Opening Bell: 10.15.12

Global Finance Chiefs At Odds (WSJ) At the annual meetings here of the International Monetary Fund and World Bank, European officials bickered about the damage caused by austerity; this week they head into a major euro-zone summit with no clear rescue plan for Greece. A territorial row between China and Japan, the world's second- and third-largest economies, bled into the conference with no sign of resolution, highlighting a new risk to growth. And many top finance officials pointed fingers at the U.S. for casting a new cloud over global markets by failing to make progress on the budget mess in the world's largest economy. Thousands March In Spain To Protest Austerity (Reuters) Several thousand anti-austerity protesters in Spain marched down a major street in the capital banging pots and pans Saturday. Many protesters also blew whistles as they blocked part of the Castellana boulevard Saturday carrying placards saying "We don't owe, we won't pay." "None of us pushed the banks to lend huge sums of money to greedy property speculators, yet we are being asked to pay for other's mistakes," 34-year-old civil servant Maria Costa, who was banging an old pot along with her two children, said. Bernanke Defends Fed From Claims It Is Being Selfish (NYT) Critics say the Fed’s unorthodox policies weaken the dollar and bolster the currencies of developing countries, hurting their ability to export. “It is not at all clear that accommodative policies in advanced economies impose net costs on emerging market economies,” Mr. Bernanke said at an event sponsored by the Bank of Japan and the International Monetary Fund. The Fed last month announced a program of open-ended bond purchases that will be continued until there is substantial improvement in labor market conditions, barring a sustained and unexpected spike in inflation. To start off, the central bank will buy $40 billion in mortgage-backed securities each month. “This policy not only helps strengthen the U.S. economic recovery, but by boosting U.S. spending and growth, it has the effect of helping support the global economy as well,” Mr. Bernanke said. Fischer Backs Fed QE3 as World ‘Awfully Close’ to Recession (Bloomberg) While there has been “a lot of progress made” to improve the global economy, its impact hasn’t materialized, Fischer said in an interview in Tokyo with Bloomberg Television airing Sunday. He signaled that by deciding not to set an end date or total amount to its third program of bond buying, the Fed is easing worries it will run out of ammunition before achieving its goals. Can Morgan Stanley's Gorman Save Wall Street? (BV) Gorman’s strategic moves are enough to convince one natural born skeptic, Mike Mayo, a financial-industry research analyst at Credit Agricole SA (ACA), to recommend Morgan Stanley’s stock for the first time in years. “The stock is valued as if it is a Greek or Spanish bank but its risk is far less,” he wrote in an e-mail to me. For Morgan Stanley to return to its glory days, he said, margins need to be improved in asset management, fixed-income trading needs to be further slimmed down and the core investment-banking franchise needs to be maintained and reinvigorated. Good advice. A firm built around lower risk-taking and lower overall pay while still providing clients with the advice and capital they need to innovate and expand is what we need on Wall Street. It’s the vision of one man taking seriously his responsibility to make the capital markets safe and productive for economies all over the world, instead of just some casino gone haywire where the house absorbs the losses and the profits go to the gamblers. The question is whether other leaders on Wall Street will follow Gorman’s example. Sex Life Was ‘Out of Step,’ Strauss-Kahn Says, but Not Illegal (NYT) More than a year after resigning in disgrace as the managing director of the International Monetary Fund, Dominique Strauss-Kahn is seeking redemption with a new consulting company, the lecture circuit and a uniquely French legal defense to settle a criminal inquiry that exposed his hidden life as a libertine...In France, “Libertinage” has a long history in the culture, dating from a 16th-century religious sect of libertines. But the most perplexing question in the Strauss-Kahn affair is how a career politician with ambition to lead one of Europe’s most powerful nations was blinded to the possibility that his zest for sex parties could present a liability, or risk blackmail. The exclusive orgies called “parties fines” — lavish Champagne affairs costing around $13,000 each — were organized as a roving international circuit from Paris to Washington by businessmen seeking to ingratiate themselves with Mr. Strauss-Kahn. Some of that money, according to a lawyer for the main host, ultimately paid for prostitutes because of a shortage of women at the mixed soirees orchestrated largely for the benefit of Mr. Strauss-Kahn, who sometimes sought sex with three or four women. German finance chief Wolfgang Schaeuble says Greece won't default or exit (Telegraph) "Greece has to take a lot of very serious reforms" and "everyone is trusting that the Greek government is doing what is necessary", he said at a meeting with business leaders in Singapore on Sunday. Mr Schaeuble said an increasing majority of Greeks understand that being in the euro "is in the best interest of Greece" and said did not think there would be a ‘staatsbankrott’ - or state bankruptcy. He said he did not see “any sense to speculate on Greece leaving the euro” because it would be very damaging for both the country and the region. High-Speed Trading No Longer Hurtling Forward (NYT) Profits from high-speed trading in American stocks are on track to be, at most, $1.25 billion this year, down 35 percent from last year and 74 percent lower than the peak of about $4.9 billion in 2009, according to estimates from the brokerage firm Rosenblatt Securities. By comparison, Wells Fargo and JPMorgan Chase each earned more in the last quarter than the high-speed trading industry will earn this year. Titanic Tycoon Plans Stake Sale Talks for $8 Billion Gas Project (Bloomberg) Australian mining magnate Clive Palmer, who’s planning to build a modern replica of the Titanic, aims to start talks next year to sell stakes in a potential $8 billion natural gas project in Papua New Guinea. “We’ve had interest from major petrochemical companies who want to joint venture” including Exxon Mobil Corp. and Chinese companies, Palmer said in an interview. “We will talk to them at the appropriate time,” likely mid-2013 when field work is scheduled to be completed, he said. Occupy Supporters Stage Protest in London (AP) Several supporters of the anti-corporate Occupy movement chained themselves to the pulpit of St. Paul’s Cathedral during a service on Sunday in an action for the anniversary of its now-dismantled protest camp outside the London landmark. The dean of St. Paul’s, David Ison, said he was conducting an evening prayer service when “four young women dressed in white” chained themselves to the structure. Dutch make massive cocaine bust in fruit shipment headed for zoo, arrest five (AP) A major cocaine seizure in Europe turned out to be good news for the animals at Rotterdam’s zoo. The drugs were hidden among boxes of bananas, and the fruit went to the monkeys and other creatures at the Blijdorp zoo. Dutch prosecutors said Friday more than eight tons of cocaine was hidden among the bananas on a ship from Ecuador. The drugs were seized Monday in the Belgian port of Antwerp, while the bananas were allowed to continue on to Rotterdam – the shipment’s final destination. Dutch police arrested a Belgian truck driver and four Dutch men on Tuesday.
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Global Finance Chiefs At Odds (WSJ)
At the annual meetings here of the International Monetary Fund and World Bank, European officials bickered about the damage caused by austerity; this week they head into a major euro-zone summit with no clear rescue plan for Greece. A territorial row between China and Japan, the world's second- and third-largest economies, bled into the conference with no sign of resolution, highlighting a new risk to growth. And many top finance officials pointed fingers at the U.S. for casting a new cloud over global markets by failing to make progress on the budget mess in the world's largest economy.

