Banks\' Risky Ways

Banks' Risky Ways  |  A prominent regulator, Thomas M. Hoenig, the Federal Deposit Insurance Corporation board member who formerly ran the Federal Reserve Bank of Kansas City, had a dire prediction for the nation's big banks on Wednesday. He said at the Exchequer Club in Washington, according to Bloomberg News:

“The behavior and practices leading to this crisis will soon reemerge and these highly complex, more vulnerable firms will have an even more devastating effect on the economy.”

Mr. Hoenig has made the argument - one that recently was echoed by the former Citigroup boss Sanford I. Weill - that the government should reinstate a version of the Glass-Steagall Act, which separated commercial banks from investment banks.

A quirk of the tax code isn't helping matters, writes Jesse Eisinger in his column, The Trade. A “tax c ode distortion” encourages banks to gorge on debt, rather than equity. Mr. Eisinger writes:
“More debt not only makes companies more vulnerable to bankruptcy but also makes investors more susceptible to panics, when they withdraw their capital en masse.”

Happy Birthday to Lloyd Blankfein!  |  The Goldman Sachs chief executive turns 58 today.

As Goldman welcomes a new chief financial officer, some analysts are wondering how the company will bolster its stock price. One possible strategy could be to cut back compensation, writes Lauren Tara LaCapra in a blog post on Reuters. Ms. LaCapra cites an unidentified “prominent investor” who says Goldman faces the “Lazard problem,” in which employees expect to be paid a lot and will leave if they are not.

Dealing with regulators shouldn't be a problem for Goldman's new chief financial officer, Harvey M. Schwartz, a ccording to Arthur Levitt, the former Securities and Exchange Commission chairman and current adviser to Goldman Sachs. Mr. Levitt told The Wall Street Journal that Mr. Schwartz's demeanor and sense of humor will “play well in Washington.”

And in case anyone was wondering, Mr. Blankfein is not a socialist, but believes in the fair distribution of wealth, as he noted during a conversation on Wednesday with the chief executive of the Royal Bank of Canada.

Robert Rubin, Tortoise  |  Mr. Rubin, whose career at Goldman Sachs, the Treasury Department and Citigroup has taken him through the upper echelons of finance and government, resembles “an ancient Galapagos tortoise,” as William D. Cohan writes in the Bloomberg Businessweek cover story. “Whatever nastiness politics or the global economy may throw at him, he abides.” But the 74-year-old's record deserves some scrutiny, Mr. Cohan writes. When the economy collapsed, “due in part to bank-friendly policies that Rubin advocated, he made more than $100 million while others lost everything.”

Betting on Housing  |  The real estate search site Trulia raised $102 million on Wednesday, surpassing expectations. As housing goes, so should Trulia. By that measure, the outlook looks decent. On Wednesday, data showed housing starts rising 2.3 percent in August and existing home sales jumping 7.8 percent.

Gaming the Rates  |  Amid a worldwide investigation into rate-rigging, Libor has faced the most scrutiny. But other rates may be similarly vulnerable. Bloomberg News reports on a confidential paper by the International Organization of Securities Commissions, which concludes that the “same lack of oversight that enable d traders to manipulate the London interbank offered rate plagues other benchmarks around the globe.”

According to Bloomberg News, the paper says that fewer than half of benchmark rates surveyed in the United States, Europe and Asia “were based on actual transactions.”

New on Twitter  | 
The Carlyle Group, using the Twitter handle @OneCarlyle, joins its rival Blackstone in telling the world about itself in 140 characters or fewer.

On the Agenda  |  The 1980s deal maker Donald Drapkin, who now runs the hedge fund Casablanca Capital, is on CNBC at 1:30 p.m.. Earnings out on Thursday include the Jefferies Group at 8 a.m., and Oracle after the bell.

In New York on Thursday, the Dow Jones Private Equity Analyst Conference kicks off at the Waldorf Astoria, featuring speakers like William E. Conway Jr. of the Carlyle Group, Richard A. Friedman of Goldman Sachs and Ted Schlein at Kleiner Perkins.

