Just wanted to pop in and tell you not to fear that tomorrow's business leaders will get us into another sticky situation, 'cause Harvard MBA students, like the ones above, are now taking an oath promising not to do anything wrong, like some alums from their school.

The MBA Oath
FULL VERSION
Preamble

As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can build alone. Therefore I will seek a course that enhances the value my enterprise can create for society over the long term. I recognize my decisions can have far-reaching consequences that affect the well-being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face difficult choices.

Therefore, I promise:

$$$ Citi jets for sale! [Cityfile]

$$$ Confidential to Christopher Meek: We read you were upset with the write-up we did of your program. And that upsets us! We get that since 99% of the time we're making fun of people, you probably assumed you were getting the same treatment, but you assumed incorrectly. In all seriousness we think you're doing a very nice thing for the people of Stamford, and, believe it or not, the headline "Goldman Sachs trader to the rescue" was completely sincere. Email us if you don't believe it. [Norwalk Advocate]

$$$ Little parody for your weekend. [Youtube]

$$$ After 93 Years, G.M. Shares Go Out on a Low Note [Dealbook]

$$$ Job of the Week: Bloomberg needs a senior loans analyst. That could be you. [DB Career Center]

We think Credit Crisis II or Credit Crisis 2.0 has a much nicer ring to it than "W recovery" or some other charting nonsense. (We're partial to the "M recovery"). Whatever we call it, we may get the chance to revisit old themes. Everything new is old and suchlike. Or so says Reuters:

The global financial crisis may morph into a second, equally virulent phase where borrowing costs rise again, hobbling an embryonic economic recovery, debilitating cash-strapped banks, and punishing investors all over again.

Early warnings signs of this scenario include surging government bond yields, a slumping U.S. dollar, and the fading of the bear market rally in U.S. stocks.

The reality is that the United States has quite a bit of housecleaning still to do. High beta stock rallies spur "green shoots" talk, but trad-weeds will grow anywhere for a time, but have no real staying power.

Rising U.S. bond yields may spark Credit Crisis II [Reuters]

WSJ: Longtime Bank of America director Temple Sloan resigns.

Are we surprised that the only big insider trading case in quite a while is somewhere outside of the SEC's jurisdiction? We seriously doubt whether there is a dearth of large insider trading cases in the United States, but they certainly seem to have fallen by the enforcement wayside. Instead, and it pains us to say this, the SEC seems to be too busy tagging the likes of Mark Cuban to get its shit together.

On January 14 last year Berndale seized control of the account of How Trading, the account Mr Waterhouse held with Berndale to trade options, because it had breached its agreed margin-call levels.

After gaining control of How Trading, Berndale used it to short-sell $51,634,606.22 of blue-chip Australian shares -- primarily the major banks and BHP Billiton. On January 17 last year Berndale then used How Trading to short-sell a further $4,260,850.63 of Commonwealth Bank shares.

On January 18 -- or January 17 in New York -- Merrill Lynch announced a $US9.83 billion fourth-quarter loss, including a $US16.7 billion write-down associated with subprime mortgage losses. Sharemarkets and bank stocks around the world tumbled on the news. In the three trading days after the Merrill Lynch announcement, the S&P/ASX 200 Index fell more than 10.5 per cent.

$55 million insider trading allegation [The Age]

Have Representative Michael Capuano accuse you of gang banging a bunch of girl scouts? Sit there while Rep. Elijah Cummings makes you feel like a bad person for treating your employees to $200,000 worth of facials? All the while knowing once you're finally allowed to leave and get back to the office, Hank Greenberg will be hiding behind the door ready to jump out and shout about how none of this was his fault? Today is your lucky day! As previously mentioned, Ed Liddy announced last week that he'll be getting the hell out of AIG just as soon as they can find a replacement for chairman and CEO (roles that are being separated to spread the love around) and apparently that day cannot come soon enough. Efforts are being ramped up to find two people willing to take on the sweet gigs, led by board member Dennis Dammerman and Big L himself who, wanting out of there a-sap, has said the process should take no more than a few months, tops. Lids told Reuters he expects the person picked as chair will be "someone familiar with the workings of government," while the CEO post should go to a masochist willing to commit up to five years to the job. Who's interested?

Pleading, urging, begging, whatever. Call it what you will, this one isn't going to drift by as "easily" as Chrysler. But then, the Chicago machine is just getting warmed up, isn't it? Either way, we continue to be amused by the (1 - 0.65) reverse spin on the debt holder (dis)approval numbers.

Advisers to General Motors Corp bondholders representing $27 billion in the automaker's debt urged investors on Friday to support a debt swap negotiated over the past week with the Obama administration.

Bondholders have until Saturday to register their support for the terms of a deal that would give them up to 25 percent of a reorganized GM. That offer is contingent on the U.S. Treasury determining that enough investors have signed on in support.

Investors representing at least 35 percent of GM's bonds are expected to support the sweetened offer from the U.S. Treasury, which will be the automaker's largest shareholder and creditor.

In a conference call open to GM bondholders, advisers to an ad hoc committee representing institutional investors urged other bondholders to offer their support for the deal.

But we wonder if the real story here isn't this:

For the government to be repaid in full, GM would have to have an enterprise value of $69 billion based on its expected 72.5 percent stake in the company, Siegert said.

Really, the jobs we are "saving" are getting obscenely expensive. What happened to a "bridge loan" and the rough backhand pimp-slap that Treasury and company were supposed to deliver to a GM that was not viable by the deadline?

Paulson never would've let this go down on his watch.

Dartmouth College, which was stripped of its triple-A rating this week, is one of the first victims. Both Standard & Poor's Ratings Services and Moody's Investors Service cited investment losses by the Hanover, N.H., school's endowment and significant debt issuance in their decisions to knock Dartmouth's rating down a notch.

For those of you holding your breaths, breathe easy:

Borrowing money doesn't necessarily affect a school's credit rating. This week, for instance, Moody's affirmed Harvard's triple-A status and stable outlook. The ratings firm said despite Harvard's investment declines, which university officials project at 30% for the current fiscal year, it can still count on significant, if reduced, donations and has the ability to boost revenue by admitting more students.

As for the rest of you, better luck next time, and perhaps think about using your heads and trotting out some tasty freshman treats next time the ratings guys show up to perform on-site diligence.

Tyler Durden over at Zero Hedge points out the (not so) subtle campaign by Bloomberg to bash the TALF. Heads I win. Tails they lose. Thanks TALF!

Collection of anti-TALF banners after the jump.

Bloomberg's Vendetta With Geithner/TALF Continues [Zero Hedge]

The story of appraisal hasn't gotten much play in the housing crisis narrative, and this is a significant oversight. Several reports on IndyMac highlighted issues with appraisal, but for whatever reason none of them ignited into anything throwing of heat. Teri Buhl, familiar to Dealbreaker readers from Housing Wire, however, has been minding the store here.

Despite calls for reform, Countrywide is still showing signs of committing the same predatory lending sins under new owner Bank of America. As Congress rushes the lending reforms through the House this month, banks are still fighting to keep control of how they run the mortgage business, and keep collecting lucrative fees in every step of the lending process.

Exhibit A is a $2.8 billion class action lawsuit filed on March 7th against a BofA subsidiary called Countrywide-KB Home Loans and its wholly owned appraisal firm Landsafe, Inc. The suit accuses the two subsidiaries of an appraisal inflation scheme affecting over 14,000 borrowers, and is a product of a yearlong investigation examining home buyers in California, Arizona, and Nevada. Leading the charge were the Laborers' International Union of America (LIUNA) and Seattle-based law firm Hagen Berman. The law firm is presently litigating over three class action cases against Countrywide.

Cuomo is, of course, all over this new twist, pushing matters all the way into the GSEs, which he insists knowingly bought loans tainted with fraudulent appraisals. With borrowers penning "liar loans," banks like IndyMac actively fabricating income details for applicants, ratings agencies applying AAA stamps to anyone with what appeared to be a default correlation model, GSEs knowingly buying "sexed up" appraisals (allegedly) and securitization drawing monoline protection without the assets to back losses, you have to wonder, what part of the mortgage process was not actually tainted by fraud?

Buhl points us to an excellent diagram on the tentacle-laden topography that is the appraisal relationship map. Catch it after the jump.

Exclusive: Banks' Appraisal Conflicts Could Continue Under New HVCC Rules [The Mortgage Lender]

A couple months back Soho House started giving financial service industry hacks the cold shoulder, refusing to renew the memberships of several Wall Street "types," under the guise of getting back to its "creative roots." To that end, they recently enacted a new dress code that bans suits (with "blue shirt, black pants" obviously coming up next) obviously in an attempt to keep people like you out:

What not to Wear

At Soho House, we've always believed that a relaxed atmosphere is a critical part of our identity. Taking that belief a step further, we're asking members not to wear jackets and ties to the Roof this summer. We'd like to extend that mood on the 6th Floor, too. Obviously we recognize the style and allure of a well-tailored suit, but we've always wanted the House to feel like a home away from home rather than an extension of the office, so please do keep that in mind.

Last year: not so good for Jeff Gendell, who shuttered his firm's flagship funds (Tontine Capital Partners and Tontine Partners) after losing 76.8 percent and 67 percent, respectively, through October and September. This year? Coming up roses, my friends (though we don't have recent numbers for Tontine Financial Partners and Tontine-25, yet, and that statement could be way off base).

The Greenwich, Conn.-based firm has raised $11 million for its new Tontine Total Return Fund, as well as $1.6 million for an offshore version of the new vehicle, according to a Securities and Exchange Commission filing. Gendell launched the fund in February, three months after telling investors he would shutter the firm's flagship hedge funds. The new fund does not use leverage.

Earlier: Tontine's Very Special Offer

Tontine Raises $12 Million For New Fund [FINalternatives]

Update:

Okay, it's not the worst but it is certainly a thankless one. You'd think sending people money in the mail would go far in ingratiating yourself to them but apparently you'd think wrong. In fact, the Madoff investors who Irving Picard, the trustee appointed to oversee Ponzi Nation's liquidation, has been tirelessly working for don't really give a rat's ass that his team has been at this thing round the clock, and are actually getting downright nasty. They think he's not moving quickly enough on the 8,800 claims, and when it comes to the ones that have been taken care of (251 so far), apparently it's not enough. According to Helen Davis Chaitman, many Madoff investors "have been forced to go on welfare, use food stamps, and sell their homes for a fraction of what they are worth."

Picard himself isn't taking it personally, telling his staff "with this kind of pain, don't expect a 'thank you,' don't expect a 'well done.' " Still, we feel bad for the little fella, and while we're not certain it'll work, would suggest he consider delivering the money on huge checks, Publisher's Clearing House-style. Guessing that'd get, on the conservative side, at least a few people to grumble "thanks, pal" under their breathe, and shooting for the stars, tears of joy and wonderment at the presence of Ed McMahon at their house.

I believe we just heard the two now verboten words slip your lips. Thought we'd let it slide? Think again, toots. If we're going to do something, let's really do it. Which brings us to this. To make sure CNBC wasn't just jerking our chains with promises of never saying "green shoots" again, what should we do to talking heads who fail to follow the law of the land? I'm thinking taser, but obviously we could get creative with this one.

Even a limp horse pulls. Everyone has a purpose. But you really wonder if there shouldn't be closer adult supervision when Austan Goolsbee speaks in (non/semi/openly) public forums. Perhaps a pair of Kissinger glasses with teleprompter HUD? You certainly wouldn't be pushing him too much farther in personal appearance. Maybe a discrete earpiece with a direct signal from Rahm Emanuel. Sure, it'd sound a little like he was giving dictation, but that's whole lot better.

"If you tried to slash spending and raise taxes you would repeat what drove us into the Great Depression," he said. "Treasury and the administration have embarked on a whole bunch of policies that have eased the credit spread quite substantially. There is no question that it is going to be a bumpy ride, but it is a signal achievement to be less worse."

I'm not sure we had to bold that. Is this just poor copy-editing by Bloomberg? We don't think so. We think it more likely these words actually escaped the Gool's lips. What could this have been parsed from?

"There is no question that it is going to be a bumpy ride, but it is a signaled agreement to be less worse."

"There is no question that it is going to be a bumpy ride, but it is a singular achievement to be less worse."

"There is no question that it is going to be a bumpy ride, but it is a singular achievement to be bratwurst."

Who knows. Then there are these gems:

I am thrilled, overjoyed that we aren't all out of our jobs and we have prevented the Great Depression....

It is unrealistic to think you are going to solve all our problems in a three-month period.

Sheesh.

Obama Prevented Depression, Now Needs Patience, Goolsbee Says [Bloomberg]

This is a good one. Many of you have expressed displeasure at CNBC's relentless need to come up with signs of "green shoots," driving some to the point of visions of violence. Mark Haines is apparently in that camp, telling gal-pal Erin Burnett just now that he wants to "shoot" the next person who says "green shoots," with the .45 Glock he's got packing.** Our interest piqued, we wondered amongst ourselves if the tide was turning over at Englewood Cliffs? Had some sort of awakening gone down in which the hard and fast rule to hit a quota of "green shoot" segments (75/day) had been discarded, reality embraced? Hell no, my pets! Instead, the network just wants you to come up with an alternative name for the exercise. They're still going to do jazz hands and spirit fingers every hour on the hour, they're not going to label it as such. Do them a solid and give it your best shot now.

Update: You can now vote on what you want that which shall not be named referred to henceforth over at CNBC. Choose from:

* Bamboo Roots

* Fertilizer

*Hope Buds

* Breaks in the Clouds

* Line Drives

* Veronicas

* Auroral Arcs

* Lighter Shades of Gray

* Groundhogs

* Meadow Muffins

**Or 1911, depending on the day.

To: All New York City Employees

From: Citi Realty Services

Please be advised that effective Monday, June 1, the name and address of the Citigroup Center building will become 601 Lexington Avenue.

Employees will note the newly constructed main entrance on Lexington Avenue, which will be open and operational on Monday. All building employees can continue to utilize all building entrances and turnstiles as usual. All visitors, however, will be required to use the new entrance, where the Security Desk will be relocated.

These changes were made by the building's landlord, Boston Properties, to greatly enhance the building and reflect its prestigious tenancy.

Please note that for mailing purposes, the address 153 E 53rd Street will remain valid as a secondary address. There is no change required for letterhead, business cards, etc.

Thank you.

Oh Acky, Acky, Acky. What are we going to do with you? Your tenacity and drive is so unrelenting that it borders on (hey, we said borders on) tilted. We are at once awed and revolted (but the guilt and amazement pulls us right back to awed) by moves like urging (and getting) investors to double down on Target after a major blow to Pershing Square IV. And how can we resist quips like:

We think inflation is a friend of the company and the nuisance value of the equity can be meaningfully greater than zero and I can be a nuisance.

No, you are made of iron. And when you assume the podium at the Ira Sohn Research Investment Conference to make the case that General Growth Partners is "...not your typical bankruptcy," E.F. Hutton like, we listen.^*

Sure, occasionally we get some throwaways. Like for instance:

"You can make a lot of money investing in a company even if it files for bankruptcy, as long as the assets are worth more than the liabilities...."

But even John Madden occasionally utters such useless platitudes as "If you want to win a football game, you've got to score some points," and the New York Times is about as likely to highlight your best quotes as they are to win the 100 yard dash while tied up with a Dictaphone lovingly knotted by a Japanese fetishist. In short, you can have a pass on this one.

