Opening Bell: 03.24.09

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AIG's Bonus Unit Now in IRS's Sights (WSJ)
""Some of the same banks that got government-funded payouts to settle contracts with American International Group Inc. also turned to the insurer for help cutting their income taxes in the U.S. and Europe, according to court records and people familiar with the business.
The Internal Revenue Service is challenging some of the tax deals structured by AIG Financial Products Corp., the same unit of the New York company that has caused political ire over $165 million in employee bonuses.
The company paid $61 million last year in disputed taxes stemming from the deals but sued the U.S. government last month in federal court in New York, seeking a refund, according to filings in the case."
Geithner Finds Government Strength In Oddest of Places (NYT)
To the quote:
"He said it was a "terrible, tragic thing" that the government did not have better tools, such as the power to take over major firms, when the credit crisis accelerated last fall. "Our system basically failed its most fundamental test," Mr. Geithner told the conference, which was sponsored by The Wall Street Journal. "It was too fragile.""
I offer that the government's inability to take over major firms, regardless of the crisis at hand, is precisely what affords our system its strength.
Stiglitz Critical Of Geithner's PPIP (Reuters)
This is bound to be the academic topic of the year, so it makes sense that we'd have a Nobel-prize winning economist leading the pack. To point: Stiglitz is concerned for the American taxpayer, calling the plan "robbery" (graceful, Stigz) - apparently not a fan of the government propping up 90% of the cash for the recovery efforts.
"The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said."
Deutsche and Credit Suisse Of To Strong Start (Bloomberg)
In what's quickly becoming "See, we're still okay" press releases, I'm sure you're all overcome with joy to learn DB and CS are still breathing, and really doing pretty well this quarter.
Welcome Back To The 80's (Bloomberg)
"Wall Street bond trading is heading back to the 1980s, when private partnerships and independent firms dominated the market."
"Smaller firms are emerging from the wreckage of the world's largest financial companies, which are conserving capital following more than $1.2 trillion of writedowns and credit losses since the start of 2007. They're luring traders with a shot at $500,000 commissions for two days' work as banks that accepted federal bailouts retrench and slash bonuses.
If Goldman Returns Aid, Will Others? (NYT)
Sorkin: "So here's something else to ponder: Goldman Sachs is planning to give back its TARP money soon. Very soon, actually -- ideally within the next month, according to people involved in the process. That's a much quicker timetable than the end-of-year goal previously set out by Lloyd C. Blankfein, Goldman Sachs's chief executive. As taxpayers, we should be thrilled that Goldman is going to quickly pay back the $10 billion it was given last October, right?"
Update, 10AM: Bernstein, Rosenberg Plan to Leave Bank of America (Bloomberg)

Richard Bernstein, chief investment strategist, and David Rosenberg, the chief North American economist, plan to leave Bank of America Corp. within two months, a company spokeswoman said.
Bernstein, 50, will start his own money management company after leaving on April 15, and Rosenberg, a native of Canada who plans to leave on May 11, will join Gluskin Sheff & Associates in Toronto, said a person familiar with the decisions. Bank of America spokeswoman Susan McCabe confirmed the departures.

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