US Plans To Sue Banks Over Bonds (WSJ)
Federal securities regulators plan to warn several major banks that they intend to sue them over mortgage-related actions linked to the financial crisis, according to people familiar with the matter. The move would mark a stepped-up regulatory effort to hold Wall Street accountable for its sale of bonds linked to subprime mortgages in 2007 and 2008. At issue is whether the banks misrepresented the poor quality of loan pools they bundled and sold to investors, the people said. It isn’t clear which firms will receive the formal Securities and Exchange Commission enforcement warnings, known as “Wells notices.” Banks whose activities are being examined in the civil investigation include Ally Financial Inc., Bank of America Corp., Citigroup Inc., Deutsche Bank AG and Goldman Sachs Group Inc., people familiar with the matter say.

Greek Deal Remains Elusive (WSJ)
A meeting among Greek Prime Minister Lucas Papademos, the parties supporting his coalition, and New Democracy, the opposition conservative party, broke up early Thursday morning without an agreement on economic overhauls sought by the European Union and the International Monetary Fund in exchange for lending an additional €130 billion ($170 billion) to the Greek government. A single issue was the sticking point: cuts in the Greek pension system.

Credit Suisse Posts First Loss In 3 Years (Bloomberg)
Credit Suisse fell the most in five weeks in Zurich trading after posting a net loss of 637 million Swiss francs ($698 million), compared with an 841 million-franc profit in the year- earlier period. That missed the 446 million-franc average profit estimate of nine analysts surveyed by Bloomberg. Credit Suisse Chief Executive Officer Brady Dougan said measures taken to accelerate a revamp of the investment bank hurt earnings in the quarter. Dougan, who lowered the company’s profit target and announced two rounds of job cuts last year, is scaling down the securities division as the European sovereign debt crisis and stricter capital requirements crimp earnings. Pretax profit at the private bank slumped 43 percent with “subdued” client activity in the fourth quarter.

BOE Adds 50 Billion Pounds to Stimulus (Bloomberg)
Bank of England officials pumped another 50 billion pounds ($79 billion) into the U.K. economy to protect a nascent recovery from the threat posed by Europe’s debt crisis. The nine-member Monetary Policy Committee raised the target for bond purchases to 325 billion pounds, more than a quarter of current outstanding gilts, according to a statement in London today. The increase was forecast by 34 of 50 economists in a Bloomberg News survey. Fifteen economists forecast a 75 billion- pound increase and one no change. The MPC also held its benchmark interest rate at a record-low 0.5 percent.

Accord Near on Foreclosure Abuses (WSJ)
Government officials are on the verge of an agreement worth as much as $26 billion with five major banks, capping a yearlong push to settle federal and state probes of alleged foreclosure abuses by lenders. The deal would represent the largest government-industry settlement since a multistate deal with the tobacco industry in 1998. The agreement covers five banks: Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., and Wells Fargo & Co. Together, the five handle payments on 55% of all outstanding home loans, or about 27 million mortgages, according to Inside Mortgage Finance. Federal and state officials were planning to announce the accord Thursday morning, but the timing could be pushed back to Friday, as officials were still ironing out details in a series of conference calls late Wednesday. Among them: the precise wording of the agreement, its size and the number and identity of participating states.

Goldman looks on the bright side of Volcker rule (Reuters)
A harsh interpretation of the rule, which bans speculative trading by commercial banks, could help return-on-equity levels because banks would be able to demand more money from clients for executing trades, Goldman Sachs Group Inc Chief Financial Officer David Viniar said at a Credit Suisse conference in Miami. “Regulation will undoubtedly bring about new ways in which the industry must manage its operations and deliver its services to clients,” Viniar said, but regulatory challenges “must be effectively navigated in order to provide shareholders with acceptable returns.”

Warren Buffett: Why Stocks Beat Gold And Bonds (Fortune)
“My own preference — and you knew this was coming — is our third category: investment in productive assets, whether businesses, farms, or real estate. Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment. Farms, real estate, and many businesses such as Coca-Cola (KO), IBM (IBM), and our own See’s Candy meet that double-barreled test. Certain other companies — think of our regulated utilities, for example — fail it because inflation places heavy capital requirements on them. To earn more, their owners must invest more. Even so, these investments will remain superior to nonproductive or currency-based assets. Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See’s peanut brittle.”

