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On Wall Street, Time to Mend Fences With Obama

Del Frisco's, an expensive steakhouse with floor-to-ceiling windows overlooking the Boston harbor, was a festive scene on Tuesday evening. The hedge fund billionaires Steven A. Cohen, Paul Singer and Daniel Loeb were among the titans of finance there dining among the gray velvet banquettes before heading several blocks away to what they hoped would be a victory party for their presidential candidate, Mitt Romney.

The next morning was a cold, sobering one for these executives.

Few industries have made such a one-sided bet as Wall Street did in opposing President Obama and supporting his Republican rival. The top five sources of contributions to Mr. Romney, a former top private equity executive, were big banks like Goldman Sachs and JPMorgan Chase, according to the Center for Responsive Politics. Wealthy financiers - led by hedge fund investors - were the biggest group of givers to the main “super PAC” backing Mr. Romney, providing almost $33 million, and gav e generously to outside groups in races around the country.

On Wednesday, Mr. Loeb, who had supported Mr. Obama in 2008, was sanguine. “You win some, you lose some,” he said in an interview. “We can all disagree. I have friends and we have spirited discussions. Sure, I am not getting invited to the White House anytime soon, but as citizens of the country we are all friendly.”

Wall Street, however, now has to come to terms with an administration it has vilified. What Washington does next will be critically important for the industry, as regulatory agencies work to put their final stamp on financial regulations and as tax increases and spending cuts are set to take effect in the new year unless a deal to avert them is reached. To not have a friend in the White House at this time is one thing, but to have an enemy is quite another.

“Wall Street is now going to have to figure out how to make this relationship work,” said Glenn Schorr, an analyst who follows the big banks for the investment bank Nomura. “It's not impossible, but it's not the starting point they had hoped for.”

Traditionally, the financial industry has tended to support Republican candidates, but, being pragmatic about power, has also donated to Democrats. That script got a rewrite in 2008, when many on Wall Street supported Mr. Obama as an intelligent leader for a country reeling from the financial crisis. Goldman employees were the leading source of campaign donations for Mr. Obama, who reaped far more contributions - roughly $16 million - from Wall Street than did his opponent, John McCain.

The love affair between Wall Street and Mr. Obama soured soon after he took office and championed an overhaul in financial regulations that became the Dodd-Frank Act.

Some financial executives complained that in meetings with the president, they found him disinterested and disengaged, while others on Wall Street never forgave Mr. Obama for cal ling them “fat cats.”

The disillusionment with the president spawned reams of critical commentary from Wall Street executives.

“So long as our leaders tell us that we must trust them to regulate and redistribute our way back to prosperity, we will not break out of this economic quagmire,” Mr. Loeb wrote in one letter to his investors.

The rhetoric at times became extreme, like the time Steven A. Schwarzman, co-founder of the private equity firm Blackstone Group, compared a tax proposal to “when Hitler invaded Poland in 1939.” (Mr. Schwarzman later apologized for the remark.)

Mr. Loeb was not alone in switching allegiances in the recent presidential race. Hedge fund executives like Leon Cooperman who had supported Mr. Obama in 2008 were big backers of Mr. Romney in 2012. And Wall Street chieftains like Jamie Dimon of JPMorgan Chase and Lloyd C. Blankfein of Goldman Sachs, who have publicly been Democrats in the past, kept a low profile duri ng this election. But their firms' employees gave money to Mr. Romney in waves.

Starting over with the Obama White House will not be easy. One senior Wall Street lawyer who spoke on condition of anonymity said Wall Street “made a bad mistake” in pushing so hard for Mr. Romney. “They are going to pay a price,” he said. “It will soften over time, but there will be a price.”

Mr. Obama is not without supporters on Wall Street. Prominent executives like Hamilton James of Blackstone, and Robert Wolf, a former top banker at UBS, were in Chicago on Tuesday night, celebrating with the president.

“What we learned is the people on Wall Street have one vote just like everyone else,” Mr. Wolf said. Still, while the support Wall Street gave Mr. Romney is undeniable, Mr. Wolf said, “Mr. Obama wants a healthy private sector, and that includes Wall Street.

“If you look at fiscal reform, infrastructure, immigration and education, they are all bipart isan issues and are more aligned than some people make it seem.”

Reshma Saujani, a former hedge fund lawyer who was among Mr. Obama's top bundlers this year and is planning to run for city office next year, agreed.

“Most people in the financial services sector are social liberals who support gay marriage and believe in a woman's right to choose, so I think many of them will swing back to Democrats in the future,” he said.



What Is a 4G Network?

November 7, 2012, 6:01 pm

From today's mailbag:
Dear Mr. Pogue,
What is the difference between 4G and 4G LTE?
And my reply:
Well, 4G is supposed to mean 4G LTE.
But AT&T has come up with a network type that's halfway in between 3G and LTE - something it calls 4G. It's faster than 3G, but nowhere near as good as LTE. So all the other companies, like Verizon, use the term “4G LTE” to emphasize that they have real 4G - the super fast type. This explains why AT&T can advertise “the biggest 4G network” - because none of its competitors even count 4G area! For them, and for you, LTE is the really desirable network type.



At a Glance: Changing Faces in Washington

The Obama Administration's second term in office will likely feature some new faces atop the key regulatory agencies that oversee Wall Street.

Timothy F. Geithner, the Treasury Secretary, is expected to leave Washington by the end of the year and Ben Bernanke, the Federal Reserve chairman, has told friends that is is not likely to stand for re-election. Andrew Ross Sorkin provided a field guide to handicapping their replacements.

