Opening Bell: 10.05.10

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Jerome Kerviel Sentenced To Three Years In Jail (Reuters)
And he has to repay 4.9 bln euros to Societe Generale, which will take 170,000 years according to his current salary as a technology consultant.

How Does Kerviel Feel About The Verdict? (WSJ)
"Jérôme is disgusted," Olivier Metzner, Mr. Kerviel's lawyer, told reporters. "This ruling says the bank is responsible of nothing and that Jérôme Kerviel is responsible for the excesses of the banking system."

Moody's Warns Of Ireland Rating (WSJ)
Moody's might cut Ireland's debt rating again, or it might not. We'll just have to see how Moody's is feeling.

Eliot Spitzer: ‘Recovering’ Politician, Aspiring ... ? (NYT)
Spitzer didn’t even look self-conscious when, in the final segment [of his new show], a “political party” where younger bloggers and journalists join the hosts at a table and festively trade quips, Ms. Parker asked him to identify his secret “guilty pleasure.” He smiled and nodded, as she supplied the answer, “Nascar.”

Breaking Even On AIG (NYT)
“I really didn’t know what I was walking into,” Jim Millstein says about taking one the biggest jobs of his life: unraveling the taxpayers’ bailout — er, investment — in the American International Group.

And the worst payers this year will be….BarCap and Nomura? (eF)
"Regardless of the miraculous retrospective increase in last year’s bonuses, this year’s will clearly be disappointing. And people at BarCap and Nomura may stand to be disappointed the most."

America Needs Stimulus Not Virtue (FT)
George Soros: "The simple truth is that the private sector does not employ available resources. Mr Obama has in fact been very friendly to business, and corporations are operating profitably. But instead of investing, they are building up liquidity. Perhaps a Republican victory will boost their confidence but, in the meantime, investment and employment require fiscal stimulus (monetary stimulus, by contrast, would be more likely to stimulate corporations to devour each other than to hire workers)."

Sheila Bair: There's "A Bit Of A Bond Bubble Right Now" (CNBC)
"Longer term, I do worry about interest rate risk and the ramifications of this very long, protracted period of very low interest rates," Bair said. "Eventually they're going to start going up, and what happens? A bit of a bond bubble now, it appears, and so how do we deal with that?"

Feathers Fly Over Goose "Kill Zones"
(NYP)
Expanded "kill zones" for the eradication of geese around Kennedy and La Guardia airports are so large that they cover nearly all of the Big Apple -- and critics say it's literally a case of overkill. "It reminds me of the old saying, 'Kill them all and let God sort it out,' " said former Parks Commissioner Henry Stern.

Henry Kravis Pledges $100 Million For Columbia's B-School Campus (Bloomberg)
“We’re not just constructing a building, we’re building a community of entrepreneurs,” Kravis said in an interview. “If we don’t get our education system right, we’re going to be going backwards. I want to make sure this campus gets built. I think it will be phenomenal.”

Citigroup: Too Big To Manage (HP)
Charlie Gasparino: "I'm not saying that Citigroup is about to fail anytime soon, but make no mistake about it, Citi is a fucked up place. Despite efforts to downsize, it's still way too big, and its management way too feeble to be running a bank of its size, particularly given the competitive pressure Pandit, the CEO since 2007, and his team will face from investors who are pretty tired of holding onto a $4 stock (it closed Monday at $4.03)...It's not that I have anything against Pandit; I've met him exactly once in my career and he seems like a nice enough fellow. He's supposed to be smart. He has a PhD., taught finance, and is said to understand complex investments, like the ones he inherited and which led to Citi's near demise in 2008. But for all Pandit's smarts, he never quite got the reality that the business model of Citigroup -- known as the universal banking model where individuals and institutions can find all their financial needs taken care of at one place -- could never work.