In Washington, the Senate Banking committee holds a hearing on high-frequency trading at 10 a.m. Dave Lauer, who quit his job last year at a high-speed trading firm in Chicago, is set to testify against the industry. The House Financial Services committee has a hearing on the Consumer Financial Protection Bureau at 10 a.m., with the agency's head, Richard Cordray, set to testify. The Senate Finance committee and the House Ways and Means committee have a hearing on the tax treatment of capital gains at 10 a.m.

Sheila Bair's New Book  |  Fortune has an excerpt of “Bull by the Horns: Fighting to Save Main Street From Wall Street and Wall Street From Itself,” the new book by Sheila Bair, who led the Federal Deposit Insu rance Corporation during the financial crisis. In the passage, Ms. Bair describes a meeting where the Treasury secretary at the time, Henry M. Paulson Jr., persuaded bank chiefs to accept the bailout:

“Nine men stood milling around in the room, peremptorily summoned there by Treasury Secretary Henry Paulson. Collectively, they headed financial institutions representing about $9 trillion in assets, or 70% of the U.S. financial system. I would be damned if I would let them see me shaking.”

The Rich Get Richer  |  The past year has been kind to the wealthiest Americans, according to Forbes, which updated its ranking of billionaires on Wednesday. Warren E. Buffett, the country's second-richest man, is worth $46 billion as of September 2012, compared with $39 billion last year. Bill Gates, the richest of the rich, is now worth $66 billion, up from $59 billion last year.

At least one financier didn't fare so well. John A. Paulson, the hedge fund manager who has had a string of money-losing quarters, is now worth $11 billion, down from $15.5 billion last year.

Mitt Romney might have ranked among this elite crew, according to Bloomberg News. The Republican presidential candidate, who is worth a mere $250 million, left the private equity industry before the boom of the early 2000s. Bloomberg News says of Mr. Romney: “Had he stayed at Bain Capital LLC, he'd be worth more than $1 billion, according to the Bloomberg Billionaires Index.”

Pension Crisis in Chicago  |  It wasn't a prominent issue in the strike, but Chicago teachers face a looming financial problem, reports The New York Times's Mary Williams Walsh:

“The Chicago Teachers' Pension Fund has about $10 billion in assets, but is paying out more than $1 billion in benefits a year - muc h more than it has been taking in. That has forced it to sell investments, worth hundreds of millions of dollars a year, to pay retired teachers. Experts say the fund could collapse within a few years unless something is done.”

Mergers & Acquisitions '

BP's Chief Meets With Russian Leaders on Joint Venture  |  The chief executive of BP, Robert W. Dudley, met with President Vladimir V. Putin of Russia in an effort to resolve a long-running business dispute in Russia.
DealBook '

Universal Poised to Win Approval for EMI Deal  |  The expected sign-off by European regulators will require Universal to sell prized assets, The Wall Street Journal reports.
WALL STREET JOURNAL

European Aerospace Companies Reach Out to Investors  |  EADS and BAE have been trying to convince certain groups of nongovernment shareholders of the merits of a merger, Bloomberg News reports, citing unidentified people familiar with the talks.
BLOOMBERG NEWS

Liberty Offers $2.6 Billion for Remainder of Telenet  |  The cable company Liberty Global already owns 50.4 percent of its Belgian rival Telenet, and on Thursday offered to pay about $2.56 billion for the shares it did not own, Reuters reports.
REUTERS

Visteon to Sell Climate Control Unit to Its Joint Venture  | 
REUTERS

Acquisition of Yoplait Bolsters General Mills's Profit  | 
ASSOCIATED PRESS

INVESTMENT BANKING '

Bank of America Speeds Up Plan to Cut Jobs  |  The bank is now planning to shed 16,000 jobs by the end of the year.
WALL STREET JOURNAL