Below is a list of other financial regulators and the status of their jobs.



What Wall Street Needs to Know About Elizabeth Warren

Wall Street has a new foe in Washington. Or more precisely, an old foe in a new role.

Elizabeth Warren, the Harvard professor who has fought to put stricter controls on banking, was elected to the Senate on Tuesday. In her new job, she will have a greater ability to influence financial regulation.

Ms. Warren, the architect of the Consumer Financial Protection Bureau, will have the opportunity to weigh in on a number of the issues that are making Wall Street nervous, as regulators work to implement the Dodd-Frank financial overhaul law.

For example, Ms. Warren has supported a simpler, stronger Volcker Rule, the regulation that bars big banks from betting with their own money. She has also pushed for a new version of the Glass-Steagall Act, the now-repealed law that kept commercial banks out of securities businesses. And she may be sympathetic to arguments to break up big banks.

Still, being just one senator of 100, Wall Street might be able to keep h er power at bay. Opposition from Republicans led President Obama to withdraw her name from consideration to head up the consumer agency. (Richard Cordray ultimately was named the first director of the agency).

“It's still better from the industry's point of view to have her in the Senate than to have her regulating them,” said Douglas J. Elliott, a former investment banker at JPMorgan Chase who is now a fellow at the Brookings Institution.

Ms. Warren, a Democrat from Massachusetts, is also likely to defend the regulatory agencies against budget cuts. She says on her Web site: “We should put real cops on the financial beat in the Commodities Futures Trading Commission and the Securities and Exchange Commission, cops with the resources they need to patrol for fraud and sustain tough prosecutions.”

And she would likely throw her support behind investigations of potential wrongdoing.

“We need to demand that the Justice Department, our state atto rneys general, and federal regulators do more to push back on the big banks and their lobbyists. We need to demand that they investigate those whose illegal actions have broken the economy and, when the evidence warrants it, that they bring public prosecutions,” she writes on her site.

Beyond the specific issues, Ms. Warren is prone to producing memorable sound bites. The industry was stung by President Obama's “fat cat bankers” line - but Ms. Warren has hurled some choice words of her own. Some greatest hits are below:

“Wall Street C.E.O.'s - the same ones who wrecked our economy and destroyed millions of jobs - still strut around Congress, no shame, demanding favors, and acting like we should thank them,” she said in her speech at the Democratic National Convention in September.

“The people on Wall Street broke this country, and they did it one lousy mortgage at a time. It happened more than three years ago, and there has been no r eal accountability, and there has been no real effort to fix it,” she said in a debate last year.

On the Occupy Wall Street movement, she told The Daily Beast last year that she “created much of the intellectual foundation for what they do.”

She once claimed to have supporters in the financial industry:

“Every now and again, I meet with someone who's been very successful on Wall Street, who says, ‘I want to support your campaign because I believe you will save capitalism. I believe in capitalism, and I understand there have to be rules. And they have to be consistently enforced,' ” she told The National Journal this summer.

(She later said she should not have repeated that remark.)



Investigations to Watch in a Second Term

In any election, new politics and policies are often debated in much detail. The impact of the presidential election on law enforcement will be more subtle, however, especially after there was little discussion about policing the markets during the campaign.

The re-election of President Obama will result in less drastic changes than if Mitt Romney had won, but there will be turnover at several agencies. In addition, there is an inevitable reshuffling of positions as some senior law enforcement officials switch to lucrative posts in the private sector. This comes as law firms will happily pay top dollar for the access and credibility that a former official can bring.

A change in leadership at any given agency often has little effect, at least in the short term, on the day-to-day work in investigations and prosecutions.

For example, the wide-ranging investigation of hedge funds that led to the conviction of Raj Rajaratnam, Rajat Gupta and a host of others for insider trading began under the Bush administration and came to fruition in October 2009. The change in the Justice Department leadership had no appreciable impact on the investigation.

I doubt there will be any new, sweeping investigations or legislation involving white-collar crime in the president's second term, barring another economic cataclysm or a hidden corporate fraud. Nevertheless, there are three topics I expect that the administration may address, or be forced to address, in the coming four years:

Foreign Bribery

In a speech the day before the election, Lanny A. Breuer, the head of the Justice Department's criminal division, said that the vigorous enforcement of the Foreign Corrupt Practices Act has been a “signature achievement” of the Obama administration. The government has aggressively pursued a number of cases, particularly against foreign companies, over paying bribes to government officials to obtain business in their countries .

Much like the insider trading investigations, the push against overseas bribery began under President George W. Bush, but the Justice Department has made this a featured player in its corporate law enforcement efforts. More investigations are being pursued in industries that traditionally were not involved in corruption investigations, like pharmaceutical companies.

That aggressive approach seems to have ensnared a global bank. Barclays recently disclosed that the Justice Department and the Securities and Exchange Commission are looking at payments made in connection with securing a large capital infusion from Qatar's investment fund in 2008. A number of government funds made investments during the financial crisis, so other companies and Wall Street banks may be in the cross hairs on this issue.

The question is whether there will be any pushback by multinational businesses swept up in inquiries. The United States Chamber of Commerce recruited in 2011a former attorney general, Michael B. Mukasey, to advocate for changes to the Foreign Corrupt Practices Act to make it more business friendly. But the recent case disclosed by The New York Times related to bribe payments in Mexico by a Wal-Mart unit seems to have derailed that effort.

