Skip to main content

Opening Bell: 05.26.11

  • Author:
  • Updated:

NY Fed investigates Goldman unit (FT)
The Federal Reserve Bank of New York is investigating allegations that the mortgage servicing arm of Goldman Sachs failed to conduct appropriate reviews before denying borrowers a chance to lower their payments through a government loan modification programme. A person familiar with the Goldman unit concerned, Litton Loan of Houston, Texas, said loans were denied without the proper review under a “denial sweep” strategy devised to clear a backlog of applications.

Fed Gave Banks Crisis Gains on $80 Billion Secretive Loans as Low as 0.01% (Bloomberg)
Credit Suisse Group AG, Goldman Sachs Group Inc. and Royal Bank of Scotland Group Plc each borrowed at least $30 billion in 2008 from a Federal Reserve emergency lending program whose details weren’t revealed to shareholders, members of Congress or the public. The $80 billion initiative, called single-tranche open-market operations, or ST OMO, made 28-day loans from March through December 2008, a period in which confidence in global credit markets collapsed after the Sept. 15 bankruptcy of Lehman Brothers Holdings Inc.

SEC Investigates Hybrids for Insider Trading (Bloomberg)
U.S. regulators are examining whether investors made illegal trades in Fifth Third Bancorp. (FITB)’s trust preferred securities after the volume of transactions spiked 54-fold before the bank said it would redeem the instruments, a person with knowledge of the inquiry said.

HSBC, Goldman Held $335 Million of Libya Funds (Bloomberg)
HSBC Holdings Plc and Goldman Sachs Group Inc. are among banks that held funds for Muammar Qaddafi’s government investment fund, according to U.K. advocacy group Global Witness. HSBC held $292.7 million across 10 accounts and Goldman Sachs had almost $44 million in four accounts as of June 30, 2010, according to a document on the Libyan Investment Authority posted on London-based Global Witness’s website.

Libya sovereign fund suffers big losses (FT)
Banks and hedge funds led by France’s Société Générale are named in about $5bn (£3bn) of deals involving the oil-rich nation, some of which had resulted in heavy losses by the middle of last year. One of the most striking losses, outlined in an internal report for the Libyan Investment Authority, was a 98.5 per cent fall in the value of the sovereign wealth fund’s $1.2bn equity and currency derivatives portfolio.

Deutsche Bank rejects succession fears (FT)
Deutsche Bank has dismissed calls to speed up a decision on who will succeed Josef Ackermann as chief executive, potentially increasing concern among investors who are calling for the issue to be settled to avoid damage to the bank. Clemens Börsig, chairman of Deutsche’s supervisory board, told the bank’s annual shareholder meeting that the decision would be made “at the appropriate time”.

Citigroup Lags in Debt Deals as Pandit Rebuilds (Bloomberg)
JPMorgan Chase & Co. now dominates the so-called league tables, reporting $971 million of debt underwriting revenue in the first quarter, almost double that of fourth-place Citigroup, the market leader for nine years before the 2008 financial crisis, according to data compiled by Bloomberg. The bank has dropped to fifth in U.S. speculative-grade debt, after ranking second in all but two of eight years before 2007.

Peter Thiel Gives Whiz Kids $100K To Quit College, Start Businesses (Fast Company)
One climbed Mount Kilimanjaro. Another started college in third grade… Now they're all getting two years of mentoring from a network of tech and entrepreneurial experts and $100,000 to start a business. The benefactor? PayPal founder, early Facebook investor, and Stanford's least favorite alumnus, Peter Thiel. Least favorite because Thiel has been making waves by arguing that college is an overhyped, overpriced bubble, and that the world needs better ways to recognize young talent.

Branson wants 600 Lloyds branches (FT)
Sir Richard Branson has set his sights on buying a network of branches from Lloyds Banking Group as he attempts to go head-to-head with some of the biggest banks on the UK high street. Sir Richard met António Horta-Osório, Lloyds chief executive, on Tuesday and plans to make a formal bid in July for the 600 branches the bank has to sell. “This can happen quickly and smoothly,” he told the Financial Times. “We are a serious bidder and can give the government what it wants through competition.”

U.S. Regulators Aim to Extend Reach (WSJ)
Foreign central banks, sovereign-wealth funds and international organizations like the World Bank could be subject to U.S. rules intended to reduce risk in the financial system. As part of last year's financial-regulatory overhaul, regulators gained power to scrutinize and regulate market participants engaging in swap transactions, including those backed by foreign governments.

Gold Companies Face Liability for Sick Miners (Bloomberg)
While the ultimate number of claims and their size is impossible to determine, mining companies may face a liability of as much as $100 billion, Leon Esterhuizen, an analyst at RBC Capital Markets in London, said in a May 6 note to clients. A settlement at a significantly lower level is more likely, he said in a May 16 interview…Esterhuizen based his May 6 estimate on the assumption that there are 300,000 potential claimants, each suing for at least 2 million rand.

The Rich Use the Web Mostly for Money, Food & Porn (WSJ Wealth Report)
According to a survey from the Affluence Collaborative, the primary online activity for the wealthy is to “check your bank account or make online money transfers.” Fully 86% of those earning $500,000 or more said they go online for banking. That’s roughly equal to the rest of the population…According to the survey, the wealthy consumer read more news online. Fully 70% read national news websites (including WSJ), compared to only 44% for the general population…As for sex, fully 38% of the wealthy visit adult sites, far higher than the 23% for the rest of the population. There was one area where the wealthy lagged the rest of the population: wasting time. The wealthy were less likely than the rest of the population to “casually surf the web and pass time.”

Ashton Kutcher Who Knows Start-Ups (NYT)
In recent years, Mr. Kutcher has become a smart early investor in some of the most talked-about Internet start-ups, including Foursquare, the mobile social network; Path, a photo-sharing application; and Flipboard, a news-reading app for the iPad… He was part of a group of investors that bought into the Internet calling service Skype in 2009 in a deal that valued it at $2.75 billion. Last month, Microsoft agreed to buy Skype for more than three times that amount. Mr. Kutcher, 33, would not discuss the size of his investments, which he has recently been making through a partnership called A Grade. People in the venture capital world estimated that they were in modest amounts, perhaps $50,000 to $200,000 — on par with what other early-stage investors would be putting in.

Walt Disney Surrenders to Navy's SEAL Team 6 (WSJ)
Walt Disney Co. said Wednesday that it would pull an application with the U.S. Patent and Trademark Office in which the entertainment giant sought the exclusive right to use the term "SEAL Team 6" on items ranging from toys and games to snow globes and Christmas stockings.