Citi reminds me of the old Soviet Union, a massive bureaucracy run by people who thought they were smarter than the free markets. Citigroup imploded in 2008; but for years it was failing, unable to meet even the barest definition of a integrated universal bank, and falling behind in profit margins. But like the Soviet Union, Citi was doomed for failure. For the bank to have succeeded, former CEO Chuck Prince and later Pandit and his team would have had to become experts in commercial banking, investment banking, ATMs, and mortgage lending, to name just a few businesses."

Related

Opening Bell: 04.09.12

JPMorgan Trader Iksil Fuels Prop-Trading Debate With Bets (Bloomberg) Iksil’s influence in the market has spurred some counterparts to dub him Voldemort, after the Harry Potter villain. He works in London in the bank’s chief investment office, which has assembled traders from across Wall Street to its staff of 400 who help oversee $350 billion in investments. While the firm describes the unit’s main task as hedging risks and investing excess cash, four hedge-fund managers and dealers say the trades are big enough to move indexes and resemble proprietary bets...The trades, first reported by Bloomberg News April 5, stirred debate among U.S. policy makers over the Easter-holiday weekend as they wrangle over this year’s implementation of the so-called Volcker rule, the portion of the Dodd-Frank Act that sets limits on risk-taking by banks with government backing. Taking Measure Of Citigroup And Bank Of America (NYT) Bank of America shares are up 66 percent this year, while Citigroup has risen 33 percent, amid the broader rebound in financial stocks. After staying out of the spotlight and earning $21 billion over the last two years, Citigroup’s potential problems are gaining attention again...At Barclays, the analyst Jason Goldberg said he was shocked when Citigroup did not get the go-ahead from the Fed, adding, “We had run mock stress tests with Citi passing by a fair amount.” Just as surprising, he added, has been Bank of America’s surge this year. Its performance has been a far cry from last year, when Bank of America’s stock, which closed at $9.23 on Thursday, was flirting with $5, and questions about whether it had enough capital were mounting. “If you asked me in January whether this thing would be up 66 percent, I’d have said you’re crazy,” Mr. Goldberg said, referring to Bank of America’s stock performance this year. A 'Fat Cat' With The President's Ear (WSJ) When President Barack Obama attacked "fat-cat bankers on Wall Street" in 2009, Robert Wolf had a ready response. "I said 'Mr. President, I know you think I'm overweight, but I can think of better names to call me,'" Mr. Wolf recalls. "He laughed." Humor and self-deprecation have served Mr. Wolf well in his often conflicting roles as presidential pal and Wall Street power broker. The 50-year-old president of UBS's UBS investment bank has remained a leading voice in the industry while also serving as Mr. Obama's chief Wall Street fundraiser and his current BFF (best friend in finance)...Mr. Wolf plays golf and basketball with the president and he is a frequent visitor to the White House. On vacation in Martha's Vineyard or at fundraising events, the two often bond over sports and their families, since they each have two school-age kids. As if to prove the president wrong about "fat cats," Mr. Wolf says he has lost 20 pounds in the past three months. Willing Banks Find Profits in Legal Trade With Iran (WSJ) As Western sanctions on Iran have grown tighter, some small banks have found a lucrative niche financing what remains of the legal trade with the Islamic Republic. Top-tier financial institutions including Société Générale SA GLE.FR -0.74% and Rabobank Group have stepped back from business with Iran in recent months, citing increased political risk and logistical hassles that attend even legal trade with the country. As a result, the remaining players are commanding higher fees and offering increasingly complicated services. Like Russia's First Czech-Russian Bank LLC and China's Bank of Kunlun Co. Ltd, they are typically small, obscure financial institutions often based in countries historically friendly to Iran. The firms and other intermediaries still brokering these trades are charging more than 6% per transaction for legitimate trade deals with Iran, on top of traditional banking fees, according to traders and bankers knowledgeable with the process. That