Wells Fargo Profit Rises as Bank Gains From Refinancing (Bloomberg)
Net income advanced to a record $5.09 billion, or 91 cents a share, from $4.11 billion, or 73 cents, a year earlier, the San Francisco-based bank said today in a statement. That beat the 89-cent average estimate of 27 analysts surveyed by Bloomberg, some of whom were excluding one-time costs tied to a regulatory settlement.
SAC Is Bracing For Big Exodus Of Funds (WSJ)
Hedge-fund group SAC Capital Advisors has told employees and business partners it is bracing for client withdrawals of at least $1 billion this year—nearly 17% of the money it manages for outside investors—amid intense regulatory scrutiny of alleged insider trading, people briefed on the conversations said…SAC manages $14 billion in total, but only around $6 billion comes from outside investors, most of the rest belonging to Mr. Cohen and SAC employees. Clients have until Feb. 15 to put in a redemption request to receive money by the first quarter’s end; it is likely even SAC won’t know the precise figure that investors will ask to pull until then. However, in recent weeks the firm’s executives have been alerting advisers and senior employees that the withdrawal requests, known as “redemptions” in the hedge-fund industry, could total $1 billion or more. At the same time, SAC’s top ranks have been reaching out to investors to gauge whether they want to keep their money with the firm or not, the people briefed said.
Geithner’s Tenure Defined by Financial Crisis (NYT)
Looking back, he is remarkably sanguine. He is comfortable with his decisions: the policy choices available to him were far from ideal, he said, but his team did the best it could within the realm of the politically possible. “It was a very bad crisis. No playbook. No road map. No clear precedent,” he said. “If we had a different set of constraints, particularly in fiscal policy, then I think that the economic outcome could have been modestly better.”
Herbalife defends its honor as Ackman presses case (Reuters)
Herbalife Ltd executives defended their business on Thursday as a “legitimate company” with customers outside the network of people who sign up to sell its nutrition products, stepping up the defense against pyramid scheme accusations by short seller Bill Ackman…minutes after the company’s presentation ended, Ackman’s hedge fund claimed Herbalife did not answer Pershing Square’s points as it said it would. “The company distorted, mischaracterized, and outright ignored large portions of our presentation,” Ackman said in a statement.
British Panel Castigates Ex-UBS Officials at Hearing (Dealbook)
“What we have heard are appalling mistakes that can only be described as gross negligence and incompetence,” said Andrew Tyrie, a politician who leads the Parliament’s commission on banking standards that is investigating wrongdoing at the firms operating in London. “The level of ignorance seems staggering to the point of incredulity.”
Nicky Hilton’s ex to face off against alleged filching assistant (NYP)
Hedge funder Todd Meister — the ex-husband of Nicky Hilton — now has a courtroom Valentine’s date with his accused embezzling “personal” assistant. A Manhattan judge today set Feb. 14 as the trial date for the allegedly filching assistant, Ukranian beauty Renata Shamrakova, accused of swiping $900,000 from Meister. Prosecutors say Shamrakova had no authority to ring up the nearly $1 million in expenses on Meister’s credit card. Shamrakova counters that she was only hired in the first place to be Meister’s very personal assistant. Meister let her run up the card as a gift during the course of their romantic relationship, she says.
Wads Of Cash Squeeze Bank Margins (WSJ)
Deposits reached a record $10.6 trillion at the end of 2012, according to Market Rates Insight Inc., a San Anselmo, Calif., firm that tracks deposit data. Meanwhile, the share of each deposit dollar that banks lend out hit a postfinancial-crisis low in the third quarter, according to data tracker SNL Financial of Charlottesville, Va. Extra cash can help cushion banks in an economic downturn, but it also helps to explain why banks’ net interest margin—the sum they collect by pocketing the difference between the interest they pay to depositors and the rate they charge borrowers—has fallen sharply. Wells Fargo has been among the hardest hit in recent quarters, with its net interest margin falling to 3.66% in the third quarter from 3.84% a year earlier.
A Hawk Assails Easy Money (WSJ)
Esther George, president of the Federal Reserve Bank of Kansas City, stepped forward as a new, high-profile internal critic of the Federal Reserve’s easy-money policies. Ms. George told an audience in Kansas City, Mo., Thursday that current Fed policies made her “uneasy” and warned that the Fed “must not ignore the possibility” that monetary policy could contribute to new bubbles that harm the financial system.
AmEx Cuts Jobs as Digital Age Transforms Travel Business (Bloomberg)
American Express Co. will eliminate 5,400 jobs this year, mostly in travel services, as consumers and businesses rely more on digital technology for bookings.
AC casinos were bad bet, with 8% revenue hit (NYP)
Hedge-fund high rollers who bet big on a comeback for Atlantic City’s casinos are watching their gambling profits dwindle. The city’s casino industry suffered its sixth straight decline last year, with winnings down 8 percent to $3.05 billion, the New Jersey Division of Gaming Enforcement said in its latest annual report, released yesterday. Even before Sandy laid waste to the city’s famed boardwalk and emptied its casinos, the gaming industry was down 4.8 percent through September, the regulator said. The numbers suggest the odds are increasingly stacked against deep-pocketed backers who play a key role in reviving the city’s fortunes. They include Marc Lasry’s $12 billion Avenue Capital, a big investor in Trump Entertainment, which owns Trump Taj Mahal and Trump Plaza. Lasry led a group of investors who brought Trump Entertainment out of bankruptcy in 2010. Billionaire investor Carl Icahn owns Tropicana Casino and Resorts, which he bought out of bankruptcy in 2010. Lasry’s Trump Taj Mahal saw casino winnings fall 15 percent last year, while Trump Plaza was down 25 percent, according to yesterday’s report. Icahn’s Tropicana fell 9.8 percent.
Lew’s Lack of Geithner Global Rolodex Not Biggest Hurdle (Bloomberg)
Geithner’s expertise ensured that his foreign counterparts would consider his views. Still, he was often frustrated that the euro area didn’t move more forcefully to fight its sovereign debt crisis. Geithner’s cause was undermined by the U.S.’s trillion-dollar deficits and infighting over the budget, according to some European officials. Lew, 57, will face the same hurdle if he is confirmed by the Senate. “There is nothing gained by having someone who has a Rolodex and knows everyone around the world,” said Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. “As the U.S. races to another cliff, its credibility is very small,” he said, referring to the budget disputes in Washington. Obama yesterday called Lew a “master of policy” in announcing that he will nominate his chief of staff to become the 76th U.S. Treasury secretary. Geithner will stay on through Jan. 25, according to a department official.
Man crashes into Lincoln Valentino’s restaurant, orders pizza (AP)
Lincoln, Nebraska police say a man crashed his car through the front door of a pizza restaurant before ordering a pie for himself. The man drove his Honda through a Valentino’s chain store Wednesday morning. While trapped in his car, the man ordered a pizza. Fire officials took it as a good sign that the man was alert. He was taken to a local hospital. No other injuries were reported. The building was not damaged structurally. No electrical or gas issues were reported.