^*Call us! We love you!

Investor Ackman Sees 13 - Fold Return on General Growth Stake [The New York Times]

There's a lengthy article in Boston Magazine about how Harvard has been hemmoraging money (the endowment has lost $11 billion, bringing it down to 2005's mere $25 bill, due in no small part to Harvard Management Company, which one alum privy to the details of the school's balance sheet told the author, "took the university right to the edge of the abyss...Meaning, you're out of cash. That...is the definition of insolvency.") Very few insiders would speak on or off the record, as Harvard is attempting to downplay the perception that its people are soiling themselves in fear, but one brave fool soul did offer this absolutely harrowing take:

While the failed presidency of Lawrence Summers generated more headlines, this quiet crisis is actually a greater threat to Harvard. The university has been so rich for so long that most of its denizens can't remember a time when money was a concern. While Harvard officials are doing their public-face best to downplay the problem, the numbers don't lie, and this economic crunch will leave the school a profoundly changed place. Harvard will have to become smaller and academically more modest, and as it does it will chafe at having grand plans without the resources to fund them. For the first time in decades, it will worry about merely paying its bills. The university will have to decide: If it is no longer so rich that it doesn't have to make choices, what does it really value? What are its priorities? It won't be a comfortable debate.

"We are in trouble," says one Crimson professor. In the aftermath of deep and damaging cuts, "there is a real chance that Harvard will no longer be considered the best there is."

This is also good:

Further squeezing Harvard was a transaction Summers had pushed it into in 2004, when he successfully argued that the university should engage in a multibillion-dollar interest rate swap with Goldman Sachs and other large banks. Under the terms of the deal, Harvard would pay Goldman a long-term fixed rate while Goldman paid Harvard the Federal Reserve rate. The main goal was to lock in a low rate for future debt, and if the Fed had raised rates, Harvard would have made hundreds of millions. But when the Fed slashed rates to historic lows to try to goose stalled credit markets, the deal turned equally sour for Harvard: By last November, the value of the swaps had fallen to negative $570 million.

Drew Gilpin Faust and the Incredible Shrinking Harvard [Boston Magazine via The Atlantic]

You could probably find a lot of people who are against bailouts but this morning the most unintentionally hilarious one is Craig T. Nelson. Coach went on Glenn Beck last night to promote this message. He's pretty steaming mad about all this ("I'm just sick and tired of it"), and you know what he's going to about it? Stop paying his taxes, that's what. Whether or not they see eye-to-eye on the whole bailout nation situation, T. Geith's ears will surely perk up when it's put that way.

Beck: Are you saying you personally won't pay income tax anymore?

Nelson: I'm really thinking about it, Glenn. As a fiscally responsible grandfather, there are programs they're asking me to fund that I refuse to fund. They should be allowed to go bankrupt! We're a capitalistic society. I go into business, I don't make it, I go bankrupt. They're not going to bail me out. I've been on food stamps and welfare,* anyone bail me out? No. I'm just SO SICK AND TIRED OF IT. I'm sick and tired of it!

*When was this?

Dutch Introduce Driver's License For Banking (CNBC)
"Getting a proper business education at a good school and finding a job in the banking industry was already hard enough -- but now, in the Netherlands, you'll have to pass a government test to keep it.

The Dutch finance ministry confirmed Thursday that it intends to implement a banking test within the next year that would be a requirement for serving on a board in the sector."

Banks Balk At Push To Reign In Derivatives (WSJ)
"A group of banks and money managers will next week present a plan designed to help fend off some rules proposed by the Obama administration, which wants to reform trading practices in the market for over-the-counter derivatives.

The banks are treading a fine line. They are being careful not to publicly oppose any rules and know that more regulation is inevitable. But at the same time they are seeking to stymie legislation that could seriously hurt their ability to generate fees. The banks plan to release a letter to the Federal Reserve Bank of New York and other U.S. and overseas regulators in coming days, according to people familiar with the matter."

Iacocca Losing Pension, Car In Chrysler Bankruptcy (Reuters)
"Lee Iacocca, the car executive credited with saving Chrysler from bankruptcy in the 1980s, is to lose a big chunk of his pension and a guaranteed life-long company car due to the U.S. automaker's bankruptcy filing two decades later.

Chrysler CEO Robert Nardelli told a U.S. bankruptcy court on Thursday that Iacocca's pension would be among the obligations Chrysler will no longer have to pay if it gets bankruptcy court approval to sell itself to a "New Chrysler" to be owned by its union, the U.S. and Canadian governments and Fiat SpA."

Fiat Pulls Out Of Opel Talks (FT)
"The Italian carmaker said that it remained interested in a potential merger, but its sudden withdrawal throws another wrench into the talks on spinning off the Detroit company's European business ahead of a US bankruptcy filing expected next Monday."

Euro-Zone Inflation Rate Falls To Zero (NYT)
"The annual inflation rate for the euro area was unchanged over the year to May, compared to a 0.6 percent gain in April, the European Union statistics agency said Friday in a preliminary report.

A breakdown of the data is not yet available, but analysts said the drop was largely attributable to lower energy and food price inflation, while core inflation, which excludes those volatile prices, probably also fell noticeably.

The annual rate of zero percent in May was below analyst expectations of a rise of 0.3 percent, and was the lowest level of inflation since Eurostat started producing comparable data in 1996."

$$$ Why GM Can't Be Saved [Deal Journal]

$$$ Bing Aims To Take On Google [WSJ]

$$$ Man Issues Fee Warning After Assets Drop [FINalternatives]

$$$ Even Bloomberg Openly Ridiculing Tim Geithner Now [ZH]

Sooner, rather than later, it seems! The Fast Money contributor apparently wrote on Minyanville just now that he'll be back in action Monday, in post entitled "People Say I'm Crazy..." (which we can't see, lacking a login, so those who can should get in touch). The "crazy" is presumably a reference to this appearance on the Kudlow report last week:

The Mackster's been MIA since then, with Steve Grasso taking his seat on the show. It's unclear if this means his contract with the network, which is said to be up in June, has been renewed or if this is more of a send-off type situation. We hope it's the former, as none of you can deny the above performance is just the sort of thing that place needs more of.

Update: Here's what J-Mack wrote. Apparently the meltdown coincided with a vacation he's had planned for a while.

Greetings from New York, where I'm taking a long-planned staycation, which morphed into a trip to Charlotte to address a ministry group on how to best help congregations deal with the financial crisis.

The Superintendent of Insurance for New York State (and frequent Squawk Box guest!) will resign in July, at which time he'll become a visiting professor at Stern, and possibly mull over running for Attorney General. (Glowing) press release from the Governor, via NYDN:

"Since January, 2007, when he was appointed as Superintendent of the New York State Insurance Department, Eric Dinallo has been a stalwart advocate for New Yorkers, a trusted advisor to me and my Administration and a committed public servant," Paterson said in a press release.

"In recent months, Superintendent Dinallo and I worked closely together with the United States Treasury Department, the Federal Reserve Bank of New York and others in the rescue of financial services giant AIG."

"Under Superintendent Dinallo's leadership, the Department effectuated the largest regulatory settlement in the U.S., played an integral part in the reform of the workers' compensation system and facilitated more than $15 billion in new capital for the bond insurance industry."

"Eric has earned the reputation as a national leader in the insurance industry and I want to thank him for all he has done at the Department to promote a competitive marketplace while also effectively protecting New York's consumers."

"Eric is no stranger to New York University. In 1990, he earned his law degree from NYU where he served as Law Review and Essay Editor. Though New York is losing a valuable and passionate public servant who has served our State in numerous capacities for more than a decade, the students of NYU are gaining a professor with a unique perspective and a reservoir of knowledge from which to learn."

"On behalf of all New Yorkers, I wish Eric great success in his new role and beyond."

Sure, the Greenlight founder is disappointed with Obama and Co, which he believes is "following the same path as the Bush administration," as it attempts to bring us back to the heady days of 2006 ("by propping up asset prices and reflating the popped credit bubble, subsidizing bank creditors and shareholders, and delaying needed bank recapitalizations, while hoping for an economic recovery"). But! Einhorn is confident Bush II is smart enough to wake up and do the right thing. Here are his closing remarks from the Ira Sohn conference. Have to say, we are loving this passive aggressive side. Notice how throws the campaign's favorite word back at them?

"I am optimistic because even though I believe that Secretary Geithner is leading us down the wrong path, President Obama has demonstrated an ability to change his mind in other areas. To me, this reflects the work of an intelligent pragmatist acting upon fresh understanding. I am optimistic that President Obama is capable of making similar reassessments of the economic rescue plan, and changing direction there as well."

David Einhorn Strikes Again [Daily Intel]

Just in case you had not yet gotten your fill of the Cross Pond Classic, another event is introduced: The 400 meter stress-test hurdles. GO!

Analysts Olivia Frieser and Andrea Cicone concede the test is a "real one", in so far as the parameters - 12 per cent unemployment, 50 per cent fall in house prices and a six per cent decline in GDP from peak to trough - are reasonably demanding:

The assumptions seem severe enough to us and therefore the stress test seems real...

However, they note:

...if we were picky, we would say that they remain static tests, and that these assumptions are merely in line with the base case of our admittedly bearish economists.

The US and the UK stress tests have two very different objectives [FT Alphaville]

Target Corp.'s shareholders have re-elected the company's slate of directors, rejecting a hedge fund's alternate slate, according to preliminary vote totals.

The head of Pershing Square Capital Management has argued that the struggling retailer needed new perspective, especially in the areas of retail and real estate so it can better compete with rival Wal-Mart Stores Inc.

Shareholders rejected those arguments at Target's shareholder meeting outside Milwaukee on Thursday. Shareholders also sided with the company in approving a measure that sets the board's size at 12 members.

Target shareholders reject Ackman board slate [AP]

Update: Margaret Brennan: "Reportedly Ackmann himself is very disappointed with the results; he in fact choked up during his presentation today."

The Vuitton, Versace, Gucci, and Dior bags will have to wait, or slip into a slipping revolver, we suspect, as Carlyle group finally admits it got tagged. Takes a lot for a private equity firm to admit to such things without lots of excuses about being on the left side of the "J curve." We're thinking short-luxury-goods just became an (even more) interesting trade.

"After several years of unprecedented growth, product innovation, geographic expansion, capital deployment and investment gains, our world changed dramatically," the Washington-based firm said in its annual report on its Web site today. "2008 was a humbling experience for us."

Carlyle Says Returns to Shrink After 'Humbling' Year for Firm [Bloomberg]

Are you into impersonating executives? Inventing hundreds of millions of dollars out of thin air? Staging fictional conference calls? Have we got the place for you! Curbed reports that Marc Dreier's One Beacon Court condo will be up for grabs this July. You'll get: 3,000 square feet, four bedrooms, five baths, a 750 square foot terrace and the sense that you're in the presence of greatness.

We've been informed that a Barcap banking analyst (tech, a legacy Lehman employee) killed himself over the weekend of the 15th. One account claimed that he'd been up for three days working and was berated by a superior, but that has not been confirmed and may simply be a product of the rumor mill. The layoffs that went down yesterday were apparently supposed to occur last week but were pushed back because of the tragedy. Barclays has not yet returned calls for comment.

Because it's unlikely Pequot's going to need the room they took over at 187 Danbury Road just last month. Art Samberg and Co. had previously been bunking in a building shared with Bridgewater, but Ray Dalio needed the space to expand and apparently "made Art an offer he couldn't refuse" (never took Dalio for the murderous type but sure, we'll buy it) and off Art went. Sad news for the landlord in Wilton, who "did a ton of build-out" in preparation for the Pequot people but possibly happy news for those of you interested in taking over the four year lease? (Of course, the wind down of the funds will take some time, but we're assuming Art and the Sambergettes don't need more than a few thousand feet and the space for a crying room.) The digs are apparently "quite plush" and include "lots of fancy-schmancy artwork" and sweet furniture, though those items will likely not come with, but rather be sold to the highest bidders (we're told John Mack has already called shotgun on the chaise lounge).

We are sure you're like us and just skip to the David Einhorn section when it comes to the Ira Sohn Conference notes that Zero Hedge has posted, courtesy of BTIG's Mike O'Rourke. Here's the take on Einhorny:

The theme of Davd Einhorn's presentation was the curse of the AAA. Obama administration is following the same policies of the Bush Administration. The administration is reflating the economy back to 2006 levels. For the economy to recover underwater entities need to restructure their debt. The willingness for banks to negotiate in this environment depends upon where the positions are marked. The Obama loan modifications lack the most important aspect of restructuring: debt reduction. The debate in the banks was too narrow with only two options discussed- Nationalizing versus Taxpayer Bailout. There is a 3rd option, debt or preferred equity conversion to common equity. Attempt to induce debt of equity conversions without creating a downdraft in the group. Banks are not materially more solvent today than they were two months ago. Regulatory forbearance has created this rally in banks. We should be overcapitalizing the banks and direct them to restructure the debt of their borrowers. The Government spending and guarantees put the U.S. AAA credit rating at risk. US debt needs to be managed responsibly.

Einhorn goes on to nuke Moodys, his short. Good play!

Ira Sohn Conference Notes [Zero Hedge]

Is anyone else looking forward, really looking forward to The Safecracker's Beijing trip next week? We certainly are. Reuters says this:

U.S. Treasury Secretary Timothy Geithner has a chance next week to persuade anxious Chinese authorities their investments in huge and growing volumes of U.S. debt securities are safe and sound.

His visit to Beijing must deal with tough economic realities: the United States is issuing new debt in record volumes as it seeks to finance an array of programs to right its economy, while China is growing nervous about whether its U.S. "nest egg" is secure.

Of course, much hinges on the Timster's visit. A small error could spell big problems. So we've put together a little "DOs" and "DON'Ts" list. We know Tim reads us, so we're confident this will smooth things over and keep things on the up and up.

DO: Make sure your visa is in order before getting on the government jet.

DON'T: Bring sunscreen. The smog takes care of that for you.

DO: Bring Treasury brochures and marketing materials. We are particularly partial to the "Safe Savings For Education" series.

DON'T: Try to avoid the VAT. We know it is tempting. Just trust us. They aren't as forgiving as confirmation committees in the United States. And, no, Tim, there is no "TurboTax 2009: The Chinese VAT" software add-on.

DO: Bring enough lubricant. Xie Xuren will want some minions to try before he buys.

DON'T: Present a Publisher's Clearing House sized check for "Six Dollars" marked "Paid In Full" at the bottom. Chinese humor can be difficult to manage and the consequences of failure are extreme.

DO: Beg. It works in the East.

DON'T: Bow when the cameras are rolling. Duh.

DO: Be polite to your secret-police minder.

DON'T: Ask him about the execution/organ harvesting vans unless you want a personal tour.

We are pretty confident that, if he follows our advice, Timmy will manage his way back just fine. (Though sitting on the plane for double digit hours on the way home might be a tad painful).

Geithner to Beijing: Keep buying our debt [Reuters]

In the latest GM clusterfuck drama, the Wall Street Journal flashes the pressing news that a group of unsecured GM noteholders has agreed to the latest 10% debt for equity swap amusement. Outstanding work guys and gals! How many votes have you got in the bag?