Thousands March In Spain To Protest Austerity (Reuters)
Several thousand anti-austerity protesters in Spain marched down a major street in the capital banging pots and pans Saturday. Many protesters also blew whistles as they blocked part of the Castellana boulevard Saturday carrying placards saying "We don't owe, we won't pay." "None of us pushed the banks to lend huge sums of money to greedy property speculators, yet we are being asked to pay for other's mistakes," 34-year-old civil servant Maria Costa, who was banging an old pot along with her two children, said.

Bernanke Defends Fed From Claims It Is Being Selfish (NYT)
Critics say the Fed’s unorthodox policies weaken the dollar and bolster the currencies of developing countries, hurting their ability to export. “It is not at all clear that accommodative policies in advanced economies impose net costs on emerging market economies,” Mr. Bernanke said at an event sponsored by the Bank of Japan and the International Monetary Fund. The Fed last month announced a program of open-ended bond purchases that will be continued until there is substantial improvement in labor market conditions, barring a sustained and unexpected spike in inflation. To start off, the central bank will buy $40 billion in mortgage-backed securities each month. “This policy not only helps strengthen the U.S. economic recovery, but by boosting U.S. spending and growth, it has the effect of helping support the global economy as well,” Mr. Bernanke said.

Fischer Backs Fed QE3 as World ‘Awfully Close’ to Recession (Bloomberg)
While there has been “a lot of progress made” to improve the global economy, its impact hasn’t materialized, Fischer said in an interview in Tokyo with Bloomberg Television airing Sunday. He signaled that by deciding not to set an end date or total amount to its third program of bond buying, the Fed is easing worries it will run out of ammunition before achieving its goals.

Can Morgan Stanley's Gorman Save Wall Street? (BV)
Gorman’s strategic moves are enough to convince one natural born skeptic, Mike Mayo, a financial-industry research analyst at Credit Agricole SA (ACA), to recommend Morgan Stanley’s stock for the first time in years. “The stock is valued as if it is a Greek or Spanish bank but its risk is far less,” he wrote in an e-mail to me. For Morgan Stanley to return to its glory days, he said, margins need to be improved in asset management, fixed-income trading needs to be further slimmed down and the core investment-banking franchise needs to be maintained and reinvigorated. Good advice. A firm built around lower risk-taking and lower overall pay while still providing clients with the advice and capital they need to innovate and expand is what we need on Wall Street. It’s the vision of one man taking seriously his responsibility to make the capital markets safe and productive for economies all over the world, instead of just some casino gone haywire where the house absorbs the losses and the profits go to the gamblers. The question is whether other leaders on Wall Street will follow Gorman’s example.

Sex Life Was ‘Out of Step,’ Strauss-Kahn Says, but Not Illegal (NYT)
More than a year after resigning in disgrace as the managing director of the International Monetary Fund, Dominique Strauss-Kahn is seeking redemption with a new consulting company, the lecture circuit and a uniquely French legal defense to settle a criminal inquiry that exposed his hidden life as a libertine...In France, “Libertinage” has a long history in the culture, dating from a 16th-century religious sect of libertines. But the most perplexing question in the Strauss-Kahn affair is how a career politician with ambition to lead one of Europe’s most powerful nations was blinded to the possibility that his zest for sex parties could present a liability, or risk blackmail. The exclusive orgies called “parties fines” — lavish Champagne affairs costing around $13,000 each — were organized as a roving international circuit from Paris to Washington by businessmen seeking to ingratiate themselves with Mr. Strauss-Kahn. Some of that money, according to a lawyer for the main host, ultimately paid for prostitutes because of a shortage of women at the mixed soirees orchestrated largely for the benefit of Mr. Strauss-Kahn, who sometimes sought sex with three or four women.

German finance chief Wolfgang Schaeuble says Greece won't default or exit (Telegraph)
"Greece has to take a lot of very serious reforms" and "everyone is trusting that the Greek government is doing what is necessary", he said at a meeting with business leaders in Singapore on Sunday. Mr Schaeuble said an increasing majority of Greeks understand that being in the euro "is in the best interest of Greece" and said did not think there would be a ‘staatsbankrott’ - or state bankruptcy. He said he did not see “any sense to speculate on Greece leaving the euro” because it would be very damaging for both the country and the region.

High-Speed Trading No Longer Hurtling Forward (NYT)
Profits from high-speed trading in American stocks are on track to be, at most, $1.25 billion this year, down 35 percent from last year and 74 percent lower than the peak of about $4.9 billion in 2009, according to estimates from the brokerage firm Rosenblatt Securities. By comparison, Wells Fargo and JPMorgan Chase each earned more in the last quarter than the high-speed trading industry will earn this year.

Titanic Tycoon Plans Stake Sale Talks for $8 Billion Gas Project (Bloomberg)
Australian mining magnate Clive Palmer, who’s planning to build a modern replica of the Titanic, aims to start talks next year to sell stakes in a potential $8 billion natural gas project in Papua New Guinea. “We’ve had interest from major petrochemical companies who want to joint venture” including Exxon Mobil Corp. and Chinese companies, Palmer said in an interview. “We will talk to them at the appropriate time,” likely mid-2013 when field work is scheduled to be completed, he said.

Occupy Supporters Stage Protest in London (AP)
Several supporters of the anti-corporate Occupy movement chained themselves to the pulpit of St. Paul’s Cathedral during a service on Sunday in an action for the anniversary of its now-dismantled protest camp outside the London landmark. The dean of St. Paul’s, David Ison, said he was conducting an evening prayer service when “four young women dressed in white” chained themselves to the structure.

Dutch make massive cocaine bust in fruit shipment headed for zoo, arrest five (AP)
A major cocaine seizure in Europe turned out to be good news for the animals at Rotterdam’s zoo. The drugs were hidden among boxes of bananas, and the fruit went to the monkeys and other creatures at the Blijdorp zoo. Dutch prosecutors said Friday more than eight tons of cocaine was hidden among the bananas on a ship from Ecuador. The drugs were seized Monday in the Belgian port of Antwerp, while the bananas were allowed to continue on to Rotterdam – the shipment’s final destination. Dutch police arrested a Belgian truck driver and four Dutch men on Tuesday.

