Charges Weigh On Bank Of America's Profit (WSJ) Overall, Bank of America reported a profit of $732 million versus a profit of $1.99 billion a year earlier. On a per-share basis, which includes the payment of preferred dividends, the bank reported earnings of three cents versus 15 cents a year earlier. The most recent period included a per-share impact of 16 cents from the Fannie Mae settlement, a six cent impact from the foreclosure review and litigation expense of five cents a share, among other items. Revenue dropped 25% to $18.66 billion as noninterest income fell 41%. Excluding $700 million of debit valuation and fair value option adjustments, and $3 billion for the cost of $3 billion, revenue was $22.6 billion. Citigroup Earnings Miss Analysts’ Estimates on Litigation (Bloomberg) Net income climbed 25 percent to $1.2 billion in the fourth quarter, or 38 cents a share, from $956 million, or 31 cents, a year earlier, the New York-based lender said today in a statement. Earnings adjusted for one-time items including restructuring costs were 69 cents a share. Twenty-one analysts surveyed by Bloomberg estimated 96 cents on average, with some items Citigroup didn’t include. Chief Executive Officer Michael Corbat, 52, took over in October and last month announced plans to eliminate about 11,000 employees and pull back from some emerging markets, undoing part of the expansion strategy of his predecessor, Vikram Pandit. Litigation costs included $305 million from a settlement between U.S. banks and federal regulators, who were probing claims that lenders improperly seized homes. Goldman Profits By Going On Offensive (WSJ) The value of Goldman Sachs's investment portfolio doubled last year. Bond underwriting hit a five-year high. The firm's workforce shrank and remaining employees were paid a smaller chunk of overall revenue. Those were just some of the ingredients in a bigger-than-expected profit jump by the New York company, which said net income almost tripled to $2.83 billion in the fourth quarter from $1.01 billion a year earlier. Wednesday's results were packed with evidence of Goldman's discipline in cutting costs, taking less risk with its own money and riding out financial crises in the U.S. and then Europe. Goldman Agonized Over Pay Cuts as Profits Suffered (Reuters) Top executives at Goldman Sachs have been considering deep cuts to staffing levels and pay for at least two years, but feared too many layoffs would leave the firm unprepared for an eventual pickup in business, people familiar with the bank said. They instead chipped away at staff levels and focused on non-personnel expenses that are less painful to cut. But investors pressured the bank to cut costs further, the sources said, and on Wednesday, Goldman gave in. The largest standalone investment bank said in the fourth quarter it cut the percentage of revenues it pays to employees in half to 21 percent. That brings the ratio for the entire year to its second-lowest level since the bank went public in 1999. Fed Concerned About Overheated Markets Amid Record Bond-Buying (Bloomberg) Now, as central bankers boost their stimulus with additional bond purchases, policy makers from Chairman Ben S. Bernanke to Kansas City Fed President Esther George are on the lookout for financial distortions that may reverse abruptly when the Fed stops adding to its portfolio and eventually shrinks it. “Prices of assets such as bonds, agricultural land, and high-yield and leveraged loans are at historically high levels,” George said in a speech last week. “We must not ignore the possibility that the low-interest rate policy may be creating incentives that lead to future financial imbalances.” Estonian president’s Twitter fight with Paul Krugman becomes an opera (RS) A Twitter feud in June between the Estonian president and New York Times columnist Paul Krugman who questioned the impact of Estonia’s austerity measures, is being turned into an opera, US composer Eugene Birman told AFP on Wednesday. “Our short opera will be first performed by Iris Oja and the Tallinn Chamber Orchestra conducted by Risto Joost during Tallinn Music Week on April 7,” Birman, who moved from Riga to the US at age of six, told AFP. The piece, in two movements, uses two voices, those of Krugman and Estonian President Toomas Hendrik Ilves, reflecting their exchanges on the Twitter social network...The bow-tie loving Ilves went on a tweet-rant after Krugman, the winner of the 2008 Nobel