Opening Bell: 05.14.14

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Geithner Must Provide S&P With Documents in Fraud Lawsuit (Bloomberg)
Ex-U.S. Treasury Secretary Timothy Geithner must comply with Standard & Poor’s demand that he provide documents related to its claim the U.S. sued the company in retaliation for downgrading government debt. Geithner is the highest former government official the McGraw Hill Financial (MHFI) Inc. unit has pursued for information to support its allegations. S&P, the only credit rating company sued by the Justice Department for allegedly giving fraudulent ratings to mortgage-backed securities, has said it was singled out because of the downgrade.

For BNP Paribas, Credit Suisse, Too Big to Jail Gets Lost in Translation (BusinessWeek)
While Lawsky has indicated he plans to pursue individuals at the companies who were involved in the alleged wrongdoing, possibly requiring that they lose their jobs and return back compensation, the Justice Department is seeking settlements with the banks rather than charges against individuals—so those eye-popping fines will be paid by the corporation, but no one is threatened with jail. Remarkably, the two banks faced with pleading guilty to an actual crime are both non-U.S. institutions. This can’t be a coincidence: Not only is it less painful politically to extract a guilty plea from a European company, but the effects on the rest of the U.S. financial system would be far less than they would be for an American bank of similar size.

Tech Firms' Cash Piles Cool Fears of a Meltdown (WSJ)
The two-month swoon in technology stocks has given investors flashbacks to the dot-com meltdown. But at least one harbinger of trouble is absent today: tech firms in danger of collapse. A Wall Street Journal analysis of 148 U.S. tech companies with recent or pending initial public offerings found none on a path to burn through their cash within a year, based on their pace of spending in 2013. Those findings are in contrast to the health of young tech companies during the last run-up of U.S. technology stocks, which peaked in March 2000. A cover story that month in the financial magazine Barron's spotlighted how one-quarter of 207 Internet companies were on track to run out of cash within a year. And many did.

Fed Warns Of Crackdown On Takeover Deals (WSJ)
The statements by a Fed official in remarks prepared for a regulatory conference were the latest warning that U.S. regulators want banks to end practices they see as risky in so-called leveraged lending markets. The Fed and the Office of the Comptroller of the Currency told banks in March 2013 to avoid funding takeover deals that would leave companies with high levels of debt. "Judging from aggregate market data, it appears that many banks have not fully implemented standards set forth" in the March 2013 guidance, said Todd Vermilyea, senior associate director in the Fed's Division of Banking Supervision and Regulation, at a Charlotte, N.C., event hosted by the Federal Reserve Bank of Richmond.

Alec Baldwin arrested for disorderly conduct after flare-up with New York cops (NYDN)
Alec Baldwin...went on a New York City-dissing Twitter tear — after he was busted Tuesday for flipping out on two cops who were just doing their jobs. “New York City is a mismanaged carnival of stupidity that is desperate for revenue and anxious to criminalize behavior once thought benign,” Baldwin wrote. Then, in a subsequent tweet, Baldwin gave up the name and badge number of the female officer who ended his foul-mouthed tirade by cuffing him. And finally, incredibly, Baldwin boo-hooed that “the police did nothing” about the photographers who were drawn by his bad behavior to his East Village building. “Meanwhile, photographers outside my home ONCE AGAIN terrified my daughter and nearly hit her with a camera,” he tweeted...Baldwin’s latest blow-up came after he was stopped at 10:15 a.m. for riding his bicycle against traffic on Fifth Ave. near 16th St. in the Flatiron District. When the cops asked him for identification, Baldwin lost it on them, sources told The Daily News. "He became belligerent, yelling and screaming at the officers, 'I don't have ID. Just give me the f-----g summonses,'" one police source said...Baldwin was still seething when he arrived at Manhattan’s 13th Precinct and was charged with disorderly conduct.
“How old are these officers?” Baldwin groused. “They don’t even know who I am.”

U.S. regulator opens door wider for Americans on mortgages (Reuters)
The regulator of Fannie Mae and Freddie Mac laid out plans for the government-run companies on Tuesday that could make it easier for Americans to obtain mortgages, marking a sharp departure from a predecessor who wanted to aggressively shrink their role in the housing finance market.