Related

Opening Bell: 05.01.12

US Considers Notes That Float (WSJ) After a series of meetings early this week, Treasury officials will decide whether to start issuing floating-rate debt for the first time ever. Instead of the interest rate being fixed throughout the life of the notes, the rate would move up and down as overall rates move higher and lower. The change would be the first new addition to the Treasury's arsenal of debt products in 15 years. Analysts are widely expecting Treasury officials to sign off on the program. Fed Said to Criticize Banks on Risk Models in Stress Test (Bloomberg) The Federal Reserve criticized how some of the 19 largest U.S. banks calculated potential losses and planned dividends in this year’s stress tests, people with knowledge of the process said. The critiques will be part of feedback letters sent to the lenders this week that cover everything from data collection to risk measurement, said three of the people, who declined to be identified because communications with the Fed are private. Flaws included marking down all housing prices at the same rate, rather than matching them to specific regions, and planning dividends that could drain needed capital. Greeks To Protest Austerity In May Day Rallies (Reuters) Greece's two major private and public sector unions GSEE and ADEDY plan to hold a rally in Athens to mark the national holiday, while the Communist-affiliated PAME group was also scheduled to hold a separate rally. Police prepared for the violence that has come to mark many such rallies once demonstrators reach the main square in front of parliament, though Athens has not seen major clashes since an unpopular austerity bill was approved in February. Athens buses, trains and the subway came to a standstill as transport workers staged a 24-hour strike, while Greek seamen held a four-hour stoppage. Public sector offices were shut and hospitals worked on emergency staff. Occupy Wall Street denies link to May Day white powder bank scare (AP) Police say seven envelopes were sent Monday to several Wells Fargo branches, a JP Morgan Chase branch and an office building. Telephone calls to Wells Fargo and JP Morgan Chase were not immediately returned. Police say the suspicious envelopes caused evacuations of several bank branches, but no injuries were reported. Police had no suspects. Representatives at some of the banks involved told CBS News the envelopes contained a note stating "Happy May Day." The envelopes were sent on the eve of planned May Day protests around the country. Bill Dobbs, a spokesman for Occupy Wall Street, said the prank had nothing to do with their protest movement. He said the incidents distract from the May 1 events. Man Group Has $1 Billion Outflows (Bloomberg) The company reported that net cash fell 56 percent to $250 million in the three months ended in March, raising concern that it’s spending too much money at a time when profits are falling. Finance Director Kevin Hayes said on a call with analysts that staff bonuses, taxes and loans to some of Man Group’s funds accounted for the lower cash reserve. Calif. Man Sues BMW For Persistent Erection (CBS via Consumerist) enry Wolf of California is suing BMW America and aftermarket seatmaker Corbin-Pacific claiming his issue began after a four-hour ride on his 1993 BMW motorcycle, with a ridge like seat. Wolf is seeking compensation for lost wages, medical expenses, emotional distress and what he calls “general damage.” He said he’s had the erection non-stop for 20 months. And it comes with another side effect: The lawsuit says Wolf is “now is unable to engage in sexual activity, which is causing him substantial emotional and mental anguish.” Icahn: No feud with Phil (NYP) Investor Carl Icahn yesterday downplayed the notion that he’s in a feud with hedge fund bigwig Phil Falcone over wireless venture LightSquared. Speaking at an activist investing conference in Midtown, Icahn said newspapers that have been writing about his standoff with Falcone “are making this into this huge shoot-out that it’s really not.” “We don’t call the shots in that deal,” he said at the conference, hosted by 13D Monitor, when asked about his plans for LightSquared. “We have one seat on the committee out of six.” Groupon Board Regrouping (DJ) The young daily deals company, which went public just six months ago to much fanfare, is adding financial expertise to its board as it tries to clean up an accounting mess that rapidly deflated its stock. Groupon yesterday appointed financial heavyweights Daniel Henry, chief financial officer of American Express, and Robert Bass, vice chairman of Deloitte, as directors. The two are replacing Starbucks CEO Howard Schultz, who is stepping down, and venture capitalist Kevin Efrusy, who won’t stand for re-election. Analysts See Record S&P 500 (Bloomberg) FYI: Analysts predict U.S. shares will rise enough this year to boost the Standard & Poor’s 500 Index to a record, even as Wall Street strategists say the best is already over for American equities. Judge rejects 'Hail Mary' motion for diplomatic immunity from DSK (NYP) The former International Monetary Fund chief tried to claim the protection in the civil case filed against him last August by chambermaid Nafissatou Diallo, who claims he sexually assaulting her in a "violent and sadistic attack" in the Midtown Sofitel hotel nearly one year ago. DSK was cleared of all criminal charges in the incident, but not before resigning from his post as chief of the IMF. “Confronted with well-stated law that his voluntary resignation from the IMF terminated any immunity which he enjoyed...Mr. Strauss-Khan, threw [legally speaking that is] his own version of a Hail Mary pass,” Judge Douglas McKeon wrote in his decision, handed down today. DSK did not claim immunity when Manhattan DA Cy Vance was pursuing the criminal charges against him, McKeon pointed out. “Mr. Strauss-Khan cannot eschew immunity in an effort to clear his name only to embrace it now in an effort to deny Ms. Diallo the opportunity to clear hers,” McKeon wrote. McKeon’s decision began with a quotation inserted in to the IMF’s 2011 annual report: “The reputation of a thousand years may be determines by the conduct of one hour."