We have been informed by the advisors to the unofficial committee of unsecured GM Noteholders, Houlihan Lokey Howard & Zukin Capital, Inc. (financial advisors) and Paul, Weiss, Rifkind, Wharton & Garrison LLP (legal counsel), that the unofficial committee and other large Noteholders (who collectively hold approximately 20% in aggregate principal amount of the Notes) support the economic terms of the Proposal. (emphasis added)

Oh. Need we point out that this appears to suggest you have failed to obtain agreement from 80% of the unsecured debtholders? So, do the ad hoc and the official credit committee agree? Any news on secured debt holders. Anyone? Anyone? Bueller? Bueller?

Maybe we were a bit quick ordering the Presidential Suite for the weekend.

GM's SEC Filing on the Treasury Offer [The Wall Street Journal]

The new surge in government jobs combined with the sudden shortage of finance positions was bound to create some interesting secondary effects. A great deal of interest in positions at the IRS and SEC, for instance. But there are a number of three letter agencies boosting their hiring in expectation of ballooning budgets. It shouldn't surprise you then, oh deposed finance guru, that if you always wanted to get your bond (girl) on, now might be your chance.

Wall Street wizards may soon be plying their trade on the James Bond market.

The CIA is looking to hire the same investment bankers and financial gurus that many hold responsible for sinking the economy to help President Obama pick up the pieces -- and also catch a few millionaire terrorists.

The spy agency started advertising the jobs on Bloomberg Radio, hoping to recruit investment bankers, top analysts and hedge fund honchos to use their "intelligence for the work of a nation."

The $160,000 salary is probably a huge pay cut for many of the disgraced masters of the universe.

Sure, but think of the sideline in insider trading and the popularity you could enjoy by being Dealbreaker's best informed tipster! (tips -at- dealbreaker -dot- -com- of course).

Also, if anyone scores an interview at the secret Manhattan location (we're not kidding) we'd love the scoop on the quality of the coffee and bagels.

CIA Is Bullish On Wall Street [The New York Post]

The tag team prostitute/pimp married couple that screwed DuPont heir Stephen Dent out of a bunch of money after he met the wife on a straight and narrow website called SeekingArrangements.com (where Dent was a regular, natch), pled guilty yesterday to charges of larceny and extortion. Dawn Jessop was one of several lovely ladies Greenwich-based Dent met online a couple years back, who he offered to pay a few G's for several in-person meetings per month (in addition to cash for other personal expenses and whatnot).

Imagine Dent's surprise when he found out these girls were just using him! You think you know a person you're paying for sex, and then they threaten to expose the situation you've got going on unless you send them a bunch more unmarked bills, which you do (Dent wired Dawn and husband Christopher Jessop $100,000 to "make the issue go away"). After such a betrayal-- and after Dawn and Chris asked for another $50,000-- it'd be only natural to get bent out of shape and call the cops. If they think they can walk all over you, they've got another thing coming, am I right? You're nobody's fool (even though this was the second time you got blackmailed by a lady-friend you met on the same website, and not that last).

Dawn was sentenced to three years probation, while husband/talent agent Christopher got 18 months in the big house and three years probation as well. According to the Jessop's lawyer, Mickey Sherman, the whole thing was "one of those bad decisions that people make, bad judgment and downright stupidity." In related news, Dent has not been charged with anything, lest other victims debating whether or not to come forward be scared off.

Earlier: Greenwich-Area "Financial Titan" Screwed, Screwed Out Of Money

PPIP Founders (WSJ)
Shocker: "A government program designed to rid banks of bad loans, part of a broader effort once viewed as central to tackling the financial crisis, is stalling and may soon be put on hold, according to people familiar with the matter."

Citi, SEC In Talks To Settle Asset Probe (WSJ)
"Citigroup Inc. is in the early stages of negotiating with the Securities and Exchange Commission to settle an investigation into whether it misled investors by not properly disclosing the amount of troubled mortgage assets it held as the market began to implode in 2007, people familiar with the matter say.

The talks signal that the SEC could be moving toward resolving a number of civil probes that began in late 2007, when mortgage-related losses began mounting on the books of banks and Wall Street firms. A Citigroup spokesman said the firm's policy isn't to comment on such regulatory issues."

Fortress Takes First Steps Into Retail Banking (FT)
"Fortress Investment Group, a listed private equity and hedge fund company with $26.5bn in assets, is nearing an agreement that would mark the first step in a push into US retail banking, according to people familiar with the transaction.

Under a deal that could be announced as early as Thursday, Fortress and other investors - including private equity firms Crestview Partners and Lightyear Capital - will inject $800m in fresh capital into a small Florida bank called First Southern."

Bank Czar Likely (WSJ)
"The new bank regulatory agency could prove controversial because it would consolidate the Office of the Comptroller of the Currency and the Office of Thrift Supervision and strip supervisory powers from the Federal Reserve and the Federal Deposit Insurance Corp.

The Fed and the FDIC would gain other powers, though, as White House officials want the Fed to be able to oversee systemic risks in the economy. They also want the FDIC to have new powers to take large financial companies that aren't banks into receivership."

We'll See A Target Vote Today (Reuters)
"In an increasingly heated proxy contest, Ackman is seeking enough shareholder votes to win five seats on the retailer's board, while Target is running a slate of four incumbent directors.

Shareholders will also have to vote on the size of the board -- Target wants to set it at 12, while Ackman claims it should be 13."

$$$ Einhorn's next victim [Cityfile]

$$$ "Why the US will not get downgraded" [FT Alphaville]

$$$ The Cost Of Taking Time Off [The Atlantic]

Re: the cuts that went down earlier today at Barcap, a bit more color:

The Energy Group was affected, as well. One guy, headed in thinking he was having a talk about "transferring to London" was instead told, "Well, this is not the conversation you thought we were going to have."

As previously mentioned, Larry Kudlow sat down with Dick Cheney earlier today to have a good bitch sesh at the current state the economy, etc. The full interview airs tonight at 7PM, but ahead of the clip, we're going to have to go ahead and assume, based on the transcript, that this thing will be uproarious. We wondered earlier how and why this one-on-one came to pass (especially after the network was scolded for a lack of fair and balanced content), guessing that it was a necessary prelude to K 'n C getting down to the business of weeping and holding each other closely during this time (T minus four years) of need. From the looks of it, we weren't too far off. Before the crying, however, comes the sex, and before the sex, the dancing:

Kudlow: Let me ask you, sir, is there an economic recovery out there in your view?

Cheney: Well, Larry, I'm reluctant to tell an economist what's going on in the economy.

Kudlow: It never stopped you in the past.

Cheney: Well, that's true. It never stopped me before.

Regardless of your political persuasion, join me ask I ask, what the hell is this awesomeness we're beholding? "It never stopped you in the past," Kudlow demurred, rubbing his foot up Cheney's pant leg. "That's true," the former VP said with a knowing snarl smile on his face, remembering that time at the lake. "It never stopped me before."

Steven Rattner, head of the U.S. Treasury Department's automotive team, has a net worth of at least $188 million and held shares in an investment fund run by the majority owner of Chrysler LLC, according to his financial- disclosure statement.

Rattner, co-founder of Quadrangle Group LLC, also bet as much as $150,000 on General Motors Corp.'s senior secured loans using a credit-default swaps index that guarantees the secured debt of 100 companies, including GM, the filing shows.

Rattner Worth at Least $188 Million, Disclosures Show [Bloomberg]

Pequot Capital Management begins the several month-long wind-down.

Conspiracy Update: Related?

N.Y. Cuts Pension Ties to 10 Fund Managers, Report Says

Four of the 10 firms that it has severed ties with were listed, but not charged, in an indictment brought by Mr. Cuomo's office against two top associates to Alan Hevesi, the former comptroller, The Daily News reported. Those four are Consulting Services Group, HFV Management, Olympia Capital Management and Pequot Capital Management, it said.

The Wall Street Journal has it: "Pequot Capital to close amid an ongoing SEC-DOJ probe into possible insider trading."

"Public disclosures about the continuing investigation have cast a cloud over the firm and have become a source of personal distraction," Mr. Samberg wrote in a letter that was sent to investors of his Pequot Capital Management Inc. late in the day on Wednesday. "With the situation increasingly untenable for the firm and for me, I have concluded that Pequot can no longer stay in business."

Letter from Samberg, via the Journal:

May 27, 2009

To Our Clients and Friends:

I am writing to you, our loyal clients and friends, to let you know that I have reached the painful conclusion that it is necessary to wind down Pequot's business.

In the coming months, we plan to liquidate the Core Funds and return cash to investors while spinning out Matawin under the leadership of Mike Corasaniti and Special Opportunities under the leadership of Rob Webster and Paul Mellinger.

Some nice suggestions from Donald Marron to end the tyranny of the TARP, but we despair that they shall ever come to pass.

Treasury should give up on negotiated sales and simply auction the warrants it received through its TARP investments. Auctioning the warrants will:

* Enhance the transparency of the process (since no one can accuse Treasury of playing favorites in the auction);

* Ensure that taxpayers get a fair return on their investment (since the warrants will be sold at their real market value);

* Allow banks, if they choose, to preserve needed capital (if investors purchase the warrants, banks won't have to use up any of their scarce capital); and

* Free banks from the nuisance of government involvement (since banks get free of TARP even if private investors end up purchasing the warrants).

The reality is that the TARP has been far more useful to the Treasury and the Administration in general as a cudgel than as a stimulus and bank support program. Donald's first and last points are, in fact, bugs, not features to a Treasury that, for example, negotiates the results of stress tests with its regulatees. Of course, it would be interesting if The Big Guy financed minimum pricing limits on the warrants.

[Donald Marron via Alea]

Yes, your boss might verbally abuse and berate you in front of the team for one down month. She might shove her stiletto up your ass for daring to disagree with her outlook on Vikram Pandit's hairline. He might throw an empty bottle of whatever's on his desk at your head for even hinting that buying another investment bank might not be the best way to ingratiate himself to shareholders. He may smash every monitor within arm's length when unprecedented market volatility doesn't land in his favor, such that walking into his office without shoes would be extremely dangerous. But he most likely doesn't pull this shtick.*

The CEO of the nation's largest linen company went berserk and brutally beat his housemaid in his posh Upper East Side apartment -- leaving her with swelling on the brain, officials said. George Bardwil, 57, who runs Bardwil Home, was charged with second degree assault in Sunday's savage attack that left the maid unconscious in a pool of blood. The maid - who was only on her second day on the job - told police that when she arrived for work that afternoon, Bardwil opened the door and began pummeling her. After repeatedly striking her on the head and face, Bardwil then dragged her across the floor to the living room where she blacked out.

[...]

Bardwil initially told police he found the maid lying on the floor when he came out of the shower and called for help...But he later admitted that he struck the woman because she had stolen money from him. "She saw where I kept an envelope with $5,500 in it. I know she took it. When she wouldn't admit it, I hit her three times in the head with my closed fist," he said.

Linen CEO Beat His Maid [NYP via Cityfile]

*Or does he? In which case, give us a call. We're good listeners!

Another day, another pro-athlete added to the Morgan Stanley roster as part of an elaborate scheme John Mack's been cooking up, the details of which are yet to be revealed. Today it's New York Jets wide receiver Wayne Chrebet, as a financial adviser (previously, it was Carolinas wide receiver Steve Smith, as an intern; tomorrow, OJ, as a compliance officer).

Chrebet is joining the Moldaver Group, a wealth-management team with six investment professionals at its Red Bank office, New York-based Morgan Stanley said in a statement today. He has been at Morgan Stanley about six months and recently completed all his tests and training to become a financial adviser. Chrebet holds an undergraduate degree in criminal justice from Hofstra University.

"Ever since I made my first dollar I made it a point of learning about the market, learning where my investments are," Chrebet said. "I've always helped out the younger guys through my career and some of the other players who weren't as knowledgeable and took pride in that...It's a great second career for me."

Nice! Heartwarming and all that. Of course, probably difficult to take for the guys who were making it their first careers until the hatchet man came a' calling, and don't have the luxury of taking the position Chrebet left vacant with the Jets, but what can you do. This, however, is troubling:

"Obviously you don't hear 70,000 people cheering for you when you are doing this, but it's exciting," Chrebet said in a phone interview. "I love it."

Don't hear 70,000 people cheering for you when you're doing this? On behalf of, let's just go with Jim Simons, who has a stadium's worth of SUNY Stony Brook students he bussed in do a little dance every time he makes a buck, we say, speak for yourself. As for the rest of you-- dream big.

It is an often forgotten fact that the United States is among the minority as a country that taxes citizens on their world-wide income. It is not self-evident that U.S. based corporations should pay tax on foreign income. This is certainly not some kind of global consensus, after all. So it is a tad annoying to listen to the bleating that seems to accompany articles about firms seeking to minimize taxation via offshore structures. Bear in mind, the vast majority of these structures are legal. The phrase "closing a tax loophole" is badly abused in this respect. We could as easily point out that your deductions for interest payments are "loopholes" that need to be "closed." Likewise, we might insist that the loophole that fails to tax the last 55% of your income be closed.

Be this as it may, the whining from Caribbean nations that has resulted is grating:

Caribbean nations say they will be the economic victims of U.S. President Barack Obama's proposals to collect more taxes on the offshore transactions of U.S. individuals and corporations.

Caribbean countries have spent decades building up a financial industry to serve companies and individuals from the U.S. and Europe, touting low tax rates, a friendly regulatory environment and proximity to the U.S. financial markets.

Caribbean nations are also the economic victims of drug enforcement efforts though, aren't they?

Caribbean Nations Squawk At US Plans To Crack Down On Tax Havens [Dow Jones]

We are not Cuban fans. This should come as no surprise to long-time Dealbreaker readers. Be this as it may, we cannot, without comment, let pass the noise that is the SEC's case against Cuban for "insider trading." In fact, we might go so far as to say that the prosecution of Cuban is demonstrative of everything that is wrong with the SEC.

The SEC's complaint fails to show that Cuban was barred from selling shares of Mamma.com Inc. in 2004 and seeks to expand the definition of insider trading, Ralph Ferrara, one of Cuban's attorneys, told US District Judge Sidney A. Fitzwater in Dallas yesterday.

It seems almost expected that the "up only" philosophy of the markets would victimize the likes of Cuban. He's everything the SEC hates. Outspoken. Possessed of a following. Short.

Cuban Asks For Dismissal [The New York Post]

Cuts are said to be going down at BarCap circa now, affecting both legacy Lehman and Barclettes. So far hit: LevFin. No word on severance (yet).

[CWS via clusterstock]
In case you needed the entirely transparent model broken down for you: DK says the reason the network encourages (requires) its talking heads to screech at each other (and at commentators) in a pitch only dogs can hear, and get into faux fights, is because you people won't pay attention to or understand today's business news unless it is packaged with "conflict, drama and struggle."

Forget the Case Shiller Index. Baltic Dry Index? Old news. Hemline analysis? Forget it. For real, serious metrics you have to think out of the box (so to speak). You have to consider the plight, for instance, of Latvian hookers. Yes we are serious. So is Bloomberg.

When the economy starts to lift itself out of this recession, what will be the leading indicator that tells us we have turned the corner?

Some people track the price of shipping to gauge the health of global trade. Others look at the supply of freshly minted money pouring out of central banks. A few will say that signs of life in the housing markets are evidence of a recovery.

Forget them all. The one lesson we can draw from the global credit crisis is that all the traditional ways of measuring the state of the economy are about as useful as a bottle of suntan lotion in a snowstorm.

So here are two benchmarks we should all be monitoring more closely: extramarital affairs and the price of Latvian hookers. Both are telling us that there is still plenty of trouble ahead.

