As the five-year anniversary of the white-knuckled days of the financial crisis approaches, Henry M. Paulson Jr., formerly Treasury secretary, spoke emphatically about the outsize bank bonuses paid after the bailouts. He said the bonuses were a primary reason for the public outrage over the program he worked hard to persuade Congress to pass and the country to support.
“There was such a total lack of awareness from the firms that paid big bonuses during this extraordinary time,†Mr. Paulson told Andrew Ross Sorkin in the DealBook column. “To say I was disappointed is an understatement,†Mr. Paulson continued. “My view has nothing to do with legality and everything to do with what was right, and everything to do with just a colossal lack of self-awareness as to how they were viewed by the American public.â€
While most economists now credit the bailout and the extraordinary measures taken by the Federal Reserve with helping prevent another depression, questions remain, including why Mr. Paulson and Congress did not seek tighter restrictions on pay. Mr. Paulson said it would have been impossible to persuade the majority of the banks to participate in the program with significant restrictions on pay. He alludes to that question in a new prologue to his book, “On the Brink,†which looks at the crisis. It is being reissued this week.
ACKMAN SELLS PENNEY STAKE Â |Â Nearly two weeks after resigning from the board of J.C. Penney, William A. Ackman sold his roughly 18 percent stake in the retailer on Monday, Michael J. de la Merced reports in DealBook.
Mr. Ackman’s firm, Pershing Square Capital Management, sold its 39.1 million shares at a price of $12.90 a share, valuing the stake at $504 million and creating a loss of about $473 million. (In addition, Mr. Ackman’s firm faces losses on derivatives it owns that are tied to Penney’s stock.)
FOR LAW FIRMS, GLOBAL DISPUTES ARE LUCRATIVE  | “Debt woes, broken contracts and soured business deals may cost global investors billions in losses and create seemingly never-ending headaches for policy makers. But there is a set of specialists profiting from such geopolitical problems: arbitration lawyers,†Elizabeth Olson writes in DealBook. “At least a dozen law firms based in the United States are in line for huge paydays stemming from myriad international issues.â€
“About a dozen legal heavyweights like White & Case, Shearman & Sterling and King & Spalding are benefiting from the growing number of lucrative, complex international disputes,†Ms. Olson writes. “Among the eye-popping claims that have already reached resolution is a $2.2 billion decision against Kuwait’s Petrochemical Industries in favor of Dow Chemical over a joint plastics venture that the Kuwaitis canceled. Dow Chemical was represented by the Atlanta-based King & Spalding and Shearman & Sterling, based in New York.â€
ON THE AGENDA  | The Standard & Poor’s Case-Shiller index of home prices for June is out at 9 a.m. A report on consumer confidence in August is out at 10 a.m. Tiffany & Company reports earnings before the market opens. TiVo announces results this evening. Jacob J. Lew, the Treasury secretary, is on CNBC at 7:30 a.m.
THE MCMANSION MAN  | There is no surer sign that big-spending ways are back in the Hamptons than the blue “Farrell Building†signs multiplying across the pristine landscape, advertising multimillion-dollar houses, Jim Rutenberg reports in The New York Times. Some call the process Farrellization.
“We’re as busy as we’ve ever been,†said Joe Farrell, the president of Farrell Building, during a recent interview and tour of his $43 million, 17,000-square-foot home.
