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 »

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 »

Facebook Sets Historic IPO (WSJ)
The filing left a few clues that Facebook’s founder, 27-year-old Mark Zuckerberg, is worried about how wealth and public scrutiny may change the company’s culture. At Facebook’s offices, employees went about business as usual Wednesday, said one person, enjoying a lunch of lobster bisque, braised beef, Moroccan couscous and apple, cream and honey galette for dessert, said another. A stack of giveaway posters left in a kitchenette at Facebook headquarters read “Stay Focused & Keep Shipping,” according to a photo shared by Facebook employees. Mr. Zuckerberg shared a photo on Facebook of the flyer on his desk.

From Founders to Decorators, Facebook Riches (NYT)
The graffiti artist who took Facebook stock instead of cash for painting the walls of the social network’s first headquarters made a smart bet. The shares owned by the artist, David Choe, are expected to be worth upward of $200 million when Facebook stock trades publicly later this year…In 2005, Mr. Choe was invited to paint murals on the walls of Facebook’s first offices in Palo Alto, Calif., by Sean Parker, then Facebook’s president. As pay, Mr. Parker offered Mr. Choe a choice between cash in the “thousands of dollars,” according to several people who know Mr. Choe, or stock then worth about the same. Mr. Choe, who has said that at the time that he thought the idea of Facebook was “ridiculous and pointless,” nevertheless chose the stock.

With Facebook, Morgan Stanley Wins Bragging Rights (Dealbook)
“In a show of support for their prospective client, bankers from the top three underwriters had set up Facebook accounts.”

Wealthy Investors May Shrug at Facebook IPO (Bloomberg)
“It’s kind of the late arrivals who get excited around the time of the IPO,” said Jason Thomas, chief investment officer of Aspiriant, whose clients on average have about $10 million under management with the Los Angeles-based firm. “Our clients remember the tech bubble very well, and are appropriately skeptical of being the last money in.”

Deutsche Bank profits fall as debt crisis bites (AP)
Deutsche Bank said in a statement on Thursday it booked net profit of 186 million euros ($245 million) in the fourth quarter, 76 percent less than in the preceding three months and a drop of 69 percent from the period from October to December in 2010. The figure is worse than expected: analysts polled by Dow Jones Newswires had been pencilling in fourth-quarter net profit of 572 million euros.

Global Strategists Abandoning Bearish Views (Bloomberg)
Just two weeks after saying that investors should “remain cautious,” Larry Hatheway, the chief economist at UBS AG (UBSN), raised his recommendations on global shares and high-yield bonds in a Jan. 23 note to customers entitled, “Wrong, but not too late.” Royal Bank of Scotland Group Plc (RBS), and Benoit Anne, the global head of emerging-markets strategy at Societe Generale (GLE) SA, said their estimates for developing nations were proven wrong.

Man goes to court for custody of ‘kidnapped’ dog (NYP)
A Manhattan man has gone to court to regain custody of his kidnapped “son” – his dog Knuckles.
In papers filed in Manhattan Supreme Court, Craig Dershowitz says he hasn’t seen his precious puggle in months, since ex-girlfriend Sarah Brega “took unilateral control of Knuckles and kidnapped him.” He believes Brega has since spirited Knuckles away to California – and he wants a judge to force Brega to bring his “baby boy” back home. “I took the step to file suit because there seemed to be no other recourse. I tried my hardest to appeal to her sense of justice and, in general, her emotions. When that did not work, I had no other choice,” said Dershowitz, a 34-year-old art gallery employee. “You say it is an extraordinary step but I think most pet owners would agree with me. Knuckles is my son, my heart – you would fight just as hard to protect your own children.” The tattooed artist said he got “Knux” through a family in New Jersey that had a litter of puggles, which are a cross between a pug and a beagle. “I chose the name ‘Knuckles’ because he was the littlest yet most spirited of the litter. He looked like a scrapper,” the Brooklyn native said. Continue reading »

US Plans Charges On Bond Fraud (WSJ)
The Manhattan U.S. Attorney’s office is planning to allege in a criminal complaint that several former traders at Credit Suisse Group AG, a major global investment bank, misled the bank’s investors by booking inflated prices of mortgage bonds to boost their bonuses, despite knowing the values of those securities had dropped, according to the people familiar with the matter.