Now that we think about it, Spitzer's "great matter" did sort of coincide with the beginning of the end. Really, for the details you should probably go to the original article:

Latvian Hookers Signal No Recovery for Economy: Matthew Lynn [Bloomberg]

Oops! But what can you do. Not my problem is what I always say. For some reason, Dick Cheney sat down with CNBC's Larry Kudlow earlier for a good bitch sesh.* Hopefully we'll get the full interview soon, but so far we just have a tease from The Call. According to Kudlow, he led the witness with, "You started all this government interference, did you not?" To which the former VP conceded, "Yes, we did." Kudlow, really nailing the guy to the wall, pressed on. "Did you realize you were going to exert this kind of control and having the government end up owning GM?" The answer: "Yeah, we didn't really think that through."

Earlier: NBC Cracking Down On CNBC Obama Bashing?

*Most likely as a prelude to holding each other in this time of need.

Brown's latest alumni magazine stars cover girl Meredith Whitney.While the profile (by fellow alum and Fortune writer Jon Birger) is largely a bunch of facts any self-respecting Dollar Dominatrix acolyte would know (Double D received death threats for her October 2007 call on Citi, as a kid she had a paper route, she's married to wrestler JBL, she doesn't take shit or prisoners), there are a few pieces of news you can use. First off, and we're not certain who could best put this to use, but probably any banks looking to butter the girl up, she she's been dubbed "the most important Brown alum on Wall Street." Working that into conversation and referring to it as a "huge understatement" could probably get you far. To that end, if you've got her out the night before she's set to drop a bomb on your ass, note that she's nostalgic for something called "Thursday Funk Nights," and tempt her with whatever that entails (Vikram). Finally, for the children reading, do not fear (unless you were hoping to be rolling around in the sticky fifties, in which case, better luck next time):

Asked what advice she'd have for Brown students contemplating careers in finance today, Whitney answers that, even with the recession, there are entry-level jobs to be had on the Street. The key, Whitney says, is to pursue them for the right reasons.

"Take research," she says. "It's a great job to have because you get paid to learn. You learn about fascinating businesses, and you do so at a young age. Plus, it's a true meritocracy.

"But if all you're thinking about is going to Wall Street to make a lot of money, forget it. Wall Street will no longer be a place where three or four years out of college, you can be making $400,000 a year."

From the front lines: "We're told the printers will not be removed today, but they took everyone's cables and left those pretty pink stickers."

Earlier: State Street's War On Printing

The most striking part about this particular development is how totally unstriking it is anymore:

Some banks are prodding the government to let them use public money to help buy troubled assets from the banks themselves.

Banking trade groups are lobbying the Federal Deposit Insurance Corp. for permission to bid on the same assets that the banks would put up for sale as part of the government's Public Private Investment Program.

[...]

The lobbying push is aimed at the Legacy Loans Program, which will use about half of the government's overall PPIP infusion to facilitate the sale of whole loans such as residential and commercial mortgages.

In some circumstances, recursive patterns are considered elegant and deft. Signs of some fundamental harmony in nature or the universe. Finance is just not one of those disciplines. This is going to (start, endure and) end in tears.

This is priceless doublespeak:

Allowing banks to have it both ways would give them added incentive to sell assets at low prices, even at a loss, the banks contend. They claim it also would free up capital by moving the assets off balance sheets, spurring more lending.

Handing them billions of dollars with no expectation of repayment would accomplish the same goals.

Banks Aiming to Play Both Sides of Coin [The Wall Street Journal]

Bank of America said Wednesday that it was "well on its way" towards raising the nearly $34 billion in capital that government regulators said it must do earlier this month to have a buffer for future loan losses.

The beleaguered banking giant said it has raised almost $26 billion since the government announced the results of its so-called "stress-test" program, including $13.5 billion through a stock sale.

Bank of America Has Raised $26 billion [CNN Money]

Yeah, probably not, though Page Six claims it so. Supposedly Lar, who took a nice nap last month during a meeting with credit card industry officials, got some shut eye last week during a private meeting with the President. We're a bit skeptical about this one because a) there were no reporters there, and who is leaking details of one-on-ones* with the Prez and b) after Summers' penchant for catching a few winks on the job made Obama's roast during the White House Correspondents Dinner, you'd think he'd be pumping himself full of amphetamines prior to making stops at 1600 Pennsylvania Avenue.

*It's unclear if the meeting was just Summers and Obama, or if others were there, but the point remains. Unless Joe Biden was on hand, in which case, why didn't we hear about this sooner?

The Journal reports that in order to get around that pesky matter of not be allowed to give bonuses employees have become accustomed to in year's past, Citi and Bank of America are "expected" to raise base salaries for investment bankers "soon." This shouldn't come as much of a shock to Ken Lewis's underlings, as it's been expected for some time (and may have actually already begun).* Of course, the banks could've been simply leaking maybe we'll do this, maybe we'll do that, maybe we'll offer deeply discounted pony rides stories to the press in order to jerk the chains of their employees, so it's nice to get a little confirmation from Bank of Amerillwide spokeslady Jessica Oppenheim (who said that "pressures in the investment-banking and capital-markets businesses continue to be intense" and that BAC would "take the steps necessary to retain key employees") and to see Vikula possibly getting on board.

In related news, JPMorgan and Goldman are not worried about their employees leaving to go work at the two greatest banks in all the land (league table trainwreck edition), despite what must be highly amusing threats to the contrary, and are therefore, supposedly, not considering an increase in base pay. Which could also possibly be explained by the fact that a raise in base pay at JPM/GS is unnecessary 'cause it'll be business as usual when bonus times comes around again, and the government can suck it. Thank you and good night.

*Nor should it be cause for celebration, since it most likely won't translate to increased comp overall. Although perhaps it's comforting to know total compensation won't be coming out to a ten spot and an autographed headshot of Lewis or Pandit, which many legitimately thought would happen. In which case, party on.

GM Bondholder Offer Disappoints (WSJ)
"General Motors Corp. said it won't repurchase any of the $27.2 billion of notes sought by the ailing auto maker, saying bondholder interest was far below the 90% threshold the company was seeking.

GM was seeking support for an effort to swap the debt load for a 10% stake in a restructured company that is on the brink of filing for bankruptcy."

Roubini Comments On Recession Ending (NYT)
"We are not yet at the bottom of the U.S. and the global recession," said Roubini. "The contraction is still occurring and the recession is going to be over more towards the end of the year rather than in the middle of the year."

"There is still too much optimism that a recovery is just around the corner," said Roubini, a professor at New York University's Stern School of Business and chairman of RGE Monitor, an independent economic research firm."

US Debt Downgrade Possible? (FT)
With the downgrade of British debt, the FT is looking into whether or not the United States could be next. While a downgrade is highly unlikely, recent events have proven just about anything is possible.

"Standard and Poor's decision to downgrade its outlook for British sovereign debt from "stable" to "negative" should be a wake-up call for the US Congress and administration. Let us hope they wake up.

Under President Barack Obama's budget plan, the federal debt is exploding. To be precise, it is rising - and will continue to rise - much faster than gross domestic product, a measure of America's ability to service it. The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years."

$$$ Scenes From the Hiring Front: 'I'll Work for Free' [Cityfile]

$$$ Lazard Predicts Close Call in Target-Ackman Battle [Dealbook]

$$$ From (Morgan Stanley) banker to yogi by way of skinny boyfriend [SC]

$$$ "Secured bank lenders to General Motors would get a full recovery on $6 billion in loans made to the auto maker, under the bankruptcy plan being finalized this week by the U.S. Treasury.

The Treasury plans to inject a fresh $50 billion in various financings to back a GM workout, most of which would take the form of company equity.

The hope is that a reorganized GM would have only about $10 billion to $12 billion in debt once it emerges from bankruptcy." [WSJ]

Can you imagine the urgency with which Goldman will now seek to emerge from under the TARP?

UBS AG, the Swiss bank which received government assistance, will stick to a policy of paying market wages after being criticized for raising salaries at its investment bank, Chief Executive Officer Oswald Gruebel told employees.

"We have to pay our employees in line with the market," Gruebel said in an internal memo to staff today. "We will stick to this stance, even if it is criticized in the emotional debate over salaries."

UBS is boosting salaries for senior bankers at its investment bank by an average of 50 percent to stem defections, three people with knowledge of the matter said earlier this month. The bank cut its bonus pool by 78 percent in January after amassing the biggest loss in Swiss corporate history in 2008 and turning to the Swiss government for help.

Our favorite part has to be "UBS AG, the Swiss bank which received government assistance." Which government, how much assistance and when received seem details that either escaped the notice of Elena Logutenkova and Ambereen Choudhury, or didn't seem to matter that much when it came time to email the copy editor and head out for a 90 minute Frappuccino.™ We can't say we blame them much. Pointing an ugly finger at banks that have "received government assistance" is a full time job. But, be that as it may, UBS is the place to be. Obviously. Well, there is the little matter of all those Eastern European mortgages denominated in Swiss Franc, but... that's for later.

UBS Will Stick to Market-Level Salaries, Gruebel Tells Staff [Bloomberg]

That's right, ladies, act quickly 'cause just like our boy toy CEO of choice, this hot piece of (real estate) ass(et) will not stay on the market for long. Jamie and his wife Judith are looking to unload their home in Chicago's Gold Coast neighborhood, where they lived during the Bank One years. For $10.5 million you'll get 15,700 square feet, 26 rooms, a 900 square foot rooftop terrace, and the stench of Black Widow wafting from the closet Jimmy Cayne's been squatting in for the last year, unbeknownst to JD.

Farewell, poor Connecticut, we barely knew ye. Next stop: Vegas, baby.

Prompted by the Bernard Madoff investment scandal and other financial failures, Democratic senators called Tuesday for Connecticut to become the first state in the nation to require more disclosure and transparency for hedge funds, private-equity firms, and venture capitalists.

Led by Senator Bob Duff of Norwalk, senators said the move was necessary in order to protect consumers and investors. The bill, which is supported by the Managed Fund Association, states that any firm that is not registered with the Securities and Exchange Commission must still abide by the SEC rules that state that material conflicts of interest must be disclosed to the investors.

"We're not changing the rules. These are the rules the SEC has,'' said Duff, who has been pushing for legislation for three years.

We are looking forward to seeing all the hedge funds move to Nevada. Actually, when you think about it, the convenience factor alone is reason enough to make the move. A lack of proximity to Washington is also a major point for the trip West. Then there are the amazing deals on hotels that the credit crunch has created. And do I even have to mention the ease of parking?

Senate Debates First State Hedge Fund Regulation in USA [courant.com]

Above, an artist's rendering of Valery and Olga Kogan's would-be Greenwich manse. Dealbreaker readers know the place for its role in ToiletGate, wherein a Fairfield County transplant attempted, almost exactly a year ago, to out-toilet the Toilet King of Greenwich (Kogan wanted to equip his home with 26 commodes, which would have beaten the pants off of a certain someone's 23, and broken Section 182, clause 17 of the Greenwich town code, which clearly states that "no home shall exceed the number of waste-removal stations as are found at Casa Cohen"). Koges, a Russian billionaire, was unsuccessful, having clearly underestimated our guy's influence with the plumbing community and the collective WASPian outrage of his neighbors at the idea of having to stare at the 39,000-square-foot monstrosity. The Russkies appeared before the town's Planning and Zoning Commission in January practically begging to be allowed to build an essentially neutered home at 18 Simmons Lane outfitted with a mere 15 toilets, and from there, fears that our majesty would be dethroned having been put to bed, we stopped caring and lost sight the story. But today brings news that we cannot ignore.

After Einhorn's Lehman pan last year, the Ira Sohn Research Investment Conference is sure to be a madhouse this time around. Tomorrow. Time Warner Center. $2,000 a head. Don't whine. Times may be tough but you are getting some hot hedge fund manager action for the price of a weekend supply of mid-budget hooker and iffy (but moderately effective) blow. Your favorites (and ours) will all be there. Einhorn is attending again, along with Ackman and Chanos. Our guess (and that of New York Magzine)? Good time to go long SKF (after consulting with your professional advisors, of course).

What could possibly happen this year to rival last year? Here's our wild guess -- another assault on the financials. Because despite the carnage of the last year, there remains a great deal of enmity toward the banks. Hedge-fund guys don't much care for the way they've gotten to bend the rules to their own advantage, like with that short-selling ban. The question is, if an investor is brave enough to restart this war, what's the most suitable target?

At this point, going after a crippled giant like Citigroup or Bank of America is cheap sport. Sure, both stocks have enjoyed an improbable run-up in recent weeks, but seriously -- does anyone actually believe in the health of these institutions? Intellectually, it's an easy case to make that they're screwed, and Ackman has already made it. The big regional banks seem equally screwed, but who can even keep their names straight? Fifth Third? What? Who?

Making a lasting impression would mean going after one of the financial untouchables, of which, as far as we can tell, there are but three: Goldman Sachs, JPMorgan, and Wells Fargo.

Goldman? GOLDMAN? Fortunately, we've stocked up on canned goods and ammo and all that time our last intern spent digging the basement shelter looks like it might pay off.

Hedge Funds Sharpen Blades in Preparation for Annual Conference [New York Magazine]

Day late, dollar short?

The situation is fluid.

It's been quite a while since we read the Times wedding section and proceeded to callously and unjustifiably assign a random "market value" to complete strangers by virtue of the fact that they work in the finance industry, hasn't it? But it's time we had some fun again and we can think of no greater fun than a couple sent to us from 2006, who uses earnings measure acronyms as foreplay. Starting today DB regular and all-around favorite Commenter Girl will select those who seem to be practically begging for it and serve them up for your consumption.

Can you feel it yet? The sand between your toes, having to block your Beirut table from the ocean breeze, the fragrant stink of burning meat on the grill: all of these things mean one thing kiddos: Love is in the Air. And oh, what sweet love stories the NYTimes troopered out for us this weekend.

Like the marriage of Rochelle Francis Gores and David Arthur Fredston-Hermann (the couple shall be known as Mr. and Mrs. Fredston, should you want to send them a gift). They were married this Saturday afternoon in Beverly Hills. And they were married by a Rabbi and a Maronite Priest (so progressive! +1). But who cares about that shit. They have a legacy, and indeed a love story, so unbelievably financey, that it could only be surpassed if they had met in the comments section of Dealbreaker.

Herewith, we re-inaugurate the long-dormant DB wedding index, Mergers and Acquisitions, in which we get all judgey up on those willing to pledge their love to each other for eternity.

So True to Form it's not even funny, unless you happen to be a fictional Leveraged Sell-Out character from 2006:

* "The bride's father is the founder of the Gores Group, an investment firm that buys and manages both established and newer businesses." (+2)

* he bridegroom's father founded FH International, a hedge fund in Harrison, NY (+10, hedge fund still sounds cooler than investment firm)

* "The bridegroom is the president and founder of Long Green Capital Management, a hedge fund in Los Angeles, that focuses on older concerns, including railroads, fertilizer producers and coal companies." (+13)

* "He graduated from Bates College." (-4)

* "She graduated from Western Michigan University." (-10)

* Both moms do community service (+15, way to keep it real)

* Although the Bride's mom supports some hippy dippy artists in residence in Michigan (-8)

So far we are even keeling it at +18. Where the couple excels, however, is courtship. Yes, the line "My daddy would never pay more than five [times Ebitda]" will be uttered.