Opening Bell: 10.09.12

Stress For Banks As Tests, Loom (WSJ) U.S. banks and the Federal Reserve are battling over a new round of "stress tests" even before the annual exams get going later this fall. The clash centers on the math regulators are using to produce the results. Bankers want more detail on how the calculations are made, and the Fed thus far has resisted disclosing more than it has already. A senior Fed supervision official, Timothy Clark, irked some bankers last month when he said at a private conference they wouldn't get additional information about the methodology, according to people who attended the event in Boston. Wells Fargo Treasurer Paul Ackerman said at the same conference that he still doesn't understand why the Fed's estimates are so different from Wells's. His remarks drew applause from bankers in the audience, said the people who attended. Bonus Round Is Over (NYP) Wall Street traders, among the best paid in financial circles, are facing another meager bonus season this year — at least by Street standards — after a rough 2011 saw bonuses slashed by as much as 30 percent. Although some groups will fare better than others, equity traders could see their prized bonuses shredded again in 2012 — by as much as 35 percent, according to recruiters and others. In addition to lower bonuses, Wall Streeters are likely to see less of the payout in cash and more in stock — with the stock facing longer deferral periods, one recruiter, Michael Karp, co-founder of Options Group, said. Deutsche Bank has already moved from three-year deferral periods to stricter five-year deferrals and it’s expected that other banks will follow suit. IMF Sees ‘Alarmingly High’ Risk of Deeper Global Slump (Bloomberg) The world economy will grow 3.3 percent this year, the slowest since the 2009 recession, and 3.6 percent next year, the IMF said today, compared with July predictions of 3.5 percent in 2012 and 3.9 percent in 2013. The Washington-based lender now sees “alarmingly high” risks of a steeper slowdown, with a one-in-six chance of growth slipping below 2 percent. Depositors Turn Up Heat On Ailing Spanish Banks (WSJ) Eugenio Nuñez Cobás stormed into a bank branch in this coastal town one morning in August with three dozen fellow customers yelling "Thieves! Thieves! Thieves!" Then they returned to the street and pelted the facade with eggs, forcing the branch to close for the day. Athens Preparing for Anti-Austerity Protests Aimed at Merkel (Bloomberg) Greece’s capital will grind to a halt today for German Chancellor Angela Merkel’s first visit since the financial crisis began, with 7,000 officers deployed around Athens to prevent violence at planned protests. Authorities have declared entire sections of downtown off- limits, notably Prime Minister Antonis Samaras’s office, where the two leaders, will meet and the German embassy. Merkel is due to arrive at 1:30 p.m., around the same time as three separate protest marches gather in front of Parliament. Can Marissa Mayer Really Have It All? (NYM) When faced with a difficult decision, Mayer likes to create a spreadsheet. She went to Stanford as an undergrad, switching from pre-med to an esoteric major called “symbolic systems,” which is a mixture of philosophy, brain science, and artificial intelligence (anybody anywhere can do pre-med, she thought), and then continued on, getting an advanced degree in computer science. She entered the job market in the spring of 1999, at the height of the dot-com boom, and got more than a dozen offers—from several dot-coms, including Google (she interviewed with Page and Sergey Brin at a Ping-Pong table), and one from McKinsey & Co. “I like to do matrices,” she told NPR. “One option per line, different facets for each column. Salary, location, happiness index, failure index, and all that.” That spring, her matrix pointed her toward Google. “To my credit, I actually gave Google a hundred times more likely chance of succeeding than any of the other start-ups [from which she got offers], because I gave them a 2 percent chance of success. I gave all the other start-ups a .02 percent chance of success.” A Beacon For DC, By Ben Bernanke (WSJ) People decry the absence of leadership in Washington these days. My response: Look no further than the home-team dugout at Nationals Park. Under Manager Davey Johnson's confident, laid-back leadership, the Washington Nationals, defying all preseason conventional wisdom, have claimed the 2012 championship of the National League Eastern Division and the best regular-season record in Major League Baseball...Davey, who earned a degree in mathematics from Trinity University, is the epitome of the head-and-heart consensus. He was an early proponent of the use of statistical analysis in baseball decision-making, and it is clear in his tactical management of games that he is very conversant with sabermetric principles. He well understands, for instance, how to use statistics in determining lineups and pitcher-hitter matchups. At the same time, Davey is also really good at identifying and nurturing talent. Most strikingly, he has shown himself willing to sacrifice short-term tactical advantage for the long-term benefit of bolstering the confidence of a player in whom he sees great potential. He lets players play through slumps and gives pitchers who have gotten behind a chance to dig themselves out. His reasoning: Giving a promising player the opportunity the prove himself will often do more for the team in the long run than making an ostensibly better tactical decision in the short run—even if it costs the team a game or two. McKinsey casts gloomy eye on world banking (Reuters) Banks worldwide remain scarred by the 2007-2009 financial crisis and are years away from developing new business models that will produce sustainable profits, according to a new study. Despite progress in meeting regulators' requirements to build capital, revenue growth is slow, costs are rising and new competitors exploiting digital technologies are emerging, McKinsey & Co said in a report released on Monday evening. Obama's Next Fed Chief: Who Gets The Job If Obama Wins Second Term? (WaPo) The top contenders are: Ben Bernanke, Larry Summers, Janet Yellen, Roger Ferguson, Bill Dudley, Tim Geithner, and Don Kohn. Man Dies After Live Roach-Eating Contest In Florida (AP) The winner of a roach-eating contest in South Florida died shortly after downing dozens of the live bugs as well as worms, authorities said Monday. About 30 contestants ate the insects during Friday night's contest at Ben Siegel Reptile Store in Deerfield Beach about 40 miles north of Miami. The grand prize was a python. Edward Archbold, 32, of West Palm Beach became ill shortly after the contest ended and collapsed in front of the store, according to a Broward Sheriff's Office statement released Monday. He was taken to the hospital where he was pronounced dead. Authorities were waiting for results of an autopsy to determine a cause of death...None of the other contestants became ill, the sheriff's office said. There was no updated phone number listed for Archbold in West Palm Beach. "We feel terribly awful," said store owner Ben Siegel, who added that Archbold did not appear to be sick before the contest. "He looked like he just wanted to show off and was very nice," Siegel said, adding that Archbold was "the life of the party."

