Federal Probe Targets Banks Over Bonds (WSJ)
Federal investigators are probing whether a number of Wall Street banks cheated clients in the years following the financial crisis by deliberately mispricing a type of mortgage bond that was central to the economic turmoil, according to people close to the inquiry. The investigation is a potential blow to the banks, who are just starting to move on from years of intense scrutiny tied to their roles in the crisis. Wall Street’s conduct leading up to and during the market convulsions of 2008 already has been closely examined by authorities. The new probe by regulators is the first known wide-ranging examination of mortgage-bond sales by banks in the years that followed. In that postcrisis period, when the economy remained shaky and many markets weren’t yet active again, banks still held on their books billions of dollars in hard-to-price assets. Regulators are seeking information about whether banks made significant misrepresentations about some of those assets to make deals. The banks under scrutiny include Barclays, Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc., JP Morgan Chase, Morgan Stanely, Royal Bank of Scotland, and UBS, said one of the people close to the probe.
Martoma’s Ex-SAC Trader Said to Be First Trial Witness (Bloomberg)
Tim Jandovitz was employed by SAC from 2005 to 2010, at least part of the time as Martoma’s trader, before leaving to start a sandwich restaurant in Chicago, said one of the people, who asked not to be identified because the matter isn’t public. Assistant U.S. Attorney Arlo Devlin-Brown said in court yesterday that Jandovitz would be called to testify as early as this afternoon, once a jury is selected and lawyers make their opening arguments in the case.
IBM Struggles to Turn Watson Computer Into Big Business (WSJ)
Three years after International Business Machines Corp. began trying to turn its “Jeopardy”-winning computer into a big business, revenue from Watson is far from the company’s ambitious targets. IBM Chief Executive Virginia “Ginni” Rometty has told executives she hopes Watson will generate $10 billion in annual revenue within 10 years, according to an October 2013 conference-call transcript reviewed by The Wall Street Journal. She set that target after the executive in charge of Watson said its business plan would bring in $1 billion of revenue a year by 2018. That would make Watson the fastest IBM business unit to reach the $1 billion milestone. But Watson had total revenue of less than $100 million as of late October, according to the transcript. One of its first big projects, with the University of Texas M.D. Anderson Cancer Center, was “in a ditch” in early 2013, said Manoj Saxena, the executive overseeing Watson.
After scandal, SAC alums raising piles of cash (NetNet)
Investors have poured hundreds of millions of dollars into hedge funds run by Jason Karp, Aaron Cowen and James “Jos” Shaver, for example, and more is on the way. Together, they make up a class of successful recent fund launches, easily powering through any negative connotation the SAC association has on their resume. Their success also points to other potentially successful spin-offs as the parent firm downsizes and transitions to a family office for billionaire founder Steven A. Cohen. “Investors know it’s not fair to paint everyone from SAC with the same brush. They’re much more focused on merit to figure out who is a good candidate to invest with or hire,” said Sasha Jensen, founder of hedge fund-focused recruiting firm HFE Search. “Having SAC on your resume isn’t a black mark.”
Rodman serenades Kim Jong Un with ‘Happy Birthday’ (AP)
Former NBA star Dennis Rodman sang “Happy Birthday” to North Korea’s dictator Kim Jong Un in front of a cheering crowd of thousands in the communist country’s capital. The ex-hoopster said Kim, who was in the audience with his wife and other senior North Korean officials, was his “best friend,” the BBC reported. It is the fourth time Rodman has visited the North Korean strongman – who recently had his own uncle killed for his alleged betrayals.
Record job growth in December as 238K join work force (AP)
A private survey shows US businesses added the most jobs in a year in December, powered by a big gain in construction jobs. The figures add to evidence that the economy gained momentum at the end of 2013. Payroll processor ADP said Wednesday that companies added 238,000 jobs in December, up slightly from 229,000 in the previous month. November’s figures were revised higher.
Wells Fargo Creates SWAT Team to Keep Loans In-House (Bloomberg)
Wells Fargo, the largest U.S. home lender, has assigned about 400 underwriters to originate mortgages for the bank to hold, with as many as 40 percent of the loans likely to fall outside government guidelines taking effect this week. The bank is training the group as a way to increase lending without losing control of quality, according to Brad Blackwell, head of portfolio lending for the San Francisco-based lender. The group will review loans including those with terms that prevent them from qualifying for protections provided by the Consumer Financial Protection Bureau, or CFPB, under new rules, he said.
Bitcoin Woos Washington to Ensure Lawmakers Don’t Kill It (Bloomberg)
Bitcoin advocates entered Washington a year ago with the shadow of a federal criminal investigation cast over the virtual currency industry. Their first mission: Win over, or at least not alarm, the U.S. Treasury Department’s Financial Crimes Enforcement Network, called Fincen. “Our first reaction, particularly when I was on the law enforcement side, when we had something new was ‘Huge risk! Huge risk for money laundering. It’s bad!’” Fincen Director Jennifer Shasky Calvery said in an interview this week. “But we’re the Department of the Treasury, we can’t have that knee-jerk of a response.”
Deep freeze puts $5 billion chill on economy (CNBC)
“We think that the problem will be short-lived, but we estimate it will cost about $5 billion because of the sheer size of the population affected — about 200 million people in the eastern two-thirds of the country,” said Evan Gold, senior vice president at business weather intelligence company Planalytics. He said the cold’s impact would be apparent in lost productivity, lack of consumer spending and higher heating bills. “A similar situation in 2010 lasted a week, with back-to-back storms with snow and ice. We calculated that cost $25 billion to $30 billion.
Oregon bar patrons leave envelope full of methamphetamine as tip (NYDN)
Ryan Bensen, 40, of Beaverton, and Erica Manley, 37, of Cascade Locks, were having drinks early Friday morning at the Twisted Fish in Seaside when they left a gift card to cover the tab — and a bunch of meth as gratuity. The shocked waitress called police about 1 a.m. when she found the white crystalline powder, Seaside Police Chief Robert Gross told the Daily News. “I think the waitress was stunned and probably offended that somebody would think she was a user of a methamphetamine,” Gross said.