So! As you're aware, Jeff Macke had something of a bizarre appearance during an interview with Dennis Kneale on CNBC last week, prompting viewers and network execs alike to wonder if he was on something or had just lost it independent of stimulants. His contract, which may or may not run out without a renewal, is up in June, so that's apparently been a source of stress for J. Mack, as has HR being on his ass over a playful repartee with former Fast Money host, Dylan Ratigan. The episode of course could've been nothing and tied to nothing and merely the Mackster's lighthearted attempt to get through an hour with Dennis Kneale, but here's another conspiracy theory, for those interested in that sort of thing:

Macke was short financials, long SKF, etc. His asset management arm blew up and blew out. Might be why he lost it.

Earlier: What's Up With Jeff Macke?

Having set the clear example that markets are to blame for the evils of commodity price inflation, the United States is beginning to find companions in the membership list of the Market Lockdown Club.

India banned futures trading in sugar, a day after Farm Minister Sharad Pawar said the government may extend a program allowing duty-free imports of raw sugar to bolster local supplies.

The ban will remain until Dec. 31, Forward Markets Commission spokesman Anupam Mishra said today, without giving a reason for the move. While existing contracts will remain valid, new contracts won't be allowed, he said in a telephone interview today from Mumbai.

Sugar prices have risen 3 percent on Mumbai's National Commodity & Derivatives Exchange since April 20, when N. Sanyal, joint secretary at the food ministry, said futures trading may be halted if prices continue to rise. The increase in prices is not related to futures trading, analyst Amol Tilak said.

They love free markets. Except when they don't.

India Bans Sugar Futures Trade With Immediate Effect [Bloomberg]

Cause it's John Thain's 53rd birthday and he's going to have a round on the mat with each and every one of you! No, just kidding! Only Ken Lewis! And on that dead serious note: we can think of no better gift than for one of you (or us, though we're not big on heavy lifting) to go on a manhunt this afternoon to find Boone's boy and transport him up north to Thain's office in Westchester for a little visit, per the birthday boy's request (exact words: "Bring me the head of Ken Lewis"). In the event we're unable to locate KL, who's likely reading this right now* and is about to get himself a head start, other ideas for thoughtful donations that we think would be much appreciated by J to the T include: a new beekeeping suit, the collector's edition DVD of My Girl, some sort of diamond encrusted commode, and/or a job (though, we're told, he's apparently been "talking" with some fund managers and might not need it, so to be safe go with the toilet).

*On an iPhone, naturally, as BAC employees were blocked from reading this here site several months back.

CNBC's Scott Cohn reports that Irving Picard, the court appointed trustee overseeing the Madoff liquidation, has secured a settlement with Optimal Investment Services (the investment arm of Banco Santander SA). Optimal will pay Ponzi Boy's victims $235 million, bringing the collected grand total to $1.22 billion. Picard is apparently pleased by the figure, though well aware that he's got, like, loads of man hours left to go on this thing. Of course, that needn't be the case, but someone's apparently not interested in expediting this thing. He'll come around, though. They all come around.

Earlier: Scam Artist Makes Offer For Madoff Securities That'd Make Bernie Proud

**Yes, we know the figure to be recouped isn't actually $50 billion, but no one seems to know what it is, so this is what we're going with.

This was an entirely familiar story, with the wrong name attached.

A former Morgan Stanley trader has been fined £140,000 and banned by the City watchdog after he traded ahead of clients to profit from their orders. It was the third punishment linked to the bank in the past month.

Nilesh Shroff engaged in so-called "front running" where a dealer, knowing a client's plans, trades in the same direction before they conduct the client's order in a n attempt to move the price and profit from the difference between the two values.

The Financial Services Authority said on Tuesday that Mr Shroff, a senior trader at the bank, "disadvantaged" clients on seven occasions between June and October 2007 by partially front running their deals.

It was the third such trading-related punishment linked to Morgan Stanley in the past three weeks. Earlier this month, the bank paid a £1.4m fine - the tenth largest ever meted out by the regulator - for weak systems and controls that allowed a credit derivatives trader, Matthew Piper, to cover up his losses for six months. Mr Piper was himself fined £105,000 and banned.

Look, people. If you want to do that sort of thing you need to head over to Goldman. The act of front running in such a place as Morgan Stanley debases a time-honored profession. One is reminded of watching the occasional idiot wearing a tux to Shake Shack, or perhaps a grand wedding reception... at Trump Tower. An astute sense of place and time should govern these things. At the very least you should consider limiting your front running to cherry-picking orders from your high-speed, low-drag, captive-quant hedge fund.

Obviously the practice is quite above Morgan Stanley traders, who seem to have mashed the keyboard sufficiently to get caught with their pants down. Leave that work to the professionals, folks.

FSA fines Morgan Stanley trader [The Financial Times]

Is to beat this (which you have to admit, is good):

Companies seeking new ideas for pay practices could also take a look at National Rural Utilities Cooperative Finance Corp, a non-profit cooperative based in Herndon, Virginia, based that ties employee bonuses to the company's credit rating.

Novel Ideas Surface For U.S. Banks' Executive Pay [NYT]

A hot steak tip, that is. Been searching high and low for a nice piece of meat on the cheap? Lady MacMadoff has apparently been telling Upper East Side passersby that Donohue's on Lexington "has a great steak special on Thursdays." Meaning she's either angling for the soon-to-be vacant Frank Bruni job, or, and this is more likely, a waitressing gig.

The Committee on Capital Markets Regulation reveals their world-changing recommendations in detail today. Damian Paletta has a preview on one of the Wall Street Journal blogs. The committee is "...an independent and nonpartisan 501(c)(3) research organization dedicated to improving the regulation of U.S. capital markets," which exactly the kind of languages that makes us immediately suspicious. We are even more alarmed when it looks like L. Ron Hubbard managed to sneak into the meetings by shuffling the letters in his name. (Despite the fact that we are highly suspicious of Columbia, we're sure he's eminently qualified, but if he starts claiming to be the reincarnation of Cecil Rhodes or recruiting the "Commodore's Messengers" we are going to get worried fast).

Likewise, we do sort of have to wonder about a financial system fix that includes the recommendation to "Ban or limit high-risk mortgages from being securitized." Oh yes. Those pesky high-risk mortgages. Would those be from borrowers with FICO scores below X? (Maxine Waters will have a cerebral embolism when she sees the "discriminatory effect" that is likely to have on interest rates). Perhaps mortgages from specific geographic areas? (Oops).

We've got a special place in our hearts for George Soros, a roped-off VIP section, if you will, where we keep all of our favorite Budapest-born hedge fund managers. So we tend to give him the benefit of the doubt on most official business matters, but this we just don't get. Jorge was recently spotted on a New York-bound Acela, which fits in nicely with the rich-guys-who-don't-really-need-to-but-are-taking-the-train-anyway trend. Except for the fact that G.So, traveling solo, bought four first-class seats, and wouldn't let anyone enter the Soros Zone, prompting some to wonder, why not just take a plane? Surely there's a reasonable explanation, though one escapes us at the moment. Would he have taken a jet but, for whatever reason, wanted to avoid security (always a point in Amtrak's favor), and need to stretch his shit out? Is this part of a monthly game he plays with himself wherein he buys a bunch of seats and rides up and down the Northeast Corridor offering them to ladies getting on at various stops along the way (assuming there'd be some tasty treats between Philly and NYC)? We're thinking it's most likely the latter, but feel free to offer alternative theories.

The Fed Chairman and Treasury Secretary at a recent Nationals game. What do you think they talked about?

US Cracks Down On Corporate Bribes (WSJ)
"At least 120 companies are under investigation, according to Mark Mendelsohn, a deputy chief in the Justice Department division overseeing the prosecutions, up from 100 at the end of last year."

Ackman Pledges To Hold Target Shares For Five Years (Dealbook)
That's how much he loves this company.

Accounting Rules Help JP Turn WaMu Deal Into Money Maker (Bloomberg)
"Faced with the highest U.S. unemployment in 25 years and a surging foreclosure rate, the lenders are seizing on a four- year-old rule aimed at standardizing how they book acquired loans that have deteriorated in credit quality. By applying the measure to mortgages and commercial loans that lost value during the worst financial crisis since the Great Depression, the banks will wring revenue from the wreckage, said Robert Willens, a former Lehman Brothers Holdings Inc. executive who runs a tax and accounting consulting firm in New York.

"It will benefit these guys dramatically," Willens said. "There's a great chance they'll be able to record very substantial gains going forward."

How Satyam Supported PwC's Schizophrenic Strategy To Reenter The Systems Integration Business (RTA)
"The firms may call these situations all anomalies, and "all in the past", but they add up to real pathology - a case of incorrigible ingratitude for a government-sponsored, highly lucrative franchise to provide audit opinions for public companies."

A Hedge Fund King Is Forced To Regroup (WSJ)
"Later that year, Mr. Asness frequently erupted in his office, smashing computer screens in anger, according to people familiar with the matter. Mr. Asness confirmed the account."

$$$ Morgan Stanley Boosts Salaries As Its Bonuses Are Limited [WSJ]

$$$ "A woman who has fled New Zealand with her boyfriend after they received a multimillion dollar bank credit also has her daughter and sister with her, it was revealed today.

Police said today they were seeking a couple over the taking of $3.8 million mistakenly credited by Westpac to a bank account." [NZHERALD]

$$$ Morgan Stanley taps UBS banker as prime-brokerage head [Wealth Report]

$$$ Richard Posner Defines Depression [The Deal]

$$$ "Beginning this weekend, Axe is trying to appeal to New York area pick-up artists with a new venture: it is sponsoring a Hamptons nightclub for the entire summer." [NYT]

That's it for us. We're off Monday, but if you happen to come across Vikram Pandit pounding some Mike's Hard Lemonades poolside, we want to know. Have a great weekend!

We cannot decide if we think it is good news or bad news that BankUnited seems to be proceeding as if nothing at all is fucked, even though it was "closed and sold" not 48 hours ago. Aren't dramatic and painful changes supposed to follow hard-upon after such passings?

Florida-based BankUnited, which was closed by the U.S. government and sold to investors, was conducting business as usual on Friday and there was no sign of panic among customers, its new chief executive said.

Banking industry veteran John Kanas, who also took over as BankUnited Financial Corp chairman, told Reuters in an interview that BankUnited plans no immediate layoffs among its work force of 1,100 and expects to expand branches in its Miami base, while closing branches outside the city.

What is receivership coming to?

BankUnited sees Miami expansion, no layoffs [Bloomberg]

It seems The Big Picture beat us to it.

Not unless you start showing a little cleave, that is. Just days after "marketing" their 640 Park Avenue co-op for $32 million ($11 mill more than they paid for it two and half years ago), Dick and Kathy Fuld have decided to keep the 6,200 square foot pad for themselves. Will they be turning the apartment, which includes 5 five fireplaces and a 25 foot long dining room, into a halfway house for down on their luck CEOs? We'll just have to wait and see. For those of you truly broken up at this turn of events, please note that while place is not for sale, you could probably get in the backdoor by applying for a position with the household staff, which, as indicated in the floor plan above, comes with room and board.

In related news, Joe Gregory has slashed the price of his 9,500 square foot Bridgehampton home by 14% to $27.9 million. It comes with 8 bedrooms, a pool, 200 feet of "ocean frontage," and many, many memories. Act now.

Lehman Ex-President's Cut [WSJ via Cityfile]

Kidding, but apparently Mikey-boy's flick is going to be an absolutely side-splitting comedy. The documentary, which is slated for an October 2 release date, is being billed as "a comical look at the corporate and political shenanigans that culminated in what Moore has described as the biggest robbery in the history of this country," which, in all seriousness, should be uproarious. We ourselves only recently stopped pissing our pants in laughter over the time Lehman Brothers put a bunch of worthless assets on its books and then got publicly dickslapped by a Jewish porn star. So you've got our $12.50 right here. Only problem is, this thing is apparently still untitled. Since you people sort of have the starring role, we figured you should do the honors. Any ideas?

It is, of course, the goal of everyone involved to shift businesses with large government stakes back into the private sector quickly. The question is, how do we define "quickly," exactly. How about almost two decades?

GMAC LLC, which is giving the U.S. Treasury Department a 35.4 percent equity stake, said on Friday it might take 17 years for the government to shed its investment if the auto and mortgage lender were to go public.

The timetable suggests that federal involvement in GMAC's affairs could persist long after troubles plaguing the economy and the auto industry end.

The reality is that if time lines like this are the only realistic alternative, we should consider another option:

Punt.

Directly related to this issue is a missive on credit penned by Megan McArdle recently. She closes with:

But maybe it's worth remembering that the tyranny that credit scores exercise over our imagination have everything to do with the fact that we've built a society so utterly dependent on credit. If you didn't need a credit card, an auto loan, and probably a mortgage to be considered middle class in this society, these opaque and unresponsive bureaus wouldn't be the most important source of information about us.

Of course, we recognize that to save UAW jobs you have to save car companies and that means boosting car company revenue and that means getting consumers to buy more cars than the situation would generally warrant and that means providing them (all of them) with loads of cheap debt to finance their purchases and that means subsidizing loans and that means saving GMAC no matter what the cost and even if it takes 18 years, $750,000 per UAW job and hundreds of lives. We also recognize that this is supposed to be the brilliant "new way" to reform crony capitalism.

We repeat: Punt.

U.S. could take 17 years to exit GMAC after an IPO [Reuters]

That the United States would be more than fleetingly conflicted about the role of capitalism in saving capitalism might be surprising- in any other age. Today, we can only shake our heads watching the government publicly disembowel the "money men" before, nearly in the same breath, pleading with them to jump in and fulfill their traditional purpose: salvaging sinking institutions.

With bank failures at a 15-year high, private equity firms have been clamoring to buy the ailing institutions recently, but have run up against regulatory restrictions and public criticism.

But the F.D.I.C., which is expected to face further bank failures in the coming months, indicated that it might soon release policy guidelines for potential private equity investors seeking to buy failed banks.

"Due to the interest of private-equity firms in the purchase of depository institutions in receivership, the FDIC has been evaluating the appropriate terms for such investments," the agency said Thursday. It added it would be giving guidance on eligibility and other conditions for private-equity investors in the near future.

Hypocrisy aside, we understand the urge to regulate... well... everything. But why look a cash-cow in the mouth? After the failure of BankUnited it is hard for us to imagine any roadblocks that make sense to erect. All we need now is for KKR to insist this "isn't the business we are in," right before closing deals on five failed banks.

F.D.I.C. to Issue Guidelines for P.E. Firms on Bank Deals [Dealbook]

Well, this is upsetting. We're big on babies and formalities, so had we known Dick Parsons was having a lovechild with model MacDella Cooper, we would've sent over a nice note and maybe a plush stuffed duck or something, like we've done in the past for all our favorite bank chairmen and CEOs. Now, it's too late, and we look like assholes. This is why we need to be kept abreast of such situations.

It must be a measure of the times that a firm that regards itself with such favor would deign to even consider participating in something so base as a government recovery program, much less discuss it on the record. Or perhaps Mr. Kravis is just a lot more loose-lipped than he used to be. That's saying something.

Still, it is hard to blame KKR for wanting to play. Accepting free money handed out without thought to risk or reward by dimmer bulbs is, after a certain sense, what private equity is all about. Kravis argues the point (unconvincingly).