Credit Suisse Employee Higgs Surrenders in CDO Prosecution (Bloomberg)
David Higgs, who has worked at Credit Suisse Group AG, surrendered to the FBI after a person familiar with the matter said fewer than five people will be charged in a U.S. prosecution for intentionally mismarking prices of securities including collateralized debt obligations…Higgs surrendered to at 8:02 a.m. this morning in Manhattan, according to J. Peter Donald, a spokesman for the Federal Bureau of Investigation. At least one other individual is set to surrender to the FBI and face charges today in New York federal court, a second person familiar with the case said.

Private Sector Adds 170,000 Jobs In January (Reuters)
The pace of job creation by private employers slowed in January after a sharp gain the month before, a report by a payrolls processor showed on Wednesday. The private sector added 170,000 jobs last month, the ADP National Employment Report showed, shy of economists’ expectations for a gain of 185,000 jobs. December’s private payrolls were revised down to an increase of 292,000 from the previously reported 325,000.

Facebook IPO: second windfall for a few insiders (NYP)
While 1,000 new millionaires are expected to be minted when Facebook shares begin trading in a few months, a handful will be experiencing their second round of IPO wealth. That’s because as the Menlo Park, Calif., tech phenom has staked its position in the gravitational center of Silicon Valley, it has been pulling talent from the old guard represented by the likes of Yahoo!, AOL and, especially, Google. The most high-profile of the exclusive Google group is Facebook Chief Operating Officer Sheryl Sandberg, who was in the trenches with Google during its IPO in 2004 — and cashed in on that $1.67 billion offering.

Wealth Adviser To Tech Elite Is Another Facebook Winner (WSJ)
Sometime around 2006, when Facebook Inc. was little more than a collection of T-shirt-clad 20-somethings in a sparsely populated office, Goldman Sachs Group Inc. private-client adviser Divesh Makan showed up to add a dash of formality. Dressed in a suit and tie and speaking in a South African accent, he impressed at least one of the start-up’s executives with his forward-thinking ideas on taxes and estate planning before the magnitude of the company’s success was clear. “He had a comprehensive approach to thinking about this stuff,” the executive recalled, at “a much more sophisticated level than anybody else.” Mr. Makan’s early prospecting paid off in a big way. The executive signed up with Mr. Makan, as eventually did Facebook founder Mark Zuckerberg and Chief Operating Officer Sheryl Sandberg, according to people familiar with Mr. Makan’s firm. Ms. Sandberg and her husband Dave Goldberg have co-hosted several “wine dinners” for a few dozen of Mr. Makan’s clients at their home, the people said. Facebook’s founding president, Sean Parker, and Zynga Inc. Chief Executive Mark Pincus also are clients of Mr. Makan’s team, the people said.

Facebook Yet to Friend Exchanges as NYSE, Nasdaq Vie for Listing (Bloomberg)
Facebook chose Morgan Stanley to lead the IPO, four people with knowledge of the matter said yesterday. The Menlo Park, California-based company will file plans today to raise $5 billion, though the amount may rise, two people said. Goldman Sachs Group Inc., JPMorgan Chase & Co., Barclays Plc and Bank of America Corp. will help manage the sale, people said. Should it increase, Facebook’s IPO could be the biggest ever by an Internet or technology company, data compiled by Bloomberg show. The debut of Infineon Technologies AG for $5.85 billion in 2000 is the largest to date. NYSE and Nasdaq are trying to lure Facebook by promising they will do the most to raise its profile, according to William Hambrecht, chairman and founder of San Francisco-based investment bank WR Hambrecht & Co. and a four-decade veteran of public offerings by Silicon Valley companies.

