Opening Bell: 06.25.10

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Lawmakers Reach Accord On Finance Rules (WSJ)
Lawmakers agreed to a provision known as the "Volcker" rule, which prohibits banks from making risky bets with their own funds. To win support from Sen. Scott Brown (R., Mass.), Democrats agreed to allow financial companies to make limited investments in areas such as hedge funds and private-equity funds. The move could require some big banks to spin off divisions, known as proprietary-trading desks, which make bets with the firms' money. The bill also includes a provision, authored by Sen. Blanche Lincoln, which would limit the ability of federally insured banks to trade derivatives. This provision almost derailed the bill following vehement objections from New York Democrats. Ms. Lincoln worked out a deal in the early hours of Friday morning that would allow banks to trade interest-rate swaps, certain credit derivatives and others.

Frank Sticks Banks With $20 Billion Tab (Politico)
Barney Frank at 2:52 a.m. moved on to sticking the banks with the $20 billion or so bill to cover the costs of the reform legislation's implementation. The fee would apply to banks with over $50 billion in assets and hedge funds with over $10 billion and would be assessed proportionally based on a bank's size.

Congress Includes Ban On Box Office Trading (HR via Heidi Moore)
An amendment banning the trading of derivatives based on boxoffice results was approved just before 1 a.m. EST on Friday morning. Barney Frank said during a short discussion that while there had been controversy about movie futures, the House conferees were not going to exercise their option to alter the amendment banning movie futures trading.

John Paulson Bullish on US, Denies Subprime Culpability (CNBC)
"We had absolutely zero impact on the mortgage or credit crisis,” he told an audience at the London School of Economics on Wednesday. “Instead, that guilt lies with the mortgage brokers themselves. They only cared about generating fees, they falsified appraisals... this was the sad underbelly of mortgage finance in the US...(w)ithout us, the mortgage market would have existed exactly as it did," Paulson said.

Goldman Sachs Reclaims Top Spot In Global M&A (Reuters)
Haters gonna hate: "Goldman would still like you to believe the firm is run by Gus Levy or John Whitehead, who was famous for saying, 'Put the client first and the firm second.' But now it seems like everybody is a (trading) counterparty," Keevil said.

Liability Questions Loom For BP And Ex-Partners (NYT)
“Other parties besides BP may be responsible for costs and liabilities arising from the oil spill, and we expect those parties to live up to their obligations,” said Tony Hayward, BP’s chief executive, in response to a June 18 statement from one of its partners in the well. That partner, Anadarko Petroleum, has a 25 percent stake in the project, and its joint operating agreement with BP gives it a 25 percent share of the liability, a potentially ruinous amount. On June 18, Anadarko issued a blunt statement intended to distance itself from BP. “The mounting evidence clearly demonstrates that this tragedy was preventable and the direct result of BP’s reckless decisions and actions,” said the company’s chief executive, Jim Hackett. “Frankly, we are shocked,” he said. “BP’s behavior and actions likely represent gross negligence or willful misconduct.”

Is BP Burning Sea Turtles? (Fox)
A boat captain working to rescue sea turtles in the Gulf of Mexico says he has seen BP ships burning sea turtles and other wildlife alive. Captain Mike Ellis said in an interview that the boats are conducting controlled burns to get rid of the oil. "They drag a boom between two shrimp boats and whatever gets caught between the two boats, they circle it up and catch it on fire. Once the turtles are in there, they can’t get out," Ellis said. Ellis said he had to cut short his three-week trip rescuing the turtles because BP quit allowing him access to rescue turtles before the burns. "They're pretty much keeping us from doing what we need to do out there," Ellis said.

What recession? This crystal bathtub costs $790,000+
(NYDN)
You need this: "It was crafted from flawless white crystal sourced from the Amazon rainforest. It was sculpted over six months using diamond cuts. It costs a $790,310." It's your next tub.

Hedge Fund Regulations Stall In Europe (Reuters)
On Thursday, the parliamentarian leading negotiations with European countries said he had disbanded efforts to reach an agreement this month on rules to clamp down on hedge funds and private equity.

