Before Scandal, Class Over Control Of Libor (WSJ) At an April 25, 2008, meeting with officials at the Bank of England, Angela Knight, head of the British Bankers' Association, argued that the London interbank offered rate had become too big for her organization to manage, according to minutes of the meeting and a person who was there. Her suggestion went nowhere. Even as Libor's deep flaws became apparent, regulators resisted a greater oversight role, the BBA's member banks clung to control of Libor, and BBA executives bickered with one another over whether to hang onto the lucrative business, according to people who were involved and a Wall Street Journal review of hundreds of pages of emails, meeting minutes and other documents. Treasury Sells Big Chunk Of AIG Stock (WSJ) The Treasury sold about 554 million shares to the public at $32.50 apiece for a total of $18 billion in one of the biggest global follow-on stock offerings since the financial crisis. The offering was the Treasury's fifth sale of AIG stock since early last year and reduced the government's stake in the company to about 22% from 92% in early 2011. The price set Monday was above the government's cost basis of $28.73 a share, meaning taxpayers will earn a profit on the sale. New iPhone could boost U.S. GDP by up to 0.5 percent, JP Morgan says (Reuters) "Calculated using the so-called retail control method, sales of iPhone 5 could boost annualized GDP growth by $3.2 billion, or $12.8 billion at an annual rate," Feroli wrote. That 0.33 percentage-point boost, he added, "would limit the downside risk to our Q4 GDP growth protection, which remains 2.0 percent." Feroli laid out his math. J.P. Morgan's analysts expect Apple to sell around 8 million iPhone 5s in the fourth quarter. They expect the sales price to be about $600. With about $200 in discounted import component costs, the government can factor in $400 per phone into its measure of gross domestic product for the fourth quarter. Feroli said the estimate of between a quarter to a half point of annualized GDP "seems fairly large, and for that reason should be treated skeptically." But, he added, "we think the recent evidence is consistent with this projection." Geithner Holds His Own on Triathlon Front (Dealbook) Geithner participated in the 7th annual Nation’s Triathlon to Benefit the Leukemia & Lymphoma Society on Sunday, swimming, biking and running his way through the nation’s capital. The race involved a 1.5-kilometer swim in the Potomac River, a 40-kilometer bike ride through the city and a 10-kilometer run. And Mr. Geithner, 51, can boast of a pretty good finish to his race, completing the course in 2:33:07. He placed ninth in his division, men aged 50 to 54, according to the race’s Web site. Individually, he completed the swim in 29:10, the bike ride in 1:13:52 and the run in 45:51. New Yorker Cartoon Dept Temporarily Banned From Facebook For Violating ‘Nudity And Sex’ Standards (Mediaite) In a post entitled “Nipplegate,” the New Yorker‘s cartoon editor, Robert Mankoff, detailed how the magazine’s cartoon department became temporarily banned on Facebook: a particular Mick Stevens cartoon violated the social networking site’s community standards on “Nudity and Sex.” Stevens redrew the cartoon, he said, “but the gain in clothes caused too great a loss in humor.” He then noted that Facebook has different standards when it comes to males and females. As “the guidelines say, ‘male nipples are ok.’ It’s the ‘female nipple bulges’ that are the problem.” Big Banks Hide Risk Transforming Collateral for Traders (Bloomberg) JPMorgan and Bank of America are helping clients find an extra $2.6 trillion to back derivatives trades amid signs that a shortage of quality collateral will erode efforts to safeguard the financial system. Starting next year, new rules designed to prevent another meltdown will force traders to post U.S. Treasury bonds or other top-rated holdings to guarantee more of their bets. The change takes effect as the $10.8 trillion market for Treasuries is already stretched thin by banks rebuilding balance sheets and investors seeking safety, leaving fewer bonds available to backstop the $648 trillion derivatives market. The solution: At least seven banks plan to let customers swap lower-rated securities that don’t meet standards in return for a loan of Treasuries or similar holdings that do qualify, a process dubbed “collateral transformation.” That’s raising concerns among investors, bank executives and academics that measures intended to avert risk are hiding it instead. Soros: Germany going into depression in 6 months (MarketWatch) The recession in Europe will spread to Germany, the euro-zone's largest economy, within six months, said George Soros, chairman of Soros Fund Management. "The policy of fiscal