Opening Bell

Opening Bell: 02.07.13

Credit Suisse Returns To Profit (WSJ)
In the fourth quarter, Credit Suisse’s net profit was 397 million francs, compared with a net loss of 637 million francs a year earlier when restructuring charges weighed on earnings. Revenue, which includes interest income, fees and trading proceeds, rose 29% to 5.8 billion francs. Analysts had expected a profit of 563 million francs and revenue of 6.14 billion francs.

State Lawsuits Could Add To S&P Exposure (WSJ)
On Tuesday, the Justice Department sued S&P for allegedly causing some banks and credit unions to lose $5 billion after relying on the company’s ratings of mortgage-linked securities. However, the $5 billion claim, which S&P has dismissed as “meritless,” is only part of the legal battle being fought by the world’s largest credit-ratings firm by number of deals rated. Thirteen states and the District of Columbia have followed in the Justice Department’s footsteps, filing separate lawsuits against S&P on Tuesday. The California attorney general alone is suing S&P for about $4 billion to recover funds for two of the country’s largest public pension funds, according to its lawsuit. Other states, such as Colorado and Arkansas, are demanding S&P give back the revenue it earned on precrisis ratings of hundreds of securities. State prosecutors allege S&P presented its ratings as based on objective and independent analysis but actually were inflated to cater to the banks that helped arrange and sell the securities.

S&P Hires Top Defense Attorney for $5 Billion Lawsuit (Reuters)
Standard and Poor’s has hired John Keker, one of the country’s top white-collar defense attorneys, to help fight the $5 billion lawsuit brought by the U.S. government this week. Keker, who is based in San Francisco and has represented everyone from cyclist Lance Armstrong to Enron’s Andrew Fastow, was hired at the recommendation of Floyd Abrams, a prominent New York attorney who also represents the ratings firm.

RBS Settles Rate Charges (WSJ)
CFTC enforcement chief David Meister said Wednesday that the trading floor was “laden with conflicts of interest,” where RBS traders “seized the opportunity to ask colleagues sitting in the next chair for false rate submissions.” From mid-2006 to the end of 2010, traders at RBS tried hundreds of times to rig the London interbank offered rate, or Libor, sometimes succeeding, said U.S. and U.K. regulators as they announced a $612 million settlement with the British bank.

‘Historic Winter Storm’ Moving Toward U.S. Northeast (Bloomberg)
A “potential historic winter storm” and blizzard may dump 2 feet of snow on Boston and eastern Massachusetts, potentially causing power outages and leaving 10 inches in New York City. Eighteen to 24 inches (46 to 61 centimeters) of snow may fall in Boston, and the city has an 85 percent chance of receiving at least 12 inches from the storm that is expected to arrive in two days, according to the latest forecast from National Weather Service in Taunton, Massachusetts, published at at 4:25 a.m. Eastern Standard Time. “Heavy snow and gusty winds will bring the potential for blizzard conditions. The worst of the storm will be Friday night into the morning,” the weather service said. The storm arrives on almost the 35th anniversary of the Blizzard of 1978, which killed 99 people, destroyed 2,000 homes, drove 10,000 residents into shelters and paralyzed eastern Massachusetts and northern Rhode Island for a week, according to the weather service.

Ireland Moves Toward Debt Deal (WSJ)
Under Ireland’s new proposal, the government will provide a long-term bond to the Irish central bank that replaces the note, the Irish finance ministry said. IBRC will be liquidated and its remaining commercial property assets will be dispatched to Ireland’s so-called bad bank, the National Asset Management Agency. Mr. Noonan told lawmakers early Thursday that there was still “no deal,” but he needed to announce new powers to liquidate IBRC—the first step toward potentially striking such a debt agreement—to protect the country from unspecified legal challenges.

