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Opening Bell: 06.13.11

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I.M.F. Reports Cyberattack Led to ‘Very Major Breach’ (NYT)
Several senior officials with knowledge of the attack said it was both sophisticated and serious. “This was a very major breach,” said one official, who said that it had occurred over the last several months, even before Dominique Strauss-Kahn, the French politician who ran the fund, was arrested on charges of sexually assaulting a chamber maid in a New York hotel.

IMF Mum On Details Of Cyber Attack (WSJ)
"We had an incident," said IMF spokesman David Hawley. "We're investigating it and the fund is completely functional."

Roubini: 'Perfect Storm' May Threaten Global Economy (Bloomberg)
There’s a one-in-three chance the factors will combine to stunt growth from 2013, Roubini said in a June 11 interview in Singapore. Other possible outcomes are “anemic but OK” global growth or an “optimistic” scenario in which the expansion improves. “There are already elements of fragility,” he said. “Everybody’s kicking the can down the road of too much public and private debt. The can is becoming heavier and heavier, and bigger on debt, and all these problems may come to a head by 2013 at the latest.”

US banks to cut Treasuries use (FT)
Some of Wall Street’s biggest banks are preparing to cut their use of US Treasuries in August as a precaution against any turbulence that could follow if warring Republicans and Democrats fail to increase soon the US debt ceiling, a senior bank chief said …Investors worldwide own large amounts of the $9,700bn of debt that has been sold by the US government as part of their portfolios. But nearly 40 per cent of the existing US Treasury debt – about $4,000bn – is used to back deals in the repurchase, futures and swaps markets, say JPMorgan Chase estimates.

Banks battle over US tax law (FT)
Banks and foreign governments are mounting an increasingly desperate push against a sweeping US tax law that will force overseas institutions to report their American clients to the Internal Revenue Service.

CalPERS has been automatically deleting emails after 60 days (LA Times)
The California Public Employees' Retirement System has begun automatically deleting any emails older than 60 days, raising concerns among watchdog groups that the giant pension fund could be destroying evidence of misdeeds. CalPERS has been under state and federal investigation over allegations that former executives and board members improperly influenced the fund's investment decisions and strong-armed a medical benefits vendor to retain a former board member as a consultant, according to an internal review ordered by the fund and released in April.

Israeli Economist Enters Race to Lead I.M.F. (NYT)
With probably the most impressive résumé and the least chance of succeeding, Stanley Fischer, the governor of the Bank of Israel, has added his name to the list of candidates for managing director of the International Monetary Fund.

In Greece, Some See a New Lehman (NYT)
Bond traders and officials at the European Central Bank have been unified in their warnings that a restructuring of Greece’s debt would set off an investor panic similar to the one that followed the bankruptcy of Lehman Brothers.

China's bank lending dips as authorities tighten policy (BBC)
Chinese banks lent 551.6bn yuan ($85bn; £52bn) in new loans, compared with 739.6bn yuan in April, according to the People's Bank of China. Authorities have been trying to slow down lending in an attempt to rein in rising property prices and inflation…"The lending growth last month is slower than market expectations, showing that tightening measures are biting," said E Yongjian of Bank of Communications in Shanghai.

Rattled by Lehman—Again (WSJ)
The firm charged with winding down the estate of the bankrupt Wall Street firm has been looking to sell a portfolio that includes credit-default swaps on $8 billion worth of municipal-bond debt in several states, according to court filings… "The Lehman unwinding is driving California CDS artificially low,'' says Adam Fisher, chief investment officer of Commonwealth Opportunity Master Fund Ltd., a Los Angeles hedge fund that is bearish on the state's debt.

Subprime Debt's Siren Call (WSJ)
Prices for the riskiest mortgage-backed securities have fallen so much in recent weeks that some money managers are starting to talk about returning to the market, despite expectations of a softening economy and increased supply.