retrenchment in the midst of rising unemployment is pro-cyclical and pushing Europe into a deeper and longer depression," Soros said in prepared remarks for a speech in Berlin Monday. "That is no longer a forecast; it is an observation. The German public doesn't yet feel it and doesn't quite believe it. But it is all too real in the periphery and it will reach Germany in the next six months or so." Lindsay Lohan encourages President Obama to slash taxes for 'Forbes millionaires' (DM) In a tweet fired off on Friday, the 26-year-old actress encouraged President Barack Obama to consider lowering taxes for the one-percenters listed on the Forbes Magazine’ millionaires’ list. Lohan, who has been very active on Twitter recently, was responding to a message posted by the Obama campaign following his Thursday speech at the Democratic National Convention. ‘I’ve cut taxes for those who need it: middle-class families, small businesses,’ the tweet read. About 10 minutes later, the star of the upcoming Elizabeth Taylor biopic ‘Liz and Dick’ put in her two cents on the issue of tax cuts: ‘We also need to cut them for those that are listed on Forbes as "millionaires" if they are not, you must consider that as well,’ her late-night message read. Gross Says Age of Credit Expansion Led Fund Returns Over (Bloomberg) Gross’s outlook follows his commentary last month, which sparked debate among investors and analysts after he declared that the “cult of equity” was dying. In his August comments, he compared long-term returns from equities to a “Ponzi scheme” and said returns of 6.6 percent above inflation, known as the Siegel Constant, won’t be seen again. “Our credit-based financial system is burdened by excessive fat and interest rates that are too low,” Gross wrote. “Central banks are agog in disbelief that the endless stream of” liquidity pumped into the banking sector has not stimulated lending, Gross wrote. Queen's Corgi Buried At Balmor (TDB) The dog, Monty was involved in a fight recently when he was one of a number of dogs which attacked Princess Beatrice's terrier Max over the summer, but it appears the fight - Max came off worst and nearly lost an ear in the fracas - was not a contributory cause of death. Buckingham Palace is not officially revealing how or when the corgi, named Monty (after the American horse whisperer Monty Roberts who has advised the queen on dogs and horses) met his end, but palace sources told the Royalist the animal passed away of old age over the summer. The animal died at the Royal Scottish residence of Balmoral, where, in accordance with tradition, he has been buried in the Royal pet cemetery opened by Queen Victoria when her beloved Collie, Noble, died there in 1887...the Queen is known to take the deaths of her pets hard: Lady Pamela Hicks, the mother of India Hicks once wrote a note when one of the Queen’s corgis died and received a six-page letter back.

At Core Of Greek Chaos, A Reviled Tax (WSJ) So despised is the property tax that its critics—which is to say, most of Greece—refer to it as the haratsi, after a per capita tax imposed by the occupying Ottomans. About three-quarters of Greece's households own their homes. Like many other European countries, Greece already has some property taxes. But those have been aimed mostly at higher-value properties and raised little revenue. JPMorgan To Spin Out 'Special Investments' (FT) The unit, whose investments include LightSquared, the wireless internet provider, will be moved to the bank’s corporate division and prevented from seeking fresh investment opportunities, bankers were told on Wednesday. Woman Who Wouldn't Be Intimidated By Citigroup Wins $31 Million (Bloomberg Markets) Sherry Hunt never expected to be a senior manager at a Wall Street bank. She was a country girl, raised in rural Michigan by a dad who taught her to fish and a mom who showed her how to find wild mushrooms. She listened to Marty Robbins and Buck Owens on the radio and came to believe that God has a bigger plan, that everything happens for a reason. She got married at 16 and didn’t go to college. After she had her first child at 17, she needed a job. A friend helped her find one in 1975, processing home loans at a small bank in Alaska. Sherry Hunt never expected to be a senior manager at a Wall Street bank. She was a country girl, raised in rural Michigan by a dad who taught her to fish and a mom who showed her how to find wild mushrooms. She listened to Marty Robbins and Buck Owens on the radio and came to believe that God has a bigger plan, that everything happens for a reason. She got married at 16 and didn’t go to college. After she had her first child at 17, she needed a job. A friend helped her find one in 1975, processing home loans at a small bank in Alaska...In March 2011, more than two years after