LEHMAN REVISITED  | The Federal Reserve let Lehman Brothers fail more than five years ago. But it wasn’t until Friday that the Fed released transcripts of the 2008 meetings of its Federal Open Market Committee that provide the fullest picture yet of the thinking of top government officials on Lehman’s collapse, Peter Eavis writes in DealBook.
According to the newly released minutes, Ben S. Bernanke, the chairman of the Federal Reserve at the time, “did not debate whether it was right to let Lehman die at the Fed meeting held on Sept. 16, the day after the investment bank filed for bankruptcy,†Mr. Eavis writes, adding, “but from the comments in the October meeting, he appeared to have been aware that the government’s decision to let Lehman fail was coming under intense scrutiny from prominent financial figures around the world who said it was a huge and unnecessary mistake that caused global financial markets to freeze up.â€
On the Fed’s ignorance: The Fed transcripts reveal that officials misread the financial crisis in 2008, repeatedly fretting about “overstimulating the economy, only to realize time and again that they needed to redouble efforts to contain the crisis,†Binyamin Appelbaum writes in The New York Times. On the morning after Lehman Brothers failed, most Federal Reserve officials still believed that the American economy would continue to grow.
The Fed’s understanding of the crisis “was clouded by its reliance on indicators that tend to miss sharp changes in conditions,†Mr. Appelbaum writes, adding, “the Fed also relied on economic models that assumed the existence of smoothly functioning financial markets, limiting its ability to project the consequences of a breakdown.â€
“My initial takeaway from these voluminous transcripts is that they paint a disturbing picture of a central bank that was in the dark about each looming disaster throughout 2008. That meant that the nation’s top bank regulators were unprepared to deal with the consequences of each new event,†Gretchen Morgenson writes in the Fair Game column.
On the wryness of Janet L. Yellen, the current Fed chairwoman: Ms. Yellen was not a full voting member of the Federal Reserve’s policy-making committee, but she nevertheless repeatedly admonished her colleagues for not acting faster, Nathaniel Popper writes in The New York Times. “But even as she pushed for more aggressive policies to deal with the financial crisis and the economic downturn, Ms. Yellen also displayed an ability to disarm her critics with a sort of gallows humor, even in the darkest days,†he writes.
“In the run-up to Halloween, we have had a witch’s brew of news,†Ms. Yellen said at one meeting in 2008. At another, she noted, “East Bay plastic surgeons and dentists note that patients are deferring elective procedures.â€
On the Fed’s aid to other nations: “While reporters and lawmakers focused on the bailouts of American financial institutions, the Fed was quietly pumping hundreds of billions of dollars to nations stretching from Switzerland to South Korea to bolster global banks when dollars were in short supply. European banks were particularly heavy beneficiaries,†Neil Irwin writes in The New York Times.
WHY FACEBOOK BOUGHT WHATSAPP REDUX: THE ADDRESS BOOK  | Facebook’s deal for WhatsApp, which could be worth up to $19 billion, is all about the address book, Jenna Wortham writes in The New York Times. In buying WhatsApp last week, Facebook is betting that social networking’s future will depend not just on broadcasting updates to thousands of “friends†but also on more intimate social connections.
Ms. Wortham writes: “Services like Instagram, Google Plus, Twitter and Facebook encourage users to share from the rooftop every life event and moment as material to be viewed and commented on. The Internet enabled that sort of broad outreach like never before, and the services continue to grow, as more than a billion people have signed up on Facebook alone.
“Yet the popularity of private-messaging applications like WhatsApp, which has more than 450 million users, suggests that despite all the technological advances in recent decades, people still crave to communicate in small groups and often just with one other person at a time.â€
In related news, WhatsApp went dark for several hours on Saturday afternoon because of server issues, the company said. Jan Koum, WhatsApp’s co-founder and chief executive, apologized on Sunday for what was the company’s “longest and biggest outage in years.â€
A CALL FOR GREATER PENSION FUND DISCLOSURE  | Detroit might have gone bankrupt regardless, but its inability to assess the health of its pension system certainly did not help. This is the thinking behind a recommendation by a blue-ribbon panel of the Society of Actuaries for pension officials to disclose a figure they have long resisted discussing: the total cost, in today’s dollars, of workers’ pensions, assuming no credit for expected investment gains over the years, Mary Williams Walsh writes in DealBook. This number is otherwise known as the plan’s total liability, discounted at a risk-free rate.
