Opening Bell: 06.14.11

Author:
Updated:
Original:

Two Views on Bank Rules: Salvation and Jobkillers (Dealbook)
Andrew Ross Sorkin: "I called Mr. Dimon, in part, to challenge his view. But I was somewhat taken aback by his response, which was far more nuanced than his seeming diatribe to the Fed chairman. 'My point wasn’t that we shouldn’t regulate the industry,' he said. 'But we should think twice about how exactly we’re doing it and the cumulative impact of the changes if the main goal is to help create jobs.' The more restrictions put on banks, he said, the less lending and financing of businesses that will take place. To him, it’s simple arithmetic. 'I want job growth like everybody else,' he said. The problem, he contends is 'we’re trying to do two very different things at the same time,' referring to regulating the industry and stimulating the economy. 'I would stop trying to solve every perceived problem at once,' he added. 'The highest and most important thing we can do right now is to get the economy growing and adding jobs'."

Qaddafi Running Out of Money: Ex-Bank Head (Bloomberg)
Libyan leader Muammar Qaddafi’s rule may end in weeks as international sanctions starve him of funds and rebels and NATO-led forces cut off fuel shipments, said Farhat Bengdara, who ran Libya’s central bank before defecting.

IMF Drops Fischer, Taps Lagarde, Carstens As Candidates For Top Job (WSJ)
The International Monetary Fund dropped Israeli central bank chief Stanley Fischer as a candidate for the fund's top job, saying it would consider the other two declared candidates, French Finance Minister Christine Lagarde and Mexican central bank chief Agustin Carstens. "The Executive Board will meet with the candidates in Washington D.C. and, thereafter, meet to discuss the strengths of the candidates and make a selection," the IMF said in a statement posted late Monday U.S. time. "The objective is to complete the selection process for the next Managing Director by June 30, 2011."

Goldman intern had link to Libyan fund (FT)
Goldman Sachs gave a paid internship to a top Libyan official’s relative while the bank was carrying out lossmaking trades on behalf of the country’s sovereign wealth fund, the Financial Times has learnt. Goldman confirmed that Haitem Zarti, brother of Mustafa Zarti, the Libyan Investment Authority’s former deputy head, worked for the bank in London and Dubai for almost a year. An initial three-month stint was extended due to good performance, the bank said. The arrangement highlights links between Muammer Gaddafi’s regime and international financial institutions. The US Securities and Exchange Commission is investigating financial institutions’ dealings with sovereign wealth funds and whether any banks improperly paid officials for access.

China ups bank reserves ratio as inflation hits 34-mth high (Reuters)
China's central bank raised bank reserve ratios on Tuesday for the ninth time since October to try to curb inflation, which is running at its fastest pace in almost three years. The 50 basis-point increase in the reserve ratio requirement (RRR) means that big banks have to put aside 21.5 percent of their deposits, a record high, locking up funds that could otherwise be loaned out and so fuel inflation. The central bank move came just hours after data showed that consumer inflation, largely fuelled by high food prices, rose in May to 5.5 percent, a 34-month high.

Greek rating now worst in the world (FT)
Greece is now the lowest-rated sovereign in the world, below Ecuador, Jamaica, Pakistan and Grenada.

Morgan Stanley’s Redeker Plans ‘Substantial’ Euro Forecast Cut on Greece (Bloomberg)
Hans Redeker, who was hired as Morgan Stanley (MS)’s head of foreign-exchange strategy in March, said he plans to revise the bank’s euro forecast “substantially lower” on weak demand for European bonds and equities. “Net flows into the longer-term bond segment are near historical lows and at odds with the current value of the euro” amid the Greek debt crisis, Redeker wrote in a research report dated yesterday. “European equity markets have lost ground. The relative underperformance compared to the U.S. market indicates that long-term capital flows should remain euro-negative.”

U.S. Criticizes BofA (WSJ)
In a seven-page statement filed June 8 in an Arizona state court in Phoenix, William W. Nixon, a Department of Housing and Urban Development assistant regional inspector general, detailed numerous examples in late 2010 when officials of the Charlotte, N.C., bank allegedly failed to cooperate with investigators.

Thieves Found Citigroup Site an Easy Entry (NYT)
Using the Citigroup customer Web site as a gateway to bypass traditional safeguards and impersonate actual credit card holders, a team of sophisticated thieves cracked into the bank’s vast reservoir of personal financial data, until they were detected in a routine check in early May.

Commodity traders hit back at planned US futures curbs (FT)
The Commodity Markets Council, whose members include trading houses such as Archer Daniels Midland, Bunge and Louis Dreyfus, and hedge funds such as Vermillion Asset Management, said in a letter to lawmakers that the proposed rules were “unnecessarily narrow” and threatened to redefine a large amount of hedging as speculation.

US demands tax tolerance of foreign financial groups (FT)
In January 2013, the US will implement a new law called the Foreign Account Tax Compliance Act (Fatca), that forces all global financial companies to report details to the IRS, the US tax authority, of any clients linked to the US with more than $50,000 in an account. These rules, quietly passed by Congress last year, would partly put the responsibility on the bank or asset manager – not just the individual – to make this filing.

Systemic U.S. Firms May Be Forced to Restructure, FDIC’s Krimminger Says (Bloomberg)
“Ultimately, a SIFI could be required to restructure its operations if it cannot demonstrate it is resolvable in an orderly manner under the Bankruptcy Code,” Michael Krimminger, the FDIC’s chief counsel, will tell a House Financial Services subcommittee today at a hearing in Washington.

HSBC sells Russia assets to Citi in retail retreat (Reuters)
HSBC (HSBA.L) said on Tuesday it had agreed to sell parts of its Russian retail banking business to Citibank (C.N) as part of plans announced in April to focus on commercial and wholesale banking in Russia.

Web IPO Boom Splits VC Haves From Have-Nots (Bloomberg)
Sequoia Capital, Greylock Partners, Accel Partners and Andreessen Horowitz are among the few firms that own stakes in the most valuable startups, giving them access to promising entrepreneurs and plenty of money for new funds. The majority of the industry, meanwhile, is struggling to raise capital.

Sino-Forest Reports First Quarter 2011 Results (PRN)
As Chairman of the Independent Committee, William Ardell said, "We have assembled a strong team of independent advisors who are working diligently to complete this examination. At this time, given that our business is primarily based in China, it is anticipated that the examination will take considerable time to complete. As a result, the Independent Committee does not expect to be in a position to provide a complete report on the findings of the examination for two to three months, at minimum.”

Missing Iraq money may have been stolen, auditors say (LA Times)
After the U.S.-led invasion of Iraq in March 2003, the George W. Bush administration flooded the conquered country with so much cash to pay for reconstruction and other projects in the first year that a new unit of measurement was born…But despite years of audits and investigations, U.S. Defense officials still cannot say what happened to $6.6 billion in cash — enough to run the Los Angeles Unified School District or the Chicago Public Schools for a year, among many other things. For the first time, federal auditors are suggesting that some or all of the cash may have been stolen, not just mislaid in an accounting error. Stuart Bowen, special inspector general for Iraq reconstruction, an office created by Congress, said the missing $6.6 billion may be "the largest theft of funds in national history."

Related