Pimco: Bull markets as we know them about to end (Reuters)
Pimco, the manager of the world's largest bond fund, said on Tuesday in its three-to-five-year outlook titled "The New Neutral" that low central bank interest rates underscore an end to bull markets in financial assets. In the report released on the firm's website, Pimco said that neutral real, or inflation-adjusted, central bank policy interest rates close to zero suggest "an end to bull markets as we've known them, but no perceptible growling from the bears."

Goldman Says Appeal of Commodities as an Asset Class Remains (Bloomberg)
Commodities as an asset class remain appealing as the global economic recovery extends into 2015, according to Goldman Sachs Group Inc. The bank raised its 12-month allocation for commodities to neutral from underweight, analysts led by Jeffrey Currie and Damien Courvalin wrote in a report dated yesterday. They increased their three and six-month price forecasts for nickel and rolled the 12-month predictions for aluminum and zinc forward to higher levels.

IRS paid at least $13B in improper tax credits (AP)
The IRS said it is aggressively fighting tax fraud, and is improving its efforts to police EITC payments. The agency said it has stopped nearly 15 million suspicious returns since 2011, blocking more than $50 billion in fraudulent refunds.

Shaq on Charles Barkley: ‘I would definitely kick his ass’ (NYP)
Charles Barkley and Shaquille O’Neal won’t meet in the ring for a mixed martial arts match as planned. “We are not going to fight,” Shaq said of a bout scheduled for Wednesday on “Inside the NBA.” “But I would definitely kick his ass because I’m from the streets and he’s not.” The big man further taunted, “He backed out … I’m serious, I would kill him.” When we asked if he was kidding, the retired star reiterated at BTIG’s Commissions for Charity Day, “That’s no joke. You can quote me on it.”

