a few weeks ago, when not even the Russian invasion could unnerve the markets.

Macquarie: The 'great unwind' is coming (FT Alphaville)
Interesting how things have changed. Well, that's obvious. Things have changed for every one of the banks and institutions we've been covering for the past 2.5 years. But in the early days, Australia's Macquarie was definitely one of the interesting ones we followed -- it invested daringly in big infrastructure deals around the world. You know, airports and water works and public highways. And now things aren't going to well, with its stock down and various financial instruments getting out of whack. A good read of how things have fallen.

$$$ Get out of here [DealBook]

$$$ Sam Waksal spotted in the wilds [The Business Sheet]

$$$ Best Buy [WallStrip]

Federal Deposit Insurance Corp data released this afternoon show 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter. That's being headlined as the worst number since 2003 but it's even worse than that. At the end of 2007, there were 76 banks on the list. In the first quarter we added 14. In the second quarter, we added twenty-seven to the total. (Actually, its worse than that since the actual failed banks are taken off the list, meaning we've added more than the total indicates). In short, the deterioration of banks is accelerating.

Even if you claim to have no interest in quitting your job before you eventually get fired and continuing to live the sweet Murray Hill lifestyle you've grown accustomed to by being made the kept boy of a rich older woman, surely you can admit that there's some entertainment value in watching others go down that path. Which is why we suggest looking out for "Cougars: NYC," a reality show now in development that will give us an insider look at life as the hunter and the hunted. God knows when it'll air-- presumably after the tears dry-- but the producers held an open casting call last week at Libation, so you know it's going to be good. According to pussy (cat) Dawn Ellison, who maintains a blog about banging younger men, the series aims to "shatter stereotypes that surround cougars and cubs."

Not content to sit this one out but unsure where to turn? We suggest RSVP'ing to UBS's September 9th Hedge Fund Client reception at L'Escale. It's been internally dubbed a "cougar hunt" and Andrew Cuomo is said to be attending so the upper limit should be almost unfairly high. Consider it good practice.

Related: The Saddest Story Ever Told

Meat and Eat [NYP]

Invite [UBS]

Banks who bought short-term bonds sold yesterday by the government chartered mortgage giant Freddie Mac may have also boosted their own balance sheets by strengthening Freddie's preferred stock.

A federal appeals court, in a 2-1 split decision announced Friday, held that the accounting oversight board created in 2002 as part of the Sarbanes-Oxley reforms is constitutionally permitted. The decision has been described as a victory for supporters of Sarbanes-Oxley and the Public Company Accounting Oversight Board. But it may in fact be its last gasp.

"Our bet is that federal high court can, in its wisdom, be counted on to reverse," the editorial writers at the New York Sun write. "We give it a year before the Nine tell American businesses that they are free to produce a little more and audit a little less."

After the jump, we explain why the Sun is probably right.

What do you think the destroyer of all worlds/marine life/investor capital is feeling right now?

Cityfile reports that Jim Chanos has closed on a triplex at 3 East 75th Street (neighbors!). Chanos paid $20.365 million two months ago for the 7,800 square foot space. In the same way that rich people often have so many rooms they don't know what to do with them all and end up devoting one to a single activity such as the Gift Wrapping Room, Chanos's abode will include a 20x20 reserved specifically for candle-lit Ouija board sessions (really not that frivolous when you consider that it's an integral part of the short selling biz. There will also be a guest bed for Alfred Winslow Jones, often summoned in the O-room during idea sessions (slumber parties) with the boys (Einhorn, Ackman, Tilson).

Related: The "Wizards" Of Short Selling

Joanna Shields Buys, Jim Chanos Closes [Cityfile]

Citi announced a slew of cost cutting measures today, all aimed at reversing the bank's declining revenues and getting rid of the sad trombone that plays on loop in the lobby. A ban on offsite meetings, mandatory use of both sides of the paper when printing, and the curtailment of color copies (which will be enforced by physically removing many of the building's color copiers, because apparently you can't be trusted*) are all on the list of behaviors that will no longer be tolerated. At first glance they come off as merely asinine rules that won't amount to jack. This assessment could not be further from the truth. In fact, we expect that they will contribute to the exact intended outcome senior execs at Citi are hoping for.

Look, Count Vikula isn't stupid. He's aware of the crippling adversity faced by Citi, and has come to terms with the fact that profitability and success are just not in the cards. Rather than spend the next few years beating around the bush as the stock drops to ten (two? whatever), he's decided to take the next few months to sink this thing and pack it in. While he could get Jimmy Cayne about things and get it over in a matter of weeks, Vikram is smarter than that and realizes that at the end of this folly, there'll be more loot in it for Vickie if he can't be held directly accountable for the bank's failure. Which is why he and the brain trust came up with the initiatives above, along with "no more computers," "no more for pay market data," "no new Blackberries," "no food," "no fun," in an effort to get all of Citi's employees to quit (let's be honest-- they're not in it for the prestige). Then VP will shrug his shoulders and make a face as if to say, "Well I did everything I could," board the place up, and finally take over the role he tells friends and family he was born to play: Morgan Stanley CEO. (More on his plans for John Mack later.)

Citigroup Limits Meetings, Pares Color Photo Copies [Bloomberg]
In Trimming Expenses, Citi Holds Back on Color Copying [Dealbook]

*Not unlike "Non Client Travel." To wit: "We previously asked that non-client travel be limited to trips which are truly essential. However, it seems that we are not consistently adhering to that policy. Going forward, all non-client travel will require pre-approval. As an alternative to non-client travel, I encourage you to make use of our audio and video conference capabilities."

