Secret Goldman Sachs Tapes Put Pressure on New York Fed (Dealbook)
Lawmakers are scrutinizing allegations that the Federal Reserve Bank of New York went easy on one of the most prominent banks under its watch, Goldman Sachs, despite concerns voiced by those inside the Fed that a deal Goldman was pursuing was “legal, but shady.” Now committees in the Senate and House of Representatives are looking at whether to hold hearings or conduct more extensive investigations into the Fed’s oversight of Goldman and other banks. The renewed interest in the Fed’s role came after the release of secret recordings detailing interactions between employees of the New York Fed and Goldman, which were made public by the investigative news organization ProPublica and the radio program “This American Life.” The former Fed employee, Carmen M. Segarra, who made the recordings had previously sued the New York Fed, arguing that she had been fired for being too hard on Goldman. While Ms. Segarra’s suit was dismissed, the newly released recordings suggest that her supervisor at the New York Fed went easy on Goldman, even after saying he wanted “to put a big shot across their bow” on a deal in which Goldman was suspected of helping make Banco Santander look financially stronger than it was.
Activist Funds Aren’t Sharing the Ties They Have to Advisers (WSJ)
Some activist investors have agreed to share trading profits with small-fry players who bring them stock ideas—but they aren’t always disclosing these financial ties. Consider the activist campaign involving Cliffs Natural Resources Inc., an iron-ore miner. Activist consultant Michael McNamara last year pitched the idea of launching a Cliffs campaign to Casablanca Capital LP, according to people familiar with the matter. Casablanca is an activist hedge fund co-run by Donald Drapkin, a former lawyer of high-profile investor Ronald Perelman. Casablanca built a stake of about 5.2% it disclosed in January. In exchange for his idea, Casablanca agreed to pay Mr. McNamara’s firm as much as one-third of the hedge fund’s profits on the stake, according to people familiar with the matter and a regulatory filing by Mr. McNamara’s firm. Casablanca didn’t disclose these ties in the Cliffs case, according to a review of its regulatory filings. A regulatory rule requires investors that acquire a stake of 5% or more in a company to describe any arrangement with another party that includes guarantees of profits, divisions of profits or losses, or other understandings related to the company’s securities.
Pimco CEO says ‘our DNA is fundamentally unchanged’ after Gross (Reuters)
Pimco CEO Doug Hodge played defense on Thursday, reiterating that Bill Gross’s departure has not affected the way the U.S. bond giant functions. “With Bill’s recent decision to resign, the perception has been that there has been a dramatic shift at Pimco,” Hodge said in a letter to clients on Pimco's website. “However, the reality is that while Pimco has evolved into a globally diversified investment company, our DNA is fundamentally unchanged.”
You Know It’s a Tough Market When Ben Bernanke Can’t Refinance (Bloomberg)
Ben S. Bernanke said the mortgage market is so tight that even he is having a hard time refinancing his own home loan. The former Federal Reserve chairman, speaking at a conference in Chicago yesterday, told moderator Mark Zandi of Moody’s Analytics Inc. -- “just between the two of us” -- that “I recently tried to refinance my mortgage and I was unsuccessful in doing so.” When the audience laughed, Bernanke said, “I’m not making that up.” “I think it’s entirely possible” that lenders “may have gone a little bit too far on mortgage credit conditions,” he said.
French court to begin Airbus insider trading trial (Reuters)
A long-awaited French corporate trial involving allegations of insider trading in the shares of Airbus Group gets under way on Friday, marking the climax of an eight-year investigation. Seven current and former managers at Europe's largest aerospace group, and two former industrial shareholders, are accused of trying to profit from inside knowledge of problems with two jet developments and a deteriorating financial outlook when they sold shares in what was then EADS in 2006. All deny the charges and are expected to argue that the trial should not be taking place because they have already been cleared by the French stock market regulator, highlighting a growing debate about "double jeopardy" rules.
South Daytona man charged with molesting vending machine (UPI, related)
Daytona Beach police have arrested a man they say is a suspect in several cases related to the robbery of coin-operated machines. On Wednesday, Daytona Beach police officers responded to Crystal's Car Wash on South Nova Road to investigate a theft and vandalism. Video surveillance captured parts of the crime, and left police with enough evidence to pursue a suspect. On the video, the suspect was seen using a sledge hammer and ax to force open the coin-operated vending machines. After reviewing the footage, detectives identified Jason Joslyn as the suspect. Joslyn was arrested four months ago for similar crimes police say he committed at Melissa's Car Wash on Beville Road. On Friday, detectives located and arrested Joslyn. He's now facing charges of felony criminal mischief, and molesting a vending machine.
Bullard says Fed 'far behind' schedule for interest rate hike (Reuters)
The Federal Reserve's third round of bond buying had a better than expected impact on the U.S. labor market, a Fed official said on Thursday, making it all the more necessary for the central bank to move faster with hiking interest rates. St. Louis Fed President James Bullard pointed out that the economy has exceeded the economic forecasts the Fed presented in September 2012, when the central bank's latest bond buying program - known formally as Quantitative Easing (QE) - was launched.
Citigroup Hopes to Finally Close Chapter on Subprime-Lending Venture (WSJ)
Citigroup's plans to get rid of its U.S. subprime-lending unit, OneMain Financial, will close one of the most complicated and volatile chapters in the bank's history. The business of charging high interest rates to low-income customers, who often couldn't get loans elsewhere, was once hailed as a core part of the financial supermarket assembled by former Chief Executive Sanford Weill. But during the financial crisis, it became a money-losing albatross. The current holder of Mr. Weill's old job, Michael Corbat, calls OneMain "a terrific business." But it doesn't fit "the Citi model," he says.
JPMorgan Says Data Breach Affected 76 Million Households (Bloomberg)
JPMorgan Chase & Co., the biggest U.S. bank, said a previously disclosed data breach affected 76 million households and 7 million small businesses. Customer names, addresses, phone numbers and e-mail addresses were taken, the New York-based bank said today in a regulatory filing. Hackers also obtained internal data identifying customers by category, such as whether they are clients of the private-bank, mortgage, auto or credit-card divisions, said a person briefed on the matter.
'An Airplane S*** On Us,' New Zealand Woman Claims (HP)
Karen Bass said she went out into her yard Sept. 28 and something smelled terrible. She said there was waste splattered all over her yard, her house, and her car. "The first thing when I walked out of my door this morning and I saw it, I thought an airplane s*** on us. You open the door and it smells like s***," she told the Herald on Sunday. "I'm absolutely disgusted at the moment. The amount of crap everywhere is horrendous." Bass' home lies directly along an Auckland International Airport flight path. She's convinced that the excrement isn't from birds or other animals, and has sent a sample of the mess to be independently tested. Other residents told the newspaper that they'd been dumped on in the past as well, but the government's Civil Aviation Authority denied it, blaming migrating ducks. "I fought it hard, we got tests done that proved it was human matter and even at that point the CAA still kicked their heels in, they wouldn't have a bar of it," a dumping victim, who did not want to be named, told the paper. Airplane waste has caused serious problems before. Last year, a British woman said a frozen chunk of mess crashed through the roof of her home and put a hole in the floor. Experts told SWNS that the frozen waste was likely caused by a leak on the plane. The U.S.'s Federal Aviation Administration has its own term for frozen airplane waste. They call it "blue ice," after the chemical that's added to toilet water to help deodorize and break down waste.