On Wall Street, Layoffs Expected to Approach 100,000  |  The analyst Meredith Whitney took to Bloomberg TV to predict more cutbacks for the financial industry.
BLOOMBERG TELEVISION

Bond Firms to Benefit From Federal Reserve's Move  |  The latest round of quantitative easing is “proving to be manna from heaven” for Pimco, DoubleLine Capital and TCW, Reuters reports.
REUTERS

Lehman Brothers Exits Texas Property Portfolio  | 
BLOOMBERG NEWS

PRIVATE EQUITY '

TPG Left as Sole Bidder for Billabong  |  Bain Capital has dropped out of the contest for the Australian surf wear company, according to The Wall Street Journal.
WALL STREET JOURNAL

China Fund Said to Lead $2 Billion Investment in Alibaba  |  A group of investors led by the China Investment Corpor ation, that country's sovereign wealth fund, paid $2 billion for a 5.6 percent stake in Alibaba Group Holding, the huge e-commerce company, Bloomberg News reports, citing an unidentified person with knowledge of the matter.
BLOOMBERG NEWS

Landmark Partners Said to Plan $2.5 Billion Fund  |  The private equity firm is looking to use the money to buy existing stakes from other funds, Bloomberg News reports.
BLOOMBERG NEWS

CVC's Head for Australia and New Zealand to Depart  | 
WALL STREET JOURNAL

HEDGE FUNDS '

Franklin Resources to Acquire Hedge Fund Firm  |  The mutual fund company Franklin Resources said it would buy a majority stake in K2 Associates, a fund of hedge funds, and gain the right to start buying the rest of the firm beginning in 2016, Reuters reports.
REUTERS

Highbridge Capital's Chief Risk Officer to Step Down  | 
REUTERS

I.P.O./OFFERINGS '

Talanx Said to Be Reviving Its I.P.O.  |  The German insurer is trying again after shelving plans to go public less than two weeks ago, Bloomberg News reports, citing two unidentified people with knowledge of the transaction.
BLOOMBERG NEWS

Nasdaq De fends Plan to Compensate Facebook Investors  | 
WALL STREET JOURNAL

Astro of Malaysia Secures Cornerstone Investors  |  The hedge funds Och-Ziff Capital Management and Standard Pacific Capital are among 16 top investors in the I.P.O. of the Malaysian TV company Astro, according to Reuters.
REUTERS

Google Expected to Overtake Facebook in U.S. Display Ads  | 
REUTERS

VENTURE CAPITAL '

To Help Europe's Economy, Start a Company  |  A new ad campaign in Europe is encouraging young people to become en trepreneurs, as “a lack of entrepreneurial gumption is widely seen as a chief barrier to growth,” The New York Times reports.
NEW YORK TIMES

Corporations Invest More in Start-Ups  |  Venture groups backed by corporations invested $2.1 billion in the second quarter, an increase of 16 percent from the period a year earlier, Reuters reports.
REUTERS

3 Out of 4 Start-Ups Fail, Research Shows  | 
WALL STREET JOURNAL

Jack Dorsey on Square  |  Mr. Dorsey, the entrepreneur behind Twitter and the mobile payments company Square, told The Wall Street Journal: “Every day is an existential threat, questioning the entire business. You wake up and you are completely jazzed about what happens and then you read an article…about a potential competitor or a rumor, and it feels like - wait, what are we going to do?”
WALL STREET JOURNAL

LEGAL/REGULATORY '

Bernanke Discusses ‘Fiscal Cliff' With Lawmakers  | 
REUTERS

Documents Shed Light on Early Concerns About Former Barclays Chief  |  Documents released on Wednesday shed light on concerns about Robert Diamond Jr., the former chief executive of Barclays who stepped down amid the rate-manipulation scandal.
DealBook '

Te ntative Deal on E-Book Prices in Europe  |  Apple and four European publishers agreed to let online retailers like Amazon sell e-books at a discount for two years, in a proposed deal that could end an investigation by the European Commission into price-fixing, The New York Times reports.
NEW YORK TIMES