Plan trustees currently prefer to be given traditional actuarial estimates, which can smooth over impending pension funding disasters. “Such numbers generally comply with current actuarial standards, but as Detroit shows, they can also paper over looming disasters. Detroit’s pension fund was said to be healthy just before the bankruptcy, but it turned out to be several billion dollars short,†Ms. Walsh writes. Not surprisingly, plan trustees and the unions that represent the public workers are suspicious of fuller disclosure, arguing that the risk-free approach will be used to cast public pensions in the worst possible light.
ON THE AGENDA  | The Purchasing Managers’ Index services flash is out at 8:58 a.m. The National Association for Business Economics annual conference begins in Arlington, Va. The Mobile World Congress begins in Barcelona, Spain. Seth Meyer takes over as the host of “Late Night†on NBC at 12:35 a.m. Samuel Zell, the chairman of Equity Group Investments, is on CNBC at 7 a.m. Jon Steinberg, the president and chief operating officer of BuzzFeed, is on CNBC at 10 a.m. “Opening Bell with Maria Bartiromo†debuts on Fox Business Network at 9 a.m.
COMCAST AND NETFLIX GET COZY  | Comcast and Netflix announced an agreement on Sunday in which Netflix will pay Comcast for faster and more reliable access to Comcast’s subscribers, Edward Wyatt and Noam Cohen write in The New York Times. “The deal is a milestone in the history of the Internet, where content providers like Netflix generally have not had to pay for access to the customers of a broadband provider,†they write.
The deal came just 10 days after Comcast announced an agreement to buy Time Warner Cable for $45 billion, which would make Comcast the cable provider to nearly one-third of American homes and the high-speed Internet company for close to 40 percent. It is not yet clear whether the Comcast-Netflix deal violates the principles of net neutrality, where content providers have equal and free access to consumers.
From The Washington Post: The deal will “transform the debate over network neutrality regulation. Officially, Comcast’s deal with Netflix is about interconnection, not traffic discrimination. But it’s hard to see a practical difference between this deal and the kind of tiered access that network neutrality advocates have long feared. Network neutrality advocates are going to have to go back to the drawing board.â€
Chesapeake May Spin Off Oil Field Services Unit  | Chesapeake Energy Corporation, the second-largest producer of natural gas in the United States, said early Monday that it is considering a potential spinoff of its Chesapeake Oilfield Services division, The Wall Street Journal writes.
WALL STREET JOURNAL
Discovery Preparing Bid for Britain’s Channel 5  | Discovery Communications is readying an offer for the British broadcaster Channel 5, The Wall Street Journal writes, citing unidentified people familiar with the situation.
WALL STREET JOURNAL
After WhatsApp Deal, Visions of Magic Numbers  | Facebook’s deal for WhatsApp, which could total up to $19 billion, has raised the question of how much it would take other technology start-ups to walk away from it all, Nick Bilton writes in the Bits blog.
NEW YORK TIMES BITS
The Online Challenge for Banking  | BBVA’s acquisition of Simple increases the possibility that banks can find a way to mastermind their own technological disruption, writes Fiona Maharg-Bravo of Reuters Breakingviews.
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University of California to Lose Millions on Interest Rate Swaps  | The 10-campus University of California system has lost tens of millions of dollars and estimates it will lose as much as $136 million over the next 34 years on interest rate swaps, with some of its biggest losses coming from a swap sold by Lehman Brothers, The Orange County Register reports.
ORANGE COUNTY REGISTER
Deutsche Bank Plans to Cut American Assets  | Deutsche Bank revealed plans to shift assets off of its American balance sheet to cope with new American regulations, The Financial Times writes.