“To spend a day with Mr. Farrell â€" a local version of Donald Trump, without the history of debt, the lush hair or the insults â€" is to see just how fully the Hamptons have rebounded, along with the confidence, and the bonuses, of their wealthier summer visitors,†Mr. Rutenberg writes. “With a customer base composed largely of Wall Street financiers, Mr. Farrell has more than 20 new homes under construction, or slated for construction, at a time, making him the biggest builder here by far.â€
A New Chief for London Metal Exchange  | The Hong Kong Stock Exchange named Garry Jones, a former top executive at NYSE Liffe, to be the chief executive of the London Metal Exchange, Reuters reports. REUTERS
Best Buy Founder Plans to Sell Stock  | Richard Schulze, the founder and largest shareholder of Best Buy, said in a securities filing that he planned to sell an undisclosed amount of stock to diversify his assets. BLOOMBERG NEWS
BATS and Direct Edge to Merge, Taking On Older Rivals  | Combining BATS Global Markets and Direct Edge will vault the new company past Nasdaq to become the second-largest exchange operator in the United States, as the industry continues to face pressure to consolidate. DealBook »
ANA of Japan to Buy Stake in Myanmar Airline  | ANA Holdings, the Japanese airline, is paying $25 million for a 49 percent stake in Asian Wings Airways of Myanmar, Bloomberg News reports. BLOOMBERG NEWS
Remembering Muriel Siebert, an ‘Icon’ for Women  | Ms. Siebert’s pragmatic approach to effecting change on Wall Street characterized many of her accomplishments, her admirers said. DEALBOOK
JPMorgan Lawyer Leaves for Another Bank  | Michael Coyne, who was associate general counsel and co-head of litigation at JPMorgan Chase, is becoming the general counsel of Union Bank and its holding company, Reuters reports. REUTERS
Bank of America’s Lawsuit Against F.D.I.C. Is Dismissed  | A judge said Bank of America’s claims against the Federal Deposit Insurance Corporation over $1.7 billion in investor losses “have no value and must therefore be dismissed because no case or controversy exists,†Bloomberg News reports. BLOOMBERG NEWS
Lloyds Sells $332 Million of Australian Loans  |Â
WALL STREET JOURNAL
Billabong Writes Down Its Brand Value to Zero  | The struggling Australian surf wear company Billabong announced the accounting charge on Tuesday, part of a record $772 million net loss it reported for its financial year. DealBook »
Globecomm Systems to Go Private for $340 Million  | The investment firm Wasserstein & Company has agreed to buy Globecomm Systems, a satellite communications provider, for $14.15 a share in cash, Reuters reports. REUTERS
Third Point Hedge Fund Increases Sotheby’s Stake  | Daniel S. Loeb’s hedge fund, Third Point, is now one of Sotheby’s biggest shareholders, with a 5.7 percent stake, according to a filing with the Securities and Exchange Commission. DealBook »
Activists Seek Short-Term Gain, Not Long-Term Value  | While shareholder activists like Carl Icahn, William Ackman, Nelson Peltz and Ron Burkle often cloak their demands in the language of long-term actions, their real goal is a short-term bump in the stock price, Bill George, a professor at Harvard Business School, writes in the Another View column. DealBook »
Violin Memory Aims to Raise $173 Million in I.P.O. Â |Â Violin Memory, a flash storage company that raised money earlier this year at an implied valuation of about $800 million, is now looking to go public, AllThingsD reports. ALLTHINGSD
‘Godmother of Silicon Alley’ Has Died  | “Red Burns, an educator who gained wide recognition for pushing for more creative uses of modern communications, helping to lead the movement for public access to cable television and starting a celebrated New York University program to foster Internet wizards, died on Friday at her Manhattan home. She was 88,†The New York Times writes. NEW YORK TIMES
JPMorgan Loses Suit Over Billionaire’s Loss  | A New York state judge found JPMorgan Chase liable to Leonard Blavatnik, a Russian-American billionaire, for breach of contract for placing risky mortgage securities in an investment account he held, ordering the bank to pay more than $50 million in damages, Reuters reports. REUTERS
Greece Could Be Eligible for More Aid, German Official Says  |Â
NEW YORK TIMES
Justice Dept. Again Signals Interest in Pursuing Financial Crisis Cases  | The United States attorney general is likely to pursue charges under a civil statute that has become the Justice Department’s favorite tool of late, Peter J. Henning writes in the White Collar Watch column. It remains to be seen whether the public will be satisfied with such action. DealBook »
Two Accused of Stealing Code From Trading Firm  | Two men were charged with stealing computer code from a high-frequency trading firm as they sought to start their own business, the Manhattan district attorney’s office says. REUTERS
Trump Further Sullies For-Profit Schools  | Given Donald Trump’s financial achievements, and lack of modesty, it is no surprise he opened a school to pass on the secrets of his success, but Trump University always seemed liked a dubious enterprise, Daniel Indiviglio of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS
