Fed to send $76.9 billion in earnings to Treasury (Reuters)
The Federal Reserve said on Tuesday it would send about $76.9 billion of its estimated 2011 net income over to the Treasury. That was down from a record $79.3 billion in 2010, and comes primarily from interest payments on securities held in the central bank's massive multi-trillion-dollar portfolio...Through its conduct of unconventional monetary stimulus, which has been implemented with purchases of government bonds, the Fed has more than tripled its balance sheet since the start of the 2008 financial crisis, to about $2.9 trillion.
Fitch: ECB Must Do More To Prevent 'Cataclysmic' Euro Collapse (Reuters)
The European Central Bank should ramp up its buying of troubled euro zone debt to support Italy and prevent a "cataclysmic" collapse of the euro, David Riley, the head of sovereign ratings for Fitch, said on Wednesday. Speaking to investors as part of a European roadshow, Riley said the collapse of the euro would be disastrous for the global economy, and while it is not Fitch's baseline scenario, it could happen if Italy did not find a way of its debt problems.
Carlyle founders reap bumper 2011 profits (Reuters)
Founders of private equity firm Carlyle Group CYL.UL have had a great payday as a result of the firm's record performance in 2011 and are set to gain even more as it prepares for an initial public offering, a regulatory filing on Tuesday showed. The billionaire founders, William Conway, Daniel D'Aniello and David Rubenstein, received $134 million each in cash distributions and $3.8 million in executive compensation, according the filing. On top of this, Conway, D'Aniello and Rubenstein received $70.8 million, $77.6 million and $56.8 million from previous investments. The filing does not state how much of that was their initial investment or what their profit on that was. They also invested big in Carlyle funds in 2011. Conway invested $163.8 million, D'Aniello put in $98.3 million and Rubenstein put in $96.9 million, according to the filing. They also charged Carlyle for business use of their private airplanes and associated services and supplies. Conway received $1.3 million, D'Aniello got $676,014, while Rubenstein got the most, $3.3 million, according to the filing. "As the co-founder primarily responsible for, among other things, maintaining strong relationships with and securing future commitments from Carlyle's investors, particularly outside the United States Mr. Rubenstein has an exceptionally rigorous travel schedule," Carlyle said in the filing.
Orange Juice Futures Surge (WSJ)
The market for orange juice futures received another jolt after the federal government said some Brazilian imports contained a potentially harmful fungicide. The news on Tuesday sent prices of the January contract soaring 9.7% to a record settlement as traders fretted that the appearance of the fungicide could lead to a sharp reduction in Brazilian orange juice imports. Traders already had driven prices higher this year amid worries that a recent cold snap in Florida had damaged crops. In just six trading days, frozen orange juice concentrate futures have soared 26%, settling at $2.1275 a pound on Tuesday on the ICE Futures U.S. exchange.
Gingrich Says Romney Has ‘Very Big Questions’ to Answer About Time at Bain (Bloomberg)
Republican presidential candidate Newt Gingrich said party front-runner Mitt Romney has “some very big questions to answer” about his time at private equity firm Bain Capital LLC and whether he chose profit over jobs. “I don’t have much respect if you rig the game so you end up walking off with all the money,” Gingrich, a former U.S. House speaker, said today on Bloomberg Television.
Attack Film Depicts Romney As "Ruthless" Rich (Bloomberg)
Mitt Romney is depicted as a financier “more ruthless than Wall Street” and a son of privilege responsible for firing thousands of workers in a film bankrolled by Newt Gingrich supporters set to be released today in South Carolina. “Make a profit,” a laughing Romney is shown saying in the 28-minute film, obtained by Bloomberg News. “That’s what it’s all about, right?”
Lindsay Lohan owes $93K to taxman (NYDN)
...documents filed in Los Angeles reveal the “Mean Girls” star owes Uncle Sam $93,701.57 for her failure to pay income taxes in 2009. In the past, the star has talked publicly about her financial troubles, telling a judge last July that she was having difficulty finding a private psychological counselor she could afford. But that, of course, was before she reportedly scored a $1-million payday for a recent Playboy photo spread. “Lindsay’s personal finances are her business and no one else’s,” her spokesman, Steve Honig, told the Daily News after news of LiLo’s fiscal woes broke Monday.
Big Banks Face Inquiry Over Home Insurance (NYT)
A New York State financial services agency is investigating several large banks to see whether they fraudulently steered homeowners into overpriced insurance policies. The investigation centers on so-called force-placed insurance that has become increasingly common since the downturn of the housing market began and homeowners had trouble keeping up with payments on their home insurance. JPMorgan Chase, Bank of America, Citigroup and Wells Fargo are among the major companies involved in the inquiry by the office of Benjamin M. Lawsky, the superintendent of New York State’s Department of Financial Services, according to a person briefed on the investigation who asked to remain unidentified because the matter was private. Mr. Lawsky’s office issued 31 subpoenas or other legal notices related to the case in early October, just as the state’s insurance and banking departments were merged under his new agency. His office has already turned up instances where mortgage servicing units at large banks steered distressed homeowners into insurance policies up to 10 times as costly as the homeowners’ original plans.
Geithner Presses China On Currency, Iran (Bloomberg)
U.S. Treasury Secretary Timothy F. Geithner will urge Asia’s two biggest economies to cut Iranian oil imports and seek to narrow differences with China on trade and currency disputes on a visit to Beijing and Tokyo this week.
Insider Trading Mole Praised By Prosecutors (WSJ)
The cooperation of a single Wall Street trader in the government's broad insider-trading investigation directly led to the prosecution of 10 individuals, making him one of the most productive informants in U.S. financial history, lawyers say. The disclosure of the specific role played by the trader, David Slaine, came in a court filing by prosecutors. In a letter to a judge, the U.S. credited Mr. Slaine with being the most important cog in an unprecedented wave of insider-trading cases, which have resulted in guilty pleas or convictions of 53 out of a total of 56 individuals charged by the government since late 2009. "Slaine's cooperation has been nothing short of extraordinary," the government said in the filing. "It is difficult to overstate the significance."
Nomura Banker Quits Over Cuts (WSJ)
The ex-Lehman Brothers Inc. banker who was to salvage Nomura Holdings Inc.'s ambitious global expansion resigned after he was unable to garner support for a more radical overhaul of the global wholesale-banking operations, people familiar with the matter said. The resignation of Jasjit "Jesse" Bhattal, Nomura's highest-ranking foreign executive and joint deputy president, is a major blow to Nomura's bid to become a global investment-banking powerhouse. The Japanese bank is suffering from the same problems facing investment banks globally: volatile stock and bond prices, soft merger activity and tighter regulation. That is even hitting Asia, a region that has been a key area of growth and investment for banks. Now firms are cutting staff and granting smaller bonuses. Nomura announced $1.2 billion in cuts to annual costs in November, but analysts said that might not be enough to stabilize profitability.
Average Binge Drinker Knocks Back 8 At A Time (WSJ)
Heavy boozers are imbibing more frequently and knocking back more alcohol per binge than previously thought, according to new government data that looked, for the first time, at the detailed habits of binge drinkers. One in six U.S. adults reported binge drinking at least once in 2010, a slight increase from the previous year, according to a Centers for Disease Control and Prevention report released today. Binge drinking is defined as a one-occasion consumption of at least four drinks for women or five or more with men. Public health officials were surprised both by how often binge drinking occurred, and, when it did happen, how many drinks were consumed. Binge drinkers reported 4.4 episodes per month — more than once a week. Each binge, on average, was 7.9 drinks.