October 17, 2021
Updated:
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Opening Bell: 06.04.13

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Nonbanks Set for Oversight (WSJ)
The Financial Stability Oversight Council, led by the Treasury Department, voted to propose designating several companies as "systemically important," according to government officials. While the panel of regulators didn't disclose which companies were proposed for designation, AIG, Prudential Financial Inc. and the GE Capital Unit of General Electric Co. confirmed they were part of the first group. ... Companies have 30 days to challenge the designation but the proposal clears the path for firms seen as systemically risky to be designated for tougher oversight by the Federal Reserve. Companies tagged as "systemically important financial institutions," or SIFIs, could be subject to tougher capital and liquidity requirements, annual stress tests and limits on executive compensation and dividends.

Wall Street Transfixed by SAC Deadline (WSJ)
But a major reason for the intense interest on Wall Street, senior brokerage firm officials say, is a commercial one: SAC has generated billions of dollars in revenues for brokerage firms over the years. Several executives — all citing client confidentiality — said that the prospect of a severely diminished SAC would hurt their bottom line, which has created fear and anxiety on trading desks across Wall Street. “This is going to have a significant impact to the Street, full stop,” said a senior executive at a brokerage firm that counts SAC as one of its largest clients. “It’s like that line in ‘Bonfire of the Vanities’: a lot of golden little crumbs have fallen off of SAC, and now it looks like there will be less of them.”

EU Seeks Role in Bank Shutdowns That Goes Against German Plan (Bloomberg)
The European Commission is seeking to give itself the power to shut down failing euro-area banks as part of a draft crisis blueprint that defies German calls for a more decentralized approach. The Brussels-based authority is set to propose that decisions to force losses on crisis-hit lenders’ creditors, as well as other steps to prevent a disorderly collapse, should be taken largely out of national hands, according to a document obtained by Bloomberg News. While the system would include a “newly-created central resolution body,” final decisions would be taken by the commission itself. ... The move puts the commission at odds with Germany, which has said that a centralized approach to bank resolution in the euro area should only come once the bloc has taken further steps toward common fiscal and economic policies.

French minister hits at Amazon ‘dumping’ (FT)
France’s culture minister has attacked Amazon, the online retailer, for deliberately undercutting traditional rivals to create a “quasi-monopoly”, in the latest assault by the socialist government on internet companies. “Today, everyone has had enough of Amazon which, through dumping practices, smashes prices to penetrate markets to then raise prices again once they are in a situation of quasi-monopoly,” said Aurélie Filippetti, the culture minister. Calling Amazon a “destroyer of bookshops”, she added that she was considering a ban on free postage offers and a current regime of allowable 5 per cent discounts on books.

Google Strips First Glass Porn App, Bans Adult Content on Its Connected Glasses (ABC)
The first pornography app for Google Glass has launched, though not for long. This morning MiKandi, a developer of adult content apps, released "T*** & Glass," an app for the connected glasses, which allows users to browse and vote on racy content. The app also takes advantage of the fact that Glass places both a screen and camera right above the eye. Glass users can record their own pornographic content or photos, and upload them to the app.

South Jersey mom vs. South Beach hookers: the rematch (Miami Herald)
Anna Burgese, the petite wife of a wealthy suburban Philadelphia homebuilder, claims in the federal lawsuit that as many as 10 prostitutes pounced on her in the hotel lobby on Jan. 19. They mistakenly believed that she was encroaching on their turf, according to Miami Beach police. ... In the suit, filed last week, Burgese claims that the assault was unprovoked and that the prostitutes threw her face-first against a stone wall in front of hotel employees. Her husband, who was on crutches, had been a few steps ahead of her when the attack began. He fought the women off with his crutches, Rogers said.

Behind the Rise in House Prices, Wall Street Buyers (DealBook)
Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets. The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out. Some are already wondering if prices will slump anew if the big money stops flowing. “The growth is being propelled by institutional money,” said Suzanne Mistretta, an analyst at Fitch Ratings. “The question is how much the change in prices really reflects market demand, rather than one-off market shifts that may not be around in a couple years.”

