Opening Bell: 07.09.13

U.K. Treasury Endorses Banking Reforms (WSJ)
The U.K. Treasury said Monday in a report on its efforts to overhaul the nation's banking industry that it is proposing a criminal law to punish "reckless" misconduct by senior bankers. The Treasury also said it was working with regulators to ensure bonuses can be deferred for up to 10 years, and clawed back when a bank is bailed out by the government. How the new law would work will be hashed out by government officials over the summer; an amendment that would put it into effect will be added to the Banking Reform Bill that currently is being debated in Parliament. The bill is expected to be passed in early 2014 and would apply to all banks that have headquarters in the U.K.

FDIC to Tighten Screws on Banks, Require 5% Leverage (CNBC)
The FDIC on Tuesday will propose a leverage rule requiring big banks to have common equity equal to at least 5 percent of their assets—stricter than the international banking regulations known as Basel III, sources told CNBC. The asset number includes off-balance-sheet items and will not be adjusted for riskiness. The proposed rule for so-called "simple leverage" is 2 percent higher than the minimum simple leverage rule under Basel III.

Why I Became a Chinese Shadow Banker (Bloomberg)
Since 2011, I have run a microcredit firm in Guangzhou, which provides loans to thousands of small-scale entrepreneurs: florists, restaurateurs, fish farmers, vegetable growers, roadside hawkers. Although we charge about 24 percent annually for our money, demand remains virtually unlimited. Our customers are too small and too unstable to get traditional bank loans. At the same time, because we keep our loan amounts small -- $20,000 apiece on average -- and because we have close contact with our clients, the business has proved reasonably secure. Our bad debts have not strayed above 5 percent since the firm was founded five years ago.

Merchant Banks Make a Comeback (WSJ)
At least half a dozen so-called merchant banks have cropped up since the 2008 financial crisis, touting themselves as practitioners of old-fashioned relationship banking when others on Wall Street are increasingly wary of potential conflicts. ... Merchant banks are mostly matchmakers. They connect clients looking to raise private capital with those who have money to invest. Most merchant banks operate funds containing outside money as well as their own.

Triple - Kippah On Madoff (YouTube)
It's the latest video from Bernie Madoff's fake nephew. (Earlier.)

Staring contest triggered stabbing on 6 train by subway rider gone berserk, witness says (NYDN)
A woman went berserk on a packed Manhattan subway train Monday morning and stabbed a female straphanger after an impromptu staring contest, authorities said. The crazed suspect, 31, stabbed the 39-year-old victim in the shoulder and abdomen on an uptown 6 train as it approached the 59th St. station about 9:45 a.m., officials said. The pair, who police do not believe knew each other, engaged in an unfriendly staring match before the attack, cops said. No words were ever exchanged between them.

China Inflation Accelerates More Than Forecast on Food Prices (Bloomberg)
The consumer price index rose 2.7 percent from a year earlier, the National Bureau of Statistics said today in Beijing, compared with a median estimate of 2.5 percent in a Bloomberg News survey and a 2.1 percent gain in May. Producer prices fell 2.7 percent. The lowest first-half inflation since the financial crisis in 2009 and prolonged factory-gate deflation underscore weaker demand that leaves the government at risk of missing its annual growth target for the first time since 1998. Premier Li Keqiang is trying to focus on spurring longer-term expansion by restructuring the economy and curbing the state’s role.

Barnes & Noble CEO resigns after Nook sales slump (Reuters)
Barnes & Noble Inc (BKS.N) CEO William Lynch resigned on Monday, an acknowledgement that its digital division Nook has failed to compete successfully in the e-reader and tablet markets and possibly presaging a further shake-up in the company. Chairman and founder Leonard Riggio, the largest shareholder of Barnes & Noble, said the company is reviewing its strategic plan and announced a series of executive changes.

Macau Considers Requiring Tourists to Declare Cash (Bloomberg)
Macau is considering a system requiring travelers to declare the cash they carry across the border, according to a government agency that sets anti-money laundering guidelines. The world’s largest gambling hub is studying a “cross-border cash declaration system, but no timeframe, declaration threshold or penalties are determined yet at the present stage,” Deborah Ng, director of the city’s Financial Intelligence Office, said in an e-mail yesterday.

CFTC Weighs Delay of Swaps Rules (WSJ)
The head of the Commodity Futures Trading Commission is proposing to partially delay controversial cross-border derivatives rules slated to go into effect Friday, according to people familiar with the negotiations. The move is an about-face for CFTC Chairman Gary Gensler, who previously refused to delay a requirement that U.S. banks operating abroad comply with U.S. swaps rules, despite mounting pleas from fellow commissioners, lawmakers and overseas policy makers. Mr. Gensler now is floating a compromise that would implement some provisions almost immediately and delay others until the end of the year, said the people familiar with the negotiations.

Perelman Sues Old Friend Milken (Not to Worry. It Isn’t Personal.) (DealBook)
One of Mr. Perelman’s companies, Harland Clarke Holdings, filed a little-noticed lawsuit last month accusing Mr. Milken of fraud. The case stems from Harland Clarke’s 2011 purchase of GlobalScholar, an education technology company backed by Mr. Milken, the fallen financier and philanthropist. The lawsuit, filed in state court in San Antonio, was said to have surprised Mr. Milken, who had done business with Mr. Perelman for decades and counts him as a friend, according to a person briefed on the matter who is not authorized to discuss the lawsuit publicly.

U.S. Suit Against S&P Tentatively Allowed to Proceed (WSJ)
U.S. District Judge David O. Carter for the Central District of California in Santa Ana said that he tentatively rejected S&P's bid to dismiss outright the federal government's lawsuit but cautioned that he would make a final ruling by July 15. ... Judge Carter made the ruling after he heard several hours of arguments from lawyers on both sides of the $5 billion lawsuit.

68-year old 'gambling nun' sentenced to 90 days in jail for stealing $130,000 from local parishes (AP)
A Roman Catholic nun has been sentenced to 90 days in jail for stealing nearly $130,000 from two western New York parishes to support a gambling addiction. Sister Mary Anne Rapp also was ordered at Monday's sentencing to perform 100 hours of community service and repay $128,000. Rapp pleaded guilty to grand larceny in Orleans County Court in April. The 68-year-old admitted stealing from St. Mary's Church in Holley and St. Mark's Church in Kendall from 2006 to 2011. The thefts were discovered during an audit. Investigators have said she stole the money to feed a gambling addiction and spent the money at western New York casinos.