Related

Opening Bell: 12.11.12

HSBC To Pay Record Penalty (WSJ) HSBC on Tuesday plans to acknowledge that for years it ignored possible money laundering, part of a record $1.9 billion settlement with U.S. authorities that caps the bank's disastrous foray into the U.S. market. The U.K.-based banking company is expected to forfeit nearly $1.3 billion as part of a deferred prosecution agreement, the largest-ever U.S. forfeiture for a bank, according to people briefed on the agreement between HSBC and multiple U.S. agencies. The deal includes a civil fine of more than $650 million, according to these people. As part of the agreement, the bank will admit to violating the Bank Secrecy Act, the Trading with the Enemy Act and other U.S. laws intended to prohibit money laundering, a government official said. Three Arrested In Libor Probe (WSJ) Three British men have been arrested as part of an investigation into the rigging of interest rates, the U.K. Serious Fraud Office said Tuesday. The SFO said the men, aged 33, 41 and 47, are being questioned at a London police station, and that it and the City of London Police executed search warrants on a home in Surrey and two homes in Essex. The arrests are the first by authorities amid a global probe into alleged rigging by bank personnel of the London interbank offered rate over several years. Morgan Stanley Weighs Share Buyback (WSJ) Morgan Stanley might soon ask U.S. regulators to let the securities firm buy back shares for the first time in more than four years, according to people familiar with the firm's thinking. The Wall Street bank could make its request to the Federal Reserve as soon as January as part of the annual "stress-test" process, these people said. The stress tests started in 2009 as a way to convince investors that the largest banks could survive a financial crisis. They have been used to determine banks' ability to pay dividends or buy back shares. Share-repurchase and dividend plans are due from 19 large financial firms by Jan. 7. "Fiscal cliff" outcome still uncertain; talks continue (Reuters) As the pace of talks quickened to avert the "fiscal cliff" of steep tax hikes and spending cuts set for the end of the year, senior members of the U.S. House of Representatives of both parties cautioned that an agreement on all the outstanding issues remained uncertain. Republicans and Democrats are not close to "finishing anything," California Representative Kevin McCarthy, the Republican whip in the House, told Fox News Monday night. "There's nothing agreed to. They are just beginning to talk," he said of House Speaker John Boehner and President Barack Obama. Meanwhile, Representative Chris Van Hollen of Maryland, the top Democrat on the House Budget Committee, said on MSNBC Monday he thought Congress could resolve some of the issues by the December 31 deadline -- among them the hikes in tax rates-but might have to leave others for the new Congress that takes office in January. Europe in Better Shape Than US: Strategists (CNBC) "The 'fiscal cliff' in the U.S. is a worry," Garry Evans,Global Head of Equity Strategy at HSBC told CNBC on Tuesday. "And that's one of the reasons that I'm underweight the U.S. and I prefer Europe - it's a bit of an unusual place to be." Insider Trading Probe Widens (WSJ) Federal prosecutors and securities regulators are taking a deeper look into how executives use prearranged trading plans to buy and sell shares of their company stock. The Manhattan U.S. attorney's office has launched a broad criminal investigation into whether seven corporate executives cited in a recent Wall Street Journal article traded improperly in shares of their own company's stock, according to a person familiar with the matter. These executives lead companies in industries ranging from retailing to energy to data processing. Stephen Baldwin Wants Tax Truce (NYP) Stephen Baldwin is hoping to set things right after he was arrested Thursday and charged with failure to file state income taxes for three years. “I went myself [to the police] in a pre-arranged kind of way, but that won’t stop the process of the powers that be being upset about it,” Baldwin told Page Six at the Plaza Hotel’s Oak Room on Sunday. “I had this pretty serious issue with filings that weren’t handled appropriately. To be honest with you, it’s a situation right now where my lawyers are in a conversation now with New York state and the district attorney’s office, and I’m very hopeful that everything should be fine,” he said. According to reports, the “Usual Suspects” star was arraigned for failure to file tax returns from 2008 to 2010. He owes more than $350,000 in taxes and penalties, and could face jail time. “You have to pay your taxes . . . I just got caught up in a situation that I’m hoping we’re gonna work out,” he said. U.S. Profit on AIG Climbs to $22.7 Billion on Share Sale (Bloomberg) The Treasury Department is selling 234.2 million shares at $32.50 each in the sixth offering since the 2008 rescue. The proceeds boost the U.S. profit on the rescue that began in 2008 to $22.7 billion, the Treasury said in an e-mailed statement. Fed Seen Pumping Up Assets to $4 Trillion in New Buying (Bloomberg) “It’s going to be massive and open-ended in size,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York and a former New York Fed economist. In EU, A Test Of Wills (WSJ) Among the concerns of EU officials are moves by regulators in countries such as Germany and the U.K. to discourage European banks from moving funds back to their home countries, these officials said. EU officials are considering taking legal action against governments that they view as having adopted overzealous policies that violate the single-market rules, these officials said. The first step would be a formal warning to national authorities. The dispute could eventually land before the European Court of Justice if there is no policy change. The officials' hope, though, is that they can resolve the dispute without resorting to legal action. Celtics’ Chris Wilcox fined $25K for flipping off ‘Kiss Cam’ during loss to 76ers (YS) ...The gag concludes when the camera pans to the opposing bench, where players usually laugh, fake kiss or just ignore the camera. Boston's Chris Wilcox had a slightly different and less appropriate reaction. Wilcox greeted the 17,921 Wells Fargo Center fans with his middle finger. He was serenaded by boos and received an earful from an assistant coach moments later.

