Opening Bell: 05.18.09

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Did Investors Know About Madoff's Scheme? (WSJ)
The Journal is looking into whether or not it's possible some of the investors (philanthropic ones, no less) could have, or in fact did, know about Madoff's little secret. Among the evidence pointing to the answer being yes: in certain cases they would define their earnings expectations, and then a short time later their accounts would reflect those expectations.
"Prosecutors haven't charged any Madoff investors with criminal wrongdoing. A lawyer for Mr. Picower, 67 years old, said his client wasn't complicit in the fraud and suffered losses in the billions. A lawyer for Mr. Chais, 82, a money manager who channeled West Coast clients to Mr. Madoff's firm, said he was unaware of a criminal probe of Mr. Chais and his client didn't have knowledge of Mr. Madoff's Ponzi scheme. Mr. Chais "has cooperated fully" with investigators, the lawyer said. A representative for Mr. Shapiro, 96, said Mr. Shapiro had no knowledge of the fraud."
Lloyds Chairman Victor Blank To Resign In Next Year (WSJ)
"A spokesman for Lloyds couldn't say how long it will be before the bank names a successor.
Mr. Blank and Chief Executive Eric Daniels have faced heavy criticism from shareholders since Lloyds, the U.K.'s fifth-largest lender, agreed to take over HBOS last fall in what amounted to a government-sanctioned bailout. The combined group has since been forced to take billions of pounds in government capital and participate in a U.K. asset-insurance plan in which the bank agreed to surrender a majority stake to the government."
Buffett Increased Holdings In WFC (MarketWatch)
"Berkshire held over 12 million more shares in Wells at the end of the first quarter compared to the end of 2008, the filing disclosed.
Wells shares slumped during the first quarter as some investors worried the largest U.S. banks might be nationalized. However, Buffett expressed strong support for Wells and some other banks at Berkshire's recent annual shareholder meeting."
Trump On How He Values His Empire (WSJ)
What happens when you allege Trump is worth less than Trump thinks Trump is worth? Trump sues your ass. Comb-Over is laying it to the author of a 2005 book that valued Trump at $150 to $250MM, claiming that it was defamation and as a result he's lost out on deals. Just, let that sink in.


AIG To Spin Off Asia Unit (MarketWatch)
"American International Group, Inc. said Monday it is accelerating steps to spin off its Asia insurance unit, American International Assurance Co., as part of its restructuring.
The U.S. insurer rescued by the U.S. government has hired Blackstone Group LP to advise it on the reorganization and listing of AIA on a stock exchange in Asia, the company said."
Smaller Banks In Need Of $24B (FT)
If we carry over the methodologies from the stress tests to the smaller banks, it looks like the smaller ones are in need of roughly $24B, according to Sandler O'Neill.
"The US Treasury has said that it does not intend to extend the stress tests beyond the 19 top institutions it examined. But analysts say that the public release of the government's test methodology and capital adequacy philosophy means that the tests' standards will become a model for the rest of the US banking system. "This will ultimately migrate down the banking industry no matter what Treasury says," said Robert Albertson, chief strategist at Sandler O'Neill. "It's like telling bank examiners to close their eyes and not to think of a chicken.""

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