Man Claims IRS Agent Coerced Him Into Sex (CBS)
An Oregon man is suing the U.S. Government and a female IRS agent he alleges pressured him into sex, by threatening a tax penalty. Vincent Burroughs, of Fall Creek, Ore., says the harassing relationship began in August of 2011 when Dora Abrahamson, an agent with the Internal Revenue Service, called him and said he would be audited, CBS affiliate KVAL reports. Burroughs says he didn’t know Abrahamson, and that he hadn’t met her before those calls – nor had he heard that he was being audited by the IRS. “She was sending me texts that she wanted to come out, give me massages because she needed to help me relax,” Burroughs said in a phone interview with KVAL News. Over the next two months, Burroughs alleges that Abrahamson sent him several flirtatious text messages – offering to give massages, asking to meet him, and sending racy photos of herself to his cell phone. “She said she knew more than my mother knew about me,” said Burroughs. In the lawsuit, Burroughs says in September 2011 Abrahamson came to his home wearing provocative attire. “Next thing I know, she’s at my gate, honking…so I opened my gate, she came into my property dressed exactly like [when] she texted me,” Burroughs said. The lawsuit states: “She said that she could impose no penalty, or a 40% penalty, and that if he would give her what she wanted, she would give him what she needed.”

E-Mails Imply JPMorgan Knew Some Mortgage Deals Were Bad (NYT)
When an outside analysis uncovered serious flaws with thousands of home loans, JPMorgan Chase executives found an easy fix. Rather than disclosing the full extent of problems like fraudulent home appraisals and overextended borrowers, the bank adjusted the critical reviews,according to documents filed early Tuesday in federal court in Manhattan. As a result, the mortgages, which JPMorgan bundled into complex securities, appeared healthier, making the deals more appealing to investors. The trove of internal e-mails and employee interviews, filed as part of a lawsuit by one of the investors in the securities, offers a fresh glimpse into Wall Street’s mortgage machine, which churned out billions of dollars of securities that later imploded. The documents reveal that JPMorgan, as well as two firms the bank acquired during the credit crisis, Washington Mutual and Bear Stearns, flouted quality controls and ignored problems, sometimes hiding them entirely, in a quest for profit.

Harvard’s Gopinath Helps France Beat Euro Straitjacket (Bloomberg)
When French President Francois Hollande unveiled a plan in November for a business tax credit and higher sales taxes as a way to revive the economy, he was implementing an idea championed by economist Gita Gopinath. Gopinath, 41, a professor at Harvard University in Cambridge, Massachusetts, has pushed for tax intervention as a way forward for euro-area countries that cannot devalue their exchange rates. “Fiscal devaluation” is helping France turn the corner during a period of extreme budget constraints, former Airbus SAS chief Louis Gallois said in a business- competitiveness report Hollande commissioned. Gopinath’s support for the theory took shape through her years teaching at Harvard and the University of Chicago and particularly as a Ph.D. student at Princeton University under the guidance of Kenneth Rogoff, Pierre-Olivier Gourinchas and Ben Bernanke, now chairman of the Federal Reserve. While her earlier work on current accounts and balance of payments garnered praise, it is her recent focus on the 17 euro nations that has national leaders paying action.

John Thomas Financial Said To Draw Regulatory Probe (NYP)
Wall Street brokerage firm John Thomas Financial, owned by flamboyant founder and CEO Tommy Belesis — who gained more than 15 minutes of fame from his role in Oliver Stone’s “Wall Street: Money Never Sleeps” — is being probed by the brokerage industry, the Securities and Exchange Commission and the FBI, The Post has learned. Agents from the FBI’s New York office have been knocking on doors of people associated with the firm, asking questions about JTF’s business practices, including cold calling by brokers and Belesis’ overseas accounts, sources told The Post.

Fewer Workers Filed Claims for U.S. Jobless Benefits Last Week (Bloomberg)
Applications for jobless benefits dropped 5,000 to 366,000 in the week ended Feb. 2, Labor Department figures showed today. Economists forecast 360,000 claims, according to the median of 53 estimates in a Bloomberg survey.

Big Mac Prices Show Which Euro Zone States Best at Belt-Tightening (Reuter)
Economist Guntram Wolff took the data and found that the price rise in Greece, Portugal and Spain has been less than the euro zone average, while in Ireland the price actually fell. These are the main countries undergoing deep economic reform due to the debt crisis. This contrasts with price rises above the euro zone burger average in Germany. Wolff concludes from this that economic adjustment is working. For example, In Ireland, which has made spending cuts after receiving international aid, the burger price has fallen from 3.80 euros to less than 3.50 euros. There is one notable exception, however. Heavily-indebted Italy is the most expensive country in the euro area to buy a Big Mac – 3.85 euros – while it costs just 3.64 euros in Germany.