The Justice Department has been promising new guidance on how it will apply the law, but nothing has been seen yet and any statement is unlikely to restrict its authority to pursue cases. The new Congress may be willing to consider potential changes to the law if a push from the Justice Department into new sectors causes companies to start lobbying for greater protection. A likely theme for any proposed changes would be that it would help create jobs by giving businesses more certainty, a claim that can be difficult to oppose.

Closing Out the Financial Crisis

There have not been many prosecutions of institutions or individuals from Wall Street related to the financial crisis, and the prospect for any new criminal cases is dim. The latest tactic appears to be to repeatedly sue the banks involved in making questionable mortgage loans that were sold to Fannie Mae and Freddie Mac or guaranteed by the government.

There is a good chance the banks will start to push back against the onslaught of lawsuits. The Justice Department sued Wells Fargo for fraud related to loans it made that were insured by the Federal Housing Administration, and the bank responded by arguing that the $25 billion mortgage settlement reached earlier this year precludes further claims against it for the loans.

A recent lawsuit seeking $1 billion in penalties from Bank of America over violations of the False Claims Act for loans sold to Fannie and Freddie may face problems because the two mortgage giants were not, at the time, agencies of the federal government.

Despite all the civil suits and the publicity about redressing fraud during the financial crisis, n o individuals have been named in the recent cases. There is a reasonable likelihood that the cases will be settled with a payment and promise not to act improperly again.

It would have been difficult for a Romney administration to turn the page on pursuing cases from the financial crisis because of his ties to Wall Street that generated suspicion about whether he would go soft on bankers. Mr. Obama, on the other hand, does not have to worry about another election, and could just stop suing the banks over and over again if no individuals are going to be held responsible.

There will always be a sense of frustration about the lack of prosecutions from the financial crisis, but at some point the government may decide it's ready to move on.

The Potential for Scandal

The second term of a president seems to lead to some type of scandal involving possible criminal violations by administration officials. We have seen investigations and Congressional hearings over Watergate, the selling arms to Iran to fund the Nicaraguan contra rebels, a relationship with a White House intern and the disclosure of the identity of a Central Intelligence Agency operative.

Will Mr. Obama be embroiled in an issue of his own during the next four years? We have already seen controversy over “Operation Fast and Furious” that led the House of Representatives to hold Attorney General Eric H. Holder Jr. in contempt, but that has not caught the public's imagination like other scandals have.

Unlike in previous investigations, the law authorizing the appointment of a special prosecutor who can act independently of the Justice Department is no longer in force. But that did not stop Patrick J. Fitzgerald, the former United States attorney in Chicago, from aggressively pursuing perjury charges against I. Lewis Libby, the former chief of staff to Vice President Dick Cheney.

There is no way to know whether a scandal will erupt, or where i t will come from. But if history is any guide, there is a good chance that white-collar defense lawyers will be called upon to represent government officials at some point in the next four years.



For Deal Makers, Few Big Changes Ahead

A second term for President Obama probably means a mixed outlook for deal-making, with some possible upside as the economy continues a slow recovery. In other words, it's the status quo.

The merger market is in a lull. For the first nine months of 2012, worldwide mergers and acquisitions activity is down 16 percent, to $1.7 trillion, from the same period a year ago, according to Thomson Reuters data. The United States market is in a bigger slump, down 21.5 percent from the 2011 period. The number of transactions is also down 13 percent, to 7,605 announced deals from 8,790.

We're likely at a cyclical bottom in terms of M.&A. activity, but any improvement is likely to be modest at best. That's because deal-making is generally driven by the stock market and the economy. The United States is in a mild recovery, but the outlook for Europe and Asia is weaker.

The United States government, of course, can affect the economy and grease the wheels for deal-ma king. With this in mind, here are the important things that deal makers will be watching for in the Obama administration:

The Fiscal Cliff

Deal makers prefer certainty. The uncertainty around “the fiscal cliff” - the simultaneous tax increases and spending cuts set to take effect in January unless Congress acts - will be a big factor in M.&A. in the next few months.

First, the specter of higher taxes is likely to lead to a short-term flurry of deals as people rush to sell their businesses at a lower capital gains tax rate. George Lucas, for example, likely saved as much as $100 million by selling Lucasfilm this year instead of next year when the capital gains rate is scheduled to go up by at least the 3.8 percent surcharge imposed by the Affordable Healthcare Act.

But over all, deal makers are likely to wait until there is some sort of resolution. And whether it is a grand bargain or merely kicking the can down the road again, any agreement is likely to be enough to bolster the outlook for deals.

Taxes

That being said, both the fiscal cliff and any legislative bargain raises the issue of tax increases generally in the Obama administration and their effect on deal-making.

Mr. Obama is on record as wanting both an increase in the income tax rate for high earners and an increase in the capital gains tax rate to 20 percent.

If the president wins on this issue, it still may not be a significant drag on mergers. The data on whether capital gains and tax rates generally impede deal-making is uncertain. Certainly during the Clinton administration, when taxes were higher, M.&.A. was robust.

Regardless of what happens with capital gains and the fiscal cliff, one tax that is likely to be raised in an Obama administration is the carried interest tax on private equity. Will this lead to less deal-making? Private equity says so, but again the data is uncertain, and the industry has been e xpecting the tax to rise for years. And there may be very easy workarounds to avoid this tax anyway by simply having the private equity partners invest directly in the firms. So, don't expect it to change deal activity much.