Police Raid 5-Story Bronx Marijuana Farm, 593 Plants Seized (NBC)
Police raided a five-story Bronx building that they believe was being used as a marijuana farm with hundreds of plants in an elaborate growing system. A search warrant was executed at about 1 p.m. Tuesday at 610 Morris Park Ave., according to police. Investigators seized 593 plants, some as tall as seven feet…each floor of the building was used for a different stage of growth for the plants. It had been outfitted with an intricate ventilation and hydration system. The seized plants and packages totaled about 1,550 pounds, police said. Continue reading »

EU Nears Greek Confrontation Amid Fiscal Pact (Bloomberg)
Euro leaders left a Brussels summit late yesterday with no accord over how to plug Greece’s widening budget hole and German Chancellor Angela Merkel voicing frustration with the Athens government’s failure to carry out an economic makeover. “Greece’s debt sustainability is especially bad,” Merkel told reporters. “You have to find a way through more action by the Greek government, more contributions by private creditors, for example, in order to close this gap.”

FSA Fines Ex-JC Flowers Officer (WSJ)
The U.K.’s Financial Services Authority said Tuesday it has issued one of its highest ever fines against an individual, former J.C. Flowers U.K. Chief Executive Ravi Sinha, for fraud. The fine is the latest in a series of tougher enforcement actions against individuals in recent months, marking a shift by the regulator away from its previous strategy of focusing largely on companies. Mr. Sinha, previously one of the U.S.-based private-equity firm’s highest profile deal makers, has been ordered to pay £2.87 million ($4.51 million) —including £1.37 million to repay fraudulently obtained funds—and a so-called “punitive” £1.5 million payment, the FSA said in statement. He is also prohibited from performing any function in relation to any regulated activity in the financial services industry, the FSA said.

Bill to Prohibit Insider Trading by Members of Congress Advances in Senate (NYT)
The bill states that members and employees of Congress are not exempt from the federal law and regulations that ban insider trading. “No member of Congress and no employee of Congress shall use any nonpublic information derived from the individual’s position as a member of Congress or employee of Congress, or gained from performance of the individual’s duties, for personal benefit,” the bill says. Federal securities law does not explicitly exempt members of Congress, but experts disagree on whether and when lawmakers may be found to have violated the law. The bill is meant to eliminate any ambiguity. It says that lawmakers have “a duty arising from a relationship of trust and confidence” to Congress, the federal government and the citizens of the United States — a duty they violate by trading on nonpublic information. The bill also requires members of Congress to disclose the purchase or sale of stocks, bonds, commodities futures and other forms of securities within 30 days of transactions. The information would be posted on the Web in a searchable format.

Queries on RBS Chief’s Fate (WSJ)
On Sunday, the bank said Mr. Hester would waive his 2011 bonus award of about £963,000 ($1.51 million) in shares, which the board had only last week decided to give him. The move came after members of the U.K. opposition Labour Party called the payout “not fair,” “immoral” and vowed to force a parliamentary vote on the matter. Britain’s Daily Mail newspaper called the bonus “a reward for failure.” People familiar with the matter said Mr. Hester is increasingly frustrated with the public scoldings and suggested he could exit the bank, which is increasingly a target of political intervention, as early as the end of this year…Mr. Hester, who took over as CEO in late 2008 after a government rescue of the bank, has been a lightning rod for criticism, given that RBS is still 83% government-owned after its bailout and is currently laying off thousands of employees.

S&P Warns Cuts Loom for G20 Nations on Health Costs (Reuters)
Ratings agency Standard & Poor’s warned it may downgrade “a number of highly rated” Group of 20 countries from 2015 if their governments fail to enact reforms to curb rising healthcare spending and other costs related to aging populations. Developed nations in Europe, as well as Japan and the United States, are likely to suffer the largest deterioration in their public finances in the next four decades as more elderly strain social safety nets, S&P said in a report. “Steadily rising healthcare spending will pull heavily on public purse strings in the coming decades,” S&P analyst Marko Mrsnik wrote in the report. “If governments do not change their social protection systems, they will likely become unsustainable.”

