Morning Agenda: Banks Could Be Victims of Their Own Success

BANKS COULD BE VICTIMS OF THEIR OWN SUCCESS  | 
The nation's six biggest banks reported $23 billion of profit in the second quarter, strong earnings that could end up undercutting their arguments against more regulation, DealBook's Peter Eavis writes. With regulators and lawmakers recently stepping up efforts intended to make the largest banks safer, those banks have warned that more regulations could hurt their ability to compete and curtail their lending. The most pressing concern for banks is a relatively tough new rule that could force banks to build up more capital.

But the banks, which now appear to have fewer allies in Washington than at any point since the financial crisis, did not demonstrate any difficulty in meeting the proposed rules, Mr. Eavis writes. That was highlighted on Wednesday when the Treasury secretary, Jacob J. Lew, called for the swift adoption of rules introduced through the Dodd-Frank financial overhaul law, effectively issuing an ultimatum to Wall Street. “If we get to the end of this year, and cannot, with an honest, straight face, say that we've ended ‘too big to fail,' we're going to have to look at other options because the policy of Dodd-Frank and the policy of the administration is to end ‘too big to fail,'” Mr. Lew said.

Still, some analysts are skeptical the Treasury and the Federal Reserve would lend their weight to the aggressive measures lawmakers are contemplating. “The recent comments may be an attempt to gain some political benefit from looking tough on the banks. And the remarks may be aimed at reducing any momentum that the more draconian pieces of bank legislation are gaining in the Senate,” Mr. Eavis writes.

JPMORGAN EXECUTIVE MAY ESCAPE PENALTY  | 
The nation's top energy regulator, as it prepares to extract a record settlement from JPMorgan Chase over accusations that it manipulated power markets, is expected to spare a top bank lieutenant who federal investigators initially contended made “false and misleading statements under oath,” Jessica Silver-Greenberg reports in DealBook. Blythe Masters, an executive known for developing exotic financial instruments, emerged this spring at the center of an investigation by the Federal Energy Regulatory Commission into accusations of illegal trading in the California and Michigan electricity markets.

Ms. Silver-Greenberg writes: “While the commission and JPMorgan are negotiating a settlement for about $500 million, the people briefed on the matter said, Ms. Masters is not expected to face a separate action. The move signals a pivot for the agency, which has been increasingly flexing its enforcement muscle, according to the people briefed on the matter, who spoke on the condition they not be named.” Ms. Masters and the bank have asserted they did nothing wrong.

DELL BUYS TIME  | 

Dell bought itself six more days to drum up support for its proposed $24.4 billion sale to its founder, but the fight for more support remains tough, DealBook's Michael J. de la Merced writes. The company on Thursday adjourned a meeting for shareholders to vote on the deal; the vote is now set for July 24 at 6 p.m.

“The meeting was adjourned after preliminary tallies showed that the deal would almost certainly have been defeated. With more time, a committee of Dell's board and the company's proposed buyers will try to twist more arms,” Mr. de la Merced writes. “The two groups have already made headway. On Wednesday night, a number of big institutional investors switched their votes to ‘yes,' people who had been briefed on the matter said. Those investors included big asset managers like the Vanguard Group, BlackRock, the State Street Corporation, the Bank of New York Mellon and Invesco.”

ON THE AGENDA  |  General Electric reported quarterly earnings this morning of 36 cents a share, narrowly beating analysts' expectations of 35 cents a share, according to Thomson Reuters. Jeffrey Rosenberg, chief investment officer of BlackRock Advisors, is on Bloomberg TV at 10:15 a.m.

IN TOURRE CASE, A COLLEAGUE IN THE SPOTLIGHT  | 
The relationship between Fabrice Tourre and Jonathan Egol - who were close colleagues on a Goldman Sachs mortgage desk in the lead-up to the financial crisis - was under the spotlight on Thursday as Mr. Egol took the witness stand in the civil trial of Mr. Tourre, a 34-year-old Frenchman accused by the Securities and Exchange Commission of misleading investors about a mortgage security that ultimately failed. “The revelations, partly rebutted when Mr. Tourre's lawyers cross-examined Mr. Egol, steadied the S.E.C.'s case after a crucial government witness did his best to unravel it,” Ben Protess and Susanne Craig write in DealBook. The witness, Paolo Pellegrini, an executive at the hedge fund that bet against the mortgage security, suddenly r etracted his earlier statements that investors were unaware the hedge fund was betting against the deal.

