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Profits in G.M.A.C. Bailout to Benefit Financiers, Not U.S.Profits in G.M.A.C. Bailout to Benefit Financiers, Not U.S.  |  Among the companies that were bailed out by the federal government during the financial crisis, perhaps the most intractable is proving to be the company formerly known as the General Motors Acceptance Corporation. It's a case study in how bailouts can linger and profits, when they do come, flow not to the government but to the Warren E. Buffetts of the world, the Deal Professor writes.

G.M.A.C. was the financial arm of General Motors. In the years leading up to the financial crisis, it was also G.M.'s most profitable unit, which tells you something about the auto industry at t he time. The company earned more profit from lending money to customers than in selling cars.

In 2005, desperate to raise cash, General Motors sold a 51 percent stake in G.M.A.C. to the private equity firm Cerberus Capital Management. Cerberus beat out a rival, Kohlberg Kravis Roberts, for the privilege, spurring BusinessWeek to write that Henry R. Kravis's loss “has to sting.”

During the financial crisis, however, the sting was felt on the other side, as G.M.A.C. staved off collapse thanks only to a government infusion of $17.2 billion. The company was renamed Ally Financial - you have probably seen its catchy commercials on television. The Treasury Department owns 73.8 percent of Ally, with Cerberus retaining an 8.7 percent stake.
DealBook '

DEAL NOTES

Officer for Buffett's Charity Pleads Guilty to Theft  |  Dhaval S. Patel, a former international monitor for the Buffett Foundation, admitted to stealing $46,000 from Warren E. Buffett's charitable organization, The Omaha World-Herald reports. He could face up to 20 years in prison, the newspaper says.
OMAHA WORLD-HERALD

Questions Surround the Secretive Maker of the Tootsie Roll  |  Tootsie Roll Industries, which refuses to hold quarterly earnings calls and shuns journalists, is run by a C.E.O. in his 90s and his 80-year-old wife, without any publicly disclosed succession plan. The company has attracted the interest of activist investors amid lackluster growth in recent years, The Wall Street Journal reports.
WALL STREET JOURNAL

Mergers & Acquisitions '

Icahn Withdraws Offer to Take Refining Company Private  |  Carl C. Icahn, who owns 82 percent of CVR Energy, said on Tuesday that he was dropping an offer to take the Texas refiner private, citing changing market conditions.
DealBook '

IAC Said to Offer More Than $300 Million for About.com  |  IAC/InterActiveCorp, the firm run by Barry Diller, has topped a rival bid for About.com, the Web site owned by the New York Times Company, Bloomberg News reports, citing an unidentified person with knowledge of the matter.
BLOOMBERG NEWS

Heineken Increases Stake in Asia Pacific Breweries  |  Heineken moved a step closer to its goal of taking control of Asia Pa cific Breweries by purchasing shares that brought its stake to 44.6 percent, Reuters reports.
REUTERS

Italian Insurer Said to Put U.S. Unit on the Block  |  Generali, the largest Italian insurer by annual premiums, is looking to sell its life reinsurance business in the United States, a unit that could be worth as much as $1 billion, The Financial Times reports, citing an unidentified person familiar with the matter.
FINANCIAL TIMES

Best Buys Income SlidesBest Buy's Income Slides  |  The electronics retailer posted worse-than-expected second-quarter earnings, badly missing the avera ge analyst estimate.
DealBook '

Seagate Technology Said to Agree to Buy Solyndra Plant  |  Seagate Technology, a Cupertino, Calif.-based maker of computer storage devices, has agreed to buy Solyndra's former manufacturing plant and headquarters building, Reuters reports, citing an unidentified person familiar with the deal.
REUTERS

INVESTMENT BANKING '

UBS Hires Grafstein as Co-Head of M.&A. in the Americas  |  UBS has hired Laurence Grafstein, a veteran deal maker, as a co-head of mergers and acquisitions in the Americas, the Swiss bank announced on Tuesday in an internal memorandum reviewed by DealBook.
DealBook '

