Opening Bell: 11.22.11

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BofA Warned To Get Stronger (WSJ)
BofA's board has been told that the company could face a public enforcement action if regulators aren't satisfied with recent steps taken to strengthen the bank, said people familiar with the situation. The nation's second-largest lender has been operating under a memorandum of understanding since May 2009, following repeated tussles with regulators over the purchase of securities firm Merrill Lynch & Co. and a downgrade of the company's confidential supervisory rating. The memorandum, which isn't public, identified governance, risk and liquidity management as problems that had to be fixed, according to people familiar with the document.

Supercomittee Failure Poses Threat to U.S. Recovery (Bloomberg)
Still, Standard & Poor’s reaffirmed it would keep the U.S. credit rating at AA+ after stripping the government of its top AAA grade on Aug. 5. Moody’s Investors Service reaffirmed its AAA rating with a negative outlook. Fitch Ratings noted in a statement that it said in August that a supercommittee failure would probably result in a “negative rating action,” likely a revision of its outlook to negative, and that a review would be concluded by the end of this month.

Soros Calls For ECB To Stop Bond Run (CNBC)
“As regulators still treat government bonds as the safe core of the financial system, this vicious circle threatens the stability of financial institutions not only in the euro zone but also in the rest of the world,” Soros, the chairman of Soros Fund Management, said in a co-written article with Peter Bofinger of Würzburg University in Tuesday’s Financial Times. Without action, Soros believes recessionary pressures will intensify making the situation in the bond market worse. “It’s a perfect vicious circle,” he wrote in the article.

EU Warns Greece On Bailout (WSJ)
"There is enough money for another 20 days," a senior Greek government official said. "Without the loan tranche we will default on the €2.8 billion bond payments in December and we won't be able to pay out salaries and pensions. The situation is very serious and this issue has to be settled this week."

Journalists Protest Occupy Wall Street Handling (ABC)
Media organizations sent letters on Monday to city officials complaining about the police handling of journalists covering the Occupy Wall Street protests and called for meetings to address their concerns. They said New York police blocked journalists from seeing when authorities cleared out the Occupy camp in lower Manhattan's Zuccotti Park last week and said police officers used force and arrested some journalists as they were trying to do their jobs. "The police actions of last week have been more hostile to the press than any other event in recent memory," a coalition of media organizations and journalist groups said in a letter to chief New York Police Department spokesman Paul Browne..."The numerous reports we have received and have learned of make clear to us that the NYPD is aggressively blocking journalists from doing their constitutionally protected work and in some instances is even targeting journalists for mistreatment," that letter said.

Man catches fire in Gothenburg train station (The Local)
An unidentified man sustained serious injuries after suddenly catching fire in Gothenburg on Sunday evening, leaving police flummoxed as to who he is and what really happened. ”All we know is that it's a man. We have no knowledge of his identity, nor of his age or any motive or even the circumstances of the incident,” said police officer Åsa Andersson to local paper Göteborgs-Posten (GP) According to eye witness accounts, the man was standing outside a record shop at the central train station around 10.30pm, when he suddenly caught on fire.

Peltz Power Play (NYP)
Billionaire investor and hockey enthusiast Nelson Peltz is weighing a plan to buy the $250 million in debt of the troubled New Jersey Devils...The plan being discussed by Peltz, whose Triarc Companies owns Wendy’s, includes lining up an equity investor to buy the money-losing NHL team should the current team owners fail in their talks with lenders to restructure the debt, according to one person who has spoken with Peltz about the plan in recent weeks. Peltz, who was said to be interested in buying the New York Islanders last December, is seeking a partner to provide perhaps $50 million in equity in a purchase of the team in a prepackaged bankruptcy.

Cut In Europe Bank Lending Has Wide Impact (WSJ)
A pullback in lending by European banks is beginning to be felt by companies in Africa, Australia and Latin America, making borrowing harder and more expensive, and putting pressure on slowing economies.

Gains Cue Jobs Heirs to Sell Apple, Disney (Bloomberg)
Under U.S. law, Jobs’s heirs may sell Apple and Disney and avoid $867 million in capital gains taxes. If Apple’s late co- founder left his estate to his wife, Laurene Powell Jobs, the family won’t be liable for the 35 percent estate tax until she dies or gives money to others, according to estate planners. “I can’t see any reason not to sell all of it,” said Kacy Gott, chief planning officer at the wealth-management firm Aspiriant. “They should have been looking to diversify years ago.”

Ex-Madoff trader admits faking records since '70s (AP)
Bernard Madoff's multibillion-dollar fraud began in the early 1970s with several employees working together to fake records when no trades actually took place, a former trader at Madoff's firm said in pleading guilty to criminal charges on Monday. The former trader, David Kugel, told a Manhattan federal court judge that he and two other longtime Madoff employees, Annette Bongiorno and Joann Crupi, used rates of returns on client statements that were pre-determined by Madoff himself. "I worked together with them to create the false trades and make them appear on investment advisor client statements and confirmations," Kugel, 66, said in admitting to six charges. Kugel, who is cooperating with the government investigation, said the trades were executed only on paper. "Specifically between the early 1970s to December 2008 I helped create fake back-dated trades."