Another tax piece unrelated to the fiscal cliff is the chance that Congress will pass a tax holiday for American companies to repatriate the trillions of cash held abroad. The Obama administration has been averse to such a holiday, but the sum is getting too big for Congress to continue to ignore, and if there is such a holiday, it will provide more hundreds of billions in cash with which to do deals.

Regulation

The election of Elizabeth Warren to the Senate has some talking of a further crackdown on Wall Street. But she is just one senator, and the Dodd-Frank Act sucked out a lot of the political air toward increased regulation. House Republicans would also no doubt object, and they will be the biggest impediment to more regulati on.

So, at best, the Obama second term likely means more status quo in terms of putting Dodd-Frank Act into effect. The financial regulatory overhaul has been bogged down in battles among regulators and it is expected to be challenged in the courts. So there is a real possibility that some fixes to Dodd-Frank may be made that cure some minor parts of its regulatory overreach or other deregulatory bills passed. And remember that the president did sign the Jumpstart Our Business Start-ups Act to partially deregulate the market for raising capital.

The bottom line is that there's unlikely to be much of a change toward increased regulation of Wall Street and possibly even some deregulation. Either way, deal-making won't be much affected.

National Security

This is one area where Mr. Obama's second term may have a clear upside for deal makers. Mitt Romney had said that he would name China a “currency manipulator” on Day 1 of his administration. This would have upset relations with our largest trading partner at a minimum and may have been indicative to more combative global trade policies. In today's world, where Canada, Australia and Europe are actively seeking to block deals on national securities grounds, Mr. Obama's more conciliatory approach may smooth these wheels for deal-making in an increasingly nationalistic global climate.

Antitrust

The Obama administration has not been as strict as some expected in this area. Indeed, in its first two years, the administration had a similar enforcement record for mergers as the last two years of the Bush administration. Still, the Justice Department allowed Continental Airlines and Delta Air Lines to combine but also blocked the AT&T/T-Mobile tie-up and H&R Block's acquisition of TaxACT. A Romney administration may have been more liberal in allowing mergers, but not much more than the Obama administration.

All of this leads to the conclusion that th ings are likely to remain the same with possibly a bit of an uptick as the economy improves. A second-term Obama administration may affect things around the edges, but that is about it.

Still, there may be a real, unexpected upside for deal-making. To be sure, Mr. Obama is not about to do what Wall Street wants and significantly reduce taxes or deregulate the industry.

But if, now comfortable in a second term, his economic team can push through real tax reform and a longer-term resolution of the fiscal cliff, it will provide needed certainty and avoid economic contraction.

As the housing market finally enters recovery mode, these events are likely to produce added growth. If so, then this will set the stage for further economic growth and more deal-making.



With an Obama Victory, Wall Street Pivots to Plan B

Wall Street went long on Mitt Romney, doling out millions of dollar of donations in the hope of beating back financial regulation. After coming up short on Election Day, the industry is moving to Plan B.

With President Obama having won a second term, lobbyists are readying a varied agenda to influence the makeup of crucial Congressional committees and regulatory agencies while working to avert the so-called fiscal cliff â€" the dreaded spending cuts and tax increases set to kick in on Jan. 1 unless a deal is reached. The Dodd-Frank regulatory overhaul enacted in the wake of the financial crisis also remains a top issue as the industry continues its efforts to temper the rules.

“With the election now over, it is vital that we return to the work at hand, namely, the continued implementation of Dodd-Frank and addressing the fiscal cliff,” Tim Ryan, chief executive of the Securities Industry and Financial Markets Association, Wall Street's main lobbying group, said in a statement on Wednesday.

For the financial industry, the Obama victory is a complicated one.

Wall Street helped bankroll Mr. Obama's first presidential run. But the relationship soured as the administration championed financial regulatory changes. Some executives are still stung by Mr. Obama's unflattering portrayal of them as “fat cats.”

Now, the administration owes little to the banks that embraced his opponent's campaign. Democrats, too, retained control of the Senate, cementing a layer of protection around Dodd-Frank and emboldening the law's chief supporters.

Without a friendly face in the White House, the financial industry will, in part, have to strike a conciliatory tone. On Wednesday, a number of financial lobbying groups circulated statements calling for cooperation with the White House.

Despite their disappointment with the election results, Mr. Obama's second term is unlikely to present a doomsday situation for the nati on's biggest banks. Many executives resigned themselves weeks ago to four more years of Mr. Obama, conceding that much of Dodd-Frank was already baked into corporate strategy.

Morgan Stanley and Goldman Sachs, for example, have already shuttered their proprietary trading desks, banned under the law. Anticipating that large-scale changes to the rules were unlikely, many banks have begun to hire additional compliance officers and assemble the required infrastructure.

With the regulatory landscape unlikely to alter significantly, Wall Street is now pivoting from a broad attack on Dodd-Frank to a more targeted approach to its most contentious rules. A central goal, lobbyists say, is to tame unfinished rules that rein in derivatives trading.

“We urge the president to carefully consider the closeness of the election results as he evaluates his regulatory policy priorities for a second term,” Dale Brown, chief executive of the Financial Services Institute, sai d in a statement on Tuesday night as election returns piled in.

Lobbyists are appealing to more sympathetic members of Congress, urging them to apply pressure on the Commodity Futures Trading Commission, which has proved to be an aggressive foe of the banks. Financial trade groups are also expected to line up behind a new bill in Congress that would undercut the authority of agencies like the trading commission and the Federal Deposit Insurance Corporation. The bill, which a Senate committee is expected to vote on this month, would subject independent regulators to heightened rule-writing standards.

