Opening Bell: 12.21.12

Critics Say UBS Let Off Too Easy (WSJ)
Our goal here is not to destroy a major financial institution,” Lanny Breuer, assistant attorney general for the Justice Department’s criminal division, said Wednesday after the $1.5 billion fine against UBS was announced. Prosecutors have to at least “evaluate whether or not innocent people might lose jobs” and other types of potential collateral damage. Sen. Charles Grassley (R., Iowa), a Senate Finance Committee member, said he is unsatisfied that prosecutors didn’t go higher up the corporate ladder at UBS than its Japanese subsidiary…”The reluctance of U.S. prosecutors to file criminal charges over big-time bank fraud is frustrating and hard to understand,” Mr. Grassley said. The $1.5 billion fine is a “spit in the ocean compared to the money lost by borrowers at every level, including taxpayers.”

Regulatory ‘Whale’ Hunt Advances (WSJ)
The first regulatory ripples from the “London Whale” trading fiasco are about to hit J.P. Morgan Chase. The Office of the Comptroller of the Currency, led by Comptroller Thomas Curry, is preparing to take a formal action demanding that J.P. Morgan remedy the lapses in risk controls that allowed a small group of London-based traders to rack up losses of more than $6 billion this year, according to people familiar with the company’s discussions with regulators.

Khuzami To Leave SEC Enforcement Post (WSJ)
Robert Khuzami, head of the Securities and Exchange Commission’s enforcement unit, plans to leave the agency as soon as next month, a person familiar with the expected move said Thursday.

Boehner Drops ‘Plan B’ as Budget Effort Turns to Disarray (Bloomberg)
House Speaker John Boehner scrapped a plan to allow higher tax rates on annual income above $1 million, yielding to anti-tax resistance within his own party and throwing already-stalled budget talks deeper into turmoil. He will hold a news conference today at 10 a.m. Washington time to discuss the next steps in the budget dispute, a Republican leadership aide said. House members and senators won’t vote on the end-of-year budget issues until after Christmas, giving them less than a week to reach agreement to avert tax increases and spending cuts set to take effect in January. The partisan divide hardened yesterday, making the path to a deal more uncertain.

BlackRock Sees Distortions in Country Ratings Seeking S&P Change (Bloomberg)
Credit rating companies are distorting capital markets by assigning the same debt ranking to countries from Italy to Thailand and Kazakhstan, according to BlackRock, the world’s biggest money manager. While 23 countries share the BBB+ to BBB- levels assessed by Standard & Poor’s, the lowest investment grades, up from 15 in 2008 at the beginning of the financial crisis, their debt to gross domestic product ratios range from 12 percent for Kazakhstan to 44 percent for Thailand and 126 percent for Italy, International Monetary Fund estimates show. The cost of insuring against a default by Italy, ranked BBB+, over the next five years is almost triple that for Thailand, which has the same rating. For BlackRock, which oversees $3.7 trillion in assets, the measures are so untrustworthy that the firm is setting up its own system to gauge the risk of investing in government bonds. This year, the market moved in the opposite direction suggested by changes to levels and outlooks 53 percent of the time, data compiled by Bloomberg show. “The rating agencies were very, very slow to the game,” Benjamin Brodsky, a managing director at BlackRock International Ltd., said in a Nov. 23 interview from London. “They all came after the fact. For us, this is not good enough.”

If You Bought Greek Bonds in January You Earned 80% (Bloomberg)
Greek government bonds returned 80 percent this year, compared with 3.7 percent for German bunds and 6.1 percent for Spanish securities, Bank of America Merrill Lynch indexes show. It’s the first year since 2009 that investors made money on Greek securities, with 2012 providing the biggest advance since Merrill began compiling the data in 1998, according to figures that don’t reflect this month’s debt buyback by the government.

Texas lawmaker: ‘Ping-pongs’ deadlier than guns (The Ticket)
Incoming Texas State Rep. Kyle Kacal says guns don’t kill people—ping-pong kills people. “I’ve heard of people being killed playing ping-pong—ping-pongs are more dangerous than guns,” he says. “Flat-screen TVs are injuring more kids today than anything.” The lifetime rancher, who will take his seat in 2013 as a freshman, says that new gun restrictions are unnecessary. Kacal, who reportedly operates a hunting business, notably came out against a bill instructing Texans how to secure their assault weapons. “People know what they need to do to be safe. We don’t need to legislate that—it’s common sense,” he said. “Once everyone’s gun is locked up, then the bad guys know everyone’s gun is locked up.”

