Mortgage Servicer’s Ties Raise Regulatory Concern

Mortgage servicers collect money from homeowners and distribute those payments to lenders. It’s a fairly boring business, but not to William C. Erbey.

The 64-year-old billionaire has built a servicing empire of mind-aching complexity that plays a huge role in the nation’s housing market. Mr. Erbey’s flagship company, Ocwen Financial, now services about one of every four subprime mortgages in the United States.

“He’s a very smart guy,” said Lawrence Bossidy, who worked with Mr. Erbey at the finance unit of General Electric in the late 1970s.

“Brilliant,” said Leon Cooperman, founder of the hedge fund firm Omega Advisors, which invests in one of Mr. Erbey’s companies.

Now, Mr. Erbey’s smarts â€" and his collection of companies are being tested. State and federal regulators are concerned that Ocwen is mishandling some of the mortgages it now services, citing examples of shoddy paperwork and faulty technology.

Regulators and investors, which actually own most of the loans Ocwen services, are also questioning the unusual arrangements between Ocwen â€" “new co” backward â€" and four other publicly traded companies where Mr. Erbey is chairman. The companies do things from buying up delinquent loans to renting out foreclosed houses.

In effect, Mr. Erbey’s enterprise has become a complex financial services group, but without the regulatory scrutiny that a bank must face.

“There is no question that Bill Erbey is clever, but I am not sure that is such a good thing all of the time,” said Jeffrey Lewis, a senior portfolio manager at TIG Securitized Asset Fund, which is betting on the decline of one of Mr. Erbey’s companies.

These complexities have helped increase investors’ returns on the theory that the five companies are worth more separately than if they were included in a single entity.

In an interview on Thursday, Mr. Erbey said that spinning off multiple companies made it clearer to investors what each entity did. “Investors get a much easier story to digest,” he said.

But in the view of critics, these businesses are rife with potential conflicts because some aren’t entirely separate from each other.

For example, Ocwen and a spinoff, Altisource Portfolio Solutions, were employing the same chief risk officer, who was reporting directly to Mr. Erbey in both capacities, according to New York’s top banking regulator.

Ocwen also contracts with some of Mr. Erbey’s other companies. And some of the other companies hire Ocwen.

According to executives at Ocwen, all transactions between the companies are at “arm’s length,” but to some investors, it is not clear whether the companies are overcharging for their service and whether those costs are being passed on to the mortgage bond investors. Mr. Erbey said the company disclosed these costs, and they are consistent with industry standards.

Critics say the relationships raise questions about whether shareholders in some of the companies are benefiting at the expense of shareholders in the other companies.

“A big question is why these companies are so focused on each other and yet needed to be separated,” Mr. Lewis said.

In the case of one of Mr. Erbey’s companies, Home Loan Servicing Solutions, it now works only with Ocwen. Home Loan Servicing Solutions was created to purchase mortgage servicing rights from the banks. Ocwen actually services the loans.

By providing financing for Ocwen’s servicing business, Home Loan Servicing helps bolster Ocwen’s returns. And Mr. Erbey owns about 13 percent of Ocwen, but a much smaller stake in Home Loan Servicing, which means that, in theory, he has more of a stake in Ocwen’s success.

Mr. Erbey said that investors in Home Loan Servicing were being compensated by the sizable dividend that the company pays, and that the company was working to expand its business relationships beyond Ocwen.

Investors have seemed willing to overlook any potential pitfalls in the unusual corporate structure. Helped by a flood of new servicing business, Ocwen’s shares more than tripled in value from the end of 2011 to the end of last year.

But its stock price has recently tumbled in the wake of fresh scrutiny of Ocwen from Benjamin M. Lawsky, New York’s superintendent of financial services, who sent a letter to Ocwen earlier this week demanding more details about the relationships between the companies.

Mr. Lawsky, who earlier this month halted the transfer of $39 billion of mortgage serving rights to Ocwen from Wells Fargo, said he was concerned that this tangled web “could create incentives that harm borrowers and push homeowners unduly into foreclosure.”

His office has installed an independent monitor at Ocwen who has found examples of loose record-keeping and other clerical issues.

In a conference call with analysts on Thursday, Ocwen executives said they were investing in quality control. The company is also working to originate more of its own mortgages, which it can service.

Supporters of Ocwen say the recent regulatory heat has obscured the company’s relative success at modifying mortgages.

While some state and federal regulators and housing advocates have criticized the servicing companies broadly for frustrating homeowners with sloppy paperwork, erroneous fees and inadequate customer support, others say that Ocwen does a good job in granting mortgage modifications to troubled borrowers.

“We get more principal reductions out of Ocwen than we do out of anyone else,” said Bruce Marks, who heads the Neighborhood Assistance Corporation of America, a nonprofit housing advocacy group.