The second Obama term is “not a lost cause,” one lobbyist at a large financial firm said this week.

In some ways, the Obama victory provides more clarity for the banks. Even as they have pushed to delay rule-writing, banks have complained that only a third of Dodd-Frank is complete. The delay, they say, has clouded their ability to hire and arrange resources .

“The banks say, ‘Just tell us what the rules are; we'll figure out how to manage this,'” said Brian Gardner, a Washington research analyst at KBW.

On a more aggressive front, the Chamber of Commerce and other business trade groups are marshaling teams of lawyers at Gibson Dunn and other firms to file lawsuits against some of Dodd-Frank's most contentious provisions.

The courtroom battles could strike down parts of the law that regulators have already finalized. The financial industry, in particular, expects to challenge the so-called Volcker Rule, which bars banks from making many risky bets with their own money.

With the focus shifting slightly away from Dodd-Frank, banks also plan to attack the fiscal cliff and other tax policies, a chief concern among their many corporate clients.

“Sixty-one percent of JPMorgan's American clients say the fiscal cliff is affecting hiring plans,” Tim Pawlenty, the head of the Financial Services Roun dtable, said in a letter to Congress last week. Mr. Pawlenty, a former Republican governor and presidential hopeful, added that Wall Street was urging Washington “to bridge over the fiscal cliff and to do so as soon as possible.” Mr. Ryan of the Securities Industry and Financial Markets Association echoed those calls on Wednesday.

As Wall Street looks to influence policy, it is taking aim at regulatory personnel. The various financial agencies have significant sway in the direction of certain rules.

Gary Gensler, the chairman of the futures trading commission who has aggressively expanded the agency's authority, is running on an expired term. He can continue to serve through 2013 unless the White House reappoints him to another term, an outcome that lobbyists at several New York banks hope to avert.

The banks will further advise the White House and Congress to replace Mary L. Schapiro, head of the Securities and Exchange Commission, who is widely expect ed to leave early next year.

The makeup of Congressional committees poses another challenge to Wall Street. Banks anticipate leadership changes at the top financial committees in the House and Senate, with Sen. Michael Crapo, an Idaho Republican, taking over for Richard Shelby, an old hand and a friend of the banks.

Elizabeth Warren, the senator-elect from Massachusetts, is another wild card for Wall Street. Ms. Warren, a Democrat who made her name in Washington as a fierce critic of Wall Street and the chief architect of the Consumer Financial Protection Bureau, defeated the incumbent, Scott P. Brown, a Republican. Her distaste for Wall Street, bankers fear, will make the president's approach seem tame.

“Wall Street C.E.O.'s, the same ones who wrecked our economy and destroyed millions of jobs,” she said at the Democratic convention in August, “still strut around Congress, no shame, demanding favors, and acting like we should thank them.”


On Wall Street, Obama\'s Re-election Sinks In

President Obama's re-election Tuesday night came as a disappointment to the many on Wall Street who had rallied behind Mitt Romney.

Markets seemed to reflect this sentiment Wednesday morning, with the Standard & Poor's 500-stock index and the Dow Jones industrial average falling modestly. Both indexes were down by more than 1 percent in morning trading. Of course the outcome of the election may have already been factored into the market.

But many looked ahead as the industry speculated about the future of regulation and the economy.

Analysts at Citigroup had been predicting an Obama victory for some time. The talk on Wall Street now moves to budget problems.

“What will matter now is how quickly and how successfully the politicians on both sides of the political spectrum come to an agreement about its massive fiscal cliff,” Geoffrey Dennis of Citigroup said in an interview on CNBC.

Alice Ross, a correspondent for the Financial Times, summed up the bank's reaction in 140 characters or less.

A number of people took to social media to offer their condolences to the financial sector. A Twitter user called “deepfoo” wrote:

The parody account @GSElevator, which claims to tweet snippets of dialogue overheard at Goldman Sachs, sounded glum, with tweets not fit to be printed here.

At the Blackstone Group, two executives found themselves on opposite sides of the political debate. Fortune's Dan Primack noted this on Wednesday:

Daniel Alpert, managing partner of Westwood Capital, began speculating about the next Treasury secretary, with Timothy F. Geithner expected to step down:

Vincent Reinhart, the chief U.S. economist for Morgan Stanley, joined the guessing game on CNBC in a discussion on the Federal Reserve.

“The Fed Reserve, like the Supreme Court, pays attention to elections and they got an implied vote from the American people about policy in terventionism and the weights toward resource slack versus inflation,” Mr. Reinhart said. “And so in some sense it validates the more accommodative stance the Fed Reserve took starting in December.”

In another closely watched race on Tuesday, Elizabeth Warren won a seat in the Senate. Ms. Warren, a Harvard professor who has provoked anger from Wall Street with her calls to rein in banks' risky ways, is now poised to have even more influence.

A financially-minded Twitter user named “IvanTheK” wrote:

It was, all around, a glum day for the advocates of w eaker financial regulation. But there's always next time.



Wall Street Stocks Slump in Wake of Obama Victory

Shares of the nation's biggest banks and financial firms fell in early market trading on Wednesday, as the prospects of a second term for President Obama mean that tougher regulations for Wall Street are here to stay.

For a refresher on what the financial services industry had been hoping for in a Romney administration, check out DealBook's primer from Tuesday.