Pair Detained in Twitter Homeland Threat Mix-Up (ABC)
A young couple from across the pond was detained at a Los Angeles airport after Homeland Security agents mistook a couple Twitter quips for threats against the U.S., the two told British media today. Friends Irishman Leigh Van Bryan, 26, and British citizen Emily Bunting, 24, were reportedly interrogated and spent 12 hours locked up under armed guard after going through customs in Los Angeles International Airport last week. According to several British outlets, the couple was taken into custody by U.S. Department of Homeland Security agents because of the slang in Bryan’s tweets. “Free this week, for quick gossip/prep before I go and destroy America,” one of the tweets read. Bryan told The Sun that in this context “destroy” just meant party…Bryan had also tweeted that he planned to be “diggin’ Marilyn Monroe up!” — another joke, he said. “The officials told us we were not allowed in to the country because of Leigh’s tweet,” Bunting said. “They wanted to know what we were going to do… They asked why we wanted to destroy America and we tried to explain it meant to get trashed and party… I almost burst out laughing when they asked me if I was going to be Leigh’s lookout while he dug up Marilyn Monroe.” After spending the night in custody, Bryan and Bunting were reportedly put on a plane back home through Paris. Continue reading »

Ex-UBS Trader Adoboli Pleads Not Guilty To $2.3 Billion Loss (Bloomberg)
Adoboli, dressed in a grey suit and blue tie, pleaded not guilty to all charges at a hearing in London today. A trial that may last as long as eight weeks was scheduled to start in early September.
Adoboli, 31, has been in custody since Sept. 15 when UBS asked London police to arrest him for causing a $2.3 billion loss. The case led to the departures of Chief Executive Officer Oswald Gruebel and the co-heads of the Swiss bank’s global equities business. The trial could be “really awful” for UBS, said Steven Francis, a regulatory lawyer in London.

Greek Debt Talks Risk Derailing EU Summit (Bloomberg)
EU chiefs arrived in Brussels today to put the finishing touches on a German-led deficit-control treaty and to endorse the statutes of a 500 billion-euro ($656 billion) rescue fund to be set up this year. European finance officials yesterday discussed a deal that Greece and its private creditors expect to complete in the coming days after bondholders signaled they would accept government demands for a bigger cut in their debt holdings…“The fact we’re still at the beginning of 2012 talking about Greece is a sign this problem hasn’t been dealt with,” U.K. Chancellor of the Exchequer George Osborne said at the World Economic Forum in Davos, Switzerland.

Germany Warns Greece On Aid Funds (WSJ)
“Greece needs to decide,” Wolfgang Schäuble said in an interview with The Wall Street Journal, when asked whether the euro zone would grant or withhold the second bailout package for the country since 2010, expected to be in excess of €130 billion ($172 billion). Europe is “prepared to support Greece” with the new loan package, Mr. Schäuble said, but he warned: “Unless Greece implements the necessary decisions and doesn’t just announce them…there’s no amount of money that can solve the problem.”

Gingrich Label Romney “Wall Street Elite” (Bloomberg)
Newt Gingrich, accusing Republican presidential primary opponent Mitt Romney of being a “fundamentally dishonest” tool of Wall Street, pledged to stop big banking firms such as Goldman Sachs from “rigging the game.” Pressing his underdog campaign into the last full day before Florida’s primary election tomorrow, Gingrich spoke of running a White House that would “challenge the system head- on” and disrupt the “Wall Street elite.” “To the degree they survive by rigging the game,” Gingrich said in an interview with Bloomberg News, “they have a lot more to fear. To the degree that they’re willing to be in a very investment-oriented, high-tempo, entrepreneurial world, they have more to gain.”