Opening Bell: 07.09.12

BofA Figures In Drug Probe (WSJ) A Mexican cocaine-trafficking cartel used accounts at Bank of America to hide money and invest illegal drug-trade proceeds in U.S. racehorses, the Federal Bureau of Investigation said. The alleged ties between the violent drug gang known as Los Zetas and the second-largest U.S. bank by assets were described in a 35-page affidavit filed in federal court in Texas last month. According to an FBI agent, a horse-buying and training business created to launder drug money had accounts at the Charlotte, N.C., bank. Libor Probe Moves To Political Arena (WSJ) The scandal over banks' manipulation of key interest rates cost the jobs of three senior financial figures last week. On Monday, the deputy governor of the Bank of England will try to ensure it doesn't derail his own career. Paul Tucker, a leading candidate to become the next governor of the Bank of England, will testify Monday afternoon before a Parliamentary committee that is examining how Barclays and other global banks improperly tried to influence interest rates like the London interbank offered rate...Barclays, after reaching a £290 million settlement with U.S. and British regulators over its attempts to manipulate Libor, sought to defend itself by releasing notes from an October 2008 phone call between Mr. Tucker and Robert Diamond. According to Mr. Diamond's notes from the call, Mr. Tucker relayed concerns from "senior" British government officials about Barclays's above-average Libor submissions. "Mr. Tucker stated…that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently," Mr. Diamond wrote to two of his colleagues the day after the call. Diamond Antithesis Seen As Key Step To Repairing Barclays (Bloomberg) The British lender faces a criminal probe and political pressure to curb or separate the investment banking unit that Diamond built up during his 16-year career at Barclays from the consumer bank. The unit generated 61 percent of the bank’s first-quarter pretax profit. At a Parliamentary hearing last week, lawmakers asked if the culture at the investment bank was “rotten” and if he lived in a “parallel universe.” Former Barclays CEO: I Too Fell for the Diamond Myth (FT) "It was a close call," Taylor says of his decision to retain Diamond as head of Barclays Capital. "I suspect the subsequent history of the business would have been very different had I asked him to go. I deserve blame for being among the first to succumb to the myth of Diamond’s indispensability, to which some in Barclays were still in thrall only a matter of days ago." SEC set to hand out up to $452M to whistleblowers (NYP) “The SEC is receiving two to three tips every day that are worth pursuing, and they’re farming them out to staffers for investigation,” said Lawrence A. West, a lawyer with Latham & Watkins. “SEC officials are eager to pay out and publicize the first whistleblower award,” said West, whose firm has gathered a number of tipsters under the new law. “Once the first award is publicized, tips to the SEC from disgruntled employees are almost certain to increase substantially.” Romney Mines Hamptons For Political Cash (NYT) EAST HAMPTON, N.Y. — A woman in a blue chiffon dress poked her head out of a black Range Rover here on Sunday afternoon and yelled to an aide to Mitt Romney. “Is there a V.I.P. entrance? We are V.I.P.” (No such entrance existed.)...what was billed as a day of elegant campaign events at the homes of the ultrarich turned out to be an afternoon of curious and clashing tableaus: protesters with their bandannas and Occupy Wall Street-inspired chants (“We got sold out, banks got bailed out!”) standing amid multimillion-dollar mansions, where live bands played “Margaritaville” and donors dined on prosciutto-wrapped melon balls...After that, Mr. Romney attended events at the Southampton homes of Clifford Sobel, the former United States ambassador to Brazil, and David Koch, the billionaire industrialist and longtime benefactor of conservative political causes. The event at Mr. Koch’s home drew about 200 protesters, who...went so far as to hire a local pilot to fly a giant red and black banner over Mr. Koch’s house, which read: “Romney has a Koch problem,” a play on the drug. (Mr. Koch’s name is pronounced the same as the word coke.) A truck, festooned with the logos of big banks like Citigroup and Wells Fargo, circled the neighborhood with a plastic dog on the roof, a jab at Mr. Romney’s much-mocked family vacation in which he traveled with his Irish setter inside a pet carrier on the roof of a car. Barclays mulls split after Libor scandal: report (MarketWatch) Board directors at U.K. bank Barclays PLC BCS -1.72% are considering splitting the company into two units, as regulatory scrutiny mounts in the wake of its role in the Libor interest-rate fixing scandal, The Sunday Times reports without citing sources. The newspaper says Barclays is examining plans to spin off its investment banking arm, which could be floated in New York, with the U.K.-headquartered retail and commercial bank retaining its London listing. (A person familiar with the matter said the story was inaccurate.) Roubini: My 'Perfect Storm' Scenario Is Unfolding Now (CNBC) In May, Roubini predicted four elements – stalling growth in the U.S., debt troubles in Europe, a slowdown in emerging markets, particularly China, and military conflict in Iran - would come together in to create a storm for the global economy in 2013. “(The) 2013 perfect storm scenario I wrote on months ago is unfolding,” Roubini said on Twitter on Monday. Tighter Control For Euro Banks (WSJ) The establishment of a single authority, with a single set of rules for the region's banks, is seen by Germany and other strong economies as an essential condition before they will consider sharing resources with other euro-zone countries. House-crasher sentenced after enjoying Diddy's food, cigars and toothbrush (NYP) A East New York man, busted for sneaking into rapper Sean “Diddy” Combs’ palatial East Hampton spread in April, guzzled the star’s top-shelf liquor, washed with his soap, and even used his toothbrush, officials revealed yesterday. “I brought a cheesesteak, a cheesecake, a bucket of fried chicken — which I ate at the house — and drank a ‘dollar’ bottle of Hennessy and four cans of Pepsi,” Quamine Taylor told prosecutors at his sentencing yesterday. He even slathered Diddy’s Frank’s Red Hot sauce on his grub, and drank a bottle of Hpnotiq, a vodka liqueur, he said, adding, “After I ate, I went upstairs and went to sleep.” He also smoked three of Diddy’s Dutch Masters cigars and drank a can of orange soda. Then he freshened up using Diddy’s soap and splashing on his aftershave.

Opening Bell: 02.26.13

J.P. Morgan’s Investor Day: Cut That Headcount (Deal Journal) JP Morgan is looking to cut another $1 billion out of its expenses this year, including somewhere around 4,000 jobs, according to a new presentation...And that may not be all the cuts. In a separate presentation on the consumer bank and mortgage operations the bank expects to cut costs in mortgage banking by $3 billion over this year and next year and cut headcount there by between 13,000 and 15,000. Banks Face Hurdle In Libor Fight (WSJ) Next week, lawyers for Barclays PLC, Royal Bank of Scotland Group PLC, UBS AG and more than a dozen other banks still under investigation are expected to ask a federal-court judge to throw out many of the suits, which seek class-action status. The suits, filed in civil court in California and New York by plaintiffs ranging from a retired cable-car driver in San Francisco to the city of Baltimore, have been piling up for nearly two years. They seek damages that could reach into the tens of billions of dollars from financial institutions that help determine the London interbank offered rate, or Libor. Barclays, RBS and UBS already have paid about $2.5 billion, and admitted wrongdoing, to settle rate-rigging allegations by U.S. and U.K. regulators. In court filings, lawyers for the 16 banks accused of wrongdoing say the lawsuits have no legal validity. The lawyers say regulatory settlements reached so far don't support the central allegation in most of the civil suits that banks engaged in illegal, anticompetitive behavior. Berlusconi Concedes as He Weighs Alliance (Bloomberg) Former Italian Prime Minister Silvio Berlusconi acknowledged rival Pier Luigi Bersani’s narrow victory in the lower house of Parliament and said he’s open to a broad alliance to avoid a second election. “Everyone needs to think what good can be done for Italy and this will take some time,” Berlusconi said in an interview with Canale 5, a station owned by his Mediaset SpA broadcaster. The country can’t be left without a government, he said. Lew gettin’ close: Senate panel to OK as next Treasury boss (NYP) Treasury Secretary-nominee Jack Lew will get the green light to replace Tim Geithner despite taking heat during and after his confirmation hearing over a loan he received from New York University. The 57-year-old former White House chief of staff has enough votes from the Senate Finance Committee, headed by Max Baucus (D-Mont.), to pass a vote today that will likely lead to his confirmation, sources said. A full Senate vote is likely to be scheduled in a couple of days and held sometime next week. Larry Summers: Sequestration 'Meat Cleaver' Is Irresponsible (CNBC) Avoiding the "sequester" is "round three" in the debt-reduction debate, former Clinton Treasury Secretary Lawrence Summers told CNBC Tuesday, arguing for a "balanced approach" because President Barack Obama has agreed to more spending cuts than revenue during the process. In a "Squawk Box" interview, Summers said the funding constraints of the Budget Control Act of 2011 — which resolved that year's debt ceiling crisis — were round one. "You had spending cuts that were far larger from the discretionary side, that were far larger than anything [on revenue] that happened in December. Right now, we're way in balance toward more spending cuts." Dominique Strauss-Kahn seeks to ban 'half-man half-pig' book (Telegraph) The "biographical novel" by Marcela Iacub, a lawyer and journalist, recounts her seven-month affair with the 64-year-old Mr Strauss-Kahn last year. It is due to be published on Wednesday under the title, Belle et Bête, or Beauty and Beast. But the one-time Socialist presidential hopeful will this morning seek to have the book banned for "violation of the intimacy of private life" and the author and her publisher fined 100,000 euros (£88,000) in damages...In the work, she claims Mr Strauss-Kahn would have transformed the Elysée Palace into a "giant swingers' club" had he been elected French president. In fresh accounts by those who have read the book yesterday, the last chapter narrates the pair's final encounter, ending in Miss Iacub receiving treatment in casualty after "the pig" left her with an "eaten ear". Mr Strauss-Kahn has slammed the work of a woman who "seduces to write a book, claiming to have amorous feelings to exploit them for financial gain". Gupta's Gotta Pay GS $6.2 Million (NYP) Former Goldman Sachs director Rajat Gupta was ordered yesterday by a Manhattan federal judge to fork over a whopping $6.2 million to repay the Wall Street bank for legal fees it spent during the government’s probe of Gupta’s insider-trading case. The 64-year-old fallen star was convicted last year of giving up secrets he learned while on Goldman’s board to his pal and hedge fund honcho Raj Rajaratnam. Among the counts, the jury found Gupta guilty of giving Rajaratnam a tip on Warren Buffett’s $5 billion investment in Goldman in the throes of the financial crisis. Gupta, the former head of consulting firm McKinsey, is out on bail while he appeals the ruling. Goldman had requested restitution of $6.9 million — and submitted 542 pages of billing records from its lawyers at Sullivan Cromwell. Yahoo’s Mayer Risks Productivity With Work-From-Home Restriction (Bloomberg) Jackie Reses, Yahoo’s executive vice president of people and development, sent a memo last week asking employees with work-from-home arrangements to make their way to the company’s offices, starting June. “To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side,” according to the memo, whose contents were confirmed by a Yahoo employee who asked not to be identified because it’s not a public document. “Speed and quality are often sacrificed when we work from home.” At a time when Mayer is under pressure to jump-start growth and create innovative products, the shift may compromise Yahoo’s ability to attract employees seeking the freedom to work outside the office -- a perk offered by many of the company’s competitors. Research suggests that working from home enhances productivity, said Jody Thompson, co-founder of workforce consultant CultureRx. BP Oil-Spill Trial Begins (WSJ) Both Transocean and the Justice Department focused part of their opening statements on a 10-minute ship-to-shore phone call between two BP engineers, Donald Vidrine and Mark Hafle, less than an hour before the blast. From the rig, Mr. Vidrine allegedly talked about unusual results from a test designed to ensure the cement sealing in the bottom of the well was successful. Investigators later found that rig workers misinterpreted the results of the test. Dennis Rodman Bound For North Korea (Reuters) Retired U.S. basketball player Dennis Rodman is to visit North Korea to film a television documentary and will arrive in the capital Pyongyang on Tuesday, the Associated Press reported. Rodman, now 51 years old, won five NBA championships in his prime, achieving a mix of fame and notoriety for his on- and off-court antics. Thirty-year-old North Korean leader Kim Jong-un, who has launched two long-range rockets and carried out a nuclear weapons test during his first year in power, is reported to be an avid NBA fan and had pictures taken with players from the Chicago Bulls and Los Angeles Lakers during his school days in Switzerland. "At a time when tensions between the two countries (the United States and North Korea) are running high, it's important to keep lines of communication open, no matter how non-traditional those channels are," AP quoted Shane Smith, the founder of VICE, which is to make the TV series, as saying.