PETA: Naked chicken corpses aren’t sexy (CM)
The American founder of People for the Ethical Treatment of Animals, president Ingrid Newkirk, criticised a newspaper for running a picture of a raw chicken. “We don’t want to see any chickens on display, but instead want them to live natural, happy lives with their families. Sexily displaying the corpse of a chicken who has been bred to grow so big, so quickly, that many collapse under their own weight, is just additionally offensive.”

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38 Responses to “Opening Bell: 02.07.13”

  1. Fly on the Wall says:

    Floyd Abrams: Look, you have to hire this guy, John Keker, he's the best of the best.
    S&P: OK, Floyd, but can you tell me a little bit about what he has done in the past?
    Floyd Abrams: He's the best defense attorney out there. I mean, the guy has represented Lance Armstrong…Andrew Fastow…lots of famous people.
    S&P: Correct me if I am wrong, Floyd, but didn't all those people eventually lose their cases?
    Floyd Abrams: Yeah…he's due!

  2. Guesti says:

    Request for Matt's inner thoughts on Shazars recent posts?

  3. Unsolicited Ski Guy says:

    Could be a doozy, folks. I'll be calling in scared to work in the morning — Sorry, boss, I'm afraid I'm not going to make it in today. Drive the '78 Econoline up to Killington, sleep in the KPeak lot with my phatties by my side and ski chokers all day Saturday. Word

  4. E. Texas Gas Trader says:

    We're hearing some of you might get 10 inches tonight.

  5. guest says:

    "Man Claims IRS Agent Coerced Him Into Sex"

    Coerced? Most of us get raped.

  6. IRS guy says:

    Your move SEC bitches

  7. Googler says:

    I will suspend judgment on Vincent's plight until photos of Dora are released

  8. 10-40 Easyyyyyyyy says:

    “She said that she could impose no penalty, or a 40% penalty, and that if he would give her what she wanted, she would give him what she needed.” Wow.

  9. guest says:

    "Sexily displaying the corpse of a chicken who has been bred to grow so big, so quickly…is just additionally offensive."

    Sing it, sister.

    – C. Christie

  10. MD in Need says:

    My firm used to have this senior partner that would tell MD’s to deliberately try to impregnate female employees at rival banks so they'll have a "trophy" of how manly and virile they are. The more babies they help conceive, especially without having to be responsible for them, the more bragging they can lie down at the country club. Every MD had his own bag of tricks too. Some would put holes in condoms and convince a new hire at firm “b” down the street to shack up and get it on! I recall a time in the early 90s that one bank in particular had its consumer products coverage group nearly depleted because of maternity leave. Boy times have changed though. Girls are no longer hired based on the amount of cleavage they show in an interview rather what they claim to have in brains! Always get a kick when I’m at recruiting events and see more than a few kids that look I’m their daddy. Brings me back to my glory days.

  11. Deleveraging says:

    It is nice to hear economists have found another use for the Big Mac besides measuring inflation in Argentina.

  12. Jim Cramtore says:

    This storm is going to be bad.

  13. Guesteban says:

    She continued: "You've been a very naughty boy. I don't want the standard treatment. I'm going to itemize what I want you to do to me: I want you to touch all my bases, with no adjustments, no exemptions and no abatement. It might get gross. Don't deduct anything. Don't try to step up. And if I even suspect that you're withholding, you'll get the boot. Oh, I'm gonna tax that ass"

  14. guest says:

    Those men tried to have sx with me!

  15. Rooney Mara says:

    Naked chickens are definitely unsexy.

  16. PED dealer says:

    In case of audit, call us.

  17. Bloomberg Reporter says:

    In addition to reporting a strong 4th quarter, Lazard also announced some changes to their capital deployment strategy. The independent investment bank said it would be making a substantial investment in protecting its reputation, chiefly by issuing preferred shares to Bess Levin in exchange for a promise that Jon Shazar would never write for Deal Breaker again. CEO Ken Jacobs said "his name is just too close to rhyming with the name of the firm, and the writing is just so atrocious."

    Nelson Peltz, the activist investor who had been urging the bank to cut costs, agreed with the plan saying "while I want expenses reined in, the firm's reputation is an invaluable asset and as Ken said, Jon Shazar is really quite abhorrent."

  18. Tribeca Trapt says:

    Bess, I'm scared of the blizzard. Are we going to be ok?