Opening Bell: 02.21.13

Feds Split Over When To Close Cash Spigot (WSJ) Minutes released Wednesday from the Fed's January policy meeting show officials concerned that the current easy-money policies could lead to excessive risk-taking and instability in financial markets. The Fed is buying $85 billion in mortgage and U.S. Treasury securities a month to drive down long-term rates and has promised to keep short-term rates near zero until unemployment improves. Citigroup Chairman Not Pressing Bank Breakup (WSJ) Michael E. O'Neill was among a small group of directors who after the financial crisis urged the company to weigh the pros and cons of splitting up the third-largest U.S. bank, said people familiar with the deliberations. Mr. O'Neill, now chairman, has overseen a management shake-up in the past year and is backing a broad cost-cutting plan. But exploring a breakup is no longer among his top priorities. Mr. O'Neill has concluded that breaking up Citigroup doesn't make sense now, given economic and regulatory uncertainty as well as a host of financial considerations, these people said. Wells Fargo ramps up private equity despite Volcker Rule (Reuters) The fine print of the Volcker Rule is expected to be finalized as soon as this year. Major banks such as Bank of America Corp and Citigroup are already pulling back from private equity investments ahead of the rules. But Wells Fargo is taking a different path. The bank invests in buyouts and venture capital deals largely on its own, with capital only from Wells Fargo itself and some employees. By avoiding equity from outside investors, the bank is considered to be engaging in "merchant banking," an activity that is likely to be exempt under the Volcker Rule, lawyers and people familiar with the matter said. Dimon Defends His Duel Leadership Roles (NYP) JPMorgan Chase CEO Jamie Dimon has no intention of relinquishing his chairmanship, insiders say, despite renewed calls from a group of shareholders to split the roles at the nation’s biggest lender. The American Federation of State, County and Municipal Employees, a granddaddy of public employee unions, as well as New York City and Connecticut pension funds, are pressuring the bank in the wake of its $6 billion “London Whale” trading blunder. The shareholders, which hold about $1 billion worth of bank shares, say the move would help to avoid a repeat of last year’s debacle, which led the board to slash Dimon’s pay in half. JPMorgan officials, though, don’t want to go as far as splitting the roles, saying their boss steered the bank successfully through the financial crisis and is well suited for both jobs. Regulator Weighs Ban For Corzine (WSJ) Two newly elected directors of the National Futures Association plan to push the agency to hold a hearing on the matter, having criticized the response of federal regulators some 16 months after the industry was shaken by the collapse of brokerage MF Global where the former New Jersey governor was chief executive. Shia LaBeouf Pulls Out Of Broadway's Orphans (NYP) Producers announced that LaBeouf parted ways with the show after just a week of rehearsals due to “creative differences,” even though the play’s scheduled to begin previews March 19. But last night LaBeouf, 26, posted e-mail exchanges on Twitter revealing divisions between him and bombastic Baldwin. In a message titled “Creative Differences” LaBeouf posted an e-mail to him from director Dan Sullivan, which reads, “I’m too old for disagreeable situations. You’re one hell of a great actor. Alec is who he is. You are who you are. You two are incompatible. I should have known it. This one will haunt me. You tried to warn me. You said you were a different breed. I didn’t get it.” Russia's Missing Billions Revealed (FT) Russia's central bank governor has lifted the lid on $49 billion in illegal capital flight - more than half of which, he says, is controlled "by one well-organized group of individuals" that he declined to name. Sergei Ignatiev, due to step down in June after 11 years in his post, is seldom outspoken about any issue other than interest rates. But he unburdened himself in an interview with the Moscow newspaper Vedomosti about money leaving the country through the back door, which he said equaled 2.5 percent of gross domestic product last year. "This might be payment for supplies of narcotics...illegal imports...bribes and kickbacks for bureaucrats...and avoiding taxes," he told the daily, which is part-owned by the Financial Times. New York Times Looks To Sell Boston Globe (CNBC) This follows the Times Company's sale of other regional papers as well as the About.com group, as it focuses in on its core asset — the New York Times brand. And with that focus, the publisher is honing in on what's really been working for the company — the New York Times subscription model. The company has retained Evercore Partners to advise on and manage the sale, but won't say who it's already talked to, or how much it thinks the assets are worth. Citi analyst Leo Kulp, who calls this a "positive move," estimates that the segment could fetch about $200 million. The segment generated $395 million in 2012 revenue, which Kulp says implies about $67 million in EBITDA in 2012. He applies a three times multiple — "on the high end of comparable large metro newspaper sales" — to give the paper a $200 million price tag. Herbalife Prez Goes On Offensive (NYP) President Des Walsh, in a conference call, said that “despite what we believe to be unprecedented, unfair and untrue attacks on this company, our business continues to do well.” Deputies: Couple started fighting over man scratching himself (WWSB) According to the Manatee County Sheriff’s Office, Shalamar Petrarca complained to her boyfriend, 30-year-old Ronald Howard, that it was rude and disgusting to be “scratching his testicles” while she was about to eat dinner. She told deputies that Howard began yelling at her, pushed her into the kitchen, causing her to get a scratch on her ankle, then threw her out of the house. Howard told deputies that she punched him in the eye for “scratching his balls”, and the he pushed her through the door in self-defense. Deputies say Howard had no visible injuries, but Petrarca did have a scratch on her ankle.