Still, the question hovering over Mr. Erbey’s empire is whether the increased regulatory scrutiny will slow the growth of Ocwen’s servicing pipeline.

Analysts said the amount of mortgages that the company services has grown nearly sixfold since 2010, thanks to a shift in the mortgage industry. Large banks, weighed down with legal and regulatory problems, are selling much of their subprime servicing rights to firms like Ocwen.

On Thursday, Ocwen said its net income in the fourth quarter increased to $105 million, from $65 million in the same period a year ago.

“I am not concerned” about possible conflicts, said Mr. Cooperman, the hedge fund investor. “This guy’s life is his business.”

Friends described Mr. Erbey as “maniacal” in his efforts to keep expanding his business as the regulatory environment shifts. They say he works 80-hour weeks in a simple office on the island of St. Croix, where he lives. Investors say he moved to the Virgin Islands to help lower Ocwen’s tax bill.

In the interview on Thursday, Mr. Erbey pointed to one of his promising new ideas: a company that buys up pools of distressed mortgage loans. If the loans are foreclosed on, the company can rent out the houses.

He said there was great opportunity for growth in the single-family rental market.

At the end of last year, its first year in business, the company had leased only about a dozen homes.

“I feel good about what we do, and we make a lot of money doing it,” Mr. Erbey said. “I think more like an investor than an employee â€" that is what my investors like.”

A House With a Modified Loan Is a Symbol of Servicers’ Tug of War With Investors

A small, run-down house in Uniondale, N.Y., may sum up why bad blood is brewing between some of the biggest players in today’s housing market â€" and why that tension may hamper the nation’s attempts to recover from years of painful foreclosures and depressed housing values.

On one side of the divide are the investment firms that funnel trillions of dollars into the housing market, helping people get mortgages. On the other is Ocwen Financial, a relatively unknown company that has come to occupy a large and crucial presence at the center of the mortgage market in recent years.

As a mortgage servicer, Ocwen collects monthly payments from borrowers and then distributes that money to the investors and banks that actually hold the loans. For struggling homeowners, Ocwen steps in and can modify the terms of loans to make them more affordable. It is that activity that is causing the big investors to find fault with Ocwen.

In short, the investment firms are concerned that they are taking unnecessary losses when Ocwen modifies loans. And one subprime mortgage, made in 2007, illustrates why they are suspicious.

That mortgage, for $382,500, was packaged with hundreds of other loans into a bond, forgettably named MSAC 07 NC4. The Wall Street giant Morgan Stanley sold that bond to investors in 2007. As the housing bust took its toll, most of the borrowers whose loans were in the bond fell behind on their payments, saddling the bond’s owners with large losses.

Despite the distressed state of the mortgage loans, Ocwen took over the right to service them after the bust, collecting a set fee each month for collecting loan payments and cutting deals for homeowners. And today the bond spits out reams of data each month that allow the investors to track closely how Ocwen is handling each loan.

By cross-referencing the bond data with property records, it appears that the $382,500 mortgage is on the house in Uniondale, which was purchased for $425,000 in 2006. The home, at 573 Northern Parkway, is not well maintained today, unlike many of the other houses on this unpretentious Long Island street. No one answered when a reporter knocked on the front door. Emails and phone calls to the person listed as owner of the house were not returned.

The bond’s data suggest the Ocwen did quite a big favor for the borrower behind this mortgage recently. The borrower listed in county records had not made a payment on the loan for over six years, according to the data. Yet in January, Ocwen modified the loan.

The amount owed on the loan is now $176,085, the bond disclosures say, less than half the mortgage’s original amount. The interest rate was also slashed. The overall monthly payment was reduced to $601.38, from $2,314.73, according to the data. The borrower has made a payment in recent weeks.

When modifying loans, the rules of the bond demand that Ocwen carry out a crucial comparison. It is supposed to calculate the value of the future cash flows from the loan after the modification being considered. If that sum is less than the cash that could be collected from foreclosing on the house and selling it, Ocwen is supposed to foreclose on the home, not modify the mortgage.

It is hard to know what Ocwen could get from selling 573 Northern Parkway right now, but an estimate on Zillow’s website says the house is worth around $260,000. That’s considerably more than the $176,085 that the borrower owes on the house after the modification. Investors in the bond might wonder whether money they could have recovered has in fact been eaten up by the modification.

Ocwen declined to comment on the borrower’s payment history or the terms of the modification, but Katarina Wenk-Bodenmiller, a spokeswoman, said Ocwen estimated that the property had a very different value than Zillow’s website had arrived at.