Citigroup took $45 billion in bailouts from the U.S. government and billions more from the Federal Reserve -- more in total than any other U.S. bank -- Jeffery Polkinghorne, an O’Fallon executive in charge of loan quality, asked Hunt and a colleague to stay in a conference room after a meeting. The encounter with Polkinghorne was brief and tense, Hunt says. The number of loans classified as defective would have to fall, he told them, or it would be “your asses on the line.” Hunt says it was clear what Polkinghorne was asking -- and she wanted no part of it. Jobless Claims Increased Last Week (Bloomberg) First-time claims for jobless benefits increased by 10,000 to 383,000 in the week ended May 26 from a revised 373,000 the prior week, the Labor Department said today. The initial claims exceeded the median estimate of 370,000 in a Bloomberg News survey of economists. The number of people on unemployment benefit rolls dropped. For French CEO's, Politics Means Big Pay Cuts (WSJ) Top managers at France's state-owned companies are expected to face significant pay cuts next month, when Socialist President François Hollande plans to begin enforcing salary caps as part of his broader electoral pledge to get tough on the rich. During the presidential campaign, Mr. Hollande vowed to curb "excessive" remunerations at France's 52 state-controlled or partially state-owned companies by ordering that executive pay not exceed 20 times the salary of the lowest-ranking employees. New York Plans to Ban Sale of Big Sizes of Sugary Drinks (NYT) The proposed ban would affect virtually the entire menu of popular sugary drinks found in delis, fast-food franchises and even sports arenas, from energy drinks to pre-sweetened iced teas. The sale of any cup or bottle of sweetened drink larger than 16 fluid ounces — about the size of a medium coffee, and smaller than a common soda bottle — would be prohibited under the first-in-the-nation plan, which could take effect as soon as next March. Gorman, Greifeld ‘Face’ off (NYP) Morgan Stanley is prepared to take Nasdaq to court to recoup money it believes it lost in the flubbed Facebook initial public offering. CEO James Gorman’s investment bank, which led the now-notorious, snafu-ridden Facebook IPO, believes Bob Greifeld’s Nasdaq owes it roughly $10 million, sources said. The investment bank, which quarterbacked the $16 billion Facebook offering, had to shell out to clients a seven-figure sum to resolve a litany of Nasdaq trading glitches. Morgan Stanley's Facebook Analyst: Sober Man in World of Hype (Reuters) Scott Devitt was one of a number of analysts to lower his revenue and earnings expectations for the social media giant after the company informed analysts that it was dropping its quarterly and annual revenue guidance. Facebook also issued an amended prospectus cautioning that the shift of its users to mobile platforms could have a negative impact on revenue growth. Such a move was highly unusual because it occurred just days before Facebook's highly anticipated IPO, whose lead underwriter was Morgan Stanley, Devitt's employer. The investment bank not only had control over the process, but over 38 percent of Facebook shares being sold. Devitt's and other analysts' revised revenue forecasts were shared via phone calls with institutional investors, but not with retail investors, before the stock began trading publicly. That in turn raised questions over whether the playing field was skewed against Main Street investors from the start and sparked lawsuits. Citigroup Debt Viewed As Risky (WSJ) Gimme Credit, a fixed-income research company based in New York, said it expects debt issued by the third-biggest U.S. bank by assets to perform less well over the next six months than bonds issued by the company's peers. Russian Zuckerberg Throws Money Paper Planes At Passersby (MSN) Russian millionaire Pavel Durov reportedly spent last weekend flying paper airplanes made from 5,000-ruble notes (equal to about $160) out the window of his office in St. Petersburg. The 27-year-old gave away around $2,000 before he stopped because "people turned into animals" grabbing the cash. Durov is the CEO of Russia's largest social network Vkontakte, which sort of makes him the Russki Mark Zuckerberg. Scarf-Wearing Pig Stuns Motorists (UPI) Pennsylvania State Police said a baby pig wearing a scarf crossed rush hour traffic in Pittsburgh and disappeared into the woods. Police said the fashionable swine was spotted crossing the inbound lanes of Parkway West near the Green Tree exit around 8:30 a.m. Wednesday, and many motorists pulled off the parkway and stopped to take pictures of the unusual pedestrian. Troopers said the pig had crossed over a guardrail and into the woods by the time they arrived, and they were unable to locate the animal.