Flare-up in war of words between Ackman, Herbalife (NYP)
“This is the highest conviction I’ve ever had about any investment I’ve ever made,” Ackman said yesterday in a series of interviews. The investor told CNBC that he expects the Federal Trade Commission will take a “hard look” at the company. The heavyweight battle picked up steam over the last two days and has become, in the typically slow days leading up to Christmas, one of the most-watched events on Wall Street. As the financial world watched, Herbalife CEO Michael Johnson returned fire — calling Ackman’s statements “bogus” and asking the Securities and Exchange Commission to probe the motives of Ackman and his Pershing Square Capital hedge fund. A spokeswoman said if Johnson were allowed the chance to face-off against the investor at the Downtown conference, the CEO “would have been able to tear Mr. Ackman’s premises and interpretation of our business model apart.”

Citigroup Said to Give CCA Managers 75% Stake in Funds for Free (Bloomberg)
Among Vikram Pandit’s last jobs as Citigroup’s chief executive officer was to decide the fate of the bank’s hedge-fund unit, which employs some of his oldest colleagues. He agreed to give them most of it for free. While Citigroup is keeping a 25 percent stake, managers at the Citi Capital Advisors unit will pay nothing for the remaining 75 percent of that business as it becomes a new firm managing as much as $2.5 billion of the bank’s money, according to people with knowledge of the plan. The lender will pay the executives fees while gradually pulling out assets to comply with impending U.S. rules, said the people, who requested anonymity because the terms aren’t public. The deal was Citigroup’s response to the Volcker rule.

Peter Madoff Is Sentenced to 10 Years for His Role in Fraud (Dealbook)
A lawyer by training, Peter Madoff is the second figure in the scandal to be sentenced. His older brother, Bernard, pleaded guilty in March 2009 and is serving a prison term of 150 years.

UK Boom in Pound Shops: An Austerity-Proof Business Model? (CNBC)
Pound shops in the U.K. are reporting massive increases in profits across the board showing that the formula “pile ‘em high and sell ‘em cheap” has particular resonance in Britain’s current age of austerity. Names like “Poundstretcher,” “Poundland” and “99p Stores” in the U.K. have become high street stalwarts as other brands go bust. The chains, immediately recognizable on price point, are opening new stores and reporting record results reflecting the increasing public demand for cheaper goods. U.K. based “Poundland” is one such chain reporting steep sales growth as its range of 3,000 items — from umbrellas and pregnancy tests (it sells 14,000 a week) to bird feeders and bags of crisps all priced at one pound – resonates with cash-strapped Britons. In the year to April 2012, the Warburg Pincus owned company said its turnover increased 22 percent to 780 million pounds ($1.25 billion) and profits increased by 50 percent to 18.3 million pounds from last year’s figure of 12.2 million.

Former Olympian Suzy Favor Hamilton admits to life as a $600-an-hour hooker (NYP)
Steamy, lingerie-clad images of the champion runner helped tout her services on the Web site of a Vegas escort agency called Haley Heston’s Private Collection, where Favor Hamilton operated under the name “Kelly Lundy,” according to The Smoking Gun. Customers could hire her lithe Olympic-class runner’s body for $600 an hour, $1,000 for two hours and $6,000 for 24 hours. The site described her build as “athletic,” her bosom as “perky,” and her belly button as “pierced.” She was willing to provide horny customers the full “girlfriend experience,” and would also engage in a certain undisclosed sex act for an extra $300. “I enjoy men of all shapes, sizes and colors, and I have an affinity for women (I am bisexual),” “Kelly” wrote on her page on the escort service’s Web site. “I consider dates with couples an experience to cherish.” Her sexual skills reportedly earned her a high rating on The Erotic Review, a Web site frequented by prostitution fans. Favor Hamilton’s lusty secret life might have stayed secret if she had not made the mistake of revealing her true identity to some of her wealthy johns, who went to the media.