Gary Busey files for Chapter 7 bankruptcy protection (Chicago Tribune)
Busey filed for Chapter 7 bankruptcy Tuesday, revealing debts that far outweigh his assets. In the papers, the actor — born William Busey — indicates that he has $50,000 or less in assets — while his liabilities are somewhere in the $500,000 to $1 million range. Busey, 67, lists various lawyers, the IRS, Wells Fargo bank, Santa Monica UCLA Medical Center, and a storage company as entities that he might owe money to. Carla Loeffler, who filed suit against Busey in November for allegedly tackling her at the Tulsa airport, is also listed among potential creditors. Continue reading »

China May ‘Move Shortly’ on Aid for Europe (Bloomberg)
China may “move shortly” to help Europe resolve its debt crisis by providing an investment of as much as 100 billion euros ($132 billion), said Yuan Gangming, an economist at the Chinese Academy of Social Sciences. The money would probably go to the European Financial Stability Facility, the euro bailout fund, said Yuan, adding that the forecasts are his own and don’t necessarily represent government plans. Economists from the academy provide policy advice without direct involvement in decisions. Helping Europe is like “hitting two birds with one stone,” Yuan said in an interview in Beijing Feb. 6. The action would have many benefits and few drawbacks, Yuan said.

Concession Smooths Way Toward a Greek Debt Deal (WSJ)
The European Central Bank has made key concessions over its holdings of Greek government bonds, which will contribute to a reduction of the country’s debt burden and smooth the path toward a new bailout for the country, said people briefed on Greece’s debt-restructuring negotiations. The decision by one of the Greek government’s biggest creditors will narrow a gap in Greece’s finances, helping pave the way for a debt-restructuring agreement with Greece’s private-sector creditors and a new €130 billion ($170 billion) bailout from other euro-zone governments and the International Monetary Fund. But it is still unclear whether Greek politicians, facing public outrage, will accept the tough austerity policies pushed by European authorities and the IMF as the conditions to secure a deal.

Bernanke-Led Economy Shows Critics Clueless (Bloomberg)
More than a year after Republicans from House Speaker John Boehner of Ohio to presidential candidate Ron Paul of Texas warned that the Fed’s second round of asset purchases risked a sharp acceleration in prices, the surge has failed to materialize. The personal-consumption-expenditures price index rose 2.4 percent for the 12 months ending in December, near the central bank’s 2 percent target…Even though the economy is showing signs of strengthening and inflation appears in check, Republicans Mitt Romney and Newt Gingrich, who also are running for president, have said they wouldn’t keep Bernanke, 58, when his second four-year term as Fed chairman expires on Jan. 31, 2014. Gingrich said in September that Bernanke was “the most inflationary, dangerous and power-centered chairman” in the central bank’s history. “The criticism about the Fed being inflationary is not fact-based,” said Mark Gertler, an economics professor at New York University who has co-written research with Bernanke. “In terms of an inflation record, the facts are the Fed has been as close to impeccable as you can possibly get.”

Spain Plans to Burn Its Bridges to Keep Vacationers on the Job (WSJ)
Tatiana Restrepo has a vacation problem. The Spanish government thinks she takes too many of them. Every year, she, like many Spaniards, strategically deploys paid vacation days as puentes—literally, bridges—to skip town for an extra-long weekend whenever public holidays fall in the middle three days of a week. In that way, she figures that last year she was able to stretch her 36 legally mandated days off into more than 50 days of downtime, including weekends. But now the time-honored tradition is under threat. In one of several measures designed to boost productivity in a sagging economy, Spain’s unions and business associations have agreed to suppress three bridges by moving the holidays to Mondays. The two sides, which rarely agree on anything, say the bridges cost the Spanish economy hundreds of millions of euros in lost production, as they result in idle plants and half-empty offices. “It’s just horrible,” says Ms. Restrepo, a marketer for Rusticae, a network of rural hotels, who every January studies the calendar with her husband to start planning jaunts around bridges.

Fink: Investors Should Be 100% in Equities (Bloomberg)
“I don’t have a view that the world is going to fall apart, so you need to take on more risk,” he said in an interview with Bloomberg Television in Hong Kong today. “You need to overcome all this noise. When you look at dividend returns on equities versus bond yields, to me it’s a pretty easy decision to be heavily in equities.”