Europe Plans Girds Greece Exit (WSJ) Emerging from Wednesday night's informal European Union summit, Italian Prime Minister Mario Monti said most leaders had backed issuing common debt, or euro-zone bonds, to help support troubled members. But Germany and others opposed them and demanded Greece do more. "We want Greece to remain in the euro zone," German Chancellor Angela Merkel told reporters after nearly eight hours of talks. "But the precondition is that Greece upholds the commitments it has made." Citi: Greek To Exit Euro, New Currency To Fall 60% (CNBC) Greece will leave the euro zone next year and the country's new currency will "immediately fall by 60 percent," according to Citi chief economist Willem Buiter. "The elections (on June 17th) will not produce a viable government that can follow the troika plan, leading to a stalemate between the Greek government and official creditors, and to the suspension of EFSF-IMF funding,” Buiter wrote in Citi's latest Global Economic Outlook. Slim Family Sees European Crisis As Good Time To Invest (Bloomberg) Carlos Slim sees Europe’s debt crisis as a “good moment” to apply his strategy of investing in times of turmoil, said the billionaire’s son, America Movil SAB Co-Chairman Carlos Slim Domit. America Movil, controlled by the elder Slim, announced a $3.4 billion bid to increase its stake in former Dutch phone monopoly Royal KPN NV earlier this month. While the acquisition would be Slim’s first major European foray, it follows a longstanding pattern, his son said. America Movil tries to stay as efficient and financially sound as possible so that it can quickly capitalize on fresh opportunities, he said. “When hard times come, you can look at opportunities in a very agile way,” Slim Domit, 45, said in an interview this week in Mexico City. “Europe is in a good moment.” After Facebook Fiasco, NYSE-Nasdaq Rivalry Heats Up (WSJ) "In the short term, if I'm deciding which platform to go with, I'd think twice at this point" before choosing Nasdaq, said Sang Lee, managing partner with Aite Group, a consultancy that researches exchanges. Investors Leery Of Paulson's Big Gold Bet (NYP) Investors are upset over Paulson’s huge gold positions — specifically, his outsize holding of AngloGold Ashanti, down 20 percent this year. That has dragged down two of Paulson’s funds. “I would be happier if he cut the gold position in half,” says one investor who put in a notice to take his money out of the fund in June. “He would have been up 4 percent in the first quarter if it weren’t for the goddamned gold.” Auction Of Ronald Reagan's Blood Stirs Debate (WSJ) Since his death in 2004 at age 93, President Ronald Reagan's popularity has only increased. Republican candidates invoke his name and policies. About 400,000 visitors a year flock to his hilltop museum outside Los Angeles, where a gift shop sells biographies, photos and his favorite jelly beans. Many people, it seems, want a piece of Mr. Reagan. But now, the sale of a very personal effect of the late president is stirring a controversy. Bidding for a vial purported to hold Mr. Reagan's blood topped $14,000 Wednesday in an online auction scheduled to end Thursday—if the Ronald Reagan Presidential Foundation doesn't try to block the sale first. PFC Auctions, based in the British Channel Islands, is offering the vial, said to have been obtained from a Maryland laboratory after the failed assassination attempt on Mr. Reagan in 1981. The sample was sent to the lab to test Mr. Reagan's blood for lead. A lab employee kept the vial as a memento and later passed it on to her adult child, according to the auction site. The head of the Reagan Foundation, a nonprofit group, called the sale "a craven act" and is fighting to stop it. It is uncertain what claims, if any, the foundation may have on the vial, which appears to contain dried blood residue, as depicted in a picture on the auction site...The seller, an admirer of Mr. Reagan's free-market policies, said in comments on the auction page, "I was a real fan of Reaganomics and felt that Pres. Reagan himself would rather see me sell it rather than donating it." Morgan Stanley, Others Make Profit of $100 Million Stabilizing Facebook (WSJ) These gains are expected to be offset somewhat by losses associated with reimbursing clients who lost money because of technology snafus at the Nasdaq Stock Market in Facebook's first day of trading, one of these people added. The Next Treasury Secretary (NYT) On the Democratic side, possibilities include Laurence D. Fink of BlackRock, the asset manager; Erskine Bowles, who served on President Obama’s National Commission on Fiscal Responsibility and Reform; Daniel