Opening Bell: 03.16.12

Mayor Bloomberg Visits Goldman Employees After Smith Op-Ed (BW) “The mayor stopped by to make clear that the company is a vital part of the city’s economy, and the kind of unfair attacks that we’re seeing can eventually hurt all New Yorkers,” said Stu Loeser, a spokesman for the mayor. Bloomberg visited the firm Thursday and met with Chief Executive Officer Lloyd C. Blankfein and numerous employees, Loeser said. Italy Said To Pay Morgan Stanley $3.4 Billion (Bloomberg) When Morgan Stanley said in January it had cut its “net exposure” to Italy by $3.4 billion, it didn’t tell investors that the nation paid that entire amount to the bank to exit a bet on interest rates. Italy, the second-most indebted nation in the European Union, paid the money to unwind derivative contracts from the 1990s that had backfired, said a person with direct knowledge of the Treasury’s payment. It was cheaper for Italy to cancel the transactions rather than to renew, said the person, who declined to be identified because the terms were private. Client Slams Goldman Slowness to Give Reassurances (Reuters) PG, a Dutch investment adviser that runs 300 billion euros of assets for more than 4.5 million people in the Netherlands, said it was surprised it took the Wall Street bank more than a day to offer APG any reassurance on points raised in Greg Smith's resignation letter. "We would have expected that a company that faces such a big media backlash over something so core to their business such as client trust would have instantly reached out to those clients to say something," APG spokesman Harmen Geers told Reuters. Banks Desire Assets Tied To AIG Bailout (WSJ) A potential sale of the CDOs by the New York Fed in the coming months, plus the government's recent decision to resume selling some of its AIG stock, could set the stage for the U.S. to recover the bulk of its money from the bailout before the presidential elections this year. Learning From The Spurned And Tipsy Fruit Fly (NYT) They were young males on the make, and they struck out not once, not twice, but a dozen times with a group of attractive females hovering nearby. So they did what so many men do after being repeatedly rejected: they got drunk, using alcohol as a balm for unfulfilled desire. And not one flew off in search of a rotting banana. Fruit flies apparently self-medicate just like many humans do, drowning their sorrows or frustrations for some of the same reasons, scientists reported Thursday. Male flies subjected to what amounted to a long tease — in a glass tube, not a dance club — preferred food spiked with alcohol far more than male flies that were able to mate. Buffett Awards Wall Street-Sized Pay Praised by Dimon (Bloomberg) Warren Buffett, who has said banker greed helped deepen the U.S. financial crisis, attracts the workers he wants with compensation that competes with Wall Street awards. Berkshire gave $17.4 million in 2011 compensation to Thomas P. Nerney, CEO of its United States Liability Insurance Group; $12.4 million to Geico Corp. CEO Tony Nicely and the National Indemnity Co. unit gave $9.26 million to Ajit Jain, according to filings to state regulators. Berkshire, which is set to send its annual-meeting notice to shareholders today, said in last year’s proxy that Buffett’s salary remains $100,000 at his request. St. Patrick's Day Message: Ireland Isn't Greece (CNBC) As large parts of the world turn green to celebrate St. Patrick’s Day, the Irish Prime Minister Enda Kenny has been flying the green, white and gold flag on a charm offensive around the world. enny is packing in trips to London, China and New York within a couple of weeks in an effort to carry forward the country’s gradual return to economic health, which has been based largely on attracting foreign investment. He opens the New York Stock Exchange on Monday, after visiting at the White House over the weekend. “This is a very important push for Ireland,” Irish businessman Barry Maloney, founder and general partner at venture capital firm Balderton Capital, told CNBC. Kozlowski in NYC work release (NYP) Convicted in 2005 of looting his company, Kozlowski was transferred from an upstate prison to the Lincoln Correctional Facility, a minimum-security site on Manhattan’s 110th Street near Fifth Avenue, on the north border of the park. He leaves every weekday morning to participate in a work-release program, said Peter Cutler, a spokesman for the New York State Department of Corrections and Community Supervision. Kozlowski is still serving a prison sentence of 8 1/3 to 25 years, Officials Cool On Yuan-Swap Proposal (WSJ) Amid growing interest in turning London into a trading hub for the Chinese yuan, some bankers have proposed to U.K financial authorities to adopt a tool increasingly used by China's central bank to foster yuan liquidity overseas: bilateral currency-swap agreements. The bankers are pushing for the Bank of England to sign a currency-swap deal withits Chinese counterpart, according to banking executives involved in the discussions. Such a deal, they say, could help foreign banks get hold of yuan and supply the currency to customers. DA grilling two 'hookers' and 'money launderer' in case of alleged madam (NYP) Court transcripts and other records, along with sources familiar with the case, indicate that the two alleged prostitutes and a mysterious “laundry man” — identified only as a 68-year-old Russian-American — have met privately with authorities to save their own hides and clinch a case against Gristina and her suspected cohort, Jaynie Mae Baker. One of the women has admitted privately to having turned tricks for Gristina at her alleged East 78th Street “brothel,” a source said. Prosecutors have engaged in hush-hush negotiations with alleged call girls Mhairiangela “Maz” Bottone, 30, and Catherine DeVries, 31 — who are both charged with prostitution, according to court documents — and with the alleged money launderer, named only as “John Doe” by authorities.