Facebook COO: IPO Will Produce Jobs, World Change (Reuters)
The most important aspects of social networking site Facebook becoming a public company are the jobs growth and social change it represents, Sheryl Sandberg, chief operating officer of the company, told CNBC Sunday. “If this is seen as an opportunity for jobs and for people to use their work to change the world that’s what we want to be a part of,” Sandberg said at a CNBC debate at the World Economic Forum in Davos.

Jim Rogers: “I Would Not Buy Facebook” (CNBC)
FYI: “No, that kind of stock I don’t buy. They are usually very, very expensive. A lot of people like to buy expensive stocks like that, but I do not,” said Rogers.

Citigroup Chairman Weighs Exit (WSJ)
The 63-year-old Mr. Parsons is expected to decide by early March, these people said.

eBay Auction Alert: President Obama’s Chrysler Saloon For $1 Million (BuzzFeed)
Obama leased the car for three years from 2004 until 2007 before trading it in for a hybrid model. Now for a cool mil you can have POTUS’s old ride.

Missing MF Global Funds Feared Gone (WSJ)
As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a “significant amount” of the money could have “vaporized” as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation. Continue reading »

Larry Summers: ‘A Lot of Work’ Needed to Fix Economy (CNBC)
“We have all got a lot of work to do,” Summers, who played a key role in the early years of President Barack Obama’s administration, said. He believes that European governments should be “redoubling” their efforts to solve the crisis. The euro zone debt crisis has been top of the agenda in Davos this week. German Chancellor Angela Merkel opened the conference with a downbeat speech emphasizing the need to solve the problems in the euro zone. The European Central Bank injected more liquidity into the European markets through a long term refinancing operation (LTRO) in December, which Summers described as “a very important step.” “That’s lubricating credit and economic activity. The sense that we are near the edge of a precipice has been clawed back,” Summers said.

Greek Debt Wrangle May Pull Default Trigger (Bloomberg)
Any agreement between the Greek government and the Washington-based Institute of International Finance on debt writedowns will only bind 50 percent of investors in the 206 billion euros ($270 billion) of notes being negotiated, Barclays Capital estimates. Hedge funds may resist a deal, seeking to get paid in full or compensated from insurance contracts.

U.S. Economy Grows 2.8%, Less Than Forecast (Bloomberg)
The U.S. economy expanded less than forecast in the fourth quarter as consumers curbed spending and government agencies cut back, validating the Federal Reserve’s decision to keep interest rates low for a longer period. Gross domestic product, the value of all goods and services produced, climbed at a 2.8 percent annual pace following a 1.8 percent gain in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of 79 economists surveyed by Bloomberg News called for a 3 percent increase.

In Punishing Year for Hedge Funds, Biggest One Thrived (Dealbook)
Bridgewater Associates posted returns of 23 percent in 2011 — a year when the average hedge fund portfolio lost 5 percent. Against the backdrop of fear over European debt and stagnant global growth, the hedge fund, led by one of Wall Street’s more enigmatic titans, Ray Dalio, sidestepped the mess. The fund did it with bets on United States Treasuries, German bonds and the Japanese yen, according to people familiar with the firm’s investment strategy, who spoke on condition of anonymity because the information is private. Continue reading »

Business Leaders Air Their Grievances (WSJ)
Complaints about perceived obstacles thrown up by U.S. politics, regulation and even its legal system were aired by corporate and finance leaders who lunched together at a Wall Street Journal CEO Council event here in Davos, Switzerland, on Wednesday. Barry Silbert, chief executive of SecondMarket, said Mr. Obama gave the country “nothing to rally behind.” Daniel Loeb, founder of hedge fund Third Point, counted himself as one falling away from previous support of the president. Mr. Loeb insisted President Obama was engaging in “class warfare.” He said business people such as himself “get sick and tired” of constantly being criticized for “engaging in the capitalist system.”