US funds left bruised by heavy bond losses (FT)
Every one of the most popular class of US mutual funds investing in bonds lost money in May, highlighting the risks for investors as interest rates rise. Bond yields around the world soared from some of the lowest levels in decades last month as investors anticipated an end to the extraordinary measures the Federal Reserve has used to stimulate the US economy. US funds that invest in higher-rated bonds with average maturities of under 10 years lost an average 1.8 per cent in May, marking their worst performance since the depths of the financial crisis in October 2008, according to Lipper, a research group.

Corbat faces ghost of Weill's deals in Citi's machines (Reuters)
Corbat's choice highlights how some 15 years after Sanford "Sandy" Weill merged Travelers Group and Citicorp to create Citigroup, the bank is still trying to integrate all its operations. For example, it still uses different account opening procedures and systems in different countries. ... The bank spends around $18 billion a year - or about a third of its operating expenses - on operations and technology, including facilities, systems and hardware, making it a major area of concern for the board as well, two sources said. The board is considering hiring a new director with technology expertise to help monitor and assess management's efforts, they said.

Zynga to Cut 18% of Workforce to Pre-IPO Level (WSJ)
The online game maker, which has struggled to build its mobile business while stemming a decline of its desktop games, said Monday it plans to dismiss about 18% of its staff, or 520 people. The cuts underscore deepening worries for Zynga, once seen as a pioneer in a wave of companies built on social technologies. The layoffs should save Zynga about $70 to $80 million per year, the company said.

2010 IRS Conference Featured 'Happiness Expert,' $17K Art Session (NBC)
The now infamous 2010 Internal Revenue Service conference in California — where goofy, expensive video parodies were shown — also featured $135,000 in spending on outside speakers like a "happiness expert" and a session titled "Leadership Through Art," congressional sources briefed on an upcoming inspector general's report told NBC News Monday night. The IRS hired 15 speakers to present at the conference in Anaheim, Calif., including $11,430 for positive psychology guru Shawn Achor — referred to as a "happiness expert" by the sources — to lead a 90-minute workshop and $17,000 for artist Erik Wahl to hold a session that used painting as a learning tool, said those familiar with the report. During his presentation, Wahl painted a portraits of Michael Jordan, Abraham Lincoln, Bono, and the Statue of Liberty, according to the sources. Wahl also lists the National Security Agency and U.S. Chamber of Commerce as clients on his website.

Come to Germany to work and find love, British are told (Telegraph)
With the aim of plugging the skills gaps in Germany’s prosperous economy, Berlin will encourage hundreds of Britons aged 18 to 35 to take up the three-year apprenticeships. ... Bob Bischof, of the German-British Chamber of Industry and Commerce, said: “This is a great offer for young Britons to get top-flight training in Germany. “We hope many of those who come over will like the life, maybe meet a German partner, and stay for good."

Court fuhrer! Nazi dad in uniform for kid hearing (NYP)
A white supremacist who named his oldest son Adolf Hitler strolled into a New Jersey courthouse yesterday dressed in full Nazi regalia — to try to convince a judge to allow him visitation with his toddler, Heinrich. “Prisoners get to see their children, murderers get to see their children. What’s so horrible about being a Nazi?” Heath Campbell, 40, told The Post after going to the Hunterdon County Family Court in Flemington in an effort to see his 2-year-old boy.