“Zillow valuations are not always accurate,” she said in an email, adding that Ocwen thought the property was worth around $186,000. The company believed that it would most likely recover no more than $167,000 in a foreclosure, perhaps far less if it took a long time to complete, Ms. Wenk-Bodenmiller said.

The $382,500 mortgage may be an outlier. Still, investors are scouring bond data to see if a pattern of excessive generosity exists. They wonder if Ocwen is keeping as many loans current as possible to maximize the revenue it gets from servicing loans.

And the investors point out that Ocwen often promotes the fact that it modifies more subprime mortgages than its rivals.

On Thursday, Ocwen’s chief executive, Ronald M. Faris, was asked on an investor call whether Ocwen was looking out for the interest of bond investors. “We have controls in place and have been servicing, and will continue to service, in accordance with the servicing agreements for each individual loan that we service,” he replied.

Many homeowner advocates ardently support Ocwen’s modifications. They note that the losses booked when foreclosing on a subprime loan are usually so large that modifications will nearly always lead to the best financial outcome for investors.

“When you do principal reductions, it benefits everybody long-term,” said Bruce Marks, chief executive of the Neighborhood Assistance Corporation of America, a nonprofit housing advocacy group. “You can’t get let their greed get in the way of doing the right thing for everybody,” he said, referring to the bond investors.

Regulators that have taken aim at Ocwen in recent months for its practices also face a dilemma. While they may have raised questions about the company’s practices, the firm may in fact be more efficient, and more supportive of homeowners, than its rivals. As the regulators lean on Ocwen, it may hamper its ability to grow, leaving more servicing in the hands of large banks, which were criticized for the way they handled the torrent of foreclosures after the financial crisis.

At the same time, however, the investors’ concerns cannot be ignored. They may be less likely to put money behind mortgages if they fear that companies like Ocwen won’t properly represent their interests.

The tensions would come to head if the investors sued Ocwen over generous modifications. But Mr. Marks, the consumer advocate, is skeptical that the investors will go to such lengths. “We’ve heard these empty threats for seven years,” he said.

Patton Boggs in Early Merger Talks With Squire Sanders

Patton Boggs, long a major force in law and in lobbying on Capitol Hill, is in merger talks with Squire Sanders, an international firm that was founded in Cleveland. The possible combination comes as Patton Boggs is trying to navigate changes in the legal industry since the 2008 financial crisis.

The two firms issued a joint statement saying that they are in the “very early stages” of talks, which, if successful, would result In a huge firm, with some 1,700 lawyers in 45 offices in 22 countries.

Patton Boggs, in addition to offices in several cities in the United States, has offices in the Middle East, which could complement the Squire Sanders offices in Europe, Asia and Latin America. When contacted, both firms said they were declining to comment further until they determined whether to proceed with the matchup.

Patton Boggs had been in merger talks last fall with the Texas-based law firm Locke Lord, but the talks ended. No official reason was given, although some legal experts said there might have been hesitancy about Patton Boggs’s liability if the Chevron Corporation follows through on its threat to sue in a long-running dispute over damage to Amazon rain forests.

In recent weeks, Patton Boggs announced it would be closing its office in Newark because its profitability had fallen. That came on the heels of the firm agreeing to represent Gov. Chris Christie of New Jersey in the scandal over lane closings at the George Washington Bridge.

Squire Sanders has about 1,300 lawyers and represents blue-chip clients like 3M, Barclays, BP, Boeing and DuPont. It was founded in 1890 and also has a Washington, D.C., office.

Patton Boggs was founded in 1962, and is noted for its lobbying prowess. The name partner Thomas Boggs played a crucial role in winning a bailout for Chrysler in 1979. In the past year, the firm has downsized twice, and is now in the 400-lawyer range, as its revenues slid 6.5 percent from 2011 to 2012 and its profits per partner, a key measurement for firms, fell by 15 percent.

Like dozens of other firms, Patton Boggs has been seeking to combine with a counterpart firm where there are no conflicts over representing clients.

Several sets of talks among major firms have been scrubbed over lawyer reluctance to part with clients. Even so, there were a record 87 such combinations, of all sizes, last year.

PepsiCo Tells Activist Investor Its Answer Is Still No

PepsiCo has rejected a proposal from Nelson Peltz, a prominent activist investor. Again.

In a letter to Mr. Peltz on Thursday, the company’s presiding director said PepsiCo still opposed the investor’s proposal for the company to spin off its North American beverage business and keep its snack food business. Last week, Mr. Peltz renewed his call for such a split, after the company said it had decided against it.

“I am writing to advise you that the board and management are comfortable and in complete alignment in rejecting your proposal,” the presiding director, Ian Cook, said in the letter to Mr. Peltz on Thursday. “In short, the board and management have concluded that the financial engineering you propose erodes value for shareholders rather than creates value.”

