Opening Bell: 03.23.11

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US Will Call Blankfein To Testify At Rajaratnam Trial (Bloomberg)
Possibly as early as this week.

In Galleon Case, Sides Clash Over Goldman Chief (WSJ)
"Rajaratnam might suggest, for example, that because Goldman Sachs is tied up in many different legal proceedings, the firm—and by extension its CEO, Mr. Blankfein—is not to be trusted," prosecutors wrote in the letter. A Goldman spokesman declined to comment.

Banks Hit For Credit Union Ills (WSJ)
In one of the broadest accusations that Wall Street helped cripple financial institutions during the crisis, the National Credit Union Administration, or NCUA, has threatened to sue several investment banks unless they refund over $50 billion of mortgage-backed securities sold to the five institutions, called wholesale credit unions. The NCUA is accusing Goldman Sachs Group Inc., Bank of America Corp.'s Merrill Lynch unit, Citigroup Inc. and J.P. Morgan Chase & Co. of misrepresenting the risks of the bonds to wholesale credit unions, which loaded up on the bonds in their role of investing on behalf of retail credit unions, according to people familiar with the situation.

Dimon Makes $20 Billion AT&T Loan Deal In Bid For Dominance (Bloomberg)
“He wants to win, and he doesn’t want to win by a small amount,” Richard Bove, an analyst for Rochdale Securities LLC in Lutz, Florida, said yesterday in an interview. “He wants to win big and dominant. He wants to be known as the next J.P. Morgan.” Bove has a “buy” rating on JPMorgan.

Fed Won't Let Bank Of America Raise Dividend (WSJ)
Bank of America said in a regulatory filing it had submitted a plan to the Fed in the wake of the latest round of government stress tests that included "a modest increase in its common dividend starting in the second half of 2011," but that the Fed had "objected to the proposed increase in capital distributions for the second half of 2011."

Gaddafi: West Will End in 'Dustbin of History' (Reuters)
"This assault ... is by a bunch of fascists who will end up in the dustbin of history," Gaddafi said in a speech followed by fireworks in the Libyan capital as crowds cheered and supporters fired guns into the air.

Chris Brown follows violent breakdown on 'Good Morning America' with game of basketball in NYC (NYDN)
Chris Brown blew off some steam on Tuesday after his violent outburst at "Good Morning America" by jumping into a pick-up basketball game in Manhattan's West Village. The volatile rapper hit the typically crowded West 4th street courts just hours after throwing a tantrum at ABC's studios following his interview with Robin Roberts, who asked him about his infamous attack on former girlfriend Rihanna in 2009. Earlier in the day, Brown had stormed out of ABC's Times Square studios shirtless after breaking a window. "He looked like he wanted to kill somebody," said a "GMA" insider. "He went completely nuts. He just walked off the set, ripped off his shirt and went into the room and threw a chair and broke the window."

Banks Bring Jobs To London As Finance Pays Most Tax In UK (Bloomberg)
Goldman Sachs employs almost as many people in London today as it did in 2007, before Lehman Brothers filed for the biggest bankruptcy in history, sparking a global recession. Goldman isn’t alone. Royal Bank of Scotland, recipient of the world’s biggest bank bailout, has more workers in its securities unit than four years ago. Barclays Capital, under Robert Diamond, hired 1,800 in 2010.

Radiation in Tokyo Water; US Curbs Japan Food Imports (Reuters)
Tokyo authorities said water at a purification plant for the capital of 13 million people had 210 becquerels of radioactive iodine — more than twice the safety level for infants. "This is without doubt, an effect of the Fukushima Daiichi plant," a Tokyo metropolitan government official said, referring to the nuclear power station.

UBS Risks Running Out Of Steam In Asia (FT)
UBS’s Asian franchise had already taken a hit in mid-2010 when Henry Cai, its leading investment banker in China, unexpectedly quit. Mr Cai and several of his colleagues subsequently turned up at Deutsche Bank. In a further blow, the Swiss bank failed to win a role in two of the biggest China deals last year – the $22.1bn initial public offering of Agricultural Bank of China, which had a total gross fee pool of about $142m, and Bank of China’s $9bn rights issue.

Buffett Looks Beyond Home Turf To India (WSJ)
Mr. Buffett said that he sees India as a large country--rather than an emerging market, and a promising investment destination, but added it would be more attractive for his company to invest in the local insurance sector if current foreign ownership restrictions are relaxed beyond the 26% levels.

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.