Mergers & Acquisitions '

Vivendi Declined SoftBank's Rich Offer for Universal  |  Vivendi rejected a $8.5 billion cash bid from SoftBank of Japan for the Universal Music Group, even though the offer was at least $2 billion more than some analysts' estimates of Universal Music's value, according to a person briefed on the offer, The New York Times reports.
NEW YORK TIMES

Apache to Sell Gulf of Mexico Unit for $3.75 Billion  |  The Apache Corporation agreed to sell its business in the Gulf of Mexico's shelf for about $3.75 billion to a company owned by the private equity firm Riverstone Holdings.
DealBook '

Pfizer Said to Decline Pursuit of Onyx  |  That would leave Amgen in the leading position to buy Onyx Pharmaceuticals, Reuters reports.
REUTERS

Pressure on PepsiCo to Respond to Peltz's Overtures  |  The financial logic of Nelson Peltz's proposals for Pepsi is compelling, Jeffrey Goldfarb of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS

Berkshire Hathaway Buys Atlantic City Newspaper  | 
PRESS OF ATLANTIC CITY

INVESTMENT BANKING '

Monte dei Paschi of Italy Yields to Change  |  Shareholders of the troubled Italian bank Monte dei Paschi di Siena voted on Thursday to lift ownership restrictions and encourage new outside investors, a move that could lead to similar changes at Italy's other big banks, The New York Times reports.
NEW YORK TIMES

Morgan Stanley Announces a Buyback, and Its Shares Rise  |  Morgan Stanley reported adjusted earnings for the second quarter that slightly beat analysts' estimates, driven by a strong performance from its wealth management unit and equity sales and trading.
DEALBOOK

BlackRock Earnings Increase 32%  |  The company's gains were driven largely by the broad rally in the stock market, which pushed up the value of BlackRock's products, especially its exchange-traded funds known as iShares.
DealBook '

UBS Leads in Underwriting Stock Sales in Southeast Asia  | 
BLOOMBERG NEWS

Former Goldman Partner Darivoff Named Chairman of DFG  |  Philip M. Darivoff, a recently retired Goldman Sachs partner, has been appointed chairman of DFG Investment Advisers, an asset management firm in New York.
DealBook '

PRIVATE EQUITY '

Blackstone Earnings More Than Tripled in 2nd Quarter  |  The Blackstone Group reported gains in its private equity and real estate funds that exceeded analysts' expectations. The firm's shares rose 6.4 percent on Thursday.
REUTERS

Private Equity Firms to Buy Unit of Cermaq of Norway  |  Bain Capital and Altor are paying about $1.1 billion for the fish feed unit of Cermaq, a fish farm operator listed in Oslo, Reuters reports. The agreement came after a bidding contest.
REUTERS

HEDGE FUNDS '

Bets on Commodities Turn Out to Be Losers  |  Reuters reports: “Funds betting on commodity price moves have lost money every month since January, their joint longest losing streak on record, raising more doubts about their ability to make money at a time when the commodity ‘supercycle' may be over.”
REUTERS

I.P.O./OFFERINGS '

SeaWorld's Pre-Emptive Strike on Critical Documentary  |  SeaWorld, the theme park operator controlled by the Blackstone Group that went public this year, sent out a detailed critique of “Blackfish,” a documentary set for release on Friday in New York and Los Angeles that makes the case that orca whales in captivity suffer distress because of confinement.
NEW YORK TIMES

From Blackstone, a Real Estate I.P.O.  |  The Blackstone Group's Brixmor Property Group, an owner of shopping centers, filed on Thursday for an initial public offering that is expected to come in the fourth quarter, Reuters reports.
REUTERS

VENTURE CAPITAL '

Yelp Buys Restaurant Reservation Start-Up  |  Yelp is paying about $12.7 million in cash and stock for SeatMe, which sells software to restaurants and bars, AllThingsD reports.
ALLTHINGSD

LEGAL/REGULATORY '

Detroit Tumbles Into Bankruptcy  |  Detroit filed for bankruptcy on Thursday, the largest American city ever to take such a course. Kevyn D. Orr, the city's emergency manager, has said the level of debt is likely to be $18 billion and perhaps as much as $20 billion, The New York Times reports.
NEW YORK TIMES

Bank in Madoff Suit Settles With Some Plaintiffs  |  Westport National Bank agreed to pay $7.5 million to investors in a related case as a jury found it not liable for losses for accounts controlled by Bernard L. Madoff Investment Securities.
DealBook '

Finra Scrutinizes High-Speed Trading Firms  |  The Financial Industry Regulatory Authority sent letters to 10 high-speed trading firms this week, asking for more information about their trading programs and the steps taken to avert “market disruptions.”
DealBook '

Bernanke's Testimony Like a Farewell Scene  |  Ben S. Bernanke's testimony before the Senate on Thursday may have been his final appearance before Congress as Fed chairman.
NEW YORK TIMES

The Time Bernanke Was Wrong  |  Critics of the Federal Reserve seem not to focus on what the central bank got wrong, Floyd Norris, a columnist for The New York Times writes: policies that allowed dangerous imbalances to grow and bring on the financial crisis.
NEW YORK TIMES

Debating, Yet Again, the Worth of Law School  |  A recent academic study is drawing a lot of criticism for quantifying the economic value of a law degree, but the study raises many valid points, Steven M. Davidoff writes in the Deal Professor column.
DealBook '