The Latest

Opening Bell: 10.14.14

Too-Big-to-Fail Banks Face Up to $870 Billion Capital Gap (Bloomberg)
Too big to fail is likely to prove a costly epithet for the world’s biggest banks as regulators demand they increase debt securities to cover losses should they collapse. The shortfall facing lenders from JPMorgan Chase & Co. to HSBC Holdings Plc could be as much as $870 billion, according to estimates from AllianceBernstein Ltd., or as little as $237 billion forecast by Barclays Plc. The range is so wide because proposals from the Basel-based Financial Stability Board outline various possibilities for the amount lenders need to have available as a portion of risk-weighted assets. With those holdings in excess of $21 trillion at the lenders most directly affected, small changes to assumptions translate into big numbers.

Banks Get Ready for Triple-Threat Tuesday (MoneyBeat)
Third-quarter earnings season for the banking sector kicks off Tuesday with an unprecedented three banks—J.P. Morgan, Wells Fargo, and Citigroup—announcing their quarterly results on the first day. “That’s over 200 pages of information that need to be reviewed,” said CLSA bank analyst Mike Mayo, struggling to contain his joy [...] “I’m going to tell my wife, ‘Honey, I will not be home for dinner,’” Mr. Mayo said. Asked about his preparations for the big day, Mr. Mayo already has it all planned out: “Back-to-back spin classes to work off the trepidation. Maybe a squash game in there too.”

Ex-UBS Banker Tax Trial Rides on Underling’s Credibility (Bloomberg)
Jury selection is set to begin today in federal court in Fort Lauderdale, Florida, where Weil was indicted in 2008 on a charge that he conspired to help 17,000 U.S. taxpayers hide $20 billion in accounts from the Internal Revenue Service. Since his arrest last year in Italy, Weil, 54, has maintained his innocence and blamed others for the bank’s misconduct. He is the highest-ranking official among three dozen foreign bankers, lawyers and advisers charged in a seven-year U.S. crackdown on offshore tax evasion. The chief witness against him is Martin Leichti, former head of cross-border banking at UBS. Leichti’s testimony about any conversations the two men had might be crucial to establishing Weil’s state of mind, said Dan Levy, a former federal prosecutor in New York.

Venezuela Default Almost Certain, Harvard Economists Say (Bloomberg)
The economy is so badly managed that per-capita gross domestic product is 2 percent below 1970 levels, the professors wrote in an column published by Project Syndicate yesterday. A decade of currency controls has made dollars scarce in the country with the world’s biggest oil reserves, causing shortages of everything from deodorant to airplane tickets.

G20 watchdog toughens up new rule for securities financing (Reuters)
The Financial Stability Board (FSB), which coordinates regulation for the Group of Twenty (G20) economies, published on Monday its new rule for the first global minimum “haircut” or discount on collateral used to back securities financing transactions, toughening up its original draft proposal. “The regulatory framework for haircuts on securities financing transactions issued by the FSB today addresses important sources of leverage and the level of risk-taking in the core funding markets,” FSB Chairman Mark Carney said in a statement. From the end of 2017, banks must impose a haircut of at least 6 percent on the collateral they receive from non-banks as “insurance” on the value of securities being loaned. The FSB had originally proposed a minimum haircut of 4 percent. This means that for every $100 a hedge fund, for example, gets from a securities transaction, the bank must collect collateral worth at least $106.

Parrot Missing For 4 Years Comes Home Speaking Spanish (AP)
A pet parrot that spoke with a British accent when it disappeared from its home four years ago has been reunited with its owner — and the bird now speaks Spanish…the reunion was brought about by a Southern California veterinarian who mistook the African gray parrot for her own missing bird. Teresa Micco tracked Nigel’s microchip to Darren Chick, a Brit who lives in Torrance. Little is known about Nigel’s whereabouts the past four years, but Chick says the bird’s British accent is gone and it now speaks Spanish. It’s the fifth parrot reunion facilitated by Micco, who has been running ads for her own missing bird for nine months. Read more »

Write-Offs: 10.13.14

$$$Blankfein’s crotch explodes $100 bills in public” [Marni Halasa / earlier]

$$$ Morgan Stanley’s Pitch to Young Talent: We’re Not Like Those Other Banks [BusinessWeek]

$$$ Dutch Police Arrest Drivers Using Uber App in Amsterdam [Bloomberg]

$$$This is a brilliant crisis management move. It keeps people sticky. It shows good faith and just squashes so many (anti-Wall Street) evangelists.” [NetNet]

$$$ Bill O’Reilly Falafel Lawsuit Turns Ten [TSG] Read more »