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Comments (67)

  1. Posted by VonSloneker | December 21, 2012 at 9:12 AM

    Once the Olympics are over we all prostitute ourselves in one way or another…

    - Bruce Jenner

  2. Posted by Guest | December 21, 2012 at 9:13 AM

    Guns < ping pong < tetherball

  3. Posted by M'Balz Izhari | December 21, 2012 at 9:14 AM

    The fuck is a hunting business?

  4. Posted by Guest | December 21, 2012 at 9:16 AM

    I feel very let down by the picture today

  5. Posted by Guest | December 21, 2012 at 9:18 AM

    I'll pay $10MM if you put that in a container full of formaldehyde.

    -S. Cohen

  6. Posted by Guest | December 21, 2012 at 9:19 AM

    A Value fund.

  7. Posted by guest | December 21, 2012 at 9:26 AM

    next time you're wondering why 1st/2nd gen asians don't vote rebublican, read that hunting biz article. something tells me his kids won't be with mine in the SAT review course on saturdays

  8. Posted by Truther | December 21, 2012 at 9:34 AM

    1st/2nd gen asians are liberals because they are butt ugly and smelly with buck teeth. Only ugly liberal girls would date such things.

  9. Posted by Guest who knows | December 21, 2012 at 9:38 AM

    Oh boy… Grassley just STFU you old piece of cow dung from Iowa. I think UBS sucks just as much as the next guy but no one wants to hear your blowhard career politician schtick. His hard-on for Wall Street is epic and he really is a clueless old man who cares solely about the "poor" farmer. Ask any American ex-pat about the nonsense he pulled to fuck us on our personal income taxes while living abroad basically putting Americans at a disavantage vs. UK, Australia et al. The clowns that manipulated LIBOR have nothing on this crusty old fart in terms of being sneaky and self-motivated…

  10. Posted by Guest | December 21, 2012 at 9:38 AM

    Guy buys a plot of land and sells access to fellow hunters to hunt on the land.

  11. Posted by Honorable Rep. Kacal | December 21, 2012 at 9:39 AM

    You people are pretty good at Ping Pong, aren't ya'?

  12. Posted by guest | December 21, 2012 at 9:40 AM

    Yup, gangster for life

    - Greg Smith

  13. Posted by Guest | December 21, 2012 at 9:41 AM

    You tell em, girlfriend!

  14. Posted by Vik P | December 21, 2012 at 9:42 AM

    1. Start hedge fund
    2. Have shitty returns
    3. Sell to Citi for $800M
    4. Become CEO of Citi
    5. Do shitty job
    6. Give hedge fund back to old colleagues for free
    7. Get fired
    8. Go back to run hedge
    9. Profit every fucking step of the way

  15. Posted by Guest | December 21, 2012 at 9:43 AM

    My kid has an inflatable whale like that.

  16. Posted by "Kelly" | December 21, 2012 at 9:47 AM

    For an extra $600, you get a chance to shoot former Olympic runners.

  17. Posted by Fruit discounter | December 21, 2012 at 9:48 AM

    Wheeeeeeeeeeeeeeeeeeeeeee

  18. Posted by PermaGuestII | December 21, 2012 at 9:51 AM

    I'll see your Kyle Kacal, and raise you a Maxine Waters.

    -Guy who thinks that neither party has a monopoly on cretinous lunatics.

  19. Posted by Phred | December 21, 2012 at 9:54 AM

    I continue to be baffled as to why regulators give a crap that JPM's shareholders lost $6BN.

  20. Posted by Long Name Baller | December 21, 2012 at 9:58 AM

    As soon as I saw the whale I knew it was gonna be a Matt kind of day.

    -Guy finalizing plans to open an "independent equity, fixed income, and structured products research firm" that just repackages Matt's posts and charts and sells them to fraudulent hedge fund managers operating ponzi schemes that want to appear as though they're doing real research.

  21. Posted by Guest | December 21, 2012 at 9:58 AM

    What's it like to have a girlfriend?

  22. Posted by Guest | December 21, 2012 at 9:58 AM

    You're forgetting the years he took $1 for a salary, doesn't that count for something?