Opening Bell: 07.16.12

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.”

Opening Bell: 01.29.13

US Wants Criminal Charges For RBS (WSJ) U.S. authorities are pushing for a settlement of interest-rate-rigging allegations with Royal Bank of Scotland that would result in a unit of the big British bank pleading guilty to criminal charges in addition to paying a penalty, according to people briefed on the negotiations. RBS executives are resisting any guilty plea, fearful that it could lead clients to cut off activity with the bank and that it could increase exposure to costly litigation, some of these people said. The negotiations reflect a newly tough stance by U.S. authorities, who until recently have faced criticism for rarely pursuing criminal action against big banks.U.S. authorities are pushing for a settlement of interest-rate-rigging allegations with Royal Bank of Scotland Group RBS.LN +0.52% PLC that would result in a unit of the big British bank pleading guilty to criminal charges in addition to paying a penalty, according to people briefed on the negotiations. RBS executives are resisting any guilty plea, fearful that it could lead clients to cut off activity with the bank and that it could increase exposure to costly litigation, some of these people said. The negotiations reflect a newly tough stance by U.S. authorities, who until recently have faced criticism for rarely pursuing criminal action against big banks. IRS can seek UBS records for taxpayers hiding income at Wegelin (Reuters) A federal judge on Monday authorized the Internal Revenue Service to seek records from UBS AG of U.S. taxpayers suspected of hiding their income in accounts with Swiss bank Wegelin. Wegelin, the oldest Swiss private bank, pleaded guilty in Manhattan federal court on January 3 to charges of helping wealthy Americans evade taxes through secret accounts and then announced it would close down as a result. Little Debbie Maker to Buy Drake’s Brand, Hostess Says (Bloomberg) Hostess Brands Inc. said McKee Foods Corp., maker of Little Debbie snacks, agreed to pay $27.5 million for its Drake’s brand and United States Bakery Inc. offered to buy certain bread brands for $28.9 million. “The contemplated purchase prices for Drake’s and the four bread brands, together with our previous announced stalking- horse bid for the majority of our bread business, means we have agreements to sell these assets for at least $440 million,” Hostess Chief Executive Officer Gregory F. Rayburn said today in a statement. United States Bakery agreed to buy the Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s bread brands, four bakeries and 14 depots, plus certain equipment, according to court papers. Iceland Wins Case On Deposit Guarantees (WSJ) Iceland won a sweeping victory in a court fight over its responsibilities to foreign depositors in Icelandic bank Landsbanki, which failed in 2008. The court of the European Free Trade Association on Monday said Iceland didn't breach European Economic Area directives on deposit guarantees by not compensating U.K. and Dutch depositors in Landsbanki's online savings accounts, known as Icesave accounts. The EFTA Surveillance Authority, or ESA, which brought the case against Iceland, had claimed that Iceland should have made sure U.K. and Dutch savers who lost money on Icesave got repaid from deposit insurance. Jamie-Lynn Sigler engaged to Lenny Dykstra's son (NYDN) The actress who played Meadow Soprano announced on Twitter Monday that she's engaged to Cutter Dykstra, a baseball player with the Washington Nationals. "So this just happened," she tweeted along with a photo showing off her huge new diamond alongside her smiling fiancé. "Thank you so much for all the love everyone. I am so happy and more importantly lucky," Sigler, 31, said in a follow-up tweet. "She said yes!!" Cutter, 23, wrote on his own Twitter feed. Sigler was by Cutter's side last month when family members filed into a federal courthouse in downtown Los Angeles for Lenny Dykstra's sentencing in his bankruptcy fraud case. Yahoo Profit Drops But Revenue Rises (WSJ) For Ms. Mayer, the results were enough that the "honeymoon period is going to last at least a couple of more quarters" while investors wait to see progress, said Sameet Sinha, an analyst at B. Riley & Co. Mayor Bloomberg Has Opinions (NYDN) In a New York Magazine profile about Christine Quinn, the City Council Speaker and candidate for mayor, the author recalled being introduced to Bloomberg at what he described as “a Christmas party for the rich” on the Upper East Side. “My friend and I followed the host over, shook Bloomberg’s hand, and my friend thanked him for his position on gun control,” the author writes. “Without even acknowledging the comment, Bloomberg gestured toward a woman in a very tight floor-length gown standing nearby and said, ‘Look at the ass on her.’” According to the article, Bloomberg also has strong opinions about Quinn’s appearance – turning up his nose when she wears flats or waits too long before coloring her hair. “The mayor has no use for flat shoes,” Quinn told the reporter. “I was at a parade with him once and he said, ‘What are those?’ and I said, ‘They’re comfortable,’ and he said, ‘I never want to hear those words out of your mouth again,’” she recalled. “He likes me in high heels.” “Another big thing with the mayor, when I am rooting … like, the couple of days a week before I need to get my hair colored, he’ll say, ‘Do you pay a lot to make your hair be two colors? Because now it’s three with the gray,’” Quinn continued. TARP Firms' Pay Unchecked (WSJ) Christy Romero, the Special Inspector General for the Troubled Asset Relief Program, on Monday said the Treasury failed to look out for taxpayers by relying "to a great extent on the companies' proposals and justifications without conducting its own independent analysis." Ms. Romero also said the Treasury hasn't put in place policies that would ensure salaries are within guidelines designed to discourage excessive risk taking by companies receiving bailout aid. Bridgewater’s Dalio Sees ‘Game Changer’ as Money Shifts (Bloomberg) Ray Dalio, founder of Bridgewater Associates LP, the world’s biggest hedge fund, said 2013 will be a “game changer” for the economy as investors reallocate money after risks such as Europe’s sovereign debt crisis receded. “There’s a lot of money in a place that’s getting a very bad return and in this particular year there’s going to be, in my opinion, a shift,” Dalio said at a Bloomberg panel discussion at the World Economic Forum in Davos, Switzerland. “The complexion of the world will change as that money goes from cash into other things. The landscape will change, particularly later in the year and beyond.” Will the New BlackBerry Win Back Corporate Customers? (WSJ) Survey says: probably not but maybe, who knows. Credit Suisse Said to Seek to Sublet at Hong Kong Skyscraper (Bloomberg) If you know anyone who's interested: Credit Suisse is seeking to sublet as much as 64,000 square feet of office space in Hong Kong’s tallest skyscraper, as prime office vacancies rise in the city amid job cuts by global financial services companies. The Zurich-based bank is looking for tenants to take up two floors, or about a fifth of the space it currently occupies at the International Commerce Centre in West Kowloon, according to two people with knowledge of the matter, who declined to be identified because the information isn’t public. Woman accused of putting poison in her privates in bid to kill husband (Mirror) A woman is being sued by her husband for allegedly trying to kill him by putting poison in her genitals and then asking him to perform oral sex. The Brazilian wife is accused of planting a toxic substance on her genitals before luring her husband to bed. Reports in the South American country suggest he was ready and willing, and only escaped death because he noticed a strange smell. The curious husband then took his wife to hospital in Sao Jose do Rito Preto to find out the cause of the unusual odour. The alleged attempt on his life was exposed when tests on his wife discovered traces of a poisonous substance down below.

