Opening Bell: 06.04.09

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Banks Try to Stiff-Arm New Rule(WSJ)
Yes! More "progress" through obfuscation and accounting manipulation!

A group that includes the Chamber of Commerce, the Mortgage Bankers Association, and the American Council of Life Insurers and others sent a letter on June 1 to Treasury Secretary Timothy Geithner, regarding the off-balance-sheet accounting-rule change, saying it should be adopted "cautiously and seek to minimize any chilling effect on our frozen credit markets."
The letter was signed by 16 industry associations, many of which were part of a group known as the "Fair Value Coalition," which was formed earlier this year with the goal of changing mark-to-market accounting rules. Mark-to-market accounting rules set guidelines for banks on when they are required to reflect market prices in the values they assign to hard-to-value securities and other assets.
Now the group of financial organizations is trying to put the brakes on the off-balance-sheet accounting measure, which would force banks to bring hundreds of billions in assets back onto their balance sheets at the beginning of 2010, effectively forcing them to set aside more capital. Some accounting experts say they aren't surprised by the banking industry's latest effort. "Here we go again. They will get out their checkbooks and go to the Hill," says Lynn Turner, the Securities and Exchange Commission's former chief accountant.

What's that saying, those who fail to learn from history are what?
With Japanese Cash, Morgan Stanley May Exit TARP (Dealbook)
Mazel tov, Mack.
House Lifts Lid on its Expenses (WSJ)
Finally a (small) step in the right direction, namely, increased transparency from Congress, purveyors of rank hypocrisy.

The House will begin posting representatives' expense reports online, giving the public easy access to records of the millions of dollars lawmakers spend on staff and items such as catering, cars, computers and TVs.
Separately, Sen. Tom Coburn (R., Okla.) said Wednesday he would introduce a bill requiring the expense records be posted online in the Senate, as well. Such disclosures are "something that we will take a look at," said Jim Manley, spokesman for Senate Majority Leader Sen. Harry Reid (D., Nev.).

Somehow I don't expect this action to reveal any ruh-rhos or red flags since any "scandalous" spending is no doubt arranged outside of Congresspeople's office budgets (Pelosi's reported frequent private jet usage, for example).
Guidance on Short-Selling Needed: GAO (NYT)

Actions taken by the Securities and Exchange Commission at the height of the market turmoil last year appear to have reduced abusive short-selling, but the agency should provide clearer guidance to the brokerage industry for applying the rules, congressional auditors concluded in a report issued Wednesday.

SEC Probes Lehman Research (WSJ)

The Securities and Exchange Commission is investigating whether information about imminent stock upgrades and downgrades was improperly used by employees at Lehman Brothers Holdings and others, according to a letter released by Sen. Charles Grassley.
Why Ackman Failed vs. Target (Ironfire Capital)
Eric Jackson (remember minority Yahoo! dissenter?) presents a detailed analysis of why Pershing Square's Bill Ackman failed in his bid to install his slate of directors on Target's BoD. I don't always find myself seeing eye to eye with Eric, but he's presented a cogent argument here that touches upon facts I've yet to see discussed elsewhere.
The language from Target's press release includes words like "shareholders appear to have" elected the incumbent directors by a "comfortable" margin. Gregg Steinhafel, Target's chairman, president and CEO, goes on to thank shareholders for their "overwhelming" support of management. Towards the end of the press release, Target suggests it will get around to actually releasing "preliminary" voting results in three to four weeks. Final results will come later, but no timeline was provided. Technically, Target doesn't have to share the final results until the end of August -- 60 days after the end of the quarter in which the annual meeting took place.
I find it insulting to shareholders that companies can get away with not releasing voting results immediately after the meeting. A month ago, Bank of America(BAC Quote), a much larger company than Target, with more votes to be counted, and also facing a large number of dissenting shareholders, provided a detailed accounting of its tally before 5 p.m. the same day as the meeting. Target gets to drag its feet for three months, while posturing to the press working on deadline that it enjoyed a sizable win.
Doesn't this sound more like how a banana republic runs itself, rather than one of the largest retailers in the world?
Take a look for yourself
--Brought to you by anal_yst