Prize for Economics, argued in a short article entitled “Estonian Rhapsody” that while Estonia had been globally praised for its austerity measures, its recovery was in fact lukewarm. “Let’s write about something we know nothing about & be smug, overbearing & patronizing…Guess a Nobel in trade means you can pontificate on fiscal matters & declare my country a ‘wasteland,’” Ilves responded on his page on the on the micro-blogging site Twitter. “But yes, what do we know? We’re just dumb and silly East Europeans,” he added, before writing in his final tweet, “Let’s sh*t on East Europeans.” Deutsche Bank Derivative Helped Monte Paschi Mask Losses (Bloomberg) Deutsche Bank designed a derivative for Banca Monte dei Paschi di Siena SpA at the height of the financial crisis that obscured losses at the world’s oldest lender before it sought a taxpayer bailout. Germany’s largest bank loaned Monte Paschi about 1.5 billion euros ($2 billion) in December 2008 through the transaction, dubbed Project Santorini, according to more than 70 pages of documents outlining the deal and obtained by Bloomberg News. The trade helped Monte Paschi mitigate a 367 million-euro loss from an older derivative contract with Deutsche Bank. As part of the arrangement, the Italian lender made a losing bet on the value of the country’s government bonds, said six derivatives specialists who reviewed the files. BlackRock Net Jumps 24% (WSJ) The company said net inflows in long-term products totaled $47 billion at the year's end, reflecting equity, fixed income and multiasset class product net inflows of $31.2 billion, $12.4 billion and $4.1 billion, respectively. The net inflows were partially offset by alternatives net outflows of $700 million. Total assets under management were $3.792 trillion as of the end of the fourth quarter, versus $3.513 trillion a year earlier and $3.673 trillion in the third quarter. Jobless Claims Drop To 5-Year Low (Reuters) Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000, the lowest level since January 2008, the Labor Department said on Thursday. It was the largest weekly drop since February 2010. Khuzami defends corp. settlements (NYP) Robert Khuzami, the Securities and Exchange Commission’s enforcement chief, is on his way out the door — but he says in an interview with The Post that the agency’s much-maligned practice of settling cases is here to stay. Khuzami, 56, defended the SEC’s policy of allowing targets to settle cases — usually without an admission of wrongdoing — despite recent criticism. “There are certain myths about SEC practices, including how ‘neither admit nor deny’ works and why we use it,” said Khuzami, who is leaving his post after heading the agency’s crackdown on big banks following the financial crisis. “I speak out against these myths in the hope of reducing the level of cynicism felt by the public, which are often fueled by mischaracterizations or misunderstandings of how we operate.” Commissioners approve regulations governing sexy coffee stands (Kitsap Sun) Owners of adult-themed coffee stands in unincorporated Kitsap County will have to post signs warning would-be customers about their scantily-clad baristas, and they'll have to do more to protect passers-by from seeing into their businesses. That's according to an ordinance passed Monday in a unanimous vote of the Kitsap County commissioners. The stands have 60 days to comply with the changes, which include a site visit by county planning staff to check the signs are posted and additional screening is added...The ordinance requires adult espresso stands — the three existing stands and any new ones — to install an 8-foot-high fence or landscape buffer, approved by the county Department of Community Development, in front of windows that face the street or other businesses, blocking views by the public. Businesses also must receive a one-time certification from DCD to guarantee the regulations are met. A boiling point was hit more than a year ago when five stands — three of them within a half-mile stretch of Highway 303 — advertised employees in pasties and lingerie. Unhappy parents demanded commissioners regulate the businesses. The health department doesn't require clothing, instead it looks at whether employees have food handler permits, said Department of Community Development associate planner Heather Adams. The state Department of Labor and Industries also has no rules dictating required clothing at coffee stands, Adams said.