Roubini sees "meaningful probability" of China hard landing (Reuters)
China faces a "meaningful probability" of a hard economic landing and the euro zone is storing up problems for the future by not tackling the debt crisis head on, said Nouriel Roubini, the economist who predicted the global financial crisis. He said U.S. Treasury prices, which have risen sharply as investors sought a safe haven from the euro area debt crisis and worries about a slowdown in the global economy, were fairly valued although he was cautious about U.S. equities.

Lloyds Banking Group job losses set to hit 43,000 (Telegraph)
Antonio Horta-Osorio is set to axe another 15,000 positions as part of a strategy review to be unveiled at the end of this month. The bank has already lost 28,000 jobs since it merged with HBOS. The job cuts come as it was revealed the Treasury could intervene in a growing row about the sales of hundreds of Lloyds' branches.

Barclays team readies retail bank split (Telegraph)
Senior sources at the bank said it could "push the button" on the ring-fencing of its UK retail arm as soon as the report is published and had already conducted extensive preparations to ready the business for separation. A team of 30 Barclays staff have spent months drawing up new employment contracts for retail branch staff as well as assessing the leases on all the bank's UK branches to begin the legal work necessary to transfer them to a new operating company.

Citi Defends Delay in Disclosing Hacking (WSJ)
Citigroup Inc. waited as long as three weeks to notify credit-card customers of a hacking attack because it was conducting an investigation and producing replacement cards, according to a person familiar with the situation. The internal investigation took 10 to 12 days and began within 24 hours of the discovery by Citigroup officials in early May that the New York bank's systems had been breached, this person said. In some cases, Citigroup took action to protect accounts considered vulnerable to fraud.

Buffett Lunch Auction Raises Record $2.63 Million for Charity (Bloomberg)
The revised winning bid for a steakhouse meal with the 80- year-old billionaire beat by $100 the record set last year by an unidentified donor.

Deutsche Bank’s Chief Casts Long Shadow in Europe (NYT)
Mr. Ackermann, 63, emerged from the panic of 2008 as the most powerful banker in Europe and, depending on whom you ask, possibly the most dangerous one, too...“He is a political animal,” Roland Berger, founder of the management consulting firm that bears his name, and a longtime adviser to Mr. Ackermann, says of him. “I’m not sure Germany without him would have mastered these critical situations as well as it did.”

Larry Summers: How to avoid a lost decade (WaPo)
Even with the massive 2008-09 policy effort that prevented financial collapse and depression, the United States is now halfway to a lost economic decade. From the first quarter of 2006 to the first quarter of 2011, the U.S. economy’s growth rate averaged less than 1 percent a year, similar to Japan in the period its bubble burst.

Doug Kass: The Threat of 'Screwflation' (Barron's)
In the 1970s, when growth was stagnant and inflation was high, economists spoke of "stagflation." Four decades later, there's another threat to a sustainable trajectory of economic and corporate profit growth. It's "screwflation," which combines inflation with the screwing of the struggling middle class.

Madoff Fraud Case Against New York Mets Owners Gets July 1 Court Hearing (Bloomberg)
New York Mets owners Fred Wilpon and Saul Katz won the right to a federal judge’s review of a $1 billion lawsuit against them by the trustee liquidating Bernard Madoff’s firm.

Mavericks win 1st NBA crown, handle Heat and prolong LeBron's wait for ring (AP via ESPN)
A season that began with Miami celebrating the signings of James, Dwyane Wade and Chris Bosh -- along with the promise of championships -- ended on the very same floor, with the Dallas Mavericks hoisting the title trophy for the first time in their franchise history after beating the Heat 105-95 on Sunday night.

Doomsday preacher Harold Camping, who incorrectly predicted end of the world, suffers stroke (NYDN)
A spokeman for Camping, Charles Menut, posted an online message Saturday informing the preacher's followers of the medical emergency. "Please just pray for him ...," Menut wrote. "He and Shirley have enough family members to handle the situation."