Opening Bell: 03.17.10 - Dealbreaker

Opening Bell: 03.17.10

Author:: Dealbreaker
Updated:: Jan 14, 2019
Original:: Mar 17, 2010

CIT Posts $1 Billion Quarterly Loss (NYT)
The U.S. company said in a regulatory filing that it would not return to profitability in 2010 under regular accounting rules. But it added that new, post-bankruptcy accounting measures would bring it back into the black this year.

Nomura Revamps Group Structure (WSJ)
Nomura Holdings Inc. has admitted a foreigner to its top decision-making committee in a bid to globalize the Japanese firm and retain former Lehman Brothers bankers, people familiar with the matter said. Nomura has restored former Lehman Brothers executive Jasjit "Jesse" Bhattal to a position of power and revamped the structure of its organization to help stem a wave of defections in recent weeks.

Deutsche Bank, JPMorgan, UBS Are Charged With Derivatives Fraud (Bloomberg)
Prosecutor Alfredo Robledo alleges the London units of the four banks misled Milan on the economic advantage of a financing package that included the swaps and earned 101 million euros in hidden fees.

Major Dutch fund ABP sues BofA over Merrill (Reuters)
"Prior to the merger date, BofA appear to have had knowledge of record quarterly losses Merrill was facing. The losses were expected to exceed $15 billion," ABP's assets manager APG said in a statement on Wednesday.

Jim Rogers Sizes Up Two Global Bubbles (CNBC)
"The euro will probably break up in the next 15 to 20 years," Rogers said in an interview. "Don't get me wrong, I own the euro. We've had currency unions in history, they didn't survive, this one won't survive either," he explained.

Rachel Maddow Questions Geithner About Role At New York Fed: 'Where Were You?' (HuffPo)

Visit msnbc.com for breaking news, world news, and news about the economy

JPMorgan Cushions Drew's Retirement With $21.5 Million (Bloomberg) JPMorgan's decision to let Chief Investment Officer Ina Drew retire four days after the bank disclosed a $2 billion loss in her division allowed her to walk away with about $21.5 million in stock and options. Drew, who resigned May 14, can keep $17.1 million in unvested restricted shares and about $4.4 million in options that she otherwise would have been required to forfeit if the New York-based bank had terminated her employment “with cause,” according to regulatory filings and estimates from consulting firm Meridian Compensation Partners LLC. A 30-year JPMorgan veteran, Drew also had accumulated 661,000 unrestricted shares of common stock worth about $23.7 million based on the May 14 closing price, $9.7 million in deferred compensation and $2.6 million in pension pay as of Dec. 31, according to company filings. Altogether, Drew’s stock, pension and deferred pay come to about $57.5 million. JPMorgan Models In Spotlight (WSJ) The Office of the Comptroller of the Currency, the bank's primary regulator, has requested reviews of models that measure the possible effects of everything from trading losses to interest-rate moves, the people said. A change in one of these models contributed to losses in the bank's Chief Investment Office, a once-obscure unit that manages $370 billion in excess cash. The change effectively increased the amount of risk traders were allowed to take. Jim Rogers: Be Afraid (CNBC) Even as markets cheered the agreement by European leaders to allow the direct use of the bloc’s bailout funds to recapitalize struggling banks, investor Jim Rogers told CNBC the move does nothing to help solve the region’s biggest problem...Rogers argues that the deal does not improve the solvency of indebted nations such as Spain. Spain's central government budget deficit has soared to 3.41 percent of GDP in the first five months of 2012, above the EU limit of 3 percent. He adds that the governments need to stop coming to the rescue of failing banks, even if it results in “financial Armageddon.” SEC May Order Nasdaq Upgrade (WSJ) As part of the deepening inquiry, regulators are weighing demanding that Nasdaq agree to revamp its processes for developing, changing, testing and implementing the computer code used in initial public offerings and other exchange functions, according to people familiar with the investigation. FBI arrests Bernie Madoff's brother Peter ahead of expected guilty plea (AP) Given Peter Madoff's "level of financial experience and sophistication," the trustee alleged that he either knew or should have known that he reaped gains "derived from purported transactionsgrounded in fraud and deception." The trustee also took aim at his daughter Shana, who once worked as an in-house lawyer at the firm and has denied involvement in the scheme. "Had Peter, as the Chief Compliance Officer, or Shana, as Compliance Counsel, done their jobs properly, the fraud might have been revealed years earlier," the complaint said. "Either they failed completely to carry out their required supervisory/compliance roles, or they knew about the fraud but covered it up." Euro Zone Sees Single Bank Supervisor (WSJ) European leaders at a two-day summit in Brussels said they would speed up plans to create a single supervisor to oversee the euro zone's banks, and agreed on measures aimed at reducing soaring borrowing costs for Spain and Italy. Credit Suisse Says Second Quarter Will Be Profitable Overall (Reuters) "Further to its statement of last Friday and in response to media reports about its second quarter financial performance, Credit Suisse informs that it expects based on quarter-to-date information to be profitable at the group level and in all its divisions," the Swiss bank said in a brief statement on Friday, the last day of the second quarter. Bankers Fleeing Europe Crisis Head To Singapore (CNBC) “Singapore seems like a very green field compared to Paris. It looks like what Europe was 20 years ago, in the sense it’s got a lot of opportunities in terms of new prospects for the markets.” Louisiana's Rogue Dolphin Entertains ... and Bites (Newser) Residents of an upscale New Orleans suburb have been warned to stay away from their friendly neighborhood dolphin. The young bottlenose dolphin, who arrived in a canal off the north shore of Lake Pontchartrain after Hurricane Katrina, is a big hit with boaters and swimmers, but has bitten at least three people who got too close to him. Wildlife officials have met with residents to tell them how to co-exist with the dolphin—and to remind them that feeding or harassing wild dolphins is banned by the Marine Mammal Protection Act. Signs have been put up urging people to stay at least 50 feet away from the dolphin. "He’s like a friendly neighborhood dog, but the dog will bite," the manager of the local homeowner's association explains to King5. "He's a wild animal and you have to treat him like he's a wild animal and not jump on him, not go swimming with him. He's not Disney World." Officials say that relocating the dolphin could kill him—and if he survived, he would probably return to the canal he calls home. One resident has another solution. "Maybe they should find him a girlfriend," he says.