Obama Wins Re-Election With Romney Defeated In Key States (Bloomberg) Obama defeated Republican Mitt Romney, winning at least 303 electoral votes in yesterday’s election with 270 needed for the victory. With one state -- Florida -- yet to be decided, Romney had 206 electoral votes...Obama won the battleground states of Ohio, Virginia, Iowa, New Hampshire, Wisconsin, Nevada and Colorado. He also carried Pennsylvania, where Romney made an 11th-hour bid for support to try to derail the president’s drive for re-election. North Carolina was the only battleground Romney won. Romney Campaigns To The End (WSJ) Hours before Mitt Romney lost his six-year quest to win the presidency, he said he had prepared only one speech—a victory speech...Until the final hour, Mr. Romney and his aides expressed confidence that he would win. The candidate, who prefers data and metrics to chitchat, appeared to be caught off guard by the loss even though he trailed in polls in crucial battlegrounds such as Ohio. Triumph Of The Nerds: Nate Silver Wins In 50 States (Mashable) The Fivethirtyeight.com analyst, despite being pilloried by the pundits, outdid even his 2008 prediction. In that year, his mathematical model correctly called 49 out of 50 states, missing only Indiana (which went to Obama by 0.1%.) This year, according to all projections, Silver’s model has correctly predicted 50 out of 50 states. A last-minute flip for Florida, which finally went blue in Silver’s prediction on Monday night, helped him to a perfect game. Loser Ryan Also A Winner (NYP) The Republican vice-presidential hopeful hedged his bet by running for re-election to his congressional seat in Wisconsin — where last night, he was declared the winner for an eighth straight time. Goldman Partners Pocket $22 Million (WSJ) More than 30 executives, including Chief Executive Officer Lloyd C. Blankfein, recently cashed in stock options awarded in the afterglow of the company's initial public offering in 1999. According to a securities filing, the executives, all Goldman partners, pocketed a total of $21.8 million by exercising options and selling the underlying shares in the three days after the firm reported third-quarter results in mid-October. The options expire at the end of November, and cashing in produced instant profits because Goldman's share price is more than 50% higher than when the options were awarded in 2002. "By exercising 10-year-old options before they expired later this year, executives captured some of the value we have built for shareholders over that period," said a spokesman for the securities firm. In contrast, many of the executives' remaining options are worthless, at least for now, because they were granted from 2005 to 2008. The stock peaked in October 2007 at about $239, or 89% higher than Tuesday's closing price of $126.25 in New York Stock Exchange composite trading at 4 p.m. The biggest gain went to Michael S. Sherwood, a Goldman vice chairman and the firm's top executive in Europe, who received $5.2 million from exercising options on 115,211 shares. Mr. Blankfein collected $3.1 million, while departing Chief Financial Officer David A. Viniar got $2.3 million, the filing shows. JPMorgan Nears SEC Settlement (WSJ) JPMorgan is close to a settlement with the Securities and Exchange Commission that would end one probe into how the company's Bear Stearns Cos. unit packaged and sold home loans to investors, according to people familiar with the case. A pact with the nation's largest bank by assets would be the first tangible victory in a wide-ranging SEC investigation into Wall Street's sale of mortgage-backed securities before the onset of the financial crisis. Since 2010, the SEC has issued more than 300 subpoenas or document requests related to the probe and collected more than 30 million pages of documents, enforcement chief Robert Khuzami said earlier this year. BNP Paribas Third Quarter Net Doubles On Trading Gains (Bloomberg) Pretax profit at BNP Paribas’s corporate- and investment- banking unit, or CIB, rose 7.3 percent to 732 million euros, beating analysts’ estimate of 686 million euros. Revenue from equity and advisory operations climbed 51 percent to 444 million euros, while fixed-income sales more than doubled to 1.13 billion euros. After Obama Victory, Donald Trump Rants On Twitter (ABC) “We can’t let this happen. We should march on Washington and stop this travesty,” Trump Tweeted. “Our nation is totally divided! Lets fight like hell and stop this great and disgusting injustice! The world is laughing at us. This election is a total sham and a travesty. We are not a