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We all know that it is better to be safe than sorry. But JPMorgan is definitely pretty sorry about that whole 76-million-customer hack job. And now that it is, it has decided that it is better to be safe and sorry than not safe and still sorry, or something. Even if that costs an extra $125 million a year. Read more »

Russian Hedge Fund’s Managers, Money On American Vacation

There are lots of reasons why a prominent hedge fund manager might wish to beat a hasty retreat from Moscow. Perhaps he’s not comfortable with Russia’s liberation of all of those Ukrainians. Perhaps he failed to go along with alleged government plot to steal its money and wasn’t interested in taking up residence at Butryka Prison. Perhaps president-or-prime-minister-for-life Vladimir Putin has ominously stopped returning his calls.

Or perhaps he just stole all of his investors’ money and thinks Miami is a better place to spend it than the Crimea. Read more »

  • 13 Oct 2014 at 11:30 AM

Pay Hike Watch ’14: Jefferies

The junior mistmakers at the House ‘o Handler will not be left out of the fun. Read more »

Opening/Holiday Bell: 10.13.14

Putin Billionaire Allies Move Assets to Sons Amid U.S. Sanctions (Bloomberg)
Arkady Rotenberg, Putin’s boyhood friend and judo partner, divested his stake in OAO Mostotrest, Russia’s largest builder of roads and bridges, and his son Igor now holds 26 percent, according to company. He also transfered his stake in TPS Real Estate Holding, which builds shopping malls in Moscow and Sochi to Igor, according to his press office. The U.S. and European Union have targeted Russians in Putin’s inner circle, as part of rolling sanctions against individuals, companies and the financial, energy and defense industries, saying they seek to defend Ukraine’s territorial integrity amid a separatist insurgency in the east. “They are obviously seeking to bypass the potential impact of sanctions,” said Igor Bunin, head of Moscow-based Center for Political Technologies. “Going after his enemies, even Joseph Stalin admitted that children aren’t responsible for their parents. Let’s see how the West would address this.”

Mud runs as new way to entertain on Wall Street (NetNet)
Firms are looking for more creative ways beyond traditional dinners to entertain clients and prospective business partners. It’s now becoming about sweat, stamina and overcoming obstacles at activities such as spinning, CrossFit and even races like Tough Mudders. Stephanie Cadet, a sales rep at investment bank CLSA, has scheduled events for clients at SoulCycle, the boutique indoor cycling chain. She has another one coming up later this month. “There are definitely many more options now—especially in the past couple of years. They have sort of flourished,” Cadet said…After the classes, [Jay Galuzzo] sees many business partners and their clients discussing work in the facility’s common area which is stocked with fresh fruit and water. “You take a class and it’s an icebreaker with the client,” said Galuzzo, who doesn’t believe a hard, sweaty workout would be a turn-off to doing business.

Who does this Swiss banker have the goods on? Stay tuned (CNBC)
The highest-ranking Swiss banker ever to be captured by U.S. authorities goes on trial Tuesday in federal court in Florida on charges of helping wealthy Americans evade millions in taxes. Raoul Weil, 54, was indicted in 2008, but continued to live and work in Switzerland, which does not extradite its citizens in tax cases. He was declared a fugitive by the United States in 2009. It wasn’t until last year, when Weil made the mistake of traveling to Italy for a vacation with his wife, that authorities were able to catch him…His indictment was a watershed moment in the effort by the United States to pierce the veil of Swiss bank secrecy: The United States alleged UBS’ so-called “cross border” business had approximately 20,000 American clients with assets hidden from the IRS totaling as much as $20 billion. In 2009, UBS agreed to pay a $780 million fine and turn over the names of thousands of clients.

Ireland Considers Closing Corporate-Tax Loophole (WSJ)
Ireland is expected on Tuesday to announce changes to its tax code that could eventually close one of the world’s most famous corporate-tax loopholes, dubbed the Double Irish, after heavy pressure from governments and the European Union, tax experts say…The Double Irish uses a twist in Irish laws to funnel royalty payments for intellectual property from one Irish-registered subsidiary to another that resides for tax purposes in a country with no corporate income taxes. It is often paired with a related tax structure that planners call the “Dutch Sandwich,” which uses a Netherlands-based structure to avoid certain taxes. The Double Irish structure allows companies to legally shift billions of euros in profit to tax havens each year.