  23. Posted by Everyone at Citi | December 21, 2012 at 10:01 AM

    You forgot:

    4A. Hire all of your loser friends from Morgan Stanley and Lehman Brothers into senior positions to actually mess up Citi even more if imaginable

  24. Posted by Bosa Nova | December 21, 2012 at 10:04 AM

    Like warm apple pie

  25. Posted by Matt's Mom | December 21, 2012 at 10:07 AM

    Would've been nice if you could have shared where to get one before Hanukkah, asshole.

  26. Posted by Farik Al Bawlzahna | December 21, 2012 at 10:15 AM

    What time is Best Buy to today?

  27. Posted by Quant me maybe | December 21, 2012 at 10:16 AM

    It's a redirect. Oldest tactic in marketing.

  28. Posted by MILFHunter | December 21, 2012 at 10:16 AM

    An enjoyable one

    - Milf Hunter

  29. Posted by Beta Guest | December 21, 2012 at 10:17 AM

    What happens with the 3rd gen?

  30. Posted by M'Cuntz Izhari | December 21, 2012 at 10:19 AM

    Did you get reservations at Per Se for tonight?

    - M'Cuntz Izhari

  31. Posted by Guest | December 21, 2012 at 10:23 AM

    I have an inflatable dog with two holes.

    -D. Kneale

  32. Posted by Guest | December 21, 2012 at 10:27 AM

    There's no 3rd gen.

    Asian chicks tend to mate only with q-tips, so by the third gen they are all q-tips…
    Asian dudes don't get any action…

  33. Posted by Little Fritz | December 21, 2012 at 10:31 AM

    Jeez, she calls it "Contributions to Olympic Fund" and the tricks are just her way of saying "Thank You to her Contributors" and she walks on the whole deal.

    It's Vegas, for cryin' out loud.

  34. Posted by Suburban Life :( | December 21, 2012 at 10:32 AM

    My wifes got an asshole the size of a crater courtesy of Terrell

  35. Posted by No One | December 21, 2012 at 10:35 AM

    cares about your kid. All I know is that my weekend is going to be a hell of a lot better than yours…

  36. Posted by FMJ | December 21, 2012 at 10:36 AM

    This is my rifle and this is my gun; this is for killing and this is for fun…

  37. Posted by Suburban Neighbor :( | December 21, 2012 at 10:39 AM

    Probably a bad time, but your lawnmower you let me borrow? Well, I sorta ran over a rock and it caused the engine to kickback and it doesnt want to start anymore so I put it back in your garage with a note explaining what happened, but I noticed your car hasnt been in the driveway for about 2 weeks now so I tried calling you at work, but I didnt get an answer. Sooo other than that, how yah been buddy? Good? Cool, cool; yeah I've just been busy with all the christmas shopping and shit and shit. Hey, my cell battery is about to die so I'm gunna hang up know. OK. talk to you soon.

  38. Posted by Asian Laxbro | December 21, 2012 at 10:46 AM

    Seriously? I only sleep with 1st and 2nd gen Asians. Their emotional neediness is far below that of the standard American women and they are grateful to date outside of the Asian ghetto. Oh yeah, and they don't age and never gain weight.

    - Guy that thinks he could do a series of Asian Laxbro stories but is paranoid as hell and is afraid of being ID'd

  39. Posted by Herbalife Quant | December 21, 2012 at 10:47 AM

    Could you please give us a call, we'd be interested in getting distributors to buy that from you.

  40. Posted by Asian dude | December 21, 2012 at 10:55 AM

    sad but true

  41. Posted by Sleeper | December 21, 2012 at 11:12 AM

    So $30 for sex and $570 for listening to her talk about how she killed it at the Olympic trials?

    - Guy who might pay that for a 20-something with a butterface but not a 40-something who could probably beat him in an armwrestle

  42. Posted by Hobbes | December 21, 2012 at 11:15 AM

    To my knowledge, only Asian women date outside of the Asian gene pool.

  43. Posted by guest | December 21, 2012 at 11:16 AM

    We don't need to imagine it. We watched it.

    Everyone not at Citi.

  44. Posted by guest | December 21, 2012 at 11:18 AM

    Well let's see. His tenure started with said sale of overpriced fund, so, no. And citi stock was down 95% while he was in charge. So no again.

