Fed’s 3-Year Rescue Plan Falling Short of Promise (NYT)
The Federal Reserve hoped that its three-year-old economic rescue campaign would reach a climax at the end of June. It hoped that consumers and businesses by now would be spending more and more, and the central bank could start doing less and less. That peak now looks like a long plateau.

Hedge funds seek rich pickings from Greek crisis (Reuters)
Hedge fund managers are sifting through the rubble of the deepening Greek debt crisis to find money-making opportunities, though political uncertainty makes it a risky business. Executives at the annual GAIM conference in Monaco said they were eyeing Greek sovereign or corporate debt, while emerging markets also offered a safer haven away from worries that the euro zone is close to its first sovereign debt default.

Paulson Is Not Alone as Sino-Forest ‘Mistake’ Hits $31 Billion Davis Fund (Bloomberg)
Christopher Davis, a value investor who researches stocks and holds them for long periods, owned 13 percent of the Chinese tree-plantation owner as of April 29 through his Tucson, Arizona-based Davis Selected Advisers LP…Davis New York Venture Fund, the firm’s flagship mutual fund with assets of $30.8 billion, struggled in the past five years as bets on financial companies including insurer American International Group Inc. (AIG) backfired, while beating the majority of its peers over the longer term. Davis’s firm, with $71 billion in assets, held 30.9 million Sino-Forest shares as of April 29, making it the second-biggest owner before Paulson & Co. dumped its stake, according to data compiled by Bloomberg.

Banks Will Be Sued If Foreclosure Practices Talks Collapse, Two States Say (Bloomberg)
The five largest U.S. mortgage servicers negotiating with state attorneys general over foreclosure practices would be sued if a settlement isn’t reached, two of the state officials leading the talks said. Illinois Attorney General Lisa Madigan and North Carolina Attorney General Roy Cooper threatened litigation if settlement talks with the companies, including Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM), break down.

Oversight Group Did Not Refer Housing Complaints (NYT)
The federal agency overseeing Fannie Mae and Freddie Mac, the taxpayer-owned mortgage finance giants, failed to refer to criminal investigators and other authorities almost 100 complaints about possible foreclosure abuse and mortgage fraud at the companies over a recent two-year period, according to a report issued late Tuesday by the inspector general of the Federal Housing Finance Agency.

Bank Fine Hints at Feds’ Playbook (WSJ)
The tactic of pressing banks to pay multimillion-dollar penalties for allegedly misleading investors by failing to provide them with complete information about mortgage-bond deals is expected to be used again by the SEC in settlements with other financial firms later this year, in the biggest effort to date by law-enforcement agencies to hold Wall Street to account for its role in the subprime-mortgage meltdown.

Showing Caution, Trader Reaches for Exxon Hedges (WSJ)
On Tuesday, one investor appeared to brace for more stock declines over the next two months by using bearish put options that grant the right to sell Exxon shares. The trader targeted August-expiration contacts to set up a large, bearish “put spread.” Spread strategies combine both the sale and purchase of contracts to reduce the overall cost of the transaction. In this case, the investor sold 15,000 August $72.50 puts to fund the purchase of 7,500 August $77.50 puts. Snapping up twice the number of contracts at one leg of a trade is referred to as a “ratio spread.”

Bridgewater Goes Large (WSJ)
The world’s biggest hedge-fund firm just got bigger with the launch of one of the largest new funds ever. Bridgewater Associates is nearly finished launching a $10 billion fund, the latest sign of the hedge-fund industry’s rebound from the 2008 financial crisis.

UBS Aids Probe of Rate Collusion (WSJ)
Swiss bank UBS AG, one of more than a dozen banks that help set the London interbank offered rate, is aiding investigators examining whether the rate is manipulated.

Pension funds mull ethics of commodity investments (Reuters)
Some pension funds are beginning to question their investments in commodities after accusations that massive flows into the sector have distorted markets, fuelled food inflation and hurt poor nations.

Cocaine cut with levamisole, drug used to de-worm animals, causing users’ skin to rot off (NYDN)
n a June report published in the Journal of the American Academy of Dermatology, doctors described six cases where users developed ghastly splotches of dead skin after snorting or smoking cocaine laced with the drug levamisole. Dr. Mary Gail Mercurio, a dermatologist at the University of Rochester Medical Center who co-authored the study, said her hospital had treated five cases in the last year. “We’ve seen very profound areas of necrosis — dying skin — usually located on scalp, ears, face and elsewhere on the body,” Mercurio said. “It’s very alarming.” Read more »

$$$ Papandreou Wins Confidence Vote, Raising Rescue Chances (Bloomberg)

$$$ IMF warns Spain of setbacks (FT)

$$$ Morgan Stanley Slashes Euro Forecast (MarketBeat)

$$$ S&P says California credit rating at ‘crossroad‘ (Reuters)

$$$ Al Capone Gun Up For Auction This Week With $100K+ Price Tag (HuffPo) Read more »