Nomura Said to Consider Overhauling Strategy  |  The Wall Street Journal reports: “The insider-trading scandal that has rocked Nomura Holdings this year was the last straw for Japanese regulators, who had already lost confidence in the leadership of the bank's executives over a money-losing push into investment banking overseas, say people with knowledge of regulators' thinking. Now, Nomura's new leaders are discussing the future of that global push as well as how to repair the company's relationship with financial authorities.”
WALL STREET JOURNAL

European Banks Contemplate Cutting More Than Jobs  |  The crisis in Europe may lead investment banks to shutter entire businesses, Bloomberg News reports.
BLOOMBERG NEWS

Santander Sells $2.5 Billion of Bonds  |  The deal was the first sale of senior unsecured bonds by a Spanish bank in more than five months, Bloomberg News reports.
BLOOMBERG NEWS

Pay for Chinese Bankers Lags Counterparts Overseas  |  Jamie Dimon, JPMorgan Chase's chief executive, earns $1.21 million for every $1 billion of profit, while the top executive at the Industrial & Commercial Bank of China makes $9,400 for the equivalent amount, Bloomberg News writes, adding that that gulf is set to widen this year.
BLOOMBERG NEWS

PRIVATE EQUITY '

White House Had a Hand in Private Equity Deal  | < /span> The Obama administration played a role in encouraging the Carlyle Group to invest in a Philadelphia oil refinery, when the imminent closure of the plant could have caused gas prices to rise, The Wall Street Journal reports.
WALL STREET JOURNAL

Once-Dominant Buyout Firms Face Skeptical Investors  |  Some of the private equity industry's big names, like WL Ross & Company and Providence Equity Partners, are facing challenges in attracting new capital, amid increased skepticism on the part of investors, The Wall Street Journal reports. But other firms that have posted strong returns are experiencing a surge of interest.
WALL STREET JOURNAL

French Insurer Prepares to Shed Private Equity Unit  |  Axa has agreed to ter ms for the sale of its majority stake in Axa Private Equity, putting the French insurer on track to spin out its private equity unit before the end of the year, Financial News reports, citing two unidentified people close to the firm.
FINANCIAL NEWS

Property Funds Turn to Wealthy Individuals for Capital  |  Firms including the Carlyle Group and Lone Star have raised money from rich people for risky real estate funds, as institutional investors, the traditional source of capital, pull back, The Wall Street Journal reports.
WALL STREET JOURNAL

HEDGE FUNDS '

Hedge Funds Give Greek Bonds a Fresh Look  |  Reuters reports: “A handful of plucky hedge funds are nibbli ng again at cut-price Greek government bonds, increasingly optimistic that progress in talks between Athens and international lenders will deliver a better principle payout for bondholders.”
REUTERS

City of Scranton Eyes a Hedge Fund Lifeline  |  The Times-Tribune newspaper of Scranton, Penn., reports: “Shunned by conventional banks and the municipal bond market, Scranton City Council is looking toward lenders of last resort - hedge funds - for $18.5 million needed to close a budget gap.”
SCRANTON TIMES TRIBUNE

UBS Executive Said to Plan to Start Hedge Fund  |  Eric Rosen, co-head of UBS's fixed-income, currencies and commodities business for the Americas, is leaving the Swiss bank in September to start a hedge fu nd focused on credit, Bloomberg News reports, citing an unidentified person familiar with the matter.
BLOOMBERG NEWS

Apple Stock Is ‘Hotel California' for Hedge Funds  |  The blog Zero Hedge notes that 230 hedge funds were long Apple stock as of June 30, making it by far the most popular stock for the industry.
ZERO HEDGE

I.P.O./OFFERINGS '

Legacy Investors Challenge Empire State Building I.P.O.  |  The Malkin family, which controls the Empire State Building, needs approval from 80 percent of the units held by legacy investors in order to form a trust and take the building public. But these investors have been vocal in their opposition, Bloomberg News writes.< br /> BLOOMBERG NEWS

Fred Wilson: Relax, Venture Investors Are Supposed to Sell  |  In recent days, early Facebook backers like Peter Thiel and Accel Partners have dumped large blocks of shares on the market, fanning concerns about the future of the social network. But Fred Wilson, a managing partner at Union Square Ventures and an early investor of Twitter, defended the practice.
DealBook '