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Opening Bell

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JPMorgan Profit Slips (WSJ) J.P. Morgan reported a profit of $5.38 billion, down from $5.56 billion a year earlier. On a per-share basis, earnings were $1.31, up from $1.28 as the share count outstanding declined. The latest quarter included a net 8-cent per-share loss tied to litigation expenses and changes in the value of the bank's debt. Analysts polled by Thomson Reuters expected a per-share profit of $1.18, excluding debt-related charges. Revenue rose 6.3% to $27.42 billion. Analysts were looking for $24.68 billion. Wells Fargo reports higher first-quarter profit (Reuters) Wells Fargo, the nation's fourth-biggest U.S. bank, said net income was $4.25 billion, or 75 cents a share, in the quarter, compared with $3.76 billion, or 67 cents, a share in the same period a year earlier. The average estimate from analysts was 73 cents per share. JPMorgan Said to Transform Treasury to Prop Trading (Bloomberg) Achilles Macris, hired in 2006 as the CIO’s top executive in London, led an expansion into corporate and mortgage-debt investments with a mandate to generate profits for the New York- based bank, three of the former employees said. Dimon, 56, closely supervised the shift from the CIO’s previous focus on protecting JPMorgan from risks inherent in its banking business, such as interest-rate and currency movements, they said. Some of Macris’s bets are now so large that JPMorgan probably can’t unwind them without losing money or roiling financial markets, the former executives said, based on knowledge gleaned from people inside the bank and dealers at other firms. Bank Bonus That Tops Salary May Be Banned by EU Lawmakers (Bloomberg) Governments and lawmakers in the 27-nation EU are considering rules for lenders that would go far beyond international agreements approved by the Basel Committee on Banking Supervision. Denmark, which holds the rotating presidency of the EU, has proposed empowering nations to set surcharges of up to 3 percent across their banking systems. Karas yesterday suggested adding language to the legislation that would ban banker bonuses that exceed fixed pay, following calls from other lawmakers to rein in excessive compensation. IMF Lifts Growth Forecast, Cautiously (WSJ) Christine Lagarde, managing director of the International Monetary Fund, said the world economy is marked by "a high degree of instability" even though prospects for global growth are better than they were a few months ago. In an interview with The Wall Street Journal, Ms. Lagarde said the IMF, which marked down its 2012 forecast for global growth in January to 3.3%, has now marked it up to reflect improving conditions in the world economy. But she said the new forecast, to be released next week, remains more pessimistic than the one it made last September, which predicted 4% growth. Europe remains the biggest single risk to the global economy, the former French finance minister said. Hedge Fund Driver Guns DownArmed Robber (NYP) A retired NYPD lieutenant blew away a drugstore bandit yesterday as the suspect tried to gun down three police officers during a foot pursuit, sources said. Thomas Barnes, Barnes — a driver for hedge fund manager Philippe Laffont, was filling his tank at the BP station on East 119th Street and First Avenue at around 11 a.m. when he saw gunman Rudolph Wyatt running from the store, and sprang into action. He crouched behind his hedge-fund boss’ Mercedes SUV and squeezed off three shots, killing Wyatt, 23. The trigger-happy thug — wanted on warrants for two other shootings — lay dead in a pool of blood on the sidewalk wearing a black stocking mask with a wad of stolen cash spilling out of his pocket, witnesses said. “Part of the back of his head was missing. He had a large head wound and there was tons of blood,” said witness John Brecevich, 59, owner of the Original Patsy’s restaurant nearby. “It was a scene straight out of NYPD Blue.” Trustees Aim For MF Execs (NYP) The trustee tasked with clawing back money for burned customers of MF Global is training his sights on the brokerage firm’s executives — a list that likely includes former CEO Jon Corzine. In a statement yesterday, trustee James Giddens said he is considering pursuing claims against “certain responsible individuals” who worked for MF at the time customers’ trading accounts were improperly tapped. Kent Jarrell, a spokesman for Giddens, declined to name names but said the trustee is considering civil suits against “officers, directors or other employees” of both the brokerage firm and the holding company. Fed Officials Differ on Need to Keep Rates Low to 2014 (Bloomberg) William C. Dudley, president of the New York Fed, and Vice Chairman Janet Yellen said the 2014 time-frame is needed to lower unemployment from 8.2 percent. Minneapolis Fed President Narayana Kocherlakota said rising inflation may prompt an interest-rate increase as early as this year, while Philadelphia’s Charles Plosser said policy should hinge on economic performance, not a calendar commitment. Newark Mayor Cory Booker: Race into home fire was a "come to Jesus moment" (CBS) Booker arrived home last night to discover his next-door neighbor's house on fire, and rescued a young woman trapped upstairs by carrying here through the flames, suffering second-degree burns in the process. The mayor's security team discovered the fire and pounded on the door to alert residents, when an elderly woman said that her daughter was trapped upstairs. At first, Newark Police Detective Alex Rodriguez would not let Booker into the burning house. "He basically told me, 'This woman is going to die if we don't help her,' and what can I say to that?," Rodriguez said. "I let him go and without thinking twice, he just ran into the flames and rescued this young lady." Booker said that as he jumped through the kitchen on the second floor, "I actually wasn't thinking. When I got there and couldn't find her in all the smoke, looked behind me and saw the kitchen really erupting with flames all over the ceiling, that's when I had very clear thoughts that I'm not going to get out of this place alive and got ... very religious. He admitted he was "not gentle" with her - "I just sort of threw her over my shoulder and dragged her through the kitchen."

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