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Probe May Hit UK Bank's Clean Image (WSJ) Last week, Standard Chartered PLC Chief Executive Peter Sands told analysts that "our culture and values are our first and last line of defense." On Tuesday, allegations by a New York financial regulator that Standard Chartered hid illegal Iranian transactions seemed to breach that line, sending the lender's shares down and wiping £7.65 billion ($11.9 billion) off its market value. In the U.K., Mr. Sands has long been heralded as a voice of reason in the country's turbulent banking sector. The former consultant, who was named Standard Chartered CEO in 2006, regularly espoused the importance of sound governance and sensible investment. While several of its British peers were being bailed out by taxpayers, Mr. Sands was guiding the Asia-focused bank to record profits boosted by growing trade between emerging nations. The executive stressed the fact that Standard Chartered doesn't have an investment bank and didn't need European Central Bank cheap loans to keep its business ticking over. Italian's Job: Premier Talks Tough in Bid to Save Euro (WSJ) During an all-night European summit in June, Mario Monti, the Italian prime minister, gave German Chancellor Angela Merkel an unexpected ultimatum: He would block all deals until she agreed to take action against Italy's and Spain's rising borrowing costs. Ms. Merkel, who has held most of the euro's cards for the past two years, wasn't used to being put on the defensive. "This is not helpful, Mario," Ms. Merkel warned, according to people present. Europe's leaders were gathered on the fifth floor of the European Union's boxy glass headquarters in Brussels, about to break for dinner. "I know," Italy's premier replied. Bill Gross: Stay Away From Europe (CNBC) “Investors get distracted by the hundreds of billions of euros in sovereign policy checks, promises that make for media headlines but forget it’s their trillions that are the real objective,” Gross wrote. “Even Mr Hollande in left-leaning France recognizes that the private sector is critical for future growth in the EU. He knows that, without its partnership, a one-sided funding via state-controlled banks and central banks will inevitably lead to high debt-to-GDP ratios and a downhill vicious cycle of recession.” “Psst…investors: Stay dry my friends!” Gross said. Richest Family Offices Seeing Fastest Growth As Firms Oust Banks (Bloomberg Markets) They call it “money camp.” Twice a week, 6- to 11-year-old scions of wealthy families take classes on being rich. They compete to corner commodities markets in Pit, the raucous Parker Brothers card game, and take part in a workshop called “business in a box,” examining products that aren’t obvious gold mines, such as the packaging on Apple Inc.’s iPhone rather than the phone itself. It’s all part of managing money for the wealthiest families, says Katherine Lintz, founder of Clayton, Missouri- based Financial Management Partners, which runs the camp for the children of clients. Supplying the families with good stock picks and a wily tax strategy isn’t enough anymore. These days, it’s about applying the human touch, she says. Lintz, 58, is on to something. Her 22-year-old firm was No. 2 among the fastest-growing multifamily offices in the second annual Bloomberg Markets ranking of companies that manage affairs for dynastic clans, Bloomberg Markets magazine reports in its September issue. The assets that FMP supervises grew 30 percent to $2.6 billion as of Dec. 31, just behind Signature, a Norfolk, Virginia-based family office that expanded 36 percent in 2011 to $3.6 billion. MS Takes Trading Hit (NYP) Morgan Stanley, which had the largest trading-revenue drop among major US banks last quarter, lost money in that business on 15 days in the period, up from eight days a year earlier. Morgan Stanley traders generated more than $100 million on three days in the period, compared with seven days in the second quarter of 2011, the company said in a regulatory filing yesterday. None of the daily losses exceeded the firm’s value-at-risk, a measure of how much the bank estimates it could lose on 95 percent of days. Morgan Stanley had a 48 percent year-over-year decrease in trading revenue, excluding accounting gains, led by a 60 percent drop in fixed-income revenue. Former Lloyds Digital Security Chief Admits $3.76 Million Fraud (Bloomberg) Lloyds Banking Group's former head of digital banking fraud and security pleaded guilty to submitting false invoices totaling more than 2.4 million pounds ($3.76 million)...Jessica Harper admitted to submitting fake invoices between 2007 and 2011 and then laundering the proceeds, the CPS said. She will be sentenced on Sept. 21, and faces as long as 24 years in prison for the two charges, a CPS spokesman said, although