  45. Posted by Texashedge | December 21, 2012 at 11:19 AM

    "$600 an hour, $1,000 for two hours"

    Hiring a hooker for two hours is really the definition of wasting money

  46. Posted by guest | December 21, 2012 at 11:21 AM

    You understand that a few years ago some banks got into similar trouble and by the time the regulators paid attention the economy was in tatters and taxpayers were on the hook to fix the problems, right?

  47. Posted by Flo | December 21, 2012 at 11:30 AM

    Speak for yourself.

    - Shamu

  48. Posted by Not a OB/GYN | December 21, 2012 at 11:30 AM

    For the record I'm not an OB/GYN, but any chick eating stinky tofu is going to emit foul odor from her between the thighs fish factory

  49. Posted by Movie Buff | December 21, 2012 at 11:30 AM

    Especially when she looks like Magda from "There's Something About Mary".

  50. Posted by DerDay | December 21, 2012 at 11:32 AM

    How much does it cost to just cry on her shoulder?

  51. Posted by Do me a Favor | December 21, 2012 at 11:32 AM

    I know how to find out for $600/hr

  52. Posted by Easy Loan Finance | December 21, 2012 at 11:44 AM

    I am without clothes as I grew up in country where not required. Great post I must say.

  53. Posted by Asian farmer | December 21, 2012 at 11:50 AM

    Need male babies only and a pool of deep water.

  54. Posted by 3 Min in Heaven | December 21, 2012 at 12:02 PM

    Only 10/min, SOLD!

  55. Posted by PermaGuestII | December 21, 2012 at 12:28 PM

    No, really? Please enlighten us, o profound OWS lurker.

  56. Posted by guest | December 21, 2012 at 12:47 PM

    Ascribing a viewpoint (actually a set of facts) that you'd rather forget to some OWS idiot is the mark of a lightweight. I'm nowhere near OWS, physically or ideologically.

    Are you disputing my broad characterization of what happened? A bunch of banks didn't fail? They didn't require taxpayer assistance? You really need enlightening on that? When we're done maybe we can cover whether the earth is flat or round.

    If you don't realize that big, poorly understood derivative bets were a major driver of bank (and insurance company) failures in 08, you're a f'ing idiot.

  57. Posted by PermaGuestII | December 21, 2012 at 1:03 PM

    How can you be *physically* proximate to an intellectual movement?

  58. Posted by guest | December 21, 2012 at 1:07 PM

    That's the best you can do? I'll declare victory then. Pretty sure there's an actual Wall Street. There's also an actual, physical Zuccotti Park. Whether there are or are not still some lunatics camped out there, I don't know. So you got me on using the wrong tense in my prior post.

  59. Posted by A. Ross Sorkin | December 21, 2012 at 1:17 PM

    Well, now that we've gotten that out of the way, please, continue to share with the class how the crisis was caused by wrong way prop-ish bets on corporate credits, very interested to hear about it.

  60. Posted by guest | December 21, 2012 at 1:33 PM

    Tell you what, you give me your money to manage. I'll wreck your portfolio with MBS. A couple years later I'll wreck it with corporate credits. When I explain to you that the second loss is *totally* different from the first loss and thus not something to worry about, you'll accept and be totally cool with that, right?

    Btw, please also point out to me where I said the crisis was caused by "prop-ish bets on corporate credits."

  61. Posted by Oblivious | December 21, 2012 at 1:48 PM

    Wtf is a qtip?

  62. Posted by PermaGuestII | December 21, 2012 at 1:49 PM

    "You understand that a few years ago some banks got into similar trouble…"

  63. Posted by guest | December 21, 2012 at 2:00 PM

    Similar = identical. Riiiiiiiight.

    You're belittling yourself perma.

  64. Posted by I'sheet M'drawrz | December 21, 2012 at 2:09 PM

    Get a room you two.

  65. Posted by Guest | December 21, 2012 at 11:18 PM

    Tell me about it.

    - Wealthy John

  66. Posted by CDO | December 21, 2012 at 11:21 PM

    I'd be interested in helping structure that for you.

    - Jefferies MD

  67. Posted by guestido | December 25, 2012 at 9:16 PM

    Why are you so angry?