Companies often take a deferential tone when one of the investors speaks up with an idea. In this case, PepsiCo used some form of the word “reject” no fewer than three times.

Mr. Peltz’s firm, Trian Fund Management, which owns 0.81 percent of PepsiCo, said last week that it would go directly to shareholders with its case for splitting the beverages and snacks businesses into two publicly traded companies. The firm said it was “highly disappointed” with the company’s decision to rebuff the proposal after a strategic review.

PepsiCo announced the results of that review this month, citing the free cash flow generated by the beverage business as one reason to keep it. Mr. Peltz, who unveiled a version of the proposal last summer, countered that the beverage business “can generate far more cash flow under focused leadership,” if it were “freed of allocated corporate costs and bureaucracy.”

But that argument is still not gaining traction among PepsiCo’s senior ranks. In its letter on Thursday, the company said it had concluded that “much of Trian’s data is selective and, in many instances, misused.”

“We trust that you appreciate the seriousness with which we have examined your observations and proposal and the firmness with which we reject the proposal to separate the businesses,” Mr. Cook said in the letter, which was disclosed in a regulatory filing.

“We welcome our shareholders’ suggestions for enhancing value,” he went on. “However, after fully considering and rejecting your proposals, the board and management have turned their attention to running the integrated company for the benefit of all shareholders and delivering the financial commitments projected.”

A representative of Trian Fund Management declined to comment.

Jos. A. Bank Rejects Latest Men’s Wearhouse Bid, but Agrees to Meet

Jos. A. Bank said on Thursday that its board had rejected Men’s Wearhouse‘s newest takeover bid, worth nearly $1.8 billion, but said that it was willing to meet to try and agree on a higher price.

The move is the latest turn in a drama that has played out publicly for months, beginning with Jos. A. Bank making an unsolicited and ultimately failed bid to buy its larger rival. Men’s Wearhouse then turned the tables, going hostile with its own takeover offer.

Earlier this month, Jos. A. Bank instead announced a plan to buy Eddie Bauer for $825 million, a maneuver intended to  both  frustrate its unwanted suitor’s hostile advances and goad Men’s Wearhouse into offering more money.

That happened earlier this week, when Men’s Wearhouse raised its takeover bid to $63.50 a share from $57.50 a share.

In a letter sent to its rival’s board on Thursday, Jos. A. Bank wrote that it considered even the latest offer too low, and that it considered the Eddie Bauer deal likely to generate real value for shareholders. But the menswear retailer added that, since its fellow suit seller had indicated a willingness to bid even more under certain conditions, it was willing to open talks.

Jos. A. Bank’s ability to break off the Eddie Bauer deal arises from several escape hatches built into that transaction, including the right to walk away if an offer that promises more value for its shareholders â€" namely a high-enough bid from Men’s Wearhouse â€" emerged.

Jos. A. Bank added that it would afford its suitor only a limited amount of time to act.

“Given the compelling nature of the Eddie Bauer transaction from a shareholder value creation standpoint, and in light of its certainty of closing, we are only prepared to give you a limited amount of time to come forward with your best offer,” Robert Wildrick, the company’s chairman, wrote in the letter.

Start-Up That Analyzes Twitter for Wall Street Raises Financing

Eagle Alpha, a start-up that mines social media and the web for market-related information, is expanding with backing from a handful of individual investors.

The company, which is based in Dublin with operations in New York and London, is expected to announce on Friday that it has raised $1.5 million from a group of current and former senior executives at banks and hedge funds. The money will help the start-up compete in a field that is becoming increasingly crowded.

Emmett Kilduff, the founder and chief executive, is hoping that the new investors will open doors for the young company.

“We didn’t want money for money’s sake,” he said in an interview on Thursday. “I wanted checks from people who were connected on Wall Street or the City of London.”

While Mr. Kilduff said his company is taking on 13 new investors, whom he described as senior figures in finance, he agreed to disclose the name of only one, Guglielmo Sartori di Borgoricco, the former head of distribution at Barclays. Mr. Kilduff also declined to reveal his start-up’s valuation.

Mr. Sartori di Borgoricco left Barclays in 2012 as part of an overhaul of the investment bank. He joined the bank in 2004 from Credit Suisse and was promoted to the executive committee in 2008 after the merger with part of Lehman Brothers.

“Having worked in finance for 25 years,” Mr. Sartori di Borgoricco said in a statement, “I believe Eagle Alpha has developed a model which delivers significant competitive advantage to its clients in a way we’ve never seen before.”