Bond Trading Revives Banks (WSJ) Gains in the financial firms' fixed-income businesses, which can account for as much as half of revenue, are putting companies including Goldman Sachs Group Inc., Morgan Stanley and the J.P. Morgan unit of J.P. Morgan Chase & Co. on track to report their strongest numbers since the first quarter of 2011, said bankers and analysts. Trade Fight Flares on China Minerals (WSJ) The Obama administration Tuesday intends to escalate its trade offensive against China, a move heavy with political overtones, by pressing the World Trade Organization to force the export giant to ease its stranglehold on rare-earth minerals critical to high-tech manufacturing. The announcement, which will be made by President Barack Obama, marks a new front in the administration's election-year effort to turn up the heat on China, amid competition from the president's potential Republican rivals on the matter. It could also pressure China to respond to the WTO on an issue that is of high importance to a range of manufacturers. The U.S., joined by the European Union and Japan, plans to ask the WTO, the international arbiter of trade practices, to open talks with China over its restrictions on exporting the rare-earth minerals, administration officials said. New York City Tops Global Competitiveness, Economist Report Says (Bloomberg) New York City ranks first among 120 cities across the globe in attracting capital, businesses and tourists, according to an Economist Intelligence Unit report commissioned by Citigroup. London was the second most-competitive city, followed by Singapore, with Paris and Hong Kong tied for fourth place, according to the report, which was released today. Among U.S. cities, Washington, Chicago and Boston made the top 10. The report cited New York’s diverse economy, driven by media, arts, fashion, technology and finance. In 2010, New York was second only to California’s Silicon Valley as a source of venture capital in the U.S., according to the report. Ex-Lehman exec arrested again (Stamford Advocate) Bradley H. Jack, a former investment banking chief at Lehman Brothers and an owner of the most expensive residential property in Fairfield, has been charged for the second time in less than a year with forging a prescription for a controlled substance. Jack, 53, of North Avenue, was charged Friday by Westport police with second-degree forgery in connection with an incident last November when he is said to have forged the date of a prescription for a controlled substance at a CVS pharmacy that was made out to him by a Fairfield doctor. Euro-Zone Ministers Press Spain for a Deal on Deficits (WSJ) Euro-zone finance ministers on Monday pressed a budget plan on Spain—regarded as a key test of ambitious new rules for the currency bloc—that would allow the government some leeway on its budget deficit for this year but would keep a tough deficit target for 2013. The plan would mean Spain would still have to embark on a bruising austerity program over the next two years that would cut nearly 6% of gross domestic product off its deficit. The program would be particularly challenging given Spain's contracting economy and 23% unemployment rate, Europe's highest. Ministers said after the meeting that Spain had agreed to consider the proposal. Greek Students Fight Stray Dogs and Despair Amid College Cuts (Bloomberg) Higher education in Greece, as in much of Europe, has been battered by the recession and austerity measures. Budget cuts of 23 percent since 2009 mean buildings aren’t heated in the winter, schools have slashed faculty salaries and newly hired professors can wait more than a year to be appointed. Students say it’s hard to be hopeful with youth unemployment surpassing 50 percent and protesters seizing university buildings. “People are pessimistic and sad,” said Konstantinos Markou, a 19-year-old law student, speaking in a lobby at the University of Athens, where dogs fought nearby and students say drug dealers and users congregate. “The sadness is all around the air.” Entire Arena Football team cut during pregame meal at Olive Garden (YS) The owner of the Pittsburgh Power fired all 24 members of his team during a pregame meal at an Orlando-area Olive Garden. With AFL players set to strike before the 2012 season opener, owner Matt Shaner reacted first, cutting his entire team hours before kickoff of a game against the Orlando Predators. "Mid-statement, all the players got up and left," former Power center Beau Elliott told the Pittsburgh Tribune-Review. "Every player got up and left while he was still talking. There were 15 to 20 angry, large individuals." Tainted Libor Guessing Games Face Replacement by Verified Trades (Bloomberg) The London interbank offered rate, the benchmark for $360 trillion of securities, may not survive allegations of being corrupted unless it’s based on transactions among banks rather than guesswork about the cost of money. “The methodology used to formulate Libor is totally unsuitable for the modern world,” said Daniel Sheard, chief investment officer of asset manager GAM U.K. Ltd., which manages about $60 billion. “The British Bankers’ Association needs to come out on the front foot and say ‘this is a system that was appropriate 20 years ago but is no longer appropriate and we are going to change it.’” SEC set to file charges over private trading (FT) The Securities and Exchange Commission is close to filing civil charges tied to the trading of private stocks against at least three executives, making it the first case since regulators began reviewing secondary markets more than a year ago. The fresh scrutiny comes as Congress weighs laws to loosen restrictions on private trading, allowing private groups to have more shareholders and market their stock to a wider range of investors, to make it easier for start-up companies to raise capital and create jobs. It also comes just months ahead of an expected initial public offering for Facebook, which has been the most heavily traded private stock. Ruth Madoff Moves To Greenwich (Greenwich Time) While some Old Greenwich residents said they did not like the idea of Madoff taking up residence in the neighborhood, others shrugged off the news that Madoff was living in town. Neil Lucey, a semi-retired investment banker who has lived in Old Greenwich for 15 years, said he had "no adverse reaction" to hearing Madoff had moved in. Researchers say long-lost Leonardo may have been found (Reuters) Art researchers and scientists said on Monday that a high-tech project using tiny video probes has uncovered evidence that a fresco by Renaissance master Leonardo da Vinci lost for five centuries may still exist behind a wall of Florence's city hall...Researchers used tiny, medical-style endoscopic probes and other high-tech tools inserted through existing cracks in the outer wall holding the Vasari fresco and took samples of substances. "We found traces of pigments that appear to be those known to have been used exclusively by Leonardo," said Maurizio Seracini, an engineer and expert in art diagnostics who has been on the trail of the "Lost Leonardo" for three decades. "These data are very encouraging," he said, adding that one black pigment found was believed to be of the same type used by Leonardo on the Mona Lisa.

