Opening Bell: 08.27.10

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SEC Vows More Action Against Wall Street on Crisis (FT)
US regulators told the Financial Times the SEC’s contentious civil fraud case against the Goldman Sachs over the sale of mortgage-backed securities was an example of the type of high-profile action its revamped enforcement division was working on. “Deterrence works in the white-collar world. Financial institutions look at cases like Goldman and review their own practices and risk-tolerance and think about how risky behaviour affects their brand,” said Robert Khuzami, SEC director of enforcement. Senior SEC officials said the regulator had a significant number of potential enforcement actions against banks and insurers still in the pipeline.

Private-Public Investment Program Reaps Rewards (NYT)
Nine months into the program, the eight investment funds chosen by the Treasury Department have generated an estimated return of about 15.5 percent for taxpayers, according to an analysis of their results through the end of June by Linus Wilson, an assistant professor of finance at the University of Louisiana, Lafayette. Two of the investment funds — one operated by an Angelo, Gordon-GE Capital consortium and another by BlackRock — have gotten off to even stronger starts, posting returns of more than 20 percent.

Banks’ Self-Dealing Super-Charged Financial Crisis (ProPublica)
"Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history. Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses: They created fake demand. A ProPublica analysis shows for the first time the extent to which banks -- primarily Merrill Lynch, but also Citigroup, UBS and others -- bought their own products and cranked up an assembly line that otherwise should have flagged."

El-Erian Says `Alarming' Data Show U.S. Economy Slowing (Bloomberg)
Unemployment is high, consumer credit is shrinking and small companies are having trouble obtaining bank lines of credit, wrote El-Erian. Increased government spending and additional debt purchases from the Federal Reserve are unlikely to spur a rebound, he wrote. “Throughout the summer, data signals have become more alarming,” wrote El-Erian. “Current policy approaches here and abroad are unlikely to deliver a durable and robust U.S. recovery.”

Tiger + Divorce = Six Strokes Under (WSJ)
Well, well, well, well, well, well, well. Not going to make too big a deal about this. Could have just been a fluke. He was due to break out soon—it's been a messy slog of a summer. Despite everything—the self-inflicted personal crisis, the maddening inconsistency on the course—he's still the No. 1-ranked golfer in the world. Technically. Which means he's, you know, good.

Baby Tiger Found Stuffed In Bag At Thai Airport (AP)
Authorities at Bangkok's international airport found a baby tiger cub that had been drugged and hidden among stuffed toy tigers in the suitcase of a woman flying from Thailand to Iran, an official and a wildlife protection group said Friday. The woman, a Thai national, had checked in for her flight and her oversized bag was sent for an X-ray which showed what appeared to be a live animal inside, according to TRAFFIC, a wildlife trade monitoring group.

Krugman: This Is Not A Recovery (NYT)
We can safely predict what he and other officials will say about where we are right now: that the economy is continuing to recover, albeit more slowly than they would like. Unfortunately, that’s not true: this isn’t a recovery, in any sense that matters.

BofA Economist: Bernanke Must Be Clear On Objectives (CNBC)
"In its recent statements, the Fed didn't explain its actions after modestly changing policy," Bank of America Chief Economist Mickey Levy told CNBC. "He (Bernanke) needs to lay out what the Fed's views are on inflation by saying the objective is one to two percent. Implicit in that will be an understanding that it's going to avoid deflation."

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