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Opening Bell: 07.19.11

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Bank of America Has Record Loss on Bad Loans (Bloomberg)
The second-quarter loss of $8.83 billion, or 90 cents a share, compared with profit of $3.12 billion, or 27 cents, a year earlier, the Charlotte, North Carolina-based lender said today in a statement. Excluding the mortgage charges and gains on asset sales, the firm earned 33 cents a share, beating the 29-cent average estimate of 21 analysts surveyed by Bloomberg.

Goldman Sachs Profit Misses Estimates (Bloomberg)
Net income climbed 77 percent to $1.09 billion, or $1.85 per share, from $613 million, or 78 cents, in the same period a year earlier, the New York-based company said today in a statement. That compares with the $2.30 per share average estimate of 23 analysts surveyed by Bloomberg. Earnings fell 38 percent if one-time costs are excluded from the 2010 results.

Wells Fargo Profit Tops Estimates (MarketWatch)
Wells Fargo said Tuesday that its second-quarter profit rose to $3.9 billion, or 70 cents a share, from $3.1 billion, or 55 cents, a year earlier. Total revenue fell to $20.4 billion from $21.4 billion. Analysts surveyed by FactSet estimated profit of 69 cents a share. "While the economic recovery continues to be slower than expected, there are signs that businesses are investing for growth," said Chief Executive John Stumpf.

Bill Clinton: I Would Use Constitutional Option To Raise Debt Ceiling And Force The Courts To Stop Me (National Memo via Morning Money)
Sharply criticizing Congressional Republicans in an exclusive Monday evening interview with The National Memo, Clinton said, “I think the Constitution is clear and I think this idea that the Congress gets to vote twice on whether to pay for [expenditures] it has appropriated is crazy.”

Spanish banks rally as debt sale eases nerves (FT)
Spain’s Ibex index put in one of the region’s best performances on Tuesday morning, as equity investors were cheered by the strong demand seen at an auction of short-term treasury bills in Madrid. The bond sale was seen as an important indicator of sentiment, given the heavy falls of the previous session in response to Friday’s bank stress test results. Although the sale of 12 and 18 month T-bills were both oversubscribed – the 18 month bill attracted bids for more than five times the number of notes on sale – average yields were higher.

European Governments Consider a Bank Tax to Finance Greek Bailout (NYT)
With European leaders poised to hold crucial talks Thursday in what one diplomat called “the euro zone’s ultimate Cinderella moment,” officials on Monday were discussing elements that might prove essential to a second bailout of Greece, including the new idea of a special levy to ensure that banks share part of the cost… Although the European Central Bank sees the idea of buying back bonds as a way of making the private sector accept losses voluntarily, Germany in particular is pressing for banks to take a bigger share of the pain.

European debt deal is 'attainable' claims Greek finance minister (Telegraph)
"Reaching a solution is attainable because this solution does not only include Greece," Venizelos said from his central Athens office. "At issue is the euro and the resilience of the eurozone. That is why protection of Greece is a self defense mechanism for the eurozone. That will help us avoid a domino effect…We want a solution that makes our national debt sustainable... guarantees Greece's borrowing needs until mid-2014 when we foresee our return to the markets, and guarantees the liquidity of Greek banks."

Deutsche Bank, SocGen, RBS Face Pressure to Boost Funds After Stress Tests (Bloomberg)
Deutsche Bank, Germany’s largest bank, had a core Tier 1 capital ratio of 6.5 percent under the test’s adverse scenario. While that surpassed the 5 percent fail rate, it ranked eighth among the 12 German banks that participated and 57th overall among the 90 banks tested. Edinburgh-based RBS had a ratio of 6.3 percent, Societe Generale of Paris 6.6 percent and Milan- based UniCredit 6.7 percent.

Seoul tightens reins on kimchi bonds (FT)
South Korea will prohibit financial companies from buying locally issued foreign-currency bonds for domestic use, seeking to temper the resurgent won and reduce short-term foreign debt. Tuesday’s widely expected move against “kimchi bonds” comes as the country's currency has gained nearly 6 per cent against the US dollar this year to become one of the world’s fastest appreciating currencies, stoking concerns that the strengthening won may weaken export competitiveness.

Soros’s Quantum Leads Hedge Funds Cutting Risk (Bloomberg)
In mid-June, Anderson told his portfolio managers to pull back on trades as the hedge fund’s losses hit 6 percent for the year, according to two people familiar with the New York-based firm. As a result, the fund is about 75 percent in cash as it waits for better opportunities, said the people, who asked not to be identified because the firm is private.

AIG Weighs Lease-Unit IPO (WSJ)
Investment bankers have told AIG that an IPO of the business known as International Lease Finance Corp. could raise $1.5 billion to $2 billion if market conditions are favorable, according to the people. That would represent a sale of roughly 25% of Los Angeles-based ILFC and rank as one of the largest IPOs in the U.S. so far this year.

Federated Investment sues Countrywide, BofA over mortgage losses (Reuters)
U.S. money manager Federated Investment Management Co has filed a complaint against Countrywide Financial and its parent Bank of America Corp over the sale of mortgage derivative products that lost value during the financial crisis, court documents showed. Federated Investment had purchased more than $185 million of mortgage-backed securities (MBS) issued by affiliates of Countrywide Financial and Bank of America, according to the court filing.

Banks still robo-signing, filing doubtful foreclosure documents (Reuters)
Reuters has found that some of the biggest U.S. banks and other "loan servicers" continue to file questionable foreclosure documents with courts and county clerks. They are using tactics that late last year triggered an outcry, multiple investigations and temporary moratoriums on foreclosures. In recent months, servicers have filed thousands of documents that appear to have been fabricated or improperly altered, or have sworn to false facts. Reuters also identified at least six "robo-signers," individuals who in recent months have each signed thousands of mortgage assignments -- legal documents which pinpoint ownership of a property. These same individuals have been identified -- in depositions, court testimony or court rulings -- as previously having signed vast numbers of foreclosure documents that they never read or checked.

Mother of Alleged French DSK Victim Had Sex With Him Years Earlier (NYMDI)
Why [Tristane Banon] never came forward at the time has largely been chalked up to pressure from her mother, Anne Mansouret, a senior official in France's Socialist Party and best friends with Brigitte Guillemette, DSK's wife at the time as well as Tristane's godmother.

The Always Quotable Larry Summers (Charlie Rose via Greg Mankiw)
“Never forget, never forget, and I think it’s very important for Democrats especially to remember this, that if Hitler had not come along, Franklin Roosevelt would have left office in 1941 with an unemployment rate in excess of 15 percent and an economic recovery strategy that had basically failed.”