This morning everyone is passing around the Temasek report, in which Singapore's sovereign wealth investment fund indicates that it still "sees value" in banking stocks in the US and Britain. Wall Street is acting like a girl who just found a crumpled note in a school desk with her name inside a heart. But before it swoons too deeply, it might want to check the other initials in the heart.

Temasek insists it's not a sovereign wealth fund. It's more open than many sovereign wealth funds, and more independent when it comes to investment decisions. It also claims that it is now a sovereign version of a closed end fund, unable to tap the state treasury for new funds. But it is 100% owned by the Sinapore Ministry of Finance, and suffers from many of the problems of state investment funds.

The one we'll focus on the fact that Temasek probably has too much money to invest. It has far more assets than is necessary for hedging government portfolios against cyclical downturns. It would arguably do better to return a large portion of its wealth to the people of Singapore as a dividend, where individuals at different stages in their lives could spend and invest the dividend to suit their needs.

The over-supply of funds, together with Temasek's compensation structure (executives have long-delayed bonus structures), encourage long-term risk taking that wouldn't be acceptable for most investment funds. Temasek needs investment opportunities and when those are scarce, its portfolio managers need to look pretty deep into the chasms of the market. Given this structure, Temasek's bets on US financials, such as its decision to at to its $5.9 billion investment in Merrill, is hardly a sign that US financials are likely to recover any time soon.

For more on Temasek's financial company investments, see FT Alphaville's take.

It's Tuesday, which means it's time for our weekly lesson from New York Time's wonderboy and DealBook editor Andrew Ross Sorkin. (We used to called this column Andrew Ross Sorked Educates Dealbreaker, ARSED, but we got bored of that joke.)

The initial entries are on Lehman Brothers. First, he says the Fed won't let Lehman die, especially since CEO Dick Fuld is a member of the board of directors of the Federal Reserve Bank of New York. (The head of Bear Stearns was not a director.) Next up: the news that buying Neuberger Berman from Lehman will cost a lot more than the sale price, since any buyer will have to pay through the nose to keep its brokers.

For his final Lehman item, Sorkin slaps down the great bullish rumor that moved markets last week. You'll recall it began with a story in Reuters about the Korea Development Bank considering buying Lehman. By Monday afternoon the story was dead, as various people stepped forward to deny it. Quite early on we said the story seemed like a bungled translation. Sorkin agrees, and draws attention to his favorite theme: loose tips sink move markets: "Nuance can often get lost in translation, and who knows what was really supposed to be in those brackets. But the episode illustrates just how fast both good and bad information can move the markets."

Lehman's Woes Haunt the Last Days of Summer [New York Times]

US stock futures edge higher after volatile sessions (MarketWatch)
Who knows if this will hold by the time you read it, but evidently stock futures are pointing uppish. Allow us to put on our Larry Kudlow hats for a sec and explain why: Michelle Obama didn't close the deal with America. The upshot: The market is now pricing in a John McCain victory and likes what it sees. Lower taxes, more freedom, faster growth. What other possible explanation could their be? That's right. No explanation.

Florida tops 1Q mortgage fraud list (AP)
This is not surprising... Florida is already a key location of the housing bubble. What's more, Florida tops every fraud list. Hello, Boca Raton? Clearwater? These cities are to fraud what Hungary is to Paprika. It's an industry. Plus, doesn't Florida have really lax mortgage/bankruptcy laws as it is?

Rio Tinto bolsters defences with record profits (FT)
Oh, this is still going on? Apparently so. BHP Billiton still wants to buy base metal miner Rio Tinto. And Rio Tinto is still trying to avoid it. The good news for Rio: It's doing fine on its own. The company just reported record profits, up 55 percent for the first half of the year from the year-ago period. Chairman Paul Skinner said demand from China and India bore credit for the strong results.

Big squeeze hits Chinese oil giant PetroChina (AP)
But not everyone who pulls industrially useful commodities out of the earth is doing quite as good. AP offers up a preview of PetroChina's earnings, which are expected to drop by about a third on refining losses. The report also notes that the company is no longer a $1 trillion firm... though it never really was. That was mainly a brief anomaly based on a small float in China, where shares briefly traded totally out of whack.

$$$Deals: A Transactional Patchwork
In our M&A roundup for the period ended Aug. 24, top deals involve banking, insurance, and defense, with energy and natural resources accounting for much of the rest. [CFO.com]

$$$ Carl Icahn hates, hates, hates Marty Lipton. [Icahn Report]

$$$ Tudor Jones's quant fund beats Simons [NYP]

$$$ Analysts: Winging it. [IHT]

Geoffrey Raymond, the greatest artist of our time, will be displaying his latest masterpiece tomorrow behind Goldman Sachs (near the service entrance?) and Wednesday at the NYSE. For those of you who've got something to get off your chests, the rules are as follows: blue pens for Dems, red pens for Repubs, invisible ink for Ron Paul supporters.

Shares of Freddie Mac are soaring today, up more than 20 percent right now. The rise is being attributed to Freddie's success in selling $1 billion of three-month and $1 billion six-month notes in a weekly auction, which has supposedly eased fears that the government sponsored mortgage company would have trouble financing its ongoing operations. But t