Deutsche Bank Legal Costs May Hit $8.8 Billion: Spiegel (Bloomberg)
Deutsche Bank’s provisions for potential legal costs could rise to as much as 7 billion euros ($8.8 billion), Spiegel reported, citing people close to Germany’s largest bank that it didn’t identify. That would be 30 percent more than what Deutsche Bank has accounted for so far. The Frankfurt-based lender said on July 29 second-quarter reserves for litigation expenses increased 450 million euros from the first quarter to 2.2 billion euros, while contingent liabilities rose to 3.2 billion euros to reflect potential costs from regulatory investigations. It said it couldn’t predict such costs for the rest of the year. The company’s legal costs, which totaled 3 billion euros last year, are hampering efforts to build capital and increase returns for investors. Deutsche Bank has yet to resolve probes into its role in industrywide attempts to manipulate benchmark interest rates and currency markets and faces lawsuits alleging it didn’t make adequate disclosure of U.S. mortgage-backed securities.

Man With Tom Brady Helmet Tattoo Arrested For Narcotics (HP)
Thompson, 46, was busted Sept. 10 for possession of Spice, the synthetic marijuana, according to The Smoking Gun. The suspect told police that he purchased the “Master Kush” Spice “from a black male for $15” at a downtown park. He also told the cops he did not know the drug was illegal in Florida, claiming it was still legal in his home state of New Hampshire, from where he had moved just three weeks prior. New Hampshire actually banned the sale of synthetic marijuana in 2012, according to UnionLeader.com. Thompson was charged with felony drug possession and trespassing. He is being held at the Pinellas County jail in lieu of $1500 bond, the New York Daily News reports. The jailers took the extra step of taking four separate booking photos of Thompson so that his tattoos could be memorialized for possible future identification purposes. The tat includes Brady’s number, 12, an American flag and the NFL logo and even a small green dot to indicate a helmet that, if real, would have a headset allowing Brady to hear plays from his coaches. Thompson’s tattoo goes further: There’s a recreation of the Vince Lombardi Super Bowl trophy and ink-replicas of the signatures of Wes Welker, Rob Gronkowski and Randy Moss tattooed across the dome, NESN.com reports. Thompson got the tattoo in January, 2008, after the Patriots finished the regular season undefeated. “It’s something that popped in my head,” he told WMUR TV at the time. “I was watching the game, and I said, ‘I want my head to look like Tom Brady’s helmet.’” Read more »

Write-Offs: 10.10.14

$$$ A Wells Fargo employee asked the CEO for a raise — and cc’d 200,000 coworkers [WaPo]

$$$ Pimco’s assets under management drop five percent in third quarter [Reuters]

$$$ SEC delays decision on SAC fund for burned investors [NYP]

$$$ On his second day of testimony in federal court, Mr. Bernanke maintained that officials sought to save AIG. “The company was on the brink of default, and our intervention would spare it the discipline of the market,” Mr. Bernanke said. [WSJ]

$$$ World’s Most Expensive Burger Is Only $1,768 [HP] Read more »

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Changing jobs can be very stressful. I’m not going to get into what I did before I won the coveted Dealbreaker Chef de Cuisine post, but let’s just say my julienning skills were more than a tad underutilized.

The first week on a new job is a brutal mishmash of emotions, whether you’re a line cook, a Chef de Cuisine, or yes, even a bond fund manager. (This is especially true when most of the money from you old gig doesn’t make the trip with you to your new one.) It takes a while to learn the rhythms of the new office, figure out whether your no-eye contact policy freaks people out, or whether insulting a colleague’s French accent will drive him into the Croque Monsieur business.

In terms of making new friends and finding his way in the new space, the fact that Bill Gross is working remotely from Malibu, and not at his new employer’s headquarters in Denver, puts him at a disadvantage. But it also offers him an opportunity. While I’m contractually barred from discussing my clients, let’s just hypothetically say Bill was one, and the two of us were sitting in his office in Newport Beach, right before hopping on the short flight to Colorado to meet some of his new colleagues, or he called me after landing, pleading for advice re: how to interact with people. The setting doesn’t matter, my advice to him would be the same: Give them a taste of Denver. Let them know you appreciate their home.

As a rookie, I’m not suggesting Bill whip up a few servings of Rocky Mountain oysters, the deep-fried testicles of bull calves that Coloradoans love so dearly. No, that could make for a bit of an awkward first impression.

When I tell Bill to “give them a taste of Denver,” I mean one thing: “Get yourself an apron and a chef’s hat and set up a Denver omelette station. Set it up IMMEDIATELY.” Read more »