Summit Midstream Partners Files to Go Public  |  Summit Midstream, which provides services to natural gas firms like Chesapeake Energy, is looking to raise up to $301.9 million in an I.P.O., Reuters reports.
REUTERS

Malaysian Cable Company Plans to R aise More Than $1.5 Billion  |  Astro Malaysia Holdings plans to sell 29.2 percent of its share capital in an I.P.O., according to an updated prospectus, with the deal expected to take place between late September and early October, The Wall Street Journal reports.
WALL STREET JOURNAL

VENTURE CAPITAL '

Entrepreneurs Put a New Emphasis on Revenue  |  Some start-up founders have modified their pitches to prospective investors to emphasize their potential to generate revenue, a sign that the early-stage fund-raising process has changed in the aftermath of Facebook's debut, Bloomberg News reports.
BLOOMBERG NEWS

Sequoia Capital Said to Be Set to Exceed Fund-Raising Goal  |  Bloomberg News reports that the venture capital firm Sequoia “is set to exceed its combined goal of $975 million for a trio of new early-stage funds, according to two people familiar with the matter.”
BLOOMBERG NEWS

Antenna Company Raises $12 Million From Bill Gates and Lux Capital  |  Bill Gates, Liberty Global and Lux Capital are investing in Kymeta, a start-up uses a lightweight material to make antennas intended to improve satellite connections used for broadband Internet.
DealBook '

Online Dating's Next Big Thing Is Offline  |  The New York Times writes: “Several sites are bringing people together the old-fashioned way, with singles parties where people can crowd together at bars while consuming alcohol and flirting.”
NEW YORK TIMES

LEGAL/REGULATORY '

R.B.S. Said to Draw Scrutiny for Business With Iran  |  The Royal Bank of Scotland is being investigated by the Federal Reserve and the Department of Justice for possible violations of sanctions with Iran, after offering information to regulators about 18 months ago, The Financial Times reports, citing unidentified people close to the situation.
FINANCIAL TIMES  |  BLOOMBERG NEWS

For Growth, Better Coordination on Bank Regulation Is Needed  |  Mohamed El-Erian, the chief executive of Pimco, writes that regulato ry agencies can avoid further deterioration of the financial system by working together for the benefit of the public and the economy.
DealBook '

S.E.C. Pays Out First Whistle-Blower Reward  |  Federal securities regulators say they have handed out the first reward under a new whistle-blower program, paying nearly $50,000 to an unnamed person who helped the agency shut down an investment fraud.
DealBook '

TCW Sued Over Carlyle Deal  |  EIG Global Energy Partners, the private equity firm that was spun out of the TCW Group in early 2011, sued the asset manager over its takeover by Carlyle, Reuters reports.
REUTERS

Regions Financial Exa mined for Ties to Recruiting Firm  |  The Wall Street Journal reports: “A federal grand jury is examining ties between Regions Financial Corp. and an executive-recruiting firm that entertained bank executives on golf trips and borrowed from the Alabama lender, according to documents reviewed by The Wall Street Journal and people close to the probe.”
WALL STREET JOURNAL

Restoring Trust in the Futures Market  |  Fixing the confidence gap does not require a wholesale restructuring of the regulatory system, argue the authors. Instead, they say, what is needed is new thinking, a commitment to ethics education and clarification of the laws already on the books.
DealBook '

The Winning Record of Prosecutors on Insider Trading  |  The United States attorney's office for the Southern District of New York has an 8-0 winning record in insider trading cases that have gone to trial under its wide-ranging investigation. Defendants may view that record as a sign that cooperation is their best option, Peter J. Henning writes in the White Collar Watch column.
DealBook '

Public Pensions Named to Lead JPMorgan Lawsuit  |  Bloomberg News reports: “Public pension funds from Arkansas, Ohio, Oregon and Sweden will be lead plaintiffs in a group lawsuit against JPMorgan Chase over trades made by Bruno Iksil, known as the ‘London Whale.'”
BLOOMBERG NEWS