Fed Will ‘Protect the US’ From Europe’s Crisis: Bernanke (Reuters)
FYI: “We are in frequent contact with European authorities, and we will continue to monitor the situation closely and take every available step to protect the U.S. financial system and the economy,” Bernanke told the Senate Budget Committee.

Hotel Workers Would Get Panic Alarm Buttons Under Proposed Contract (City Room)
Nine months after a hotel housekeeper accused Dominique Strauss-Kahn, the French politician, of sexually assaulting her in his suite in Manhattan, hotels across the city have agreed to equip their employees with panic buttons that will summon help immediately. That provision, scheduled to be put in place within a year, is included in a new seven-year labor contract that the Hotel Association of New York City approved last week.

Boston gets Butterfinger candy in honor of Patriots loss to Giants (NYP)
Colorado-based online pawn shop Pawngo.com left 900 pounds of Butterfinger candy bars in Boston’s Copley Square on Tuesday to mock the New England Patriots. Patriots receiver Wes Welker dropped a pass late in the fourth quarter of Sunday’s Super Bowl XLVI against the Giants, costing his team a shot at the title in a game they lost 21-17. The website left a large placard near the giant pile of 8,000 candy bars that read, “Thank you Wes Welker.” Welker also was the likely target of Tom Brady’s model wife, Gisele Bundchen, who said Sunday on her way out of the game, “My husband cannot f–king throw the ball and catch the ball at the same time! I can’t believe they dropped the ball so many times!” Continue reading »

Greek Talks Resume Amid Strikes (WSJ)
According to Greek officials, the political leaders are closing in on a deal that would reduce those supplementary pension benefits by about 20%, while the cuts in public-sector payrolls will likely be agreed to. Two-month bonus salaries now paid to Greek workers each year are likely to be kept intact, but could be trimmed. Meanwhile, signs of popular protest are growing. Thousands of workers, students and business owners marched through the streets of the Greek capital Tuesday protesting against the new austerity measures being demanded by Greece’s international creditors.

Profit Falls At UBS (WSJ)
UBS aid net profit fell to 393 million Swiss francs ($427.9 million) in the quarter ended Dec. 31, from 1.66 billion francs a year earlier, below analysts’ average estimate of 739 million francs in net profit. Revenue declined 16% to 5.97 billion francs. In a gesture to shareholders who have gone without a dividend since 2006, UBS will pay a nominal dividend of 0.10 franc a share. The bank’s executives did, however, sound a cautious note on the year ahead. “As in the fourth quarter of 2011, ongoing concerns surrounding euro-zone sovereign debt, the European banking system and U.S. federal budget deficit issues, as well as continued uncertainty about the global economic outlook in general, appear likely to have a negative influence on client activity levels in the first quarter of 2012,” UBS said in a statement.

UBS Cuts 2011 Bonus Pool 40% (Bloomberg)
“I don’t see how compensation should stay the same or go up if profitability of the banking industry is going south,” Chief Executive Officer Sergio Ermotti told reporters in Zurich today. “We’re trying to strive for a situation in which both the shareholder and employee can have a win-win situation.”

For Sale: AIG’s Subprime Bonds (WSJ)
Selling the bonds would let the New York Fed take advantage of buoyant market conditions to dispose of more troubled assets from the financial crisis. It also would bring the central bank closer to ending a controversial chapter of its support for financial markets since 2008. A sale could take place as soon as Wednesday, the people said, if the New York Fed and its investment manager, BlackRock Solutions, feel the winning bid represents good value for U.S. taxpayers.

Facebook Governance a Concern for Pension Fund (Reuters)
The pension fund, which has a portfolio valued at around $145 billion, is planning to send a letter to Facebook, hoping to engage the social networking website on corporate governance, two CalSTRS executives told Reuters in an interview on Monday…CalSTRS decided on Friday — just two days after Facebook filed for a $5 billion initial public offering — to try to talk to the website about improving its corporate governance. CalSTRS invested in Facebook from its funds on the private equity side and is likely to invest in the company’s publicly traded shares, Hester-Amey said. “No matter how brilliant you are, when you come to the public market — not that we want to ever tell Zuckerberg or anyone like him how to run his company — there should be some protection especially for long-term, patient money like CalSTRS,” Hester-Amey said. “So I think there should be some more respect for capital,” she said.

