US Plans To Sue Banks Over Bonds (WSJ)
Federal securities regulators plan to warn several major banks that they intend to sue them over mortgage-related actions linked to the financial crisis, according to people familiar with the matter. The move would mark a stepped-up regulatory effort to hold Wall Street accountable for its sale of bonds linked to subprime mortgages in 2007 and 2008. At issue is whether the banks misrepresented the poor quality of loan pools they bundled and sold to investors, the people said. It isn't clear which firms will receive the formal Securities and Exchange Commission enforcement warnings, known as "Wells notices." Banks whose activities are being examined in the civil investigation include Ally Financial Inc., Bank of America Corp., Citigroup Inc., Deutsche Bank AG and Goldman Sachs Group Inc., people familiar with the matter say.
Greek Deal Remains Elusive (WSJ)
A meeting among Greek Prime Minister Lucas Papademos, the parties supporting his coalition, and New Democracy, the opposition conservative party, broke up early Thursday morning without an agreement on economic overhauls sought by the European Union and the International Monetary Fund in exchange for lending an additional €130 billion ($170 billion) to the Greek government. A single issue was the sticking point: cuts in the Greek pension system.
Credit Suisse Posts First Loss In 3 Years (Bloomberg)
Credit Suisse fell the most in five weeks in Zurich trading after posting a net loss of 637 million Swiss francs ($698 million), compared with an 841 million-franc profit in the year- earlier period. That missed the 446 million-franc average profit estimate of nine analysts surveyed by Bloomberg. Credit Suisse Chief Executive Officer Brady Dougan said measures taken to accelerate a revamp of the investment bank hurt earnings in the quarter. Dougan, who lowered the company’s profit target and announced two rounds of job cuts last year, is scaling down the securities division as the European sovereign debt crisis and stricter capital requirements crimp earnings. Pretax profit at the private bank slumped 43 percent with “subdued” client activity in the fourth quarter.
BOE Adds 50 Billion Pounds to Stimulus (Bloomberg)
Bank of England officials pumped another 50 billion pounds ($79 billion) into the U.K. economy to protect a nascent recovery from the threat posed by Europe’s debt crisis. The nine-member Monetary Policy Committee raised the target for bond purchases to 325 billion pounds, more than a quarter of current outstanding gilts, according to a statement in London today. The increase was forecast by 34 of 50 economists in a Bloomberg News survey. Fifteen economists forecast a 75 billion- pound increase and one no change. The MPC also held its benchmark interest rate at a record-low 0.5 percent.
Accord Near on Foreclosure Abuses (WSJ)
Government officials are on the verge of an agreement worth as much as $26 billion with five major banks, capping a yearlong push to settle federal and state probes of alleged foreclosure abuses by lenders. The deal would represent the largest government-industry settlement since a multistate deal with the tobacco industry in 1998. The agreement covers five banks: Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., and Wells Fargo & Co. Together, the five handle payments on 55% of all outstanding home loans, or about 27 million mortgages, according to Inside Mortgage Finance. Federal and state officials were planning to announce the accord Thursday morning, but the timing could be pushed back to Friday, as officials were still ironing out details in a series of conference calls late Wednesday. Among them: the precise wording of the agreement, its size and the number and identity of participating states.
Goldman looks on the bright side of Volcker rule (Reuters)
A harsh interpretation of the rule, which bans speculative trading by commercial banks, could help return-on-equity levels because banks would be able to demand more money from clients for executing trades, Goldman Sachs Group Inc Chief Financial Officer David Viniar said at a Credit Suisse conference in Miami. "Regulation will undoubtedly bring about new ways in which the industry must manage its operations and deliver its services to clients," Viniar said, but regulatory challenges "must be effectively navigated in order to provide shareholders with acceptable returns."
Warren Buffett: Why Stocks Beat Gold And Bonds (Fortune)
"My own preference -- and you knew this was coming -- is our third category: investment in productive assets, whether businesses, farms, or real estate. Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment. Farms, real estate, and many businesses such as Coca-Cola (KO), IBM (IBM), and our own See's Candy meet that double-barreled test. Certain other companies -- think of our regulated utilities, for example -- fail it because inflation places heavy capital requirements on them. To earn more, their owners must invest more. Even so, these investments will remain superior to nonproductive or currency-based assets. Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See's peanut brittle."
Gary Busey files for Chapter 7 bankruptcy protection (Chicago Tribune)
Busey filed for Chapter 7 bankruptcy Tuesday, revealing debts that far outweigh his assets. In the papers, the actor -- born William Busey -- indicates that he has $50,000 or less in assets -- while his liabilities are somewhere in the $500,000 to $1 million range. Busey, 67, lists various lawyers, the IRS, Wells Fargo bank, Santa Monica UCLA Medical Center, and a storage company as entities that he might owe money to. Carla Loeffler, who filed suit against Busey in November for allegedly tackling her at the Tulsa airport, is also listed among potential creditors.
Groupon Posts Positive Revenue, Misses on Earnings (Reuters)
On an adjusted basis, the company posted a fourth-quarter loss of 2 cents a share. The company also reported fourth-quarter revenue of $506.5 million, up 194 percent from the final quarter of 2010. Analyst had expected the company to deliver a profit of 3 cents a share on revenue of $475 million, according to Thomson Reuters.
5 European Nations Agree to Help U.S. Crack Down on Tax Evasion (NYT)
The United States and the five European countries said Wednesday that they would get around the secrecy problem by having financial institutions share data with their own governments, which would then share with Washington.
Falcone’s lulu loan (NYP)
Billionaire Phil Falcone’s hedge fund, which tumbled by almost half last year because of a troubled wireless venture, is paying a 15 percent interest rate for a $190 million loan, almost triple what the riskiest corporate borrowers pay, said two people with knowledge of the loan. Falcone borrowed the money from Jefferies Group Inc. after paying off a $400 million loan from UBS AG on Jan. 30. He received $160 million from Jefferies after fees, and will pay an annualized rate of 15 percent on the loan, which matures on Oct. 31, according to the people, who asked not to be identified because the fund is private. Interest on the loan will be paid monthly.
You Can Buy A Romney Condom Now (CBS)
Benjamin Sherman, founder of the New York-based company Say It With A Condom, has launched a new product line named after the Republican presidential candidate. The condom wrapper features a caricature of Romney on top of $100 bills with the slogan “Never Settle.” In 2008, his company rolled out Barack Obama condoms in packaging with a motto “Hope Is Not A Form Of Protection.”