KKR could take advantage of the infrastructure stimulus plan but is less interested in buying banks or their troubled assets, co-founders Henry Kravis and George Roberts have told the Financial Times.

"I think there may be some programmes where it will be appropriate for us to partner with the government," Mr Kravis said. "I think one area in particular that I think is a very big need and where we will have opportunities to participate is in infrastructure."

The Obama administration has committed hundreds of billions of dollars to infrastructure spending as part of its plan, ranging from road and bridge construction to investments in broadband and "green" energy.

Mr Kravis said the firm was looking at the public-private investment partnership and other initiatives. But the partners expressed caution about an overly opportunistic approach.

"Simply buying a pool of assets [through] a highly levered vehicle because a government is willing to give you more leverage than the markets and just sitting there and running off the assets and giving the money back to your partners is not what we do," Mr Roberts said.

Of course this is totally ridiculous. This is exactly what private equity firms do and if the government had been offering buyout artists even a tenth of a percent lower rates than the leveraged finance groups that multiplied like rabbits over the last fifteen years the Treasury would now labor under a balance sheet bloated with large swaths of now-private businesses in or approaching default.

KKR sets out stall for role in stimulus package [The Financial Times]

It's Friday before a long weekend and clearly we don't have to tell you we've completely checked out.* Unfortunately we're obligated to stick around here for a few more hours, so, shall we discuss everyone's Memorial Day plans? This guy Joe Couceiro-- Barry Williams' doppelgänger--would probably appreciate it if we all took a trip to SeaWorld, and while we're gonna pass, we're oddly mesmerized by Jeffrey (Geoffrey?), the "frisky" lemur from Madacascar that appeared on Squawk Box with him early this morning. Anyway, plans. Ken Lewis tells us he'll be spending what will probably be his last MemDayWeekend at the Hilton Head vacay house with the Boone's Farm representatives he met the other night, which sounds nice. Now you go. Something fun, or studying for the CFA while fantasizing about a life that doesn't so closely resemble hell?

*A state of mind probably caused in large part by the fact that we're typing this from a roofdeck where cocktail hour starts at 10AM on holiday weekends.

He maintains they won't be capping your asses, but you should probably still gird those loins.

Treasury Secretary Timothy Geithner called for major changes in compensation practices at financial companies and said the Obama administration's plan to help realign pay with performance will be rolled out by mid-June.

"I don't think we can go back to the way it was," Geithner said in an interview on Bloomberg Television's "Political Capital with Al Hunt," to be aired tonight and over the weekend. "We're going to need to see very, very substantial change."

He said that Wall Street's pay practices, which include big year-end bonuses, encouraged excessive risk-taking and helped precipitate the financial crisis. What's needed is a set of broad standards that financial supervisors can use to make sure that doesn't happen again, he said.

The administration's pay plan would be part of a proposed comprehensive overhaul of financial regulation aimed at both protecting consumers and reducing vulnerability to crises. Geithner has previously ruled out setting specific caps on pay and declined to infringe compensation contracts already agreed.

Geithner Calls For 'Very Substantial' Change In Wall Street Pay [Bloomberg]

William Richards is off today. OB brought to you by anal_yst.

Ezra Merkin Quits Synagogue Post (NYT)
And just after being nominated chairman. Might've had to do with losing a bunch of members a truckload of money.

The Road To Bankruptcy (The Atlantic)
"At the end of his book's harrowing account of mortgage mistakes and credit card crises, NYT reporter Edmund Andrews writes: "While our misadventure had certainly been more extreme than those of many other Americans, our situation was not all that unusual." And indeed the book reads like the story of an American Everyman, easily sucked in to the alluring world of easy credit as he struggled to blend a new family. The terrifying implication is that it could happen to you--to anyone who leads with their heart and not their head.

But en route to that moral, it turns out the story has been tidied up a little. Patty Barreiro, Andrews' wife, has declared bankruptcy twice. The second time was while they were married, a detail that didn't make it into either the book or the excerpt that ran in last Sunday's New York Times Magazine."

Sears Holdings Swings to Q1 Profit (sec.gov)
"In this challenging economic environment we are pleased with the progress we have made in improving our gross margin rate, controlling inventories and further reducing our cost structure," said W. Bruce Johnson, Sears Holdings' interim chief executive officer and president. "Our efforts had a clear impact on our overall results as both net income attributable to Holdings' shareholders and Adjusted EBITDA increased significantly during the first quarter as compared to last year."

This is all well and good and surely cause for a huge pop in the stock, BUT (and forgive me for raining on Eddie's parade), the main driver of this quarter's profit was reduced advertising and payroll expenses. Yea, good luck repeating that every quarter until the economy "recovers." Lemme know how that works out for ya'.

PIMCO's Gross: US could lose AAA rating (Reuters, via FT)
O noes! Sayeth the (formerly) Moustachio'd one:

The United States will face a downgrade in "at least three to four years, if that, but the market will recognize the problems before the rating services -- just like it did today," Gross told Reuters.

I know its too much to hope that within 3-4 years time no reasonably sane investor will give a flying fuck what S&P/Moodys has to say, but its not like the fundamentals are a big secret here. US issues metric asston of debt, re-inflates asset bubbles...shit eventually hits fan. Of course, given the various precedents set by the Gov't over the past year or two, I think its obvious that if any rating agency were to even loosely consider a downgrade on US Sovereign ("Sovereign") debt, the PPT would be all over that shit like white on rice.

$$$ Sleep where Marissa Brown née Noel (daughter of Walter and Monica) hath slept. She and the husb have put their UES townhouse on the market for $12 million, though apparently they're willing to take "much" less. [Daily Intel]

$$$ Mild Skepticism: Credit Card Bill of Rights Edition [DJT]

$$$ Of course Google isn't buying a newspaper. [The Deal]

Muffie Benson-Perella (muffie AT muffmarkets.com) was an Associate in the Investment Banking Division of a "Bulge Bracket" bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school's "French Club." Today, Ms. Benson-Perella is the Founder and Managing Director of "Muffie on Markets" (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for non-existent, prestigious and accredited investors only, employing an actively managed, long-short strategy.

Certainly history will write its own lists of heroes and villains with respect to the credit crisis. It is a sort of mandatory, cleansing practice that collates the pages of the current time of troubles. And, while many of history's verdicts may form less than a consensus, it seems clear that the verdict rendered for Benjamin N. Dover, III will be one of the rosier ones.

Mr. Dover's sometimes controversial, but always insightful observations writ large by the disclosure requirements of the SEC and FDIC public comment process have set the cutting edge for debate on everything from short-selling to the PPIP programs for the last several weeks. Here is a passage of his work:

Truth #1: Stock Market Crashes Are Caused By Stock Sales.

It should be painfully obvious by now that the market's decline since November 2007 was caused by stock selling. Not even pernicious speculators like George Soros would dispute this basic truth. Similarly, the market's steep fall after several large bank failures and the deepening of the economic crisis in September 2008 also was the result of stock selling. We can safely conclude, therefore, that had stock sales been banned in 2007 the stock market crash of 2008-2009 never would have happened. Logically, it follows that banning stock sales would also prevent future market crashes.

Agree or disagree, you simply cannot ignore his common sense approach to markets, finance and economics. But who is Benjamin N. Dover, III? Very little biographical information is available on the maverick finance expert, but I decided to find out. Accordingly, to lift the curtain on this modern finance mind I sat down with Benjamin N. Dover III at the Peninsula for his first public interview:

Muffie Benson-Perella: Benjamin Dover, is that British? Perhaps Irish?

B. Dover: I'm an American original. (Not be confused, of course, with Native American.) And I appreciate your calling me by my given name. For some odd reason, many people seem to find it amusing to use its abbreviation.

As soon as replacements are found for the chair and CEO positions, which are being separated. Any takers?

Dear Colleagues,

I wanted to let you know that I have informed the Board of Directors of my intention to
step down from my roles as Chairman and Chief Executive Officer once the Board
successfully concludes a search for replacements for these roles.

While much work remains to be done at AIG, we can all be proud that much has already
been accomplished. With the financial assistance of the Federal Reserve Bank of New
York and the U.S. Department of the Treasury, we have made substantial progress in
stabilizing AIG, reducing the systemic risk that led the government to rescue the
company, protecting our policyholders and our businesses, and developing a plan to
repay American taxpayers.

As it relates to Tuesday night's completely bizarre episode with Dennis Kneale? Gawker reports that the network is worried about his mental health, which may have something to do with "stressful" contract negotiations. Apparently, we're told, everyone is "highly disturbed" by the showing, up to the "highest levels of CNBC," and some people wonder if he "overdosed on something" prior to going on the air Tuesday. Separately, we've also been informed that Macke has been on executives' radars for the past several months, after an on-air tiff with Dylan Ratigan caused Macke to send a drunk email later that night, joking that he was going to "break" D-Rat's legs, which the former Fast Money host proceeded to report to HR. (Really.)

This is somewhat overdue, but our default is to avoid tough conversations, preferring instead to bury our feelings and live in denial. But the time has come. As you may or may not know, we love (most) Dealbreaker readers and are happy to have you here. And we want you to feel comfortable, and not like a guest in our house. We've invited you to not only take off your shoes and put your feet up on the table, but treat it like the ex-frat house you so deeply miss and spend nights weeping over. But-- there's always a but-- we draw the line when you start pissing on the walls or defecating in the stairwells, which a select few of you are under the misguided impression is appropriate. This isn't Merrill Lynch. Not only is it not okay but it makes us-- how to put this-- want to take a walk over to your places of business and wring your god damn necks or run you over (and over and over) with the Zamboni we have on loan or at the very least, yell "shut the fuck up, asshats." However, we're more evolved than that. So. Some ground rules will be laid out. They are not up for discussion or interpretation, and believe me when we tell you we will go prison warden crazy on the asses of those who fail to comply and/or dispatch Charlie Gasparino to take care of whatever needs taking care of. Don't make us go to an all-registration format. You won't like it, and SteveInStamford has already been snagged. Join us as we review (for those of you who don't like words, feel free to refer to the tag, and have a great day):

Treasury Secretary Timothy Geithner said the U.S.'s $700 billion financial rescue package can't be used to aid Lehman Brotherscities and states facing budget crises.

The law "does not appear to us to provide a viable way of responding to the issues that Lehman Brothers facesthat challenge," Geithner told a House Appropriations subcommittee in Washington today. Among the hurdles: Money from the Troubled Asset Relief Program is reserved for financial companies, he said.

The Treasury chief said he will work with Congress to help investment banksstates such as California that have been battered by the credit crunch and are struggling to arrange backing for municipal bonds and short-term debt.

Geithner Says TARP Can't Help U.S. States Solve Budget Crises [Bloomberg]

Even now Marc Dreier's assets are being fire-saled away. What an awful pity. Perhaps someone should have pointed out, however, that "Dreier's Escape" was sort of slow for a get-away craft.

Marc Dreier's Fire Sale at Sea [Cityfile]

The SEC gets a bad rap. This is because they richly deserve it. For years they have concentrated on petty frauds at the expense of actually uncovering massive, systemically dangerous shenanigans, even when led directly to them. However, it would be rude to call them irredeemable. They do, after all, provide very entertaining copy on occasion:

The Securities and Exchange Commission has charged eight participants in a penny stock manipulation ring that allegedly pumped the market prices of at least four stocks and generated more than $6.2 million in illicit profits when they dumped shares on the market.

The SEC alleges that Pawel Dynkowski, who resided in Newark, Del., carried out the market manipulation schemes with others he met through a penny stock web site InvestorsHub.com, which is operated by Matthew Brown of Aliso Viejo, Calif.

We have to admit, we were somewhat bored reading these materials, until some details emerged. To wit:

The SEC alleges that Dynkowski personally saw to it that the manipulative trading was coordinated with misleading press releases from the company, and in some instances he wrote the press releases for Asia Global himself. According to the SEC's complaint, Dynkowski instructed Brown on Aug. 24, 2006, to have Asia Global issue a press release hyping the company's second quarter 2006 financial results and to "make it sound ENORMOUS." On September 1, Asia Global issued a press release claiming that its profits for July 2006 were 745 percent greater than its profits for July 2005.

Or perhaps:

Furthermore, according to the SEC's complaint, Asia Global issued a press release on Feb. 6, 2007, claiming that its subsidiary had just received a license to produce 104 episodes of "Who Wants to Be a Millionaire" in China.

We don't know about the rest of you, but we sleep better at night knowing the SEC people are on the wall somewhere. Locked and loaded.

SEC Charges Eight Participants in Penny Stock Manipulation Ring [SEC.gov]

Thought you were alone in your quiet shame of needing a discrete place to bang a prostie or pal, the trading floor bathroom no longer being an option? Think again! Your Japanese counterparts (and colleagues there on business) are in the same posish and the economy yonder over there is benefiting. Bloomberg reports that Japanese "love hotels," which would be hotels you take someone you with whom you only want to spend a few hours and not be charged for 24, are make making money money, take taking money money. "It's a recession-proof industry," says Steve Mansfield, chief executive officer at New Perspective, formerly of Citadel, where he opened the firm's Tokyo office and headed its Asian private investment strategy and no doubt learned a thing or two. If any of you enterprising young pups are considering opening a chain of these establishments, please note that this isn't your father's p-town palace. Provide accordingly.

Many love hotels have abandoned the red velvet sofas, revolving beds and mirrored ceilings that made them famous in the 1960s and 70s. A renovation at the Bonita hotel in Sendai, north of Tokyo, recently bought by Japan Leisure, has rooms more akin to a boutique hotel, with 42-inch flat-panel televisions, black modern sofas and king size beds.

Customers choose their room from a display with pictures of the suites. There's no check-in form and you pay a cashier hidden behind a screen.

"It can feel embarrassing to take people back home and so love hotels are popular," said Mitsuo Seki, a 32-year-old bartender in Tokyo, who visited love hotels three to four times a month. "They have lots of extras as well that are very entertaining."

Some stories, you just have no idea how to improve on. The irony and satire is so implicit in the fact pattern that any commentary seems somewhat strained by comparison. One struggles to unify the themes, only to find them so intricately locked in a matrix that to move them is to detract from the whole. For instance:

A law
Invented at Disney World
Requiring medium and larger firms
To offer paid vacation
To make the economy more efficient

Behold:

Rep. Alan Grayson was standing in the middle of Disney World when it hit him: What Americans really need is a week of paid vacation.

So on Thursday, the Florida Democrat will introduce the Paid Vacation Act -- legislation that would be the first to make paid vacation time a requirement under federal law.

The bill would require companies with more than 100 employees to offer a week of paid vacation for both full-time and part-time employees after they've put in a year on the job. Three years after the effective date of the law, those same companies would be required to provide two weeks of paid vacation, and companies with 50 or more employees would have to provide one week.

The idea: More vacation will stimulate the economy through fewer sick days, better productivity and happier employees.

This is, of course, why French industry dominates the European continent.

Alan Grayson to introduce Paid Vacation Act [Politico]

The Post reports that Irving Picard, the court-appointed trustee overseeing the liquidation of Ponzi Nation, has received a $100 trillion offer for Big Bern's baby. It comes from Ade Ogunjobi, who put an "all stock tax free transaction involving $100 trillion in stock or 400 million shares" of his company, Toks Inc on the table. Picard, who never likes to have any fun, characterized the plan as "replete with credible and unfounded statements" with "no facts to back up the deal" and requested that Manhattan bankruptcy Judge Burton Lifland dismiss the offer, and GTFO. For his part, Ogunjobi apparently told the Post that he is dead serious and will be in court the scheduled June 2 hearing, which we appreciate.