Banks Paying U.S. Homeowners to Avoid Foreclosures (Bloomberg)
Karen Farley hadn’t made a mortgage payment in a year when she got what looked like a form letter from her lender. “You could sell your home, owe nothing more on your mortgage and get $30,000,” JPMorgan Chase & Co. said in the Aug. 17 letter obtained by Bloomberg. Farley, whose home construction lending business dried up after the housing crash, said the New York-based bank agreed to let her sell her San Marcos, California, home for $592,000 — about $200,000 less than what she owes. The $30,000 will cover moving costs and the rental deposit for her next home. Farley, who is also approved for an additional $3,000 through a federal incentive program, is scheduled to close the deal Feb. 10. “I wondered, why would they offer me something, and why wouldn’t they just give me the boot?” Farley, 65, said in a telephone interview. “Instead, I’m getting money.” Continue reading »

Time Is Running Out For Greece, Merkel Says (Bloomberg)
European leaders stepped up pressure on Greek politicians to accept the conditions for a 130 billion- euro ($171 billion) bailout, saying time was running out. French President Nicolas Sarkozy met German Chancellor Angela Merkel in Paris today as Greece’s interim prime minister, Lucas Papademos, and chiefs of the three parties supporting him sought to find consensus in Athens. They agreed in a five-hour meeting yesterday to make additional reductions this year equal to 1.5 percent of gross domestic product. “I can’t quite understand why we need a few more days — time is running out,” Merkel said today in a joint briefing with Sarkozy.

Merkel, Sarkozy Propose Setting Up Separate Interest Account for Greece (Bloomberg)
German Chancellor Angela Merkel and French President Nicolas Sarkozy proposed setting up a separate account for Greek debt payments to reassure creditors. Merkel said sequestering aid in such an account would give the Greek government guaranteed access to funds to finance its interest obligations. Sarkozy said it will “allow us to assure that the Greek debt is dealt with,” as both urged Greek leaders to agree to conditions set out by international creditors.

Paulson’s Advantage Plus Hedge Fund Said to Rise 5% in January (Bloomberg)
John Paulson, the billionaire money manager who had his worst year on record in 2011, posted a 5 percent gain in January in one of his largest hedge funds as all strategies rose, according to a person briefed on the returns.

Foreclosure Deal Is Closer (WSJ)
State attorneys general must indicate by Monday whether they are signing on to the deal, said one person familiar with the negotiations, a key test of whether banks and federal officials will be able to wrap up a deal. The Monday cutoff marks a step back from the previous deadline of last Friday—a delay that is emblematic of what has been a vexing process. Government officials have been aiming for a deal valued at $25 billion in loan write-downs, refinancings and other homeowner assistance, as well as cash penalties, with Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co.

Atlanta BofA Tower Auction Highlights Foreclosures (Bloomberg)
Atlanta’s 55-story Bank of America Plaza, the tallest tower in the Southeast, is set to be sold at an open outcry auction on the steps of the Fulton County Courthouse tomorrow after landlord BentleyForbes missed mortgage payments. It bought the skyscraper in 2006 for $436 million from Bank of America Corp. (BAC) and Cousins Properties Inc. (CUZ) in the city’s biggest property deal.

Facebook tells IPO banks not to talk about stock offering (NYP)
Zuckerberg, 27, whose stake in the social network giant amounts, in round figures, to around $28 billion, wasn’t too happy that some aspects of the much-anticipated initial stock float — including the fact that its filing with the Securities and Exchange Commission would take place on Feb. 1 — were disclosed. Facebook officials let the bankers know about it through phone calls and e-mails, sources said. Facebook officials also appeared to also be irked about what appeared to be subtle sniping in the press between Morgan Stanley and Goldman Sachs centered on which firm would grab the coveted lead underwriting role on the IPO — the highest profile since Google went public with a $1.7 billion offering back 2004.