As more companies and investors use Twitter and other sites to release important information, market participants are trying to figure out how to sift through the noise and find useful insights on social media. One company, Social Market Analytics, is working with the New York Stock Exchange to give investors a window into how particular stocks are being discussed on Twitter. Others, including Dataminr and DataSift, buy data directly from Twitter and sell their analysis to clients.

Eagle Alpha, which sells its information products to hedge funds and investment banks, says it differs from its rivals by relying on people, in addition to technology, to curate the Internet. Using solely algorithms is “probably a higher margin approach but not the right approach,” Mr. Kilduff said.

Mr. Kilduff, 37, comes from the world of investment banking in London, having worked in equity capital markets at Credit Suisse and Morgan Stanley. He left Morgan Stanley in 2012 and started Eagle Alpha that year.

The company currently offers three different products. One, Global Macro, intended to appeal to hedge funds, scours the web for relevant content and includes a read-only Twitter feed of 100 tweets a day. Another, Social Sonar, offers a more robust interaction with Twitter, identifying important users of the service and pointing clients to interesting tweets.

In connection to the latest financing, the company hired a small sales force in January, with two employees in London and two in New York. Mr. Kilduff says the company now has 16 full-time employees.

A JPMorgan Co-Head of Debt Capital Markets to Take a New Role

One of JPMorgan Chase’s heads of debt capital markets, Andrew O’Brien, will take on a broader new role overseeing lending activity across the investment bank, the firm announced in an internal memo on Thursday.

Mr. O’Brien will take on the new title of global head of loan capital strategy and will report to both Jeff Urwin, the global head of investment banking, and Don McCree, the global head of corporate banking and treasury services, according to the memo, which was reviewed by DealBook.

The other co-head of debt capital markets, James Casey, will become the sole head of the group. He will continue to report to Mr. Urwin.

A spokeswoman for JPMorgan confirmed the contents of the memo.

Mr. O’Brien is a 29-year veteran of the firm who has spent much of his career overseeing lending to corporate clients. Among the deals he has worked on are Verizon Communications’ $130 billion purchase of Vodafone‘s stake in its wireless unit and AT&T’s aborted $39 billion takeover of T-Mobile USA, which involved the biggest-ever loan made by the bank alone.

He also played roles in Dell’s sale to its founder and the investment firm Silver Lake, and Comcast’s $45 billion takeover of Time Warner Cable.

“Andy’s unique mix of client, product, market and leadership skills and experiences make him particularly qualified to ensure we succeed in this new and important initiative,” Mr. McCree and Mr. Urwin wrote in the internal memo.

Mr. Casey, who has been with JPMorgan for 17 years, has worked on such transactions as H.J. Heinz’s $23 billion sale to 3G Capital and Berkshire Hathaway, and Sprint Nextel’s sale of $6.5 billion worth of junk bonds, the single biggest noninvestment-grade offering ever sold directly to investors.

The two became co-heads of debt capital markets in 2011.

A JPMorgan Co-Head of Debt Capital Markets to Take a New Role

One of JPMorgan Chase’s heads of debt capital markets, Andrew O’Brien, will take on a broader new role overseeing lending activity across the investment bank, the firm announced in an internal memo on Thursday.

Mr. O’Brien will take on the new title of global head of loan capital strategy and will report to both Jeff Urwin, the global head of investment banking, and Don McCree, the global head of corporate banking and treasury services, according to the memo, which was reviewed by DealBook.

The other co-head of debt capital markets, James Casey, will become the sole head of the group. He will continue to report to Mr. Urwin.

A spokeswoman for JPMorgan confirmed the contents of the memo.

Mr. O’Brien is a 29-year veteran of the firm who has spent much of his career overseeing lending to corporate clients. Among the deals he has worked on are Verizon Communications’ $130 billion purchase of Vodafone‘s stake in its wireless unit and AT&T’s aborted $39 billion takeover of T-Mobile USA, which involved the biggest-ever loan made by the bank alone.

He also played roles in Dell’s sale to its founder and the investment firm Silver Lake, and Comcast’s $45 billion takeover of Time Warner Cable.

“Andy’s unique mix of client, product, market and leadership skills and experiences make him particularly qualified to ensure we succeed in this new and important initiative,” Mr. McCree and Mr. Urwin wrote in the internal memo.

Mr. Casey, who has been with JPMorgan for 17 years, has worked on such transactions as H.J. Heinz’s $23 billion sale to 3G Capital and Berkshire Hathaway, and Sprint Nextel’s sale of $6.5 billion worth of junk bonds, the single biggest noninvestment-grade offering ever sold directly to investors.

The two became co-heads of debt capital markets in 2011.