K. Tarullo, a member of the Federal Reserve Board; and Roger C. Altman, the investment banker. For the Republicans, the front-runners include Robert B. Zoellick, the head of the World Bank; John B. Taylor, the Stanford economist; Glenn Hubbard, the head of Columbia Business School and a Mitt Romney adviser; and Kevin Warsh, a former member of the Federal Reserve Board. Spain To Recapitalize Bankia (WSJ) The Spanish government will provide about €9 billion ($11.4 billion) to cover Bankia SA's provisioning needs, Finance Minister Luis de Guindos said Wednesday, in the latest sign that Spain's economic deterioration is forcing authorities to inject more public funds to bail out ailing banks. Since Bankia won't be able to meet provisioning and capital needs, Spain's Fund for Orderly Bank Restructuring will be ready to inject capital into Bankia's unlisted parent company, Banco Financiero & de Ahorros SA, which holds the company's most toxic real-estate assets, Mr. de Guindos told legislators in Parliament. Indian State OKs Shooting Tiger Poachers On Sight (AP) A state in western India has declared war on animal poaching by allowing forest guards to shoot hunters on sight in an effort to curb rampant attacks on tigers and other wildlife. The government in Maharashtra says injuring or killing suspected poachers will no longer be considered a crime. Forest guards should not be "booked for human rights violations when they have taken action against poachers," Maharashtra Forest Minister Patangrao Kadam said Tuesday. The state also will send more rangers and jeeps into the forest, and will offer secret payments to informers who give tips about poachers and animal smugglers, he said.

JPMorgan London Whale Was Prodded (WSJ) A JPMorgan executive encouraged the trader known as the "London whale" to boost valuations on some trades, said a person who reviewed communications emerging from the bank's internal probe of recent trading losses. After reviewing emails and voice-mail messages, the bank has concluded that Bruno Iksil, the J.P. Morgan trader nicknamed for the large positions he took in the credit markets, was urged by his boss to put higher values on some positions than they might have fetched in the open market at the time, people familiar with the probe said. The bank's conclusion is based on a series of emails and voice communications in late March and April, as losses on his bullish credit-market bet mounted, the people said. The bank believes they show the executive, Javier Martin-Artajo, pushing Mr. Iksil to adjust trade prices higher, according to people close to the bank's investigation. At the time, Mr. Martin-Artajo was credit-trading chief for the company's Chief Investment Office, or CIO. RBS Loss Widens (WSJ) The 82%-government-owned bank reported a net loss of £1.99 billion ($3.09 billion), wider than the loss of £1.43 billion a year earlier. However, the result was hit by a £3 billion accounting charge for the fair value of the company's debt and a number of provisions for misselling financial products. Analysts focused on the more-positive underlying figures for the half, helping to make its shares the leading gainer on the FTSE 100. Excluding the own-debt charge, RBS would have posted a net profit of £287 million. It posted an operating profit of £1.83 billion, down from the £1.97 billion a year earlier. Nevertheless, RBS warned that it faces a number of lawsuits. The bank is cooperating with regulators in the U.S., Japan and the U.K., who are probing whether banks colluded to try and rig benchmark rates including the London interbank offered rate. RBS said that it had fired a number of traders following the investigations but said it was too early to estimate the fines the bank may have to pay. RBS’s CEO Blames Libor-Manipulation On ‘Handful’ Of Individuals (Bloomberg) RBS dismissed four employees for trying to influence the individual responsible for Libor submissions following an internal investigation, the bank said today, without identifying the staff involved. Hester said it is too early to estimate the potential cost of fines and litigation linked to rate-rigging. “The Libor issue is more to do with the wrongdoing of individuals than it is to do with a systemic problem,” Hester, 51, said on a call with journalists today after the Edinburgh- based bank reported a 22 percent drop in second-quarter operating profit. “It’s hugely regrettable that the actions of a relatively small number of wrongdoers, which seems to be the key issue here, has such a tainting effect on the industry.” Knight Said To Open Books To Suitors As Loss Pressure Grows (Bloomberg) Bank of America Corp. was among several