FINANCIAL TIMES
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Banks Set to Gain from Energy Future Holdings Bankruptcy  | Citigroup and Morgan Stanley were part of a group that earned about $735 million in fees in arranging the financing for the $45 billion takeover of Energy Future Holdings, previously known as TXU, in 2007. Now, the two banks are among the lenders expected to gain hundreds of millions by helping the company operate through a possible bankruptcy, The Wall Street Journal writes.
WALL STREET JOURNAL
Cinven to Buy Clinical Research Firm  | Cinven will pay $915 million for the Cincinnati-based Medpace, which operates in more than 45 countries. Cinven purchased the stake from CCMP Capital Advisors, which acquired Medpace in 2011.
DealBook »
Citigroup’s Consumer Finance Unit Draws Private Equity Interest  | Private equity firms including the Fortress Investment Group have approached Citigroup about a potential deal for the bank’s consumer finance business, OneMain Financial, Reuters reports, citing unidentified people familiar with the situation. The bank has not yet made a decision about whether it will sell the business.
REUTERS
S.E.C. Weighing Exemption for Private Equity Over Broker Rules  | The Securities and Exchange Commission is considering giving private equity firms a break after they collected billions of dollars in deal fees without being registered as broker dealers, Bloomberg News writes, citing an unidentified person familiar with the situation.
BLOOMBERG NEWS
Activist Hedge Fund Takes 2.5% Stake in Tribune  | The activist hedge fund Blue Harbour Group has taken a 2.5 percent stake in the Tribune Company and is discussing strategic moves with the company’s management, The Wall Street Journal reports.
WALL STREET JOURNAL
Starboard Wants Red Lobster Spinoff Put to Vote  | The activist hedge fund Starboard Value is expected to reveal a plan on Monday for shareholders to vote on a resolution telling Darden Restaurants to halt any plans to shed its Red Lobster seafood chain unless they get to vote directly on the decision, The Wall Street Journal reports.
WALL STREET JOURNAL
China’s Sina Prepares Weibo for I.P.O.  | Sina, the Chinese Internet platform, has hired Goldman Sachs and Credit Suisse to manage the New York initial public offering of Weibo, its Twitter-like microblogging service, The Financial Times reports.
FINANCIAL TIMES
Allen & Company Rises in Technology Sector  | Marc Andreessen told The Wall Street Journal that Facebook’s hiring of Allen & Company, a boutique investment bank, as an adviser on its initial public offering, was “an opportunity to repay†the bank for previous work it had done for Facebook.
WALL STREET JOURNAL
Online Learning Company 2U Files for I.P.O. Â |Â The online learning company 2U filed on Friday for an initial public offering to raise up to $100 million, Reuters writes.
REUTERS
Mt. Gox Head Resigns From the Bitcoin Foundation  | Mark Karpeles, the chief executive of Mt. Gox, has stepped down from the board of the Bitcoin Foundation, Bloomberg News writes. The move is the latest setback for the virtual currency.
BLOOMBERG NEWS
Washington Lobbying Shop Inspired by Start-Ups  | Inspired by how technology start-ups build their businesses, McBee Strategic Consulting, the lobbying shop founded by Steve McBee, is blurring the lines when it comes to his firm’s services, The Washington Post reports.
WASHINGTON POST
ECommera Raises $41 Million  | The retail software company, eCommera, has collected $41 million in Series C funding led by Dawn Capital, bringing the company’s total to $50 million, TechCrunch writes.
TECHCRUNCH
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Ex-Evercore Managing Director Charged With Insider Trading  | Federal prosecutors contend that Frank Perkins Hixon Jr. used a brokerage account under the name of a woman who had his child to commit insider trading from 2011 until last year.
DealBook »
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Whistle-Blower Lawsuit Puts U.S. Ambassador in the Spotlight  | A lawsuit filed by the plastic pipe manufacturer JM Eagle against a former employee and the law firm that represented him, which was founded by the current United States ambassador to Italy, is raising questions about what employees can do when assembling a whistle-blower lawsuit that is supposedly on behalf of the government, Forbes reports.
FORBES