Here's how the stocks of several major banks were trading right after the opening bell:

Shares in mergers advisory specialists were down as well, perhaps because of concerns that a second Obama administration means that tougher antitrust scrutiny will remain in place, dampening an appetite for deals. (But several bankers and lawyers played down that possibility, arguing that companies needed to find new ways to grow, including through M.&A.)

And shares in publicly traded private equity shops were down as well. Private equity had been a highly visible target during the campaign, owing to Mitt Romney‘s roots in the industry, and many leveraged buyout executives turned out in droves to support the Republican ticket. Such firms could be in line for reduced profitability if the Obama administration moves to raise corporate tax rates on investment activity. That includes carried interest, one of their traditionally biggest sources of income.



Sprint to Buy Spectrum and Customers From US Cellular

OVERLAND PARK, Kan.--(BUSINESS WIRE)--Sprint (NYSE: S) today announced that it has entered into a definitive agreement with U.S. Cellular (NYSE: USM) to acquire PCS spectrum and customers in parts of Illinois, Indiana, Michigan, Missouri and Ohio including the Chicago and St. Louis markets for $480 million in cash and the assumption of certain liabilities. The additional spectrum will be used to supplement Sprint's coverage in these areas as it continues to deploy its Network Vision upgrade and roll out 4G LTE nationally.

“This transaction will enable us to strengthen our business and become a more robust competitor”

“This transaction will enable us to strengthen our business and become a more robust competitor,” said Dan Hesse, Sprint's CEO. “Acquiring this spectrum will significantly increase Sprint's network capacity and improve the customer experience in several important Midwest markets including Chicago and St. Louis. We welcome the new customers in these markets and look forward to providing them with Sprint's unique combination of unlimited plans, an iconic device portfolio and unmatched customer service.”

Under the terms of the agreement, Sprint will acquire 20 MHz of PCS spectrum in the 1900 MHz band in various Midwest markets including Chicago, South Bend, Ind. and Champaign, Ill. and 10 MHz of PCS spectrum in the St. Louis market. In addition, the transaction involves approximately 585,000 U.S. Cellular customers. U.S Cellular will continue its business operations outside of these markets following the closing.

The transaction is subject to regulatory approvals by the Department of Justice and the Federal Communications Commission and is expected to close in mid-2013. In the meantime, the accounts and service of U.S. Cellular customers in these markets will not change. Once the transaction is closed, Sprint will provide additional information on transition plans. Customers with questions can go to USCellularinfo.com to learn more.

The 2012 American Customer Satisfaction Index ranked Sprint No. 1 among all national carriers in customer satisfaction and most improved, across all 47 U.S. industries, during the last four years. Sprint is the only national carrier with Truly UnlimitedSM 4G LTE data, text and calling to any mobile. Everything Data plans with Any Mobile, AnytimeSM, which includes unlimited Web, texting and calling to and from any mobile in America while on the Sprint Network, start at just $79.99 per month (excludes surcharges and taxes) for smartphones. Sprint offers a wide selection of 4G LTE smartphones and has launched 4G LTE in 32 cities and expects that 4G LTE will be available in more than 115 additional cities in the coming months.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

* This news release includes “forward-looking statements” within the meaning of the securities laws. The statements in this news release regarding network performance, coverage and capabilities, business and network efficiencies, migration of services new technologies, timing of deployment, and products and services, as well as other statements that are not historical facts, are forward-looking statements. The words “estimate,” “will,” “project,” “forecast,” intend,” “expect,” “believe,” “target,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are estimates and projections reflecting management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, development and deployment of new technologies; efficiencies and cost savings of multimode technologies; customer and network usage; customer growth and retention; service, coverage and quality; availability of devices; the timing of various events and the economic environment. Sprint Nextel believes these forward-looking statements are reasonable; however, you should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date of this release. Sprint Nextel is not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of this release. Sprint Nextel provides a detailed discussion of risk factors in periodic SEC filings, including its annual report on Form 10-K for the year ended Dec. 31, 2011, in Part I, Item 1A, “Risk Factors,” and in Part II, Item 1A, “Risk Factors,” of its quarterly report on Form 10-Q for the period ended September 30, 2012.

About Sprint Nextel

Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served nearly 56 million customers at the end of the third quarter of 2012 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. The American Customer Satisfaction Index rated Sprint No. 1 among all national carriers in customer satisfaction and most improved, across all 47 industries, during the last four years. Newsweek ranked Sprint No. 3 in both its 2011 and 2012 Green Rankings, listing it as one of the nation's greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.



Wall Street Wakes Up to a 2nd Obama Term

WALL STREET WAKES UP TO A 2ND OBAMA TERM  |  Barack Obama won a second term as president after a drama-filled election night on Tuesday. For the financial industry, it was a complicated moment. Wall Street employees had rallied behind Mitt Romney, a former private equity executive, and many were no doubt disappointed with the results.

And yet, Mr. Obama's second term “might not be a doomsday situation” for Wall Street, write Ben Protess and Jessica Silver-Greenberg in DealBook. “In many ways, the industry has already adjusted to the new regulatory environment, and the administration might rein in its fervor for change.” Democrats kept control of the Senate on Tuesday, cementing a layer of protection around the Dodd-Frank law. At least Wall Street knows roughly what to expect.

Still, there's a new wildcard in Washi ngton. Elizabeth Warren was elected senator from Massachusetts, defeating the incumbent Scott P. Brown. Ms. Warren, the Harvard professor behind the Consumer Financial Protection Bureau, is a well-known Wall Street opponent who is likely to support stricter controls on the industry (with rhetoric to make the president's “fat cat bankers” comment seem tame).