PayPal Has the Maturity to Go Out on Its Own

PayPal has outgrown the warm embrace of its parent eBay. Ownership by the online merchant provided rich soil for the payment system to thrive. But PayPal is now mature enough to grow faster on its own. The activist investor Carl C. Icahn has a point when he says that splitting eBay in two â€" as first suggested by Breakingviews in 2008 â€" would make investors about 15 percent richer.

EBay’s users and online auctions have helped PayPal grow. That’s important, because payment networks become more useful for both buyers and sellers the larger they become. The most recent example was mobile. In 2010, 80 percent of PayPal’s nascent mobile business came from eBay apps. Three years later, PayPal’s mobile payments volume had increased more than fortyfold, to $27 billion.

EBay argues that separating the two would rip PayPal from this rich source of business. It points out that 30 percent of new PayPal users come from eBay. If anything, though, this shows that PayPal has grown too big for its parent. A majority of its new customers come from outside eBay’s walls. Giving the unit independence might attract even more. Retailers like Amazon might be more willing to work with PayPal if it weren’t owned by an e-commerce rival.

Moreover, investors would probably pay to own a chunk of a company growing about 20 percent a year in the hot area of e-payments. The division should generate about $2 billion this year of earnings before interest, taxes, depreciation and amortization. Put on the same multiple as Visa and MasterCard, it would be worth about $30 billion. That’s conservative, as PayPal should grow faster, and could attract a premium.

EBay’s auction business is worth about $50 billion and online commerce services for other companies another $1 billion, according to research by Jefferies. Add the company’s $4 billion of net cash, and the company’s parts are worth at least $85 billion, or 15 percent more than its current market value.

EBay and its chief executive, John Donahoe, resist the idea, viewing a split as a risky change to two business units that have a loving and symbiotic relationship. Mr. Icahn’s heated attack on conflicts of interest among board members, and his complaint that Mr. Donahoe is willfully blind to them, is unlikely to change their minds. But the cooler logic of arithmetic may prove harder to resist.

Robert Cyran is a columnist for Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

A World Tour for Restructuring Enthusiasts

Just when the world of restructuring was becoming dull, the world responded with a wave of financial distress. That sounds like bad news for most people, but for the cognoscenti of financial misfortune, it’s like an early Mardi Gras.

Starting in Greece, there is a story that, if not quite Mycenaean, is at least getting old. The country, you see, will probably need another bailout. Greece has already negotiated two bailouts worth 240 billion euros, or about $310 billion, with the European Commission, the European Central Bank and the International Monetary Fund, but the country now agrees that its banks need at least $6 billion to $7 billion. Everyone else says the number is closer to $20 billion. That sounds like small potatoes to those steeped in United States financial institutions, but remember that the Greek banking sector is probably close to the size of New Jersey’s. A third bailout cannot be too far behind.

Next stop, Ukraine, where the jubilation over getting a “do over” on closer relations with Western Europe is largely masking the dwindling foreign reserves in its banking sector. Ukraine said on Thursday that it would seek $15 billion worth of aid from the I.M.F. Christine Lagarde, the managing director of the I.M.F., said that she would send a mission to Kiev in the coming days for preliminary talks. There is a good chance that the United States â€" perhaps with friends â€" is going to get back into the bailout business, at least until the I.M.F. can take over. I suspect the Tea Party types will love that.

On the other side of the Atlantic, Repsol has agreed to take about $5 billion in Argentine debt to make up for the government’s decision to snatch Repsol’s local subsidiary. It will be interesting to see how precisely that is going to work because you can bet that Elliott Management is going to be lurking about to make sure that any payment on that debt heads its way first. Argentina has asked the Supreme Court for help on that one.

For Repsol, the government has promised that it will realize at least $5 billion on the debt, which will actually have a face value somewhat higher, so wouldn’t it be interesting if Elliott decided to buy the debt from Repsol? Maybe for something less than $5 billion, assuming there are no transfer restrictions, of course. Then Argentina would get to pay off Repsol and deal with Elliott, too. What fun!

And closer to home, we may finally have a big Chapter 11 case filed in 2014. But it probably won’t happen until March, or maybe April, at the earliest.

The on again off again bankruptcy of the company formerly known as TXU appears to be on again. Energy Future Holdings, brought into the world as part of one of the most ill-conceived leveraged buyouts ever, is likely to be broken up. Most interesting, after rumors of a prepackaged deal, and then a pre-negotiated one, and then something about a so-called 363 sale of assets, it looks as if Energy Future is just going to file an old-fashioned Chapter 11 case and negotiate a plan with its creditors.

The case would be a wild affair, given the huge amounts of debt and complex tax issues at stake. The bankruptcy attorneys can barely contain their excitement.

Stephen J. Lubben is the Harvey Washington Wiley Chair in corporate governance and business ethics at Seton Hall Law School and an expert on bankruptcy.