Westminster Hits At Goldman Sachs Bonus Plan (FT) Goldman Sachs provoked a furious reaction in Westminster after it emerged that the U.S. investment bank was mulling a plan to delay its U.K. bonus payments to take advantage of the imminent cut to the top rate of tax. John Mann, a Labour member of the Treasury select committee, criticized an "opportunistic money grab" by banks at a time of intensifying public anger against the sector. Some 10 banks had previously considered delaying bonuses until the top rate falls from 50 to 45 pence - although most have since concluded that this would be damaging. Chris Leslie, shadow Treasury minister, said banks needed to think carefully about their reputations. Fitch Warns Of US Downgrade Over Debt Fight (CNBC) In a statement Fitch said the debt ceiling was "an ineffective and potentially dangerous mechanism for enforcing fiscal discipline. It does not prevent tax and spending decisions that will incur debt issuance in excess of the ceiling while the sanction of not raising the ceilingrisks a sovereign default and renders such a threat incredible." Fitch Upbeat On Ireland (Reuters) If [Ireland's] debts could be shared out among euro zone states through the region's bailout mechanisms there could be scope for Ireland's BBB-plus rating to rise into the single-A category, according to Fitch analyst Douglas Renwick. "If there is an element of risk sharing, say perhaps through the ESM (European Stability Mechanism) over a bit of time, it could rise back to the single-A (range)," Renwick said. JPMorgan Ordered To Fix Lapses (WSJ) US regulators hit JPMorgan with four formal enforcement actions targeting lapses in risk-management and money-laundering controls, including the first sanctions in response to the bank's multibillion-dollar 2012 trading debacle. One set of cease-and-desist orders from the Office of the Comptroller of the Currency and the Federal Reserve instructs the largest U.S. bank by assets to remedy the breakdowns that allowed a small group of London-based traders to rack up more than $6 billion in losses last year. Another requires the bank to beef up its antimoney-laundering procedures and mirrors an action taken last April when regulators ordered Citigroup to upgrade its transaction-monitoring procedures and enhance internal audit. None of the orders issued Monday require any fines or monetary penalties, but regulators left the door open to future action. Wells Fargo Bets On Charlotte Trading After BofA Flees (Bloomberg) \Wells Fargo is betting its securities business can thrive 600 miles from New York in the same city Bank of America's traders largely abandoned. The first of 900 Wells Fargo employees moved last month into a new space on two floors of a 48-story tower in Charlotte, North Carolina. From their windows they can see the complex a half-mile away where Bank of America built its own state-of-the- art facility less than a decade ago for about 550 traders and investment bankers. Most have since been fired or moved to New York. Police: Teacher offers sexual favors to officer to avoid DUI arrest (WPBF) According to the arrest report, an empty gallon jug of Carlo Rossi wine was found behind the driver's seat of Maloney's damaged van, which was parked on the side of the street when officers arrived. Police said Maloney refused to cooperate with officers during their DUI investigation. Police said she began yelling at them and made random vulgar statements. While she was on her way to the police station, Maloney allegedly told an officer, "How much do I need to pay you to just let me go? Don't you understand I am a school teacher?" She then offered to perform oral sex on the officer and let him fondle her breasts, the report