Opening Bell: 08.22.11

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Wall Street Aristocracy Got $1.2 Trillion In Loans From Fed (Bloomberg)
Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley, got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress. “These are all whopping numbers,” said Robert Litan, a former Justice Department official who in the 1990s served on a commission probing the causes of the savings and loan crisis. “You’re talking about the aristocracy of American finance going down the tubes without the federal money.”

Bernanke Ready For Action, But When Is In Doubt (MarketWatch)
Federal Reserve Chairman Ben Bernanke is expected to use his highly anticipated speech from Jackson Hole, Wyo. to stress that he is willing to ride to the rescue to stabilize the economy. When, is a different matter...NYU economist professor Mark Gertler said all options are on the table, including another round of asset purchases, or quantitative easing. In the first round of bond purchases between Dec. 2008 and March 2010, the Fed bought $1.7 trillion of mostly mortgage securities, and in the second round between November and June, the central bank snapped up $600 billion of Treasury bonds. “QE3 is an option if there is a significant downturn in the economy or extraordinary stress in financial markets,” Gertler said.

Libyan Rebels Seize Most Of Tripoli (WSJ)
Libyan rebels seized control over most of Tripoli on Monday amid scenes of jubilation, a day after surging into the city's center and meeting little resistance from Col. Moammar Gadhafi's defenses, though heavy clashes were reported at Col. Gadhafi's compound and the leader's whereabouts remained unknown.

ICC, Libya rebels discuss handover of Gaddafi's son Saif (Reuters)
The International Criminal Court said on Monday it was in talks with the Libyan rebels about the potential transfer of Saif al-Islam, the son of Libya's Muammar Gaddafi, to the war crimes court in The Hague. "We are in discussions with the Libyan council about the surrender of Saif al-Islam," ICC official Fadi el-Abdallah said. "It is simply too early to talk about details of those discussions or timeframes. The situation is not fully clear or stable in Tripoli so that might take some time."

Merkel Says She'll Resist Pressure For Eurobond (Bloomberg)
"At this time -- we’re in a dramatic crisis -- euro bonds are precisely the wrong answer,” Merkel said in an interview with ZDF television in Berlin yesterday. “They lead us into a debt union, not a stability union. Each country has to take its own steps to reduce its debt.”

Strauss-Kahn Case Said To Be Set For Dismissal (NYT)
Three months after authorizing Dominique Strauss-Kahn’s swift indictment after his arrest on sexual assault charges, the Manhattan district attorney, Cyrus R. Vance Jr., has decided to ask a judge to dismiss the case, a person briefed on the matter said on Sunday.

Smithers Sees 'Significant' S&P 500 Rally (Bloomberg)
Companies are cashed up and likely to buy back shares at a time when price-to-earnings ratios are low, providing a trigger for a short-term rally, said economist Andrew Smithers, who claimed stocks were overvalued in 2000 before a near 50 percent decline over 2 1/2 years. Investors should sell shares once their holdings gain 10 percent because even after the recent rout, U.S. stocks are about 40 percent above fair value, the president of research company Smithers & Co. said in an e-mail on Aug. 18.

Foreclosure Talks Snag On Bank Liability (WSJ)
Efforts to reach a settlement that would end the long-running probe of foreclosure practices are snagged over whether banks will get broad legal immunity from state officials for mortgage-related claims. Federal and state officials are seeking penalties of $20 billion to $25 billion from Bank of America Corp., J.P. Morgan Chase & Co. and other financial firms under investigation since last fall. The banks are pushing hard for a deal, but they have insisted on a wide-ranging legal release from state attorneys general. "They wanted to be released from everything, including original sin," said a U.S. official involved in the discussions.

Small bank giant: US Bancorp outperforms all Wall St. titans (NYP)
Forget JPMorgan Chase’s Jamie Dimon. Wall Street has a new golden boy: US Bancorp’s Richard Davis. “He’s become very, very well-respected on Wall Street,” said bank analyst Scott Siefers of Sandler O’Neill. “A lot of regular Americans know who Jamie Dimon is, but unless you look at regional banks, the public at large probably doesn’t know Richard Davis. But they should,” said Siefers.

Economists Split Over Path Forward (WSJ)
The National Association for Business Economics said roughly 49% of the economists surveyed in late July and early August favor a more restrictive fiscal path forward over the next two years, while 37% chose the other direction, supporting more efforts to stimulate the economy through fiscal measures. More than seven in 10 economists who took part in the survey said they expect fiscal policy will be tightened regardless of whether that is the best approach.

Romney To Quadruple La Jolla Home Size (SD)
Romney has filed an application with the city to bulldoze his 3,009-square-foot, single-story home at 311 Dunemere Dr. and replace it with a two-story, 11,062-square-foot structure. No date has been set to consider the proposed coastal development and site development permits, which must be approved by the city. The former governor of Massachusetts purchased the home three years ago. According to a description from the listing agent, the Spanish-style residence at the end of a quiet cul-de-sac is sophisticated and understated in its décor, “offering complete privacy and unsurpassed elegance.” Tentative plans call for new retaining walls and a relocated driveway, but would retain the existing lap pool and spa...“Let’s hope he hires a contractor that provides union-equivalent wages and helps to stimulate the local economy,” Jess Durfee, chairman of the San Diego County Democratic Party. “He also could register to vote here and help out the Republicans, whose numbers are dwindling.”

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