Don't shed too many tears for Mr. Romney - he can always return to a career in high finance, writes Steven M. Davidoff in the Deal Professor column. If he wants it, Mr. Romney could probably land a high-paying job as a senior adviser (or just a professional schmoozer), following similar moves by Tony Blair, Dan Quayle, Al Gore and even Bill Clinton. At the very least, Mr. Romney, who turned down a potentially lucrative offer from Julian Robertson four years ago, may find it hard to “pass up the occasional $100,000 speaking engagement,” Mr. Davidoff says.

While the president spoke of “bu ilding consensus” in his victory speech, others fear that paralyzing bickering may return. Sergey Brin, the Google co-founder, proposed a solution in a blog post on Tuesday: he asked the winners to “withdraw from your respective parties and govern as independents in name and in spirit.” Mohamed El-Erian, Pimco's chief executive, sounded a skeptical note, writing in a blog post for The Financial Times that while investors may “continue to hope for political Sputnik moments,” they are likely to be faced with the familiar set of broad economic concerns.

In the wake of the election results, stock index futures were slightly higher early Wednesday morning, suggesting a solid start to trading, according to Reuters. While a few hedge fund parties were spoiled last night, others in the industry were pleased. “I'm delighted that President Obama has won,” said George Soros, the powerful Democratic donor. “Hopefully the Republicans in office will make better partn ers in the coming years, most urgently in avoiding the so-called fiscal cliff.”

ON THE AGENDA  |  As the recovery continues from last week's storm, Jefferies plans to donate today's trading commissions to the relief effort. Kraft Foods, Macy's and Time Warner report earnings before the market opens. CBS and Qualcomm announce results this evening. Wilbur Ross is on CNBC at
7:15 a.m, and Marc Andreessen of Andreessen Horowitz is on CNBC at 3:10 p.m. A Claude Monet painting that was owned by the family of Herb Allen is scheduled for auction at Christie's this evening.

BNP PARIBAS PROFIT DOUBLES  |  The French bank BNP Paribas said its net profit rose to 1.3 billion euros, or $1.7 billion, in the third quarter, compared with 541 million euros a year earlier. The bank, which has been reducing its exposure to euro zone countries, said it had reached its capital adequacy targets ahead of schedule. A strong performance in its investment banking unit bolstered income, the bank said, cautioning that last year's lackluster results made the picture this quarter look rosier, reports David Jolly in DealBook.

Mergers & Acquisitions '

Gulf Oil of India to Buy Houghton International for $1 Billion  |  The Gulf Oil Corporation of India has agreed to buy the chemical and lubricant company Houghton International for $1 billion.
DealBook '

Morgan Stanley Said to Be Selling Its Indian Private Bank  | 
REUTE RS

TCW's Sale to Carlyle in Doubt  |  Reuters reports: “A federal judge in Los Angeles has issued a tentative ruling that could block a sale of asset manager TCW Group to private equity firm The Carlyle Group.”
REUTERS

Financial Times Up for Sale, Report Says, but Pearson Says Not So Fast  |  The British publisher Pearson is entertaining offers for The Financial Times that could lead to a much-anticipated sale, Bloomberg News reports. But Pearson has moved to try to discredit the report.
DealBook '

Netflix's Poison Pill Has a Shareholder-Friendly Flavor  |  In seeking to prevent a sale of the company on the cheap, Netfl ix tries to be noncontroversial. But its battle with the activist investor Carl Icahn is far from over, writes Steven M. Davidoff in the Deal Professor column.
DealBook '

INVESTMENT BANKING '

Morgan Stanley's Fix-It Job in Fixed Income  |  Colm Kelleher, who was named the sole head of Morgan Stanley's securities arm on Monday, faces some significant challenges in transforming the bank's fixed-income division.
DealBook '

Morgan Stanley Had Fewer Losing Days Last Quarter  |  The firm's trading business lost money on eight days in the third quarter, compared with 31 days a year earlier, Bloomberg News reports.
BLOOMBERG NEWS

ING to Cut 2,350 Jobs  |  The Dutch financial services company reported a 64 percent drop in third-quarter profit.
BLOOMBERG NEWS

French Banks Embrace Securitization  |  French banks are increasingly turning to a practice more commonly seen in the United States, and one that “led to huge losses not so long ago,” The Wall Street Journal writes.
WALL STREET JOURNAL

Goldman Partners Cash In Stock Options  |  More than 30 Goldman Sachs executives made a combined $21.8 million from the transactions, The Wall Street Journal reports.
WALL STREET JOURNAL

PRIVATE EQUITY '

McGraw-Hill Said to Be in Talks With Apollo Over Education Unit Sale  |  McGraw-Hill has begun holding talks with Apollo Global Management over a potential sale of its education unit, though any deal might yield less than expected, a person briefed on the matter said on Tuesday.
DealBook '

Bain Expects a Private Equity Rebound in Southeast Asia  | 
BLOOMBERG NEWS

China Fund Said to Approach Timber Deal With Brookfield  | 
WALL STREET JOURNAL

HEDGE FUNDS '

Peltz Said to Take Stake in Danone  |  The activist investor Nelson Peltz plans to begin a campaign against the French food maker Danone, having acquired a 1 percent stake in the company, according to a person briefed on the matter.
DealBook '