democracy! And then: “Our country is now in serious and unprecedented trouble…like never before. Our nation is a once great nation divided! The electoral college is a disaster for a democracy. Hopefully the House of Representatives can hold our country together for four more years…stay strong and never give up! House of Representatives shouldn’t give anything to Obama unless he terminates Obamacare.” And finally: “This election is a total sham and a travesty. We are not a democracy!” Fitch: No Fiscal Honeymoon For President Obama (CNBC) President Barack Obama will need to quickly secure agreement on avoiding the "fiscal cliff" and raising the debt ceiling following Tuesday's elections, Fitch Ratings said. The economic policy challenge facing the president is to put in place a credible deficit-reduction plan necessary to underpin economic recovery and confidence in the full faith and credit of the U.S., according to Fitch. Resolution of these fiscal policy choices would likely result in the U.S. retaining its triple-A status from Fitch, the firm said. Failure to avoid the so-called fiscal cliff and raise the debt ceiling in a timely manner, as well as securing agreement on credible deficit reduction, would likely result in a rating downgrade in 2013, Fitch said. The New Haven For Investors (WSJ) Treasurys have a new rival for safe-haven status: U.S. companies. Bonds of Exxon Mobil and Johnson & Johnson are trading with yields below those of comparable Treasurys, a sign that investors perceive them as a safer bet. It is a rare phenomenon that some market observers said could be the beginning of a new era for debt markets. It could ultimately mean some companies will borrow at lower rates than the U.S. government. Swiss, Greeks Begin Talks On Tax Deal (WSJ) Switzerland has begun formal talks on a deal to tax assets stashed in secret Swiss bank accounts by Greek citizens, in line with similar agreements struck with other European countries, the Swiss government said Wednesday. Woman Wearing MIT Shirt Nearly Banned From Voting In Boca Raton (BNN) A woman attempting to vote in West Boca Raton yesterday was initially prohibited from entering the polling place because she was wearing a t-shirt with the letters MIT. BocaNewsNow.com heard from multiple sources that an election supervisor at the polling place ultimately realized that MIT stands for “Massachusetts Institute of Technology” — a school where students tend to know how to spell — and was not a campaign shirt for the Republican candidate, who spells his name MITT. Campaigning is not permitted within several yards of a polling place. The woman was ultimately allowed to vote.

Spain Prepares More Austerity, Protesters Battle Police (Reuters) Protesters clashed with police in Spain's capital on Tuesday as the government prepared a new round of unpopular austerity measures for the 2013 budget to be announced on Thursday. Thousands gathered in Neptune plaza, a few metres from El Prado museum in central Madrid, where they formed a human chain around parliament, surrounded by barricades, police trucks and more than 1,500 police in riot gear. Police fired rubber bullets and beat protesters with truncheons, first as protesters were trying to tear down barriers and later to clear the square. The police said at least 22 people had been arrested and at least 32 injured, including four policemen. Facebook's Next Fight: Suits And More Suits (WSJ) About 50 lawsuits have been filed against Facebook, Nasdaq OMX Group Inc. and underwriters of Facebook's May IPO, according to lawyers involved in the cases. In addition, securities lawyers who represent Facebook investors say they expect hundreds of arbitration claims to be launched against brokers and securities firms that pitched the company's shares. Credit Suisse Said to Consider Merging Its Asset-Management Unit (Bloomberg) The bank is considering combining its asset-management unit with the private and investment banking divisions, a person familiar with the matter said. SAC Capital Fund Manager Said To Be Uncharged Conspirator (Bloomberg) The role allegedly played by Michael Steinberg emerged in court papers filed by the U.S. in the securities-fraud case of Jon Horvath, a former technology analyst at Cohen’s $14 billion hedge fund who Steinberg supervised. Steinberg, who hasn’t been charged with a crime, is the fifth person to be tied to insider trading while employed at SAC. Horvath faces trial Oct. 29 in Manhattan federal court along with two other portfolio managers for his part in what Manhattan U.S. Attorney Preet Bharara called a “criminal club:” a conspiracy