she will get credit for the guilty plea. Ex Lehman Exec Requests Rehab To Avoid Jail Time (NYP) Former Lehman Brothers Co-Chief Operating Officer Bradley H. Jack, arrested twice in less than a year on charges of prescription forgery, said he is willing to undergo a program for drug and alcohol treatment to avoid prosecution. Jack applied for the program at a hearing yesterday in Connecticut Superior Court in Norwalk. Judge Bruce Hudock ordered a doctor’s report to determine if he is eligible for the new program, which the judge said would be “a rare event.” Fed Official Calls For Bond Buying (WSJ) Eric Rosengren, president of the Federal Reserve Bank of Boston, called on the Fed to launch an aggressive, open-ended bond buying program that the central bank would continue until economic growth picks up and unemployment starts falling again. His call came in an interview with The Wall Street Journal, the first since the central bank signaled last week that it was leaning strongly toward taking new measures to support economic growth. Mr. Rosengren isn't currently among the regional Fed bank presidents with a vote on monetary policy. Although all 12 presidents participate in Fed deliberations, only five join the seven Fed governors in Washington in the formal committee vote. Tokyo Exchange Glitch Halts Derivatives Trading (WSJ) The Tokyo Stock Exchange on Tuesday temporarily suspended all derivatives trading soon after the morning open due to an unidentified system problem, the second significant trading glitch on the exchange this year. Amazon Exec Swindled By Tom Petty Con Artist (NYDN) Brian Valentine simply wanted to give his wife the wedding present of a lifetime - a performance by Tom Petty and the Heartbreakers. The senior vice president of Amazon, instead, fell victim to fraud, losing a whopping $165,000 to a Las Vegas man who pretended to be a concert booking agent, the Smoking Gun reported. FBI agents arrested the fraudulent agent, Chad Christopher Lund, on Aug. 2 in Illinois, after a private investigator Valentine had hired found that Lund had skipped town. But the ordeal began almost ten months before in late 2011, a year after Valentine, 52, popped the question to fellow Amazon employee, Gianna Puerini, 39, according to a wire fraud complaint unsealed by the U.S. District Court. Valentine decided that he wanted the "Won't Back Down" singer to perform a set at the couple's wedding reception since he proposed to Puerini at a Petty concert in Seattle. He turned to the Internet, where he found the website of Lund's firm, lundlive.com, boasting to have booked acts like Petty, Run-DMC and Ludacris. Lundlive.com no longer exists. Valentine connected with Lund over email and by October 2011, Lund told the Amazon exec that he had negotiated with Petty's representatives "down to a price of $330,000 for the performance." Later in the month, Lund sent Valentine a contract with the forged signature of Petty's manager, Tony Dimitraides. Valentine sent Lund a $165,000 down payment in return. 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Financial Crisis Amnesia (WSJ) Tim Geithner: "My wife occasionally looks up from the newspaper with bewilderment while reading another story about people in the financial world or their lobbyists complaining about Wall Street reform or claiming they didn't need the Troubled Asset Relief Program. She reminds me of the panicked calls she answered for me at home late at night or early in the morning in 2008 from the then-giants of our financial system. We cannot afford to forget the lessons of the crisis and the damage it caused to millions of Americans. Amnesia is what causes financial crises. These reforms are worth fighting to preserve." IMF Says Threat Of Sharp Global Slowdown Has Eased (Reuters) So that's nice. 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Madoff moneyman Merkin near $400M AG deal (NYP) After a bitter three-year legal battle, Ezra Merkin, the Manhattan moneyman who funneled more than $2 billion to convicted Ponzi king Bernie Madoff, is nearing a settlement with the New York attorney general that could have him shell out as much as $400 million. Sources said the settlement with AG Eric Schneiderman would recover the bulk of the $470 million in fees the notorious middleman pocketed from investing his clients’ cash with Madoff. Game Changer For Zynga: No Facebook (WSJ) The San Francisco-based company, whose offerings have long been associated with Facebook as well as apps for mobile devices such as Apple Inc.'s iPhone, said a "beta," or prerelease version of what it calls the Zynga Platform, will initially allow customers to play five of its popular titles—"CityVille," "Hidden Chronicles," "Zynga Poker," "CastleVille" and "Words With Friends"—from its website. 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