British Regulator Pursuing Charges Against 3rd Person in Libor Case

Britain’s markets regulator issued the third notice in as many weeks that another individual is in its cross-hairs in its wide-ranging investigation into the manipulation of important interest rate benchmarks, including the London Interbank Offer Rate, or Libor.

On Thursday, the Financial Conduct Authority issued a warning against an unnamed individual at an unnamed bank, on allegations that the person colluded with another trader to in an attempt to influence interest rate benchmarks.

If that sounds vague, it is because the authority cannot name them or their firm, but it has to give a warning within three years of the start of an investigation.

The warning is similar to a Wells notice issued by the Securities and Exchange Commission and lays out, in very broad strokes, civil charges brought against the individual. The individual can enter settlement talks, or can contest the decision to the F.C.A.’s Regulatory Decisions Committee, a group that includes a judge and a panel of individuals with expertise in the area of finance under inquiry.

In early February, the authority used its newly minted authority to issue publicly similar warnings against two other individuals for the first time.

The latest charges come amid a continuing global investigation into various interest rate benchmarks. It is separate from another extensive inquiry examining the possible rigging of foreign exchange rates.

The F.C.A. has fined five banks â€" Rabobank, ICAP, UBS, Barclays and the Royal Bank of Scotland â€" 426 million pounds ($710 million) to settle allegations of manipulation of interest rate benchmarks. The fines free the authority to pursue cases against individuals at those firms. Other banks remain under investigation.

The Financial Conduct Authority started investigating firms for manipulating interest rate benchmarks at the end of 2008, but homed in on individuals starting in 2011-2012.

Other regulators have investigations under way. Last week, Britain’s Serious Fraud Office said it had begun criminal proceedings against three former Barclays employees suspected in the manipulation of Libor, which is one of the main rates used to determine the borrowing costs for trillions of dollars in loans, including many adjustable-rate mortgages in the United States.

Three people were already facing criminal charges in Britain. Last December, Tom Hayes, a former derivatives trader at UBS and Citigroup, and Terry J. Farr and James A. Gilmour, former traders at the brokerage firm RP Martin, pleaded not guilty in London. British prosecutors have said that they have identified 22 people as potential co-conspirators.

Both the interest rate investigation and the foreign exchange one are proving logistically challenging to the multiple regulators investigating multiple banks in far-reaching corners of the world. The Serious Fraud Office, for example, is working with the authority and the U.S. Department of Justice, which is also conducting investigations. How to divide up the cases has been the source of tension, though some agreement appears to be taking shape.

In Britain, if both the Financial Conduct Authority and the Serious Fraud Office are investigating the same people, the fraud office, which can file criminal proceedings, takes precedent. But since the authority faces a statute of limitations while the fraud office does not, the authority may end up issuing warnings while the fraud office pursues a case.

Joseph Dear, Calpers Investment Chief, Dies at 62

Joseph A. Dear, the chief investment officer of the California Public Employees’ Retirement System, who restored the pension fund to health after the financial crisis, died on Wednesday in Sacramento. He was 62.

The cause was prostate cancer, the fund, which is known as Calpers, said in a statement.

Mr. Dear had taken a medical leave in January. Theodore Eliopoulos, the acting chief investment officer, will continue in that role until further notice from Calpers about a search for a replacement, the pension fund said.

In his five years overseeing the investments of Calpers, Mr. Dear embraced a risky investment philosophy that proved successful in restoring the pension fund’s assets to above their level before the crisis, when they fell by more than a fourth. With 1.7 million members and $283.9 billion in assets, Calpers is the biggest public pension fund in the United States.

Mr. Dear took charge of Calpers’s investments at a dark moment in its history. The pension fund’s assets had fallen to $183.3 billion by the end of 2008, from $253 billion a year earlier, a loss of nearly 28 percent. Gov. Arnold Schwarzenegger said the fund was “unsustainable.”

But Mr. Dear, after joining Calpers in March 2009, committed more money to illiquid investment strategies, including private equity and hedge funds, betting that these would help the pension fund achieve returns superior to those available in the public markets.

A longtime government employee who once ran the Occupational Safety and Health Administration, Mr. Dear became a powerful figure in the world of Wall Street money management, negotiating lower fees from the private equity firms that wanted his business.

Mr. Dear also helped Calpers weather a pay-to-play scandal that emerged during his first year on the job. In the wake of the controversy, which involved fees paid to the middlemen that connect pension funds with money managers, Calpers adopted new policies to improve disclosure.

Mr. Dear had a passion for “making government work better through innovative public policy and sheer force of will,” Calpers said in a statement.

A graduate of Evergreen State College in Olympia, Wash., Mr. Dear was nominated by President Bill Clinton to lead OSHA in 1993. He returned to Olympia four years later to serve as chief of staff to Gov. Gary Locke.