of hedge fund managers, co-workers and company insiders who reaped millions of dollars on illegal tips about Dell Inc. and Nvidia Corp. “The government added four additional co-conspirators,” prosecutors wrote in a Sept. 6 letter filed with the court, with the names blacked out. One of them, the U.S. said, is “the portfolio manager to whom Jon Horvath reported at his hedge fund.” That person was Steinberg, said the people, who declined to be identified because the matter isn’t public. UK Group To Give Up Libor Oversight (WSJ) The council of the BBA, a private trade association, voted earlier this month to give up management of Libor, according to people familiar with the matter. The move clears the way for what is likely to be the biggest change in Libor's 26-year history, and introduces the possibility that British or international regulators could be in charge of overseeing the rate, which is tied to trillions of dollars of financial contracts. Rent-a-reptile: Florida company adds alligators to kids’ pool parties (NYDN) Bob Barrett gives Florida kids pool parties they’ll never forget — because they get to swim with real live alligators. Jump houses? Pizza parties? Boring, says Barrett. “You jump for a while and that’s it, we’ve had that party before,” he told the Daily News. “Clown party, Chuck E. Cheese party, they’ve all been done.” Barrett,who runs Alligator Attractions in Madeira Beach — where visitors get to hold gators — was already bringing his reptiles around to birthday parties when he was inspired to take the next step. “We would do [an alligator demonstration] at someone’s house and they would have a pool,” he explained. “And I said, you know, ‘Hey, let’s put ‘em in the pool.’” Hedge Fund Skeptics Warn on ‘QE Infinity’ (FT) “A man’s got to know his limitations,” says “Dirty Harry” Callahan, the gun-toting, rule book-ignoring cop immortalized by Clint Eastwood in “Magnum Force.” It is a principle the U.S. Federal Reserve – which earlier this month embarked upon its own, third bout of “unorthodox” enforcement, “QE3” – could learn from, according to Stephen Jen, the former Morgan Stanley foreign-exchange guru turned hedge fund manager. “The Fed officials are some of the smartest economists around,” he wrote in his most recent note to clients. The trouble is, said Mr. Jen, “they know everything except their own limitations.” Irish Bank Offers Properties For 70% Less Than 2007 Value (Bloomberg) RBS's Irish unit offered to sell properties, including 640 apartments and a hotel, for about 70 percent less than their value at the market’s 2007 peak, according to the broker managing the sale. The Gemini portfolio, containing buildings in the Irish cities of Dublin and Cork, has an asking price of 75 million euros ($97 million), according to Domhnaill O’Sullivan, a director at Savills Plc (SVS)’s Dublin office. MIT Miscounts Its New B-School Students (WSJ) After realizing they had a student surplus, school officials emailed the incoming class on Aug. 7, offering "guaranteed admission to the class of 2015 for the first 20 admitted students who request it." The school gave them until Aug. 13 to respond, according to one student's copy of the letter, which was reviewed by The Wall Street Journal. But it didn't get enough takers. So, like an airline offering vouchers to travelers willing to hop off oversold flights, the school put money on the table, offering students who expressed an interest a $15,000 scholarship to be applied to next year's tuition. Students still balked, and on Aug. 21, a day after pre-term refresher courses began, Sloan raised the offer to $20,000 for the first 10 respondents. (Tuition for the 2012-2013 academic year is $58,200, with total expenses—including books, housing and food—estimated at just under $89,000.) NFL replacement referee who blew touchdown call in Green Bay Packers-Seattle Seahawks game is a full-time banker (NYDN) ...fans, particular those in Wisconsin, said the 52-year-old southern California banker with no previous professional or major college refereeing experience should have never left his desk to become a replacement during the NFL’s lockout of unionized refs. Even the Lingerie Football League piled on, revealing that some of the scab refs weren’t qualified to work its games. “Due to several on-field occurrences of incompetent officiating, we chose to part ways with a crew which apparently is now officiating in the NFL,” said Mitch Mortaza, commissioner of the female bra-and-panty league. “We have a lot of respect for our officials, but we felt the officiating was not in line with our expectations.”