stated. RBS Libor Fine May Hit $800M+ (Bloomberg) US and UK regulators could hit the Royal Bank of Scotland with as much as $804 million in fines next week to settle allegations traders tried to rig interest rates, two people with knowledge of the matter said. Investment banking chief John Hourican and Peter Nielsen, the head of markets, may also be asked to leave because they had responsibility for the parts of the company where the alleged wrongdoing occurred. The fine would be the second-largest levied by regulators in their investigation into allegations traders at the world’s biggest lenders manipulated submissions used to set the London interbank offered rate. UBS AG, Switzerland’s biggest lender, was fined $1.5 billion in December for rate-rigging, exceeding the 290 million pounds Barclays paid in June. Bob Khuzami, Master Blaster (NYP) Robert Khuzami yesterday took aim at a Columbia University professor who chided the SEC’s head of enforcement for not suing enough high-ranking individuals at large financial institutions, choosing instead to settle with those companies...Khuzami said in a blistering 1,500-word article in the National Law Journal that the SEC has charged a total of 102 individuals associated with the credit crisis, including high-level executives at Citigroup, Credit Suisse, Bear Stearns, and Fannie Mae and Freddie Mac...It’s the second time in as many weeks that Khuzami has called out his critics by name. Just before New Year’s Eve, the Brooklyn native blasted Simon Johnson, a professor at MIT Sloan School of Management, for a New York Times blog that said Khuzami’s hire was a “mistake” because of his former ties to Deutsche Bank. Khuzami shot back in the comment section of the blog — an unusual move for a public official. Wall Street Pay Gets Tougher Look (WSJ) Daniel Loeb, who runs hedge-fund firm Third Point LLC, has raised questions about whether compensation levels at Morgan Stanley are justified given the New York company's size and relative simplicity compared with larger bank. Hedge Funds' Manhattan Migration (WSJ) Of the new firms starting out in Manhattan, Greenwich or Stamford, about 86% picked the Big Apple, on average, from 2003 to 2008, according to eVestment, which tracks data on about 70% of U.S. hedge-fund firms. In 2009 and 2010, Manhattan was home to an average of 92% of the fund launches. Data for 2011 suggest the trend has continued. "There are blips in the data, but it's clear launches shifted toward New York after the crisis," says Peter Laurelli, eVestment's head of research. Detroit mafia boss says Jimmy Hoffa is buried in shallow grave north of Detroit (NYDN) Tony Zerilli, 85, says Hoffa was buried in a field outside Detroit, about 20 miles from the restaurant where he was last seen in July 1975. The aging Zerilli, who was in prison at the time of Hoffa’s disappearance, told TV news stations WNBC and WDIV that the plan was to move Hoffa’s body, but that never happened. “The master plan was, that I understood, was that they were going to put him in a shallow grave here. Then, they were going to take him from here to Rogers City upstate,” Zerilli said. “There was a hunting lodge and they were going to bury in a shallow grave then take him up there for final burial. Then, I understand, that it just fell through.” It was unclear why Zerilli chose to speak now about the 37-year-old mystery that has elicited dozens of false leads and conspiracy theories in the past. Zerilli said is to be ailing and penniless since his release from prison in 2008. WNBC reported he is promoting an upcoming book titled "Hoffa Found.” “All this speculation about where he is and he’s not,” Zerilli said. “They say he was in a meat grinder. It’s all baloney.”