Opening Bell: 08.01.12

Hope For MF Global Clients (WSJ) A bankruptcy trustee sifting through the remains of MF Global Holdings Ltd. expressed confidence that the failed securities firm's U.S. customers will get all their money back. In written testimony submitted to the Senate Agriculture Committee for a hearing Wednesday, trustee Louis J. Freeh said farmers, ranchers, traders and other investors still owed an estimated $1.6 billion "eventually will be made whole," according to a copy of the testimony reviewed by The Wall Street Journal. UBS Facing Battle On Facebook After Nasdaq Set Aside Cash (Bloomberg) Nasdaq OMX’s creation of a $62 million pool to pay brokers that lost money in Facebook’s public debut shows how far apart the exchange owner is from UBS on who is to blame for losses in the botched deal. Switzerland’s biggest bank said yesterday that its second- quarter profit fell 58 percent in part because of losses that exceeded $350 million in the May 18 initial public offering. UBS is among brokers including Knight Capital Group that have said they’ll seek compensation after a design flaw in Nasdaq’s computers delayed orders and confirmations just as the shares were about to start changing hands. UBS promised legal action to get back more than five times as much money as Nasdaq has set aside. Greeks Can No Longer Afford Paying Expensive Bribes (Reuters) Greeks, whose country is facing bankruptcy, can no longer afford the expensive customary cash-filled "fakelaki" or "little envelope" bribes paid to public sector workers, according to an official. Greece, dependent on international aid to remain solvent, has struggled for years with rampant corruption that has hampered efforts to raise taxes and reform its stricken economy. The health sector and the tax authorities topped the country's corruption rankings for 2011, said a report by Leandros Rakintzis, tasked with uncovering wrongdoing in the public sector...As the crisis deepens, more and more Greeks find themselves no longer able to pay expensive bribes, Rakintzis said. "There are no longer serious corruption offences. There is no money for major wrongdoings," he was quoted as saying by Proto Thema newspaper. Oakland Leaders Enter Battle With Goldman Sachs (Reuters) Oakland is trying to get out of a Goldman-brokered interest rate swap that is costing the cash-starved city some $4 million a year. The swap, entered into 15 years ago as part of a bond sale to hedge against rising interest rates, has turned sour for Oakland now that interest rates are near zero. "I hope that other cities will follow our lead," said Oakland city council member Desley Brooks, addressing about 30 protesters outside Goldman's San Francisco offices. Société Générale Profit Hit by Write-Downs (WSJ) Revenue fell 3.6% to €6.27 billion from €6.50 billion a year earlier. Weak capital markets weighed on corporate and investment bank revenue, which dropped 33% to €1.22 billion in the quarter. French retail bank operations were flat at €2.04 billion while international retail bank revenue fell 1.7% to €1.24 billion. ADP: Private Hiring Jumps (WSJ) Private-sector jobs in the U.S. increased 163,000 last month, according to a national employment report calculated by payroll processor Automatic Data Processing Inc. and consultancy Macroeconomic Advisers. The gain was far above economists' median expectation of 108,000 contained in a survey done by Dow Jones Newswires. The June data were revised to show an advance of 172,000 instead of the 176,000 increase reported earlier. Olympics badminton: Eight players disqualified (BBC) The Badminton World Federation has disqualified eight players after accusing them of "not using one's best efforts to win." Four pairs of players - two from South Korea and one each from China and Indonesia - are out of the Olympics after their matches on Tuesday. The eight were charged after a stream of basic errors during the match. All four pairs were accused of wanting to lose in an attempt to manipulate the draw for the knockout stage. The federation met on Wednesday morning to discuss the case. As well as the "not using best efforts" charge, the players were also accused of "conducting oneself in a manner that is clearly abusive or detrimental to the sport." Speaking before the verdict, Korea's coach Sung Han-kook said: "The Chinese started this. They did it first." Regulate, Don't Split Up, Huge Banks (NYT) Steven Rattner: "We need a Dodd-Frank do-over to create the right oversight apparatus for huge banks. Regulators will always be outnumbered by bankers, and they will never find every problem. But, like prison guards, regulators are essential, even if they are outnumbered. In a world of behemoth banks, it is wrong to think we can shrink ours to a size that eliminates the “too big to fail” problem without emasculating one of our most successful industries." Poker Site Pays $731 Million Fine (WSJ) PokerStars agreed to pay $731 million to end a Justice Department lawsuit alleging bank fraud, money laundering and violations of gambling regulations against it and a another poker website. Under the terms, PokerStars, based in the Isle of Man, will pay $547 million to the Justice Department and $184 million to poker players overseas owed money by it and rival website, Full Tilt Poker. As part of the arrangement, Pokerstars will acquire the assets of Full Tilt, once a fierce rival. Stocks Perform Better If Women Are On Company Boards (Bloomberg) Shares of companies with a market capitalization of more than $10 billion and with women board members outperformed comparable businesses with all-male boards by 26 percent worldwide over a period of six years, according to a report by the Credit Suisse Research Institute, created in 2008 to analyze trends expected to affect global markets. “Companies with women on boards really outperformed when the downturn came through in 2008,” Mary Curtis, director of thematic equity research at Credit Suisse in Johannesburg and an author of the report, said in a telephone interview. “Stocks of companies with women on boards tend to be a little more risk averse and have on average a little less debt, which seems to be one of the key reasons why they’ve outperformed so strongly in this particular period.” ‘High’-end LI coke shuttle (NYP) A Bronx-based drug crew used secret car compartments activated by air conditioning and wiper buttons to deliver up to four kilograms of cocaine to the East End of Long Island each week, Suffolk County authorities said yesterday. Two Bronx men and a Riverhead distributor were busted after a seven-month investigation into the coke operation that flooded the Hamptons with $60 one-gram bags of the white powder. Suffolk DA Thomas Spota said the crew transported the product in cars with secret stash areas that opened when basic car-function buttons were pressed in sequence.