is as much as triple the fees typically charged by Arab Gulf banks two years ago, before the United States and European Union significantly stiffened sanctions, according to Iranian businessmen. Easter Bunny Arrested (KTLA) An Easter Bunny was arrested this week after police found he was carrying around more than Easter eggs and candy. Joshua Lee Bolling, 24, was arrested and charged on Thursday with illegally possessing prescription narcotics. Police arrested Bolling after businesses at the Piedmont Mall in Danville, Virginia complained that the Easter Bunny was acting suspicious. "His suspicious behavior took place while he was on breaks and not during his contact with children," a police release said. UBS Faces Billionaire Olenicoff in Lawsuit Over His Tax Felony (Bloomberg) and billionaire Igor Olenicoff are scheduled to clash in court today over his claim that the bank bears blame for his failure to declare $200 million in offshore accounts on U.S. tax returns. Olenicoff, 69, a real-estate developer, pleaded guilty in 2007 to filing a false tax return, admitting he didn’t tell the Internal Revenue Service about his offshore accounts for seven years. He was sentenced to two years’ probation and ordered to pay $52 million in back taxes, fines and penalties. In 2008, he sued Zurich-based UBS, the largest Swiss bank, claiming it traded excessively in his accounts, engaged in racketeering and committed fraud by not telling him he owed U.S. taxes. He seeks as much as $1.7 billion in damages. Arguments on the bank’s motion to dismiss the case are set for today before U.S. District Judge Andrew Guilford in Santa Ana, California. Markets at the Start of a More Significant Downturn Says Marc Faber (CNBC) “The technical underpinnings of the market have been a disaster in the last couple of weeks,” Faber said on the sidelines of the Maybank Invest Asia conference. “The number of new highs have declined, the volume has been poor, insider sales just hit a record.” Faber said the weakness in economically sensitive stocks such as mining and industrial goods was particularly “disturbing.” Agencies At Odds Over New Ratings (FT) The latest example came this month when a near-$800 million bond deal backed by U.S. prime mortgages was sold to investors with triple-A ratings — provided by Standard & Poor’s and DBRS, a smaller competitor based in Canada — on some tranches. Fitch Ratings issued a statement saying it would not have rated the bonds triple A. It said it provided “feedback” on the transaction to the arranger, Credit Suisse, and “was ultimately not asked to rate the deal due to the agency’s more conservative credit stance”. Steven Vames, a Credit Suisse spokesman, said it was common for an issuer to engage multiple rating agencies to look at a deal and ultimately choose a subset of those agencies to rate it. In March, Moody’s said: “Some recent cases have come to market for which we believe increased risk has not been adequately mitigated for the level of ratings assigned by another agency.” In particular, Moody’s faulted ratings issued by S&P, Fitch and DBRS on asset-backed deals. For Big Companies, Life Is Good (WSJ) An analysis by The Wall Street Journal of corporate financial reports finds that cumulative sales, profits and employment last year among members of the Standard & Poor's 500-stock index exceeded the totals of 2007, before the recession and financial crisis. UK Cruise Retraces Titanic's Ill-Fated Voyage (Reuters) Descendants of some of the 1,500 people killed when the Titanic sank a century ago were among the passengers on a cruise ship that set off from Britain on Sunday to retrace the route of the liner's ill-fated voyage. Some donned period costume, including furs and feathered hats for women and suits and bowler hats for men, to board the MS Balmoral at Southampton on the southern English coast. The world's most famous maritime disaster has fascinated people ever since, explaining why passengers from 28 countries were prepared to pay up to 8,000 pounds ($13,000) each to be a passenger on the memorial cruise organized by a British travel firm. The Balmoral will follow in the wake of the Titanic, sailing near Cherbourg in France and then calling at Cobh inIreland before arriving at the spot where the Titanic went down...Passenger Jane Allen, whose great-uncle died on his honeymoon trip on the Titanic while her great-aunt survived, said she did not think it was "ghoulish or macabre" to go on the voyage.