Economic Gains Aid Obama (WSJ)
Partial results from the poll, released Wednesday, found voters feeling more positively about the economy and of Mr. Obama’s handling of it. Some 30% believed the country was headed in the right direction, up eight percentage points from a month ago. Some 60% said the country was on the wrong track, down from 69% in December and from 74% in October. The question is considered an important measure of voters’ mood. For the first time in seven months, the poll found that more people approve of Mr. Obama’s job performance than disapprove, 48% to 46%. Some 45% said they approve of his handling of the economy—up six points from mid-December.

Greek Debt Talks Resume in Athens as Policy Makers Squabble Over Haircut (Bloomberg)
Charles Dallara and Jean Lemierre, negotiating on behalf of private creditors, return to Athens after European finance ministers insisted bondholders take bigger losses on their Greek debt. The International Monetary Fund further roiled the discussions by suggesting that public holders of Greek bonds might also have to increase support. The parties are groping for a solution three months after private bondholders agreed with European officials to implement a 50 percent cut in the face value of more than 200 billion euros ($262 billion) of debt by voluntarily swapping bonds for new securities. Since then, an economic contraction that exceeded estimates has made the goal of cutting Greece’s debt to 120 percent of gross domestic product by 2020 harder. An accord is tied to a second bailout for the country, which faces a 14.5 billion-euro bond payment on March 20.

Dimon: Impact of Greek Default on US Banks Almost Zero (CNBC)
“The direct impact of a Greek default is almost zero,” Dimon said. “The effect it has on the global economy will obviously filter down to the American banks too,” he added, but although “there may be a surprise somewhere,” he expressed little concern over such a development. “There’s a teeny chance of a catastrophic outcome, which is why the muddle-through is the only good strategy. There is no other good strategy.”

Buffett Defends Proposed Tax Rate Change (Reuters)
“The question is what is fair when you have to raise multi-trillions to fund the United States of America,” Buffett said in a joint interview with his long-time secretary, Debbie Bosanek, on ABC News. “Raising taxes will not change my behavior. I have paid all different kinds of rates and I’ve always been interested in making money. I believe this should be a defining issue. Debbie works just as hard as I do and she pays twice the rate I do,” said Buffett, a Democrat and Obama supporter. Bosanek pays a tax rate of 35.8 percent on her income, ABC said. She attended Tuesday’s State of the Union address as a guest of first lady Michelle Obama. “I just feel like an average citizen. I represent the average citizen who needs a voice,” Bosanek told ABC. “Everybody in our office is paying a higher tax rate than Warren.”

Bonus Grinches At Bloomberg (NYP)
The company, founded by Mayor Mike Bloomberg, said revenue rose $720 million, or 10.5 percent, to $7.59 billion during a tough year for its biggest Wall Street clients, according to an internal memo…Bloomberg, known for its ubiquitous financial terminals on trading floors, said it fell short of its own internal sales targets, to which employee pay is tied. According to the employee memo from Chairman Peter Grauer and CEO Dan Doctoroff, employee pay based on terminal sales, known as “certs,” will be below expectations because of the terminal shortfall.

Newt: America WILL Have A Permanent Lunar Base By End Of My Presidency (TPM)
By the end of my second term we will have the first permanent base on the moon and it will be American,” he said. According to Newt, the base would be used for “science, tourism, and manufacturing” and create a “robust industry” modeled on the airline business in the 20th century. From there, Gingrich suggested moving towards a Mars mission by the end of the next decade. He proposed setting aside 10% of NASA’s budget in prize money for private research into interplanetary exploration. “I accept the charge that I am grandiose,” he said. “Because Americans are instinctively grandiose.” Continue reading »

Facebook Trades Said To Be Halted For Three Days (Bloomberg)
Shareholders of Facebook Inc., the Internet site preparing an initial public offering, are facing a three-day suspension of trading on secondary markets this week, people with knowledge of the matter said. While buy and sell orders can be made, transactions won’t be processed by Facebook’s attorneys at Fenwick & West LLC from Jan. 25 to Jan. 27, said the people, who declined to be named because details on secondary transactions are kept private. The halt pertains to trading of Facebook shares only, one of the people said. Facebook, the largest social-networking site, is considering raising about $10 billion in an IPO that would value the company at more than $100 billion, a person with knowledge of the situation said in November.