potential partners that was in talks with Knight yesterday, said a person with knowledge of the matter. John Yiannacopoulos, a Bank of America spokesman, declined to comment. Loss Swamps Trading Firm (WSJ) Knight wouldn't comment on the status of the rescue talks. But market participants said the firm is running out of time. In the span of two days, the company's market value has plunged to $253.4 million from $1.01 billion, and its shares continued their nosedive in after-hours trading. "If they don't get an investor within the next 48 to 72 hours, I think Knight's going to have trouble surviving," said David Simon, chief executive of hedge fund Twin Capital Management LLC. Mt. Sinai urologist busted on charges he used spy cam to peek up subway riders’ skirts (NYDN) Dr. Adam Levinson, an assistant professor of urology at the hospital’s school of medicine, allegedly clipped a pen camera to a folded newspaper so he could peek up a woman’s skirt on a southbound 4 train about 5 p.m. Tuesday, authorities and a witness said. Sheldon Birthwright, 46, a construction worker who once worked for the Transportation Security Administration, said he sensed something wrong almost immediately after Levinson stepped on the train at E. 59th St. The doctor — a New York Medical College grad who twice won a national Patients’ Choice Award — held the newspaper at his side as he inched toward a woman wearing a knee-high dress and reading a Kindle. “He’s leaning on the pole right next to the door,” Birthwright told the Daily News. “He has a paper in his hand. But what’s mysterious about it, there’s a pen attached to the paper...He has it down in a very unsuspicious way. But every time the woman would move, he would move.” Catholic Fund Fails To Convince Believers (FT) JPMorgan Asset Management had hoped to attract investors who wanted exposure to investments that would not clash with tenets on issues such as birth control and civil rights. It also eschewed investments in governments of countries that have the death penalty. The aim was to replicate the success of funds compliant with Shariah law which have been in strong demand with Muslim investors. However, JPMorgan is to liquidate the Global Catholic Ethical Balanced Fund just over a year since it was launched. At May 31, it had net assets of just 4.3 million euros ($5.24 million), far short of a $30 million threshold outlined in its prospectus. Fake-bookers (NYP) Facebook admitted that some 83 million of the social network’s 955 million total users are fakes — meaning duplicates, spam or silly pages for pets. That represents nearly 9 percent of profiles on the site. The rash of fakes — equal to the population of Egypt — has shot up since Facebook’s rocky public debut in May, when it estimated “false” profiles accounted for 5 percent to 6 percent of its users. “These estimates are based on an internal review of a limited sample of accounts, and we apply significant judgment in making this determination, such as identifying names that appear to be fake or other behavior that appears inauthentic,” the company said in a recent regulatory filing. The spike is a major cause for concern, with advertisers and investors questioning Facebook’s effectiveness in reaching consumers. In particular, Facebook has been under scrutiny for slowing ad sales growth. Economy Adds 163,000 Jobs (WSJ) U.S. employers stepped up hiring in July as the economy continued its uneven recovery heading into this fall's presidential election. U.S. payrolls increased by a seasonally adjusted 163,000 jobs last month, the Labor Department said Friday, but the unemployment rate, obtained by a separate survey of U.S. households, ticked up one-tenth of a percent to 8.3%. Economists surveyed by Dow Jones Newswires expected a gain of 95,000 in payrolls and an 8.2% jobless rate. Family kept grandparents' deaths secret from Chinese diver until she won gold medal (YS) Chinese diver Wu Minxia's celebrations at winning a third Olympic gold medal were cut short after her family revealed the details of a devastating secret they had kept for several years. Wu's parents decided to withhold news of both the death of her grandparents and of her mother's long battle with breast cancer until after she won the 3-meter springboard in London so as to not interfere with her diving career. "It was essential to tell this white lie," said her father Wu Yuming...Wu's mother defended the decision to keep her situation private and admitted she only broached the subject of her breast cancer at this point because she is now in remission. Both of Wu's grandparents died more than a year ago, but the diver knew nothing of their passing until this week.