One hears often lately that shareholders are simply incapable of "throwing the bastards out." Even in the face of mounting losses and some very poor risk management very few corporate heads have actually been tossed by shareholders. Government, of course, has been more "effective" in this regard. Still, of the vanishingly small pool of shareholder executed CEO defenestrations CEO pay has played a major part in, again, a small fraction of cases. For the uninitiated, a small fraction of a vanishingly small pool is not much. We wonder, however, if the trend is shifting, at least in the UK:

In one of the biggest investor rebellions over directors' pay, about 59 per cent of Shell shareholders voted down the company's remuneration report.

The Shell 'No' vote was the second biggest against a UK company's remuneration report this year, topped only by the 80 per cent of votes cast against Royal Bank of Scotland, according to Manifest, the voting agency.

Shell's executive pay plan voted down in shareholder rebellion [The Financial Times]

Not as soon as Goldman, though that'd be nice, but about three decades earlier than anyone expected it'd get done. BAC is apparently telling people it'll have the government out its hair by the end of the year, after raising the $35 billion in capital the Treasury claims are necessary by September, and returning the strings-attached bailout funds. This bold declaration, possibly spawned by liquid courage, has resulted in lots of laughs and many a "have another drink, Ken." Even the FT is barely able to conceal the smirk on its face.

BofA's desire to repay its Tarp money early will surprise the market. Most analysts expect BofA to be one the last banks to do this, partly because of the large amount of the funds it received and partly because it was found to have the biggest capital shortfall of any US bank in recent regulatory stress tests.

BofA Seeks To Repay $45bn By End Of Year [FT]

Wall Street being the lifeblood of the city and all that, the state of financial jobs is, one notices, a topic of concern. This being so, here comes the bad joss from the Independent Budget Office of New York:

Wall Street securities firms will emerge from the current recession in a down-sized mode, with few of the jobs cut replaced by 2013, even as the industry returns to profitability next year, a New York City fiscal monitor said in a gloomy report released on Wednesday.

The city faces a decline in tax revenues of $2.5 billion in the current fiscal year, and a further $2.2 billion decline in the 2010 fiscal year, due to the Wall Street job cuts, a drooping real estate market and lower business taxes, the city's Independent Budget Office said in the report.

The projected decline for the current fiscal year ending on June 30 represents a 6.6 percent decline in tax revenues, according to the watchdog's report.

"This back-to-back decline -- which follows a year, 2008, of essentially no tax revenue growth -- would mark the first time in at least three decades that the city experienced consecutive years of falling tax revenues," the Independent Budget Office said in the report.

Of course, we already know that the collapse of revenue is both a federal and state problem at this point and after we are done bailing out California it is easy to suspect there may be nothing left in the royal purse. Then what?

Wall Street Seen Replacing Few Of Jobs Cut By 2013 [The New York Times]

Mailbag:

Supposedly many at BAC-MER are getting raises to their base compensation. It seems very widespread overseas, especially in Hong Kong and London. But back in the land of Barney Frank and Maxine Waters, less so. I've only heard this so far on the Merrill legacy side (at all title levels), though I would think it'd happen for the BAC-ers as well.

This, presumably, has something to do with this.

Oh, don't think for a second this mean he's finished with Nouriel Roubini, he's just spreading the love/hate around. To recap: last month Cramer said that Roubs was "intoxicated" with his own "prescience and vision." Roubini responded with "Cramer is a buffoon," and the alleged court jester, who loves it when you tell him he sucks, invited Dr. Doom onto his show to say it to his face. Then, two weeks ago, Cramer suggested Roubini was in bed with the shorts. Perhaps ticked that the doctor hasn't given him the satisfaction of a response, JC again attempted to provoke something, anything, at the very least a "go fuck yourself" today. Probably figuring that Roubini won't take the bait but a certain wrestling-loving firecracker just might, he threw Meredith Whitney into the mix. Which, we have to say, was smart.

Oddly, the people who are saying it tend to be the same ones who declared the recession over in March. I always have to remind these people they have it quite wrong: the depression ended in March, where deflation seemed unstoppable. That was when Citigroup (C) , Bank of America(BAC) , U.S. Bancorp(USB) and Wells Fargo(WFC) had their obituaries written by the two most implacable forces at the time in the investing universe -- Professor Roubini and Meredith Whitney. (Because I am a harsh critic of the scene, I now dub them "Professor and Maryanne [sic]," who would turn the millionaire and his wife into paupers.)

Roubini And Whitney: The Professor And Maryanne? [TRB via Clusterstock]

Just, you know, in case. He's not being escorted from the building yet, and, apparently, if Bank of Amerillwide turns a profit everything will be cool in Lewis Land, but the BAC board is supposedly "quietly preparing for the possibility [they'll have to replace KL] and will soon create a list of potential successors." Since convincing someone to take over the place likely will not be the easiest sell, any and all suggestions are being considered. For the good of the country, let's come up with some names now. I'll start: Ang Moz. Now you go.

You've had a good run, mostly because the mall security guards that were supposed to be keeping an eye on you were in the break room daring each other to do tequila shots that involved snorting the salt, taking the shot and squeezing the lime in their eyes, and just JO&C'ing on the clock in general, but those days are over. You might as well pack up your Ponzi schemes big and small now because you don't stand a chance. As we type, a "warning system" is being built across the pond to help UK's Serious Fraud Office detect hedge fund fraud via a system of red flags that point to shady things going down. And it's not just your chippie counterparts who have something to fear. Back at home, Mary Schapiro is apparently working on a similar machine being constructed in her garage by an out of work Chris Cox who just can't quit the beat. It's not up and running yet but early blueprints show that any detection of unusually high levels of cameltoe activate an alarm system that begins with a marble being dropped down a shoot and ends with an email marked importance: high as fuck landing in MareSchaps inbox. Basically, you're done here.

S&P Lowers Britain's Debt Outlook (WSJ)
S&P has lowered the outlook from stable to negative on public debt concerns (now approaching 100% of GDP), giving warning to the central bank that they need to step in to curtail the practices. S&P has noted that they're not likely to downgrade soon, but rather that a downgrade is possible.

The U.K. Treasury noted that S&P reaffirmed the triple-A rating, at least until after the election. "There are significant uncertainties in the global economy at the present time and S&P point out that the outlook could be revised back to stable," said a Treasury spokesman. "The Budget set out a clear plan to halve the deficit within 5 years. That judgment was based on a deliberately cautious view of the public finances."

Greenspan Says Banks Still Have Large Capital Requirement (Bloomberg)
"Former Federal Reserve Chairman Alan Greenspan signaled that the financial crisis has yet to end even as borrowing costs tumble, warning that U.S. banks must raise "large" amounts of money.

"There is still a very large unfunded capital requirement in the commercial banking system in the United States and that's got to be funded," Greenspan said in an interview yesterday in Washington. He also said that "until the price of homes flattens out we still have a very serious potential mortgage crisis."

New US Derivatives Rules Could Make Odd Partners (Reuters)
"Goldman and several other big banks own a 50-percent equity stake in IntercontinentalExchange's clearinghouse for credit default swaps. Dealer backing pushed ICE to the fore of clearinghouses looking to clear U.S. CDS, default-insurance products blamed for worsening the crisis.

The world's biggest exchanges, including CME Group Inc, NYSE Euronext and Nasdaq OMX, have sought partnerships with dealers and other big OTC players who would drive business to their derivative clearinghouses and exchanges."

GM Workers Hold Out (NYT)
"Just 450 workers are left there, witnesses to the dismantling of Buick City and survivors, so far, of G.M.'s financial collapse. And even as the company gets nearer to bankruptcy, they do not want to leave."

"They are part of the last generation of auto workers who were hired when G.M. dominated the United States market decades ago. And even with all the offers to leave, they stay, showing up for a job that is, in many cases, the only one they have ever known.

"I just get up in the morning, wash up, and drive here every day," said O. C. Cooper, a 64-year-old machine operator at Flint North. "It's just been a way of life.""

$$$ Fuld Resigns As Lehman's Chairman [NYT]

$$$ "The U.S. is set to invest more than $7 billion into GMAC, part of a package that could total $14 billion and make the government majority owner." [WSJ]

$$$ Fed faith grows from April's wary optimism [FT]

$$$ I-banks, law firms hiring for structured finance [The Deal]

Can you think of anyone less qualified to make assertions on pay, and economic recovery than Kenneth Lewis? Yes, Big Bird is a good answer, it's true. In some ways we are quite surprised to see that Ken is making waves. The man is quite lucky still to be working so it is hard to imagine why he would rock the boat. And yet:

Bank of America Corp Chief Executive Kenneth Lewis, whose bank sold $13.47 billion of common stock this month, on Wednesday said the worst of the economic downturn has likely passed and that conditions will not worsen as much as feared.

"We are on the cusp of what will turn out to be a slow but sustainable economic recovery," Lewis said at a conference in London. "There will continue to be a lot of pain ... but I think the worst is most likely behind us." He projected modest U.S. and European economic growth in the second half of 2009.

Lewis, whose bank bought Merrill Lynch & Co on January 1, also said corporate and investment banking pay practices must be "reformed," with pay being tied to performance and banks being able to "claw back" pay from people who took on too much risk.

Oh, boy.

Economy bottoming, pay reform needed: BofA CEO [Reuters]

1 drink short of Bank of Amerillwide necessitating a stomach pump, but no matter. Better late than never, right-o, BAC shareholders? (And for all you naysayers out there-- this has nothing to do with him getting flack over Countrywide and Merrill which, we'll say it again, were brilliant acquisitions whose genius is yet to be revealed but will one day be understood, the same day you'll eat your words!)

Bank of America Corp. Chief Executive Officer Kenneth Lewis expects more mergers among U.S. banks as the economy stabilizes, and said his bank won't be among the participants.

"Merger activity will pick up for others," Lewis said in a speech in London today. "At Bank of America, we've got enough on our hands right now."

Lewis, who spent more than $120 billion on acquisitions since becoming CEO in 2001, is still trying to quell investor doubts about his most recent purchases, which led to his ouster as chairman last month. The Charlotte, North Carolina-based bank bought home lender Countrywide Financial Corp. last July and brokerage Merrill Lynch & Co. in January as the financial industry was teetering near collapse.

The recession and credit crunch left the U.S. banking system with too much capacity, making absorption of weaker banks by stronger ones inevitable, Lewis said. Consolidation stalled over the past year as "severe market stress and disruptions made pricing difficult," he said.

Nothing is fucked people. Nothing. Nothing at all. Green shoots are made thick oak. Cats have filed for voluntary separations from dogs and are no longer living together. Britney will retire from creating... anything. Including children. The Flu is cured. So is cancer. Just relax, will you?

Lawmakers in Washington are increasingly optimistic that the prospect of economic Armageddon is behind them.

Despite rising unemployment and continued dismal news in the housing market, which instigated the financial crisis, there's been a definite shift in the Beltway's economic mood.

"We're headed toward the bottom," said Rep. Paul Hodes (D-N.H.), who expects continued uncertainty in the economy but sees a recovery on the horizon.

"It will be a very slow, gradual recovery," he said. "But it's like falling off a cliff. It's the place where the cliff hits the beach, that kind of end of collapse."

...where your battered and crushed body will be gently nestled in a bloody bed of sand, quietly caressing you before the crabs begin to pick at your lips and the seagulls your eyes. How very beautifully peacefully consoling. Hey, how about you raise my taxes now?

Lawmakers don't expect Armageddon [The Hill]

And lots of 'em, it seems! [via AdamsOptions]

Dennis Kneale: Macke let's start with you...Patty Daum is talking about how the credit markets tonight are really thawing tonight...and her sources tell her it's going to be helping the stock market. What do you think of that?

Jeff Macke: I have no idea Dennis...I'm going to talk to you like a child...if you understand what I'm saying, just say 'yeah.'

DK: Okay, yeah.

JM: Yeah...see...you're what happens when you're trying to talk to car people at like half an hour ago...I dismissed these people as idiots YEARS AGO. And not that I finally try and engage them, they have no idea what I'm talking about.

DK: Okay...

It continues.

Apparently, the women who can't even remember to bring her ID to court is a dangerous and crafty agent of intrigue prone to flight at any moment.

Laura Pendergest-Holt, the Stanford Financial Group Co. executive indicted for obstructing a U.S. regulator's probe into an alleged $8 billion fraud, is a flight risk requiring electronic monitoring, U.S. prosecutors say.

Pendergest-Holt, chief investment officer for one of three R. Allen Stanford-led businesses sued by the U.S. Securities and Exchange Commission for misleading investors, pleaded innocent to the criminal charges on May 14. Freed on a $300,000 bond, she is wearing an electronic-monitoring ankle bracelet her lawyers say is unnecessary. Prosecutors disagree.

We're sold.

Stanford's Pendergest-Holt a Flight Risk, U.S. Prosecutors Say [Bloomberg]

It's for charity, so we can't make too much fun, but we can make a little. The RFK Center for Justice and Human Rights is holding its annual fund raiser and lots of celebrities have generously offered themselves for up for bidding on the auction block, sort of, though it kind of just sounds like you're forking over money for the privilege of tagging along as they do whatever it is they'd do on any other day.* Like Ben Affleck, who invites you to come watch him get drunk at Fenway, or Jim Cramer, who's offering a once in a lifetime opportunity to behold as he throws a chair. That's right, for an estimated $5,000 (so far only $1,600 has been bid), you and three friends can attend a taping of Mad Money (tickets to which are typically free). JC not the CNBC personality who tickles your fancy? For at least six g's you can accompany Charlie Gasparino as he chases down a story at San Pietro (pumping Jimmy Cayne for hot gossip in the men's room likely to be included!) and for a minimum bid of ten-large, you could be telling your friends about the time you served as Dennis Kneale's fluffer while he surfed for Asian porn between Power Lunch commercial breaks. Other actual items up for grabs include: a 20-minute phone conversation with Suze Orman (ask her to elaborate on this) and a tour of CNBC.

The Celebrity Auction of the Century [Cityfile]

*Which is nice, but if someone's donating a few large to charity, we want to see these people dance.

Our relationship with risk-taking is a schizophrenic one. Bold actions taken, even foolishly, yield bright accolades for winners, enduring damnation for losers. Qui audet adipiscitur, after all. Phrased another way: One may dare, but one must win.

On reflection, David Redmond probably shouldn't have gone back to the office after a fateful boozy lunch last year that lasted three and a half hours.

The commodities trader arrived back at his desk at Morgan Stanley in London at 4.41pm on 6 February and through the fug proceeded to gamble $10m (£5.1m) in a frantic series of trades. It very nearly went down as the most expensive lunch in history. In the sober light of the following day, he managed to trade his way out of the position without telling anyone and avoided making any losses. But it wasn't enough to save his neck.

The Financial Services Authority today banned Redmond from working in the City for at least two years for concealing his trading position from bosses and leaving the bank exposed to significant risk. Margaret Cole, the director of enforcement at the City watchdog, said his actions had "showed a lack of honesty and integrity".

Who among us doubts that, had Redmond come out +20% on the positions, his name would endure in the office forever, emblazoned on brass plaque under the hermetically sealed, bulletproof-plexi case holding the actual glass he drank from that faithful afternoon?