Morgan Stanley Sets Sights On Facebook IPO (WSJ)
For the past year, Morgan Stanley and rival Goldman Sachs Group Inc. have been viewed as leading contenders for the coveted “lead left” spot in Facebook’s IPO prospectus, which goes to the bank with the most responsibility for the offering. Goldman was presumed to have an upper hand after arranging a private offering of Facebook shares last year, though its odds were seen as declining amid a flub in that process that led the bank to limit the deal to non-U.S. investors. After that, executives at the social-networking company became less enamored with the bank, according to people familiar with the matter…Clients say one plus for Morgan Stanley’s team, based in Menlo Park, Calif., is that it has been largely unchanged since the mid-1990s, after veteran deal-maker Frank Quattrone left for a rival shop in 1996, taking with him a team of bankers. The 45-year-old Mr. Grimes, who had joined a year earlier, helped rebuild Morgan Stanley’s tech team through the dotcom boom and bust. In 2005, Mr. Grimes was appointed a co-head of global tech banking, along with Paul Chamberlain, 48, another veteran of the bank. “They’ve been in the same jobs, not leaving for other firms, not moving to New York, they’ve decades of experience and seen every tech cycle… that carries a lot of weight with clients,” said Egon Durban, a managing partner at private equity firm Silver Lake Partners.

Obama Speech Makes Pitch for Economic Fairness (NYT)
“We will not go back to an economy weakened by outsourcing, bad debt and phony financial profits,” Mr. Obama said. Though his advisers have vowed a campaign against Congress, he expressed a willingness to “work with anyone in this chamber” and said he would “oppose any effort to return to the very same policies that brought on this economic crisis in the first place.”

Obama Calls For Higher Taxes On Wealthy (Bloomberg)
Invoking a tax idea named for billionaire Warren Buffett, Obama said the law should make sure million-dollar earners pay at least 30 percent in taxes. “We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by,” Obama said in his televised address to a joint session of Congress. “Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules…You can call this class warfare all you want,” Obama said, referring to Republican criticism of his proposals. “But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.” He also called for incentives for companies to return jobs to the U.S., development of domestic natural gas reserves and alternative energy sources, and providing American workers with better training.

Romney Rethinks Key Income-Tax Break (WSJ)
If elected president, Mitt Romney might consider ending a tax break that helped the former Massachusetts governor accumulate his fortune, an aide suggested Tuesday. The comments came as the Romney campaign made available more than 500 pages of tax-return data for 2010 and 2011 amid signs the issue was hurting him with some voters. Later in the day, in a signal of how the tax issue is roiling the GOP campaign, the Romney camp tried to step back from the aide’s remarks, underscoring that the former Massachusetts governor didn’t want to raise anyone’s taxes. The back-and-forth Tuesday about Mr. Romney’s approach to one particular tax break began when Lanhee Chen, the candidate’s policy director, indicated in a call with reporters the candidate might be willing to reconsider a tax break known as “carried interest” as part of a comprehensive tax overhaul. The break gives private-equity and venture-capital executives a relatively low 15% tax rate on much of their income.

IMF: Europe Poses Global Recession Threat (Reuters)
You heard it here first.

Cop: Circumcision proves I didn’t flash woman (NYP)
A cop says he got the shaft when he was booted from the NYPD for exposing himself to a female prisoner in a holding cell, because the penis she described couldn’t have been his. The woman told cops and testified at an administrative NYPD hearing that “she unequivocally and clearly saw petitioner’s penis and that it was uncircumcised.” Owen Hopper says he definitely is circumcised, but the NYPD hearing officer ignored his smoking gun evidence and found him guilty anyway. Hopper “submitted uncontested medical evidence and proof that his penis was circumcised and had been so since petitioner’s childhood,” his court papers complain. He was canned this past September, and is now suing to get his job back. Continue reading »