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Citigroup Profit Beats Analysts’ Estimates On Investment Bank (Bloomberg) Citi reported a 12 percent drop in second-quarter profit that beat analysts’ estimates on revenue from advising on mergers and underwriting stocks and bonds. Net income declined to $2.95 billion, or 95 cents a share, from $3.34 billion, or $1.09, a year earlier, the New York-based bank said today in a statement. Excluding accounting adjustments and a loss from the sale of a stake in a Turkish bank, earnings were $1 a share, compared with the average estimate of 89 cents in a Bloomberg survey of 18 analysts. HSBC Seeks To Evict Occupiers In Hong Kong (WSJ) HSBC said Monday it is seeking the right to evict an encampment of protesters that has been occupying the ground floor of the bank's Hong Kong headquarters since October, drawing inspiration from the Occupy Wall Street protests in New York last year. Libor Flaws Allowed Banks To Rig Rates Without Conspiracy (Bloomberg) FYI: “It is far easier to manipulate Libor than it may appear,” Andrew Verstein, a lecturer at Yale Law School, said in a paper to be published in the Winter 2013 issue of the Yale Journal on Regulation. “No conspiracy is required.” States Join Libor Probe (WSJ) Prosecutors in New York and Connecticut are investigating whether their states incurred losses as a result of interest-rate manipulation by banks, a probe that could lead to a wider multistate enforcement action, according to New York officials. The joint probe by New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen could lead to civil enforcement action, including possible breaches of antitrust and fraud laws, the officials said. Libor Probe May Yield Criminal Charges By September (Bloomberg) Barclays traders involved in allegedly manipulating Libor rates between 2005 and 2007 may be charged by U.S. prosecutors before the Labor Day holiday on Sept. 3, said a person familiar with the Justice Department investigation in Washington. Zuckerberg’s Loan Gives New Meaning To The 1% (Bloomberg) The Facebook founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property. Missteps Doomed Barclays Leaders (WSJ) Mr. Diamond's downfall may have been hastened because the U.S.-born investment banker, who became chief executive at the start of 2011, had never won acceptance by Britain's political and financial establishment. When the rate-fixing scandal erupted, Mr. Diamond had few allies. It wasn't for lack of trying. Mr. Diamond enthusiastically embraced British culture and tried to overcome his reputation as a brash American. Mr. Diamond, a native of Concord, Mass., supported the Chelsea Football Club, handing out trophies himself when the team won England's premier soccer league in 2010. A month before the Libor settlement, Mr. Diamond hosted British aristocrats and Barclays' clients at the annual Chelsea Flower Show, providing Champagne and canapés as his guests inspected elaborate gardens and floral arrangements...But Mr. Diamond, age 60, was criticized for his lofty pay packages, as well as perceived risks in the investment-banking business he built. He sometimes appeared tone deaf in a country still angry about the role of banks in the financial crisis. "There was a period of remorse and apology," he told Parliament last year. "That period needs to be over." Activists Go After Big Game (WSJ) William Ackman's $2 billion bet that he can boost the value of consumer-products giant Procter & Gamble Co. reflects a new era of activist investing, in which no company is too big a target and restless institutional investors are more willing to rock the boat. Mr. Ackman's Pershing Square Capital Management LP owns a little more than 1% of P&G's shares. A few years ago, that would have been considered too small a stake in too big a company to exert much influence on management, the board or other investors. Tax Cuts Perpetuate Inequality, Should End: Summers (CNBC) The United States should not extend Bush-era tax cuts for the wealthiest Americans even as the so-called ‘fiscal cliff’ looms because it will perpetuate income inequality, says Larry Summers, former U.S. Treasury Secretary. Instead, these revenues should go towards strengthening public education and ensuring that low-income students are presented with equal opportunities as their wealthy counterparts so that they can participate in the economy. Tax breaks for the wealthy cannot continue to exist because it leads to a “perpetuation of privilege”, Summers said in the editorial in the Financial Times on Sunday. Unless steps were taken to “responsibly” increase the burden on those with high income and redistribute the proceeds, the trend toward inequality will continue, he said. Devils On The (B)rink (NYP) New Jersey Devils owner Jeff Vanderbeek is talking to private-equity firms and hedge funds about buying into his financially strapped team, according to sources close to the situation Vanderbeek is looking to sell a majority stake, but keep operating control, sources said. The talks, coming three weeks after the 55-year old former Wall Street executive seemed close to inking a deal with an investor to save the team, are leading some in the financial world to believe the deal has fallen apart. If that’s so, it would be a terrible break for Vanderbeek, who is facing an Aug. 14 deadline to get the Devils’ financing in order...Creditors are owed $80 million. Downgrade Anniversary Shows Investors Gained Buying U.S. (Bloomberg) When Standard & Poor’s downgraded the U.S. government’s credit rating in August, predictions of serious fallout soon followed. Republican presidential candidate Mitt Romney described it as a “meltdown” reminiscent of the economic crises of Jimmy Carter’s presidency. He warned of higher long-term interest rates and damage to foreign investors’ confidence in the U.S. U.S. House Budget Committee Chairman Paul Ryan said the government’s loss of its AAA rating would raise the cost of mortgages and car loans. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said over time the standing of the dollar and U.S. financial markets would erode and credit costs rise “for virtually all American borrowers.” They were wrong. Almost a year later, mortgage rates have dropped to record lows, the government’s borrowing costs have eased, the dollar and the benchmark S&P stock index are up, and global investors’ enthusiasm for Treasury debt has strengthened. Woman tells police man sucked her toe at Grovetown Walmart (AC) The 18-year-old said she was shopping when a man, who looked to be in his late 30s or early 40s, walked up and asked if her toenails were painted, according to a Columbia County Sheriff’s Office incident report. After replying yes and questioning why he wanted to know, the woman was asked if she’d watched America’s Funniest Home Videos. The man told her he was with the TV show and if she complied with his requests, everything she purchased that day would be free. She said she reluctantly agreed to let him take a photo of her foot. He asked if he could kiss her foot as part of the prank and she agreed. The man guided her to an area behind a clothing rack, dropped to the floor, grabbed her ankle and told her, “Don’t worry. I don’t bite.” He then started sucking on her big toe. The woman said she screamed at him to stop. Before the man ran from the store, he told her, “It tasted so good, though.”

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