Hedge Funds Had a Lackluster October  |  Hedge funds lost 1.9 percent last month as stocks fell, according to data compiled by Bloomberg.
BLOOMBERG NEWS

I.P.O./OFFERINGS '

Evernote Avoids an I.P.O. For Now  |  “Everyone I know who is running a public company is not having a good time,” Phil Libin, the chief executive of Evernote, told The Wall Street Journal. “We just want to del ay.”
WALL STREET JOURNAL

VENTURE CAPITAL '

Fab.com Acquires Its Indian Partner  |  The online design shop Fab.com is buying True Sparrow Systems, its technology partner in India, in a deal that was said to consist of cash and stock.
TECHCRUNCH

Benchmark Pares Down Its Web Site  |  The venture capital firm is taking a minimalist approach to its online presence.
BUSINESS INSIDER

LEGAL/REGULATORY '

Big Bet Sours, Imperiling Small Firm  |  Rochdale Securities, which is known for employing the banking analyst Dick Bove, is in negotiations to sell itself or receive a cash infusion from outside investors.
DealBook '

Restructurings and the Impact of Credit-Default Swaps  |  A disclosure requirement might be one way to address the “empty creditor” problem that comes up in times of financial distress, writes Stephen J. Lubben in his column, In Debt.
DealBook '

Morgan Stanley Looks to End Arbitration Case Over Facebook I.P.O.  | 
REUTERS

Former Swiss Banker Pleads Guilty to Aiding Tax Evaders  | 
REUTERS

Greece to Vote on $23 Billion in Cuts  | 
NEW YORK TIMES

Suzuki Retreats From U.S. Automobile Market  |  “It came as little surprise to most analysts when Suzuki announced late Monday that it would stop selling automobiles in the United States and put its American unit into Chapter 11 bankruptcy,” The New York Times reports.
NEW YORK TIMES



Gulf Oil of India to Buy Houghton International for $1 Billion

LONDON - Gulf Oil Corporation of India agreed on Wednesday to buy the chemicals and lubricants company Houghton International from the private equity firm AEA Investors for $1 billion.

Gulf Oil, which is part of the Indian conglomerate Hinduja Group, said it would use the strong presence of Houghton, based in Houston, across the United States, Europe and Asia to expand its lubricants operations, primarily in the industrial and automotive sectors.

Gulf Oil is controlled by the Indian billionaire Hinduja brothers, who operate companies across a number of sectors like energy, media and banking.

Gulf Oil, based in Hyderabad, India, manufactures lubricant products for the agricultural, automotive, and industrial sectors. Houghton will continue to be run as a separate business. The acquisition will be made through Gulf Oil's British unit, according to a company statement.

Houghton reported pretax sales of $132 million for the 12 months through Sept. 30, o n revenues of $858 million, Gulf Oil added.

AEA Investors, based in New York, had acquired Houghton in 2007 for an undisclosed amount.



B.N.P. Paribas\' Profit Doubles in Third Quarter

PARIS - B.N.P. Paribas, the largest French bank, said on Wednesday that its net income more than doubled in the third quarter, lifted by a strong performance in its investment banking unit, and that it had reached its capital adequacy targets ahead of schedule.

The bank's net profit rose to 1.3 billion euros, or $1.7 billion, in the three months through Sept. 30, compared to 541 million euros in the same period a year earlier. The firm's corporate and investment banking unit posted pretax profit of 732 million euros, up 7.3 percent, as both the fixed-income and equity and advisory segments performed well.

The bank noted that results were flattered by the comparison to the year-earlier period, when the sovereign debt crisis in Greece and other countries had a significant impact on European banks' earnings, as American money market funds reduced loans to the region.

B.N.P. Paribas and its rivals have since worked to secure their balance sheets by selling do llar-funded assets and cutting exposure to euro zone countries that the market considered to be risky. The French firm's corporate and investment bank division cut its risk-weighted assets by 45 billion euros, compared with the third quarter of 2011.

Aggressive action by the European Central Bank, which has promised to purchase bonds to hold down euro zone governments' borrowing costs, has also helped to restore a relative sense of calm to the euro zone.

B.N.P. Paribas said that at the end of September it had a 9.5 percent Basel III common equity Tier 1 ratio, a measure of a lender's ability to weather financial shocks, taking it above its 9 percent target. The figure puts the French bank ahead of many of its global peers.

Jean-Laurent Bonnafé, the bank's chief executive, said the results showed the bank's “resilience in a challenging economic environment,” adding that B.N.P. Paribas was now “one of the best-capitalized amongst the leading global ban ks.”

B.N.P. Paribas' overall revenue fell 3.4 percent to 9.7 billion euros, dragged down by a 774 million euro charge connected to the value of the firm's own debt.

Adjusted for one-off costs, the bank's results surpassed market expectations, Jon Peace, a banking analyst at Nomura International in London, told investors in a research note on Wednesday. The bank's success in meeting its capital targets early also creates “expectations for a decent cash dividend payout for 2012,” Mr. Peace added.

Shares in the French bank rose 4.2 percent in early morning trading in Paris.

Last month, the ratings agency Standard & Poor's cut B.N.P. Paribas' credit rating by one notch, to A+/A-1 from AA-/A-1+.

S.&P. warned the French financial sector faced growing risks from the weakness in the euro zone, as well as the possibility that French real estate prices might decline. The ratings cut brings the B.N.P. Paribas' rating in line with those of its French rival Société Générale, which reports earnings on Thursday, as well as other global lenders like JPMorgan Chase and HSBC Holdings.



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