FSA bans Morgan Stanley's oiled trader [Guardian Online]

The problem with one trick ponies is that they get old quickly. It appears that the present administration's one trick pony is short-term gains at the expense of long-term credibility. So, we should barely be surprised when, true to form, precisely the investors needed to get the PPIP program off the ground are savaged from the bully pulpit and bullied by a natty puppet.

Hedge fund manager George Schultze says he may avoid lending to any more unionized companies after being burned by President Barack Obama in Chrysler LLC's bankruptcy.

Obama put Chrysler under court protection on April 30 after lenders balked at a proposal giving them about 29 cents on the dollar for their $6.9 billion in debt. The investors said the president's plan favored a union retiree medical fund whose claims ranked behind them for repayment. It was offered a 55 percent equity stake in the automaker.

Pacific Investment Management Co., Barclays Capital and Fridson Investment Advisors have joined Schultze Asset Management LLC in saying lenders may be unwilling to back unionized companies with underfunded pension and medical obligations, such as airlines and auto-industry suppliers, because Chrysler's creditors failed to block Obama's move. The reluctance may put additional pressure on borrowers seeking capital in the worst financial crisis since the Great Depression.

"Lenders will have to figure out how to price this risk," Schultze, 39, said in a telephone interview from his office in Purchase, New York. "The obvious one is: Don't lend to a company with big legacy liabilities or demand a much higher rate of interest because you may be leapfrogged in a bankruptcy."

Since we have debunked Capitalism, we are sure that would never happen.

Fund Managers Burned by Obama Now Say They Are Wary [Bloomberg]

When it comes to coeds. In Universum USA's annual survey of college students' top picks for employers they'd like to work for, JPMorgan beat Goldman Sachs for the first time since the survey began 14 years ago, coming in at 19 and 21, respectively, a coup the pollsters attribute to JPM having "a very dedicated CEO who's been quite visible." Since these kids have had one, maybe two internships at these companies during undergrad, and were asked to name five of their dream jobs, this thing is really based on which CEO comes off as the best Beirut partner (as it should be). And speaking of drinking, Bank of America clocked in at the 31st most desired place to work, which must please Ken Lewis greatly. Other notable results (and how they did last year):

- Morgan Stanley: 40 (25)

- Federal Reserve Bank: 45 (49)

- Wells Fargo: 62 (78)

- Deutsche Bank: 73 (59)

- Citi: 94 (43)

Undergrads Shuffle List of Dream Employers [BW via Dealbook]

I was talking to a lobbyist for Burger King the other day who assured me this entire fast food thing was overblown paranoia, there was absolutely nothing wrong with the environment, and I should consider nonsense like "Super Size Me" slanderous prattle. He then jumped into his Lincoln Navigator (the springs of which creaked loudly while straining to support his imperial asstonage) and proceeded to run over a family of chipmunks while screeching out of the parking lot in front of a blue-white cloud of exhaust. Oh, and The Safecracker had this to say:

U.S. Treasury Secretary Timothy Geithner Wednesday updated lawmakers on the Obama administration's efforts to rescue financial markets, saying that recently-conducted stress tests have gone a long way to boost confidence in the financial system.

In prepared testimony to the Senate Banking Committee, he said the 19 large, stress-tested banks have raised more than $56 billion in funds to date, including $34 billion common equity capital. (Read the full remarks.)

"Of the $56 billion, about $48 billion has been planned or executed by banks" that government regulators found to have a capital shortfall, Mr. Geithner told the Senate panel, adding that banks without a shortfall have already started signaling their plans to repay government aid.

Geithner Says Stress Tests Helpful [The Wall Street Journal]

Or if she is, she's not expressing that remorse to ABC cameramen staked outside the prison where she visited Big Bern this week. Lady McMadoff offered "No response" to the question of whether or not she wants to apologize to Ponzi-Boy's victims, or if she knew what was going down on the 17th floor of the Lipstick Building, though she does offer a "fuck you" just before getting in a cab (likely paid for with ill-gotten gains!), which is something.

Of course, the scamp doesn't say how much longer (someone's getting the hang of this), but surely we can make some educated guesses.

David Reilly says yes. The Bloomberg columnist crunched some numbers and estimates that "only about 15 percent of directors have banking experience at the 10 largest U.S. commercial banks by assets" (and just over a third if you include backgrounds in investing, accounting, insurance, real estate and slinging crack-rock, which helps Goldman's rate considerably). Apparently having people on the board who knew what was up could've helped us avoid the current situation we've got on our hands (though the presence of people like Bobby Rubin at Citi taint that theory slightly). Moving forward, we need to stack these things with guys who will understand when to ask Ken Lewis "No, seriously, WTF?" (just after he hastily overpays for a chain of biker bars without telling anyone) and rough him up accordingly (Reilly: "if you're in the business of making sausage, it pays to have some butchers on hand").

We're not saying its definitively going down but given T. Geith's much noted desperation to fill some slots and apparent proclivity for former Bill Clinton staffers...it does have the potential to happen.

Treasury Secretary Timothy Geithner is surrounding himself with former aides to President Bill Clinton as he attempts to rebound from a rocky start even as top-tier vacancies have slowed decision-making.

Former Clinton press secretary Jake Siewert, a business development and government affairs officer at aluminum giant Alcoa, is headed to Treasury soon as a senior adviser, sources said.

He will join an advisory team that also includes former Clinton economic adviser Gene Sperling and Lee Sachs, who was an assistant Treasury secretary for financial matters under Clinton.

The former Clinton aides have credibility because Clinton's tenure in the 1990s was marked by a strong economy, though the economic problems they encountered bear little resemblance to the crushing challenges President Barack Obama faces.

Earlier: Barney Frank Would Appreicate It If Tim Geithner Would Move His Ass On Hiring People

Banks Use Life Insurance To Fund Bonuses (WSJ)
"Banks are using a little-known tactic to help pay bonuses, deferred pay and pensions they owe executives: They're holding life-insurance policies on hundreds of thousands of their workers, with themselves as the beneficiaries.

[...]

Bank of America Corp. has the most life insurance on employees: $17.3 billion at the end of the first quarter, according to bank filings. Wachovia Corp. has $12 billion, J.P. Morgan Chase & Co. has $11.1 billion and Wells Fargo & Co. has $5.7 billion. (Wells Fargo acquired Wachovia at the end of last year.)"

BAC Raises $13.7B In Share Sale (Reuters)
Bank of America is now about half way to its state goal of $33.9B, having raised $13.7B in this effort, and $7.3B from the dumping of China Construction Bank Corp holdings.

""We're pleased to have this portion of our capital plan completed," Chief Financial Officer Joe Price said in a statement. "This strengthens and diversifies our capital structure."

White House Calling For Death Of SEC (Bloomberg)
"The Obama administration may call for stripping the Securities and Exchange Commission of some of its powers under a regulatory reorganization that could be unveiled as soon as next week, people familiar with the matter said.

The proposal, still being drafted, is likely to give the Federal Reserve more authority to supervise financial firms deemed too big to fail. The Fed may inherit some SEC functions, with others going to other agencies, the people said. On the table: giving oversight of mutual funds to a bank regulator or a new agency to police consumer-finance products, two people said."

Officials Weigh Having One Mortgage Regulator (WSJ)
"Senior Obama administration officials are discussing giving a federal agency authority to police mortgages and other consumer-oriented financial products as part of the government's broader overhaul of financial regulation, people familiar with the matter said.

The entity would aim to address what many critics perceive is a blind spot in the existing regulatory structure, which spreads consumer protection across multiple agencies."

The Low Down On The Lingerie League (CNBC)
"Well, honestly, as you guys all know, a lot of leagues have come and gone that have tried to directly compete in some way with the NFL. That's not what we're doing here. This is a fun Friday night out with you and your buddies or you and your girlfriends to watch lingerie football and be part of this Disneyland for football fans type setting that we're putting together in all the host stadiums and arenas."

$$$ John Paulson bets on property recovery with new fund [Telegraph]

$$$ VW and Porsche merger is back on track. [Dealbook]

$$$ Bank of America priced a secondary offering of 825 million new shares at $10 each, David Faber reported late Tuesday. [MarketWatch]

"This isn't like your typical Nor'easter where a tree falls and your lights flicker," said Michael Daly, founder of the buyers' brokerage True North Realty Associates in North Haven, New York, and a Hamptons real estate blogger. "This is more like a Katrina," he said, alluding to the historic 2005 Category 5 Hurricane. "It's going to be a number of years before the market recovers."

In case you are actively considering laying down the $32 million Dick and Kathy Fuld are asking for but can't get away from the desk to check it out, here's a floor plan of the space, courtesy of Curbed. Interior shots found here, though they're of the place before Fuld moved in two and half years ago and likely do not reflect his decorating tastes (which leans more toward mid-century pimp). As one Curbed commenter (take a shot at identifying the fellow CEO below) put it, "I would suck God only knows how many cocks, just to walk through that place and have a look around," though you may not feel the same way.

Earlier: Sleep Where Dick Fuld Hath Slept

Some population restructuring is said to be going down at the House of Dougan this afternoon. So far affected: leveraged finance. No word on parting packages (yet), though Shake Shack on Brady would be nice but unlikely, as he's having some money trubs at the moment.

Of course there is no way they would try to abuse the 363 sale process again since that trick is kind of old.

General Motors Corp's plan for a bankruptcy filing involves a quick sale of the company's healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.

The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source.

The remaining assets of GM would stay in bankruptcy protection to satisfy other outstanding claims.

WOOPS. Yes, sure enough, here it is again. Of course, part of the problem here is that much of GM's debt is spread out down to even retail levels. Craming down Grandma UAW's GM bonds is, ironically, going to be much less easy than screwing over a few hedge funds, both public relations wise and as a practical matter.

GM bankruptcy plan eyes quick sale to gov't [Reuters]

The Observer reports that Richard and the wife, Kathy, are "marketing" (but not yet listing, in order to avoid bad press) their 640 Park Avenue co-op, which mostly served as a crash pad for the former Lehman Brothers CEO and his various lieutenants (the couple's primary residence is in Greenwich). It'll set you back $32 million, which is $11 million more than they paid for it less than two and half years ago, but that sounds like a bargain when you think of the star power that comes with, and the various nicknacks left behind by Erin Callan after LEH slumber parties, which you could probably flip on eBay and pocket some decent coin. You'll also score: four bedrooms, a 25 foot-long dining room, five fireplaces, and the ghost of a dearly departed chocolate lab, who will haunt your dreams.

Fuld Wants $32 Million For Park Co-Op [Observer via Cityfile]

In the grand rush to make sure that corporate America pays the price for excessive borrowing and that lenders feel the confinement of that narrow space left between "redlining" and "reverse-redlining," somehow attacking credit card issuers seems to have hit the legislative agenda.

Normally, it would be our tendency to grumble about such things, but in this case, we would be remiss if we didn't offer at least lukewarm support. The reality is that fee structures and back office stuff as obscure as balance processing order is complex enough in the world of consumer credit that a little bit of regulation could be a very nice thing. And, of course, issuers are just going to buoy overall rates up to meet any losses in fees they incur due to new legislation anyhow, so we aren't sure exactly what Congress thinks it is doing here (unless it is simply moving revenues over to the actual interest paid- which, at least for transparency isn't a bad idea anyhow).

The Journal gives us a peek at what to expect:

Existing balances: Issuers cannot retroactively change the rate on an existing balance unless the account is 60 days delinquent.

Payments: A consumer payment above the minimum applies first to the balance with the highest rate.

Teaser rates: Issuers cannot raise rates for the first year after an account opened. Promotional rates must last at least six months.

Changing Credit: Highlights of the Senate Credit-Card Bill [The Wall Street Journal]

The U.S. v. U.K. battle continues. Remember all that talk about how the taxpayer might actually see a profit from all these bailout efforts? You know, when the Treasury or the Fed or whatever sold all this stuff back to dumb moneyinvestors with a long-term perspective at prices higher than they paid? Well, The Bank of England is a bit ahead of us there.

The Bank of England revealed yesterday that it had racked up record profits of almost £1 billion in the year to February as its fee-earning activities burgeoned amid the global financial and economic turmoil.

During a crisis that has brought some of the mightiest forces in global banking to their knees -- and some to collapse and oblivion -- the Bank emerged as having thrived while famed commercial institutions foundered.

Figures released yesterday in the Bank's annual report showed that in the 12 months to February 28 it raked in profits before tax of £995 million. This marks a more than fivefold rise from £197 million in 2008 and is the biggest figure since its establishment in 1694.

This little note after the main article made our day, however:

The proportion of banknotes found to be counterfeit has more than doubled in a year, the result of three "major criminal gangs" pumping fake notes into the economy, the Bank of England said.

As if there isn't enough inflation going on....

Bank of England makes £1bn profit from bailouts after riding to rescue of high street lenders [The Times Online]

Break out the Boone's, ladies-- it's party time in Charlotte. Remember those BAC shares Ken Lewis bought in January? The Bank of Amerillwide chief made a nice $2.5 million paper profit (or 500,000 bottles of Strawberry Hill) on the 400,000 votes of confidence, according to Bloomberg, which the newswire helpfully points out is "more than his $1.5 million salary in 2008, when Lewis got no bonus for running Bank of America." Twelve other top managers also did okay for themselves on 640,000 shares bought for as little as $3.78, having made over $4 million among them.

Not faring as well was former Countrywide chief-cum-Bank of America make-up artist Angelo Mozilo, who lost money intended to go toward legal fees playing the slots.

From having Paulson shove the money down his throat all the to trying to pay it back, this thing has been worse than the time our favorite Boy Toy CEO stuck Little Dimon in a pencil sharpener "on a lark." You can bet your asses there will be PTSD night terrors.

Which is clearly disappointing to those in the group (Blankfein) hoping to get the go-ahead this week so they could really let loose over the long weekend but what can you do. Steve Liesman reports that supervisors having discussions with several banks (GS, JPM, MS) on the matter of repaying the very much strings-attached TARP funds have requested "supplemental info" on which recommendations to the Treasury will be made. Besides proving that at least one member of the board can make an entire meal out of one ingredient (don't know why that has bearing on how they'll fare out in the wilds of the market but apparently it does), Steve-O says evidence must be produced that the firms can issue unguaranteed debt, self-fund in the market, and, wait for it, pass the stress test without the taxpayer money (BAC, hearing this last one, steps out of the line formed outside the building).

It's not that we don't like J. Erza Merkin, but one wondered why, given appearances, he remained "in charge" thus far. Alas, no more.

Financier and money manager J. Ezra Merkin agreed to New York Attorney General Andrew Cuomo's demands to step down as manager of his hedge funds and place them into receivership, according to a person familiar with the matter.

Mr. Merkin, who funneled $2.4 billion from universities and nonprofit organizations into Bernard Madoff's firm, was charged last month on allegations he "betrayed hundreds of investors" by repeatedly lying to them about how he invested their money.

There is little doubt that the Madoff affair drew the waters back to a great extent and, to borrow a turn of phrase, exposed a number of skinny dippers in the water of finance. In this connection it is no accident that New York State is struggling with its own "promoters scandal" and film distribution underwriting embarrassment at present. We suspect, given this, that Merkin is but the tip of the iceberg. More fun and games to come, no doubt. Probably less amusing names though.

Cuomo Removes Merkin as Manager of Funds [The Wall Street Journal]

(We were very tempted to shorten this to "Cuomo Removes Merkin," but we decided that would be a bit much).