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Clock Ticks On Cyprus (WSJ) Cyprus, in an 11th-hour bid to unlock international aid, reopen the nation's banking system and preserve membership in the euro, readied a plan that would restructure its second-largest lender and enforce unprecedented restrictions on financial transactions. The proposals, if they take effect, would allow authorities to restrict noncash transactions, curtail check cashing, limit withdrawals and even convert checking accounts into fixed-term deposits when banks reopen. They have been closed since March 16. Parliament is set to debate the measures on Friday. If Cyprus can't pass them, it could find itself with little choice but to leave the euro zone—opening a Pandora's box that could threaten Spain and Italy. Time is short: The European Central Bank on Thursday threatened to cut off a financial lifeline if Cyprus's banks aren't stabilized by Monday. Credit Suisse Chief Gets 34% Raise (WSJ) Credit Suisse rewarded Chief Executive Brady Dougan for repositioning the bank in 2012 with a 34% pay rise, despite a fall in net profit for the year and a backdrop of growing criticism of executive remuneration. Mr. Dougan earned 7.77 million Swiss francs ($8.21 million), up from 5.8 million francs in 2011, when he took a pay cut as Switzerland's No. 2 bank by assets slogged through a difficult year in which its stock price fell 41%. Europe’s Bonus Clampdown Hits Two-Thirds of Fund Managers (Bloomberg) The European Parliament’s vote to cap bonuses in the asset-management industry could affect two- thirds of senior fund managers in the U.K., U.S. funds in Europe and hedge funds open to small investors. Bonuses should not exceed base salaries for managers of mutual funds regulated by the European Union, known as UCITS, European lawmakers in the economic and monetary affairs committee voted yesterday. The rules would cover 5 trillion euros ($6.5 trillion) of assets in UCITS, which include funds managed outside Europe and some linked to hedge-fund strategies such as John Paulson’s New York-based Paulson & Co. and Och-Ziff Capital Management Group. “If the final rules are even close to what has been agreed today, then this will fundamentally change the way asset managers are paid,” said Jon Terry, a partner at PricewaterhouseCoopers LLC. Asset managers “are now facing the toughest pay rules across the whole of the financial-services sector.” Boaz Says Dimon Should Have Known (NYP) The buck stops with Jamie Dimon. That’s the view of Boaz Weinstein, the hedge-fund manager who first speared the “London Whale” that led to $6.2 billion in trading losses for Dimon’s JPMorgan. Despite making a bundle by taking the other side of the bank’s bad bet, Boaz says that requiring bank CEOs to sign off on such trades is the only way to prevent debacles. As the “ultimate boss” of JPMorgan, Dimon should have had to approve the complicated trade, he said. “If you had a rule that anytime, anyone wants to make an investment in any one thing greater than $10 billion or $20 billion, the boss has to sign off on it,” then those types of disasters wouldn’t happen, Boaz said yesterday at the Absolute Return Symposium in Manhattan. Long Island Man Accepts Plea Deal in Fake Drowning (AP) The man, Raymond Roth, 48, of Massapequa, pleaded guilty to fourth-degree conspiracy. “The restitution Mr. Roth is ordered to pay ensures that the taxpayers won’t foot the bill for this scam,” said Kathleen M. Rice, the Nassau County district attorney. Prosecutors said Mr. Roth and his son, Jonathan Roth, 22, had plotted to collect about $400,000 in life insurance. The younger man’s case is pending. On July 28, Jonathan Roth told the authorities that his father had gone for a swim at Jones Beach and never came back. Responders searched for Raymond Roth for several days, while he was actually on his way to Orlando, Fla., prosecutors said. Raymond Roth’s wife found e-mails discussing the plot, and the authorities were alerted. Raymond Roth’s lawyer, Brian Davis, said on Thursday that he believed the plea bargain was fair, adding, “At this point, he wants to put it behind him.” Mood Sours In Northern Europe (WSJ) A worsening mood among businesses largely predated fraught negotiations over a Cypriot bailout, which economists say could stoke tensions surrounding the euro zone's debt crisis. Poorer sentiment among businesses lessens the chances of a rise in corporate investment, crucial for an economic recovery in the bloc at a time when most of its member states are cutting spending to control their debts. Economists See No Crisis With U.S. Debt as Economy Gains (Bloomberg) Three years after a government spending surge in response to the recession drove the U.S. past that red line -- the nation’s $16.7 trillion total debt is now 106 percent of the $15.8 trillion economy -- key indicators reflect gathering strength. Businesses have increased spending by 27 percent since the end of 2009. The annual rate of new home construction jumped about 60 percent. Employers have created almost 6 million jobs. And with borrowing costs near record lows, the cost of paying off the debt is lower now than in the year Ronald Reagan left the White House, as a percentage of the economy. BP to return $8 billion to shareholders from TNK-BP sale (Reuters) BP, which completed the sale of the half-owned TNK-BP to Russian state oil firm Rosneft on Thursday, said the move, designed to increase the value of remaining shares, was an amount equivalent to the value of the company's original investment in TNK-BP in 2003. Man finds knife blade in his back three years after stabbing (TS) A Northwest Territories man was just scratching what he thought was an annoying old itch earlier this week when it turned out to be a knife blade that had been buried in his flesh for almost three years. “I jumped in a cab and went straight to emergency,” said Billy McNeely, 32. The story goes back to an April 2010 birthday party in McNeely’s home town of Fort Good Hope, N.W.T. McNeely said a fight broke out between himself and another man over an arm-wrestling contest that ended up with McNeely being stabbed five times. “They stitched me up and bandaged me up,” said McNeely. “They never took X-rays.” Ever since, McNeely has had a lump in his back where the knife went in. Doctors and nurses told him nerves had been damaged in the stabbing. But the old wound never stopped nagging. “I always had back pains. There was always a burning feeling with it.” The injury was constantly itchy and irritated. It set off metal detectors. That was explained away as a metal fragment that had lodged in his bone. On Monday, while McNeely and his girlfriend were asleep in bed, the pain came back. “I sat up, I tried to rub it and scratch it the way I always did, and then the tip of my nail caught a piece of something solid, something sharp. “My girlfriend got up and she started playing around with it and she manoeuvred my back in a certain way and the tip of a blade poked out of my skin.” Doctors dug out a blade measuring about seven centimetres long.

(Getty Images)

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