Blankfein To Speak Out For Same-Sex Marriage (Dealbook)
The Human Rights Campaign, a national organization that promotes equal rights for gay, lesbian, bisexual and transgender people, has persuaded Mr. Blankfein to be its first national corporate spokesman for same-sex marriage, an issue that will come up for a legislative vote in several states this year, including Washington and Maryland…“I’m Lloyd Blankfein, chairman and C.E.O. of Goldman Sachs, and I support marriage equality,” Mr. Blankfein says in the Web spot, which was recorded at the bank’s headquarters in downtown Manhattan. “America’s corporations learned long ago that equality is just good business and is the right thing to do.” Behind the scenes, Mr. Blankfein has long been a supporter of same-sex marriage. Last year, he signed a letter urging state lawmakers to vote for a bill legalizing same-sex marriage and encouraged other chief executives to do the same. He also called lawmakers directly on the matter.

This is a thing that happened (@CGasparino, earlier)

It’s big ‘woooo!’ (NYP)
“I’m going to cry!” yelled Jimmy Conlisk, 31, an FDNY firefighter from Queens who came to the heartland with colleagues. “I’m absolutely super excited!” screamed Karen Szpyhulsky, 29, of South Amboy, NJ, just minutes after watching the Giants take the championship in Indiana. “I’ve been to every playoff game, and I had to be here as a lucky charm. I’m shaking! They gave me a couple of heart attacks, but it was worth it!” Continue reading »

Harbinger Lost 47% In 2011 (Bloomberg)
Phil Falcone’s Harbinger Capital Partners LLC lost 47 percent for investors in his main hedge fund last year as he was forced to slash the value of his troubled wireless venture by more than half, according to a person familiar with the results. Most of the decline in the Harbinger Capital Partners Offshore Fund I came from Falcone’s investment in LightSquared Inc. (SKYT), which plans to offer high-speed data service to as many as 260 million people…That the fund had to cut the value of its LightSquared stake by 59 percent illustrates the precarious nature of the investment on which Falcone, 49, is betting the future of his firm. Harbinger, which managed $5.7 billion at the end of last year, has put about $3 billion into LightSquared, and the investment accounted for 62 percent of the main fund at the end of May.

Greece Seeks Second Rescue, Fights for Euro (Bloomberg)
The rescue plan, which European officials and Greek creditors say may be wrapped up in coming days, includes a loss of more than 70 percent for bondholders in a voluntary debt exchange and loans likely to exceed the 130 billion euros ($171 billion) now on the table. That won’t stanch the bleeding, say economists including Holger Schmieding of Berenberg Bank in London. Greece will be saddled with too much debt, too little growth and too large a budget hole to do without even more money that euro nations led by Germany are increasingly reluctant to offer, they say. “Greece is in deep trouble,” Schmieding said in a Jan. 30 report. “The current Greek adjustment program is failing. Excessive austerity, a lack of supply-side reforms, administrative incompetence and political deadlock have pushed the Greek economy into an apparent death spiral. More of the same will not work.”

Wisconsin Woman Accused of Selling Fake Facebook Stock (Reuters)
In a criminal complaint on Thursday, prosecutors said Marianne Oleson told acquaintances she obtained $1 million in stock because her daughter was an acquaintance of Facebook’s founder, and persuaded several people to buy fictitious Facebook stock over a four-month period. The Oshkosh woman was charged with 31 counts of theft, forgery and making misleading statements.

UBS, Credit Suisse in Swiss Rate-Fixing Probe (Bloomberg)
“Collusion between derivative traders might have influenced” Libor and its Japanese equivalent, Tibor, the Swiss competition watchdog, Comco, said in an e-mailed statement today. “Market conditions regarding derivative products based on these reference rates might have been manipulated too.”

Unemployment Drops to 8.3%; Payrolls in U.S. Jump 243,000 (Bloomberg)
The 243,000 increase in payrolls was the most since April and exceeded all forecasts in a Bloomberg News survey, Labor Department figures showed in Washington. The unemployment rate dropped to 8.3 percent, the lowest since February 2009.

The 21 Rules Of Surviving A Super Bowl Party (WSJ)
6. It is OK for a host to sell “premium seat upgrades”—a reservation on the couch, center of the room, complimentary soft drinks—for $35 each. Everyone’s been on a plane recently. They’ll grumble but understand. Continue reading »