In 2002, Mr. Dear became the head of Washington State’s public pension fund, pushing it to take more risk and invest more in private equity. That bet served the pension fund well in boom times, though its fortunes reversed in the financial crisis.

Mr. Dear was born on June 7, 1951, in Washington, D.C. He is survived by his wife, Anne Sheehan, and two children.

Loeb Plans a Proxy Fight at Sotheby’s

Sotheby’s announced plans last month to pay out $450 million to investors and change up its business, in an effort to quell restive shareholders.

But the most vocal of them all, the activist investor Daniel S. Loeb, still appears dissatisfied.

Mr. Loeb’s hedge fund, Third Point, disclosed in a regulatory filing on Thursday that it was seeking three seats on the auction house’s board. The proposed slate consists of Mr. Loeb; Harry Wilson, a restructuring expert who served with Mr. Loeb on the board of Yahoo until several months ago; and Olivier Reza, a former investment banker who is now the head of the House of Alexandre Reza, a Parisian jeweler.

The filing on Thursday sets the stage for a battle between Sotheby’s and one of the most vocal activist investors in the business, one who has long argued that the auction house need a financial overhaul to better compete against the likes of Christie’s. Mr. Loeb, who claims an economic interest in about 9.5 percent of the company’s shares, has likened the auction house to “an old painting in desperate need of restoration.”

Other activists have also descended on the company, including Mick McGuire of Marcato Capital Management.

In the plan unveiled last month, Sotheby’s will return $450 million to shareholders through stock buybacks and special dividends, as well as  separate its agency and financial services units.

“We commend the company for taking some action following our filing and believe these expeditious improvements demonstrate the benefits of engaging with shareholders,” Third Point wrote in its filing.

But it added, “We believe these prompt and long overdue developments make the case that the company and all shareholders will benefit from having an owner’s perspective in the boardroom.”

In Third Point’s filing, the hedge fund argued that the existing directors own less than 1 percent of Sotheby’s shares. The firm also pointed to the company’s shareholder rights plan â€" meant to prevent anyone from accumulating too big a position in the stock â€" as a sign of entrenchment.

Third Point added that with the majority of Sotheby’s board having served for more than seven years, it lacked the independence necessary to take a clear look at what improvements were still needed. Not even the addition of Domenico De Sole, the chairman of the luxury fashion house Tom Ford, was enough.

“All shareholders will benefit from further depth of experience in Sotheby’s key business building block: luxury customer relationship development,” Third Point wrote.

A representative for Sotheby’s did not have an immediate comment on the filing.

SoftBank’s Investment in Alibaba May Turn Into a Burden

SoftBank’s investment in Alibaba must be one of the most successful of all time. Masayoshi Son, the billionaire chief executive of SoftBank, injected $20 million into the Chinese e-commerce giant in 2000. Today, that 36.7 percent stake accounts for a large chunk of Japanese group’s market value. As Alibaba heads toward an initial public offering, however, Mr. Son’s investment blessing may become a burden.

Alibaba, the owner of the online shopping site Taobao and the Alipay electronic payment system, is still a private company. Based on Alibaba’s limited financial disclosures, Breakingviews estimates that it is worth around $113 billion. That values SoftBank’s stake at $41 billion, or 38 percent of the Japanese group’s total sum of the parts, according to a new Breakingviews calculator.

Many of SoftBank’s other businesses are already listed. Its 80 percent stake in the American cellphone carrier Sprint is valued at $26.5 billion. SoftBank’s 42.5 percent shareholding in Yahoo Japan is worth $15.3 billion. Other stakes in the online games makers GungHo Online Entertainment and Supercell as well as the handset maker Brightstar add up to $7 billion, based on market values or recent purchase prices.

Then there’s SoftBank’s wholly owned Japanese telecommunications business. Apply an industry multiple of 4.4 times earnings before interest, taxes, depreciation and amortization, then strip out the remaining net debt and the equity is worth $19.2 billion. Put it all together, and SoftBank’s parts add up to $109.5 billion.

But investors aren’t giving Mr. Son full credit for his empire, which is broadly focused on the Internet. Though SoftBank shares have more than doubled in the past year, they still trade at 16 percent below the combined value of the company’s parts. Some discount is warranted: SoftBank can’t easily sell. Investors also seem to be overlooking synergies: Together, SoftBank’s Japanese and American telecommunications operations are the world’s second-largest purchaser of network equipment.

The bigger question is Alibaba. Its founder, Jack Ma, sits on SoftBank’s board, but that’s where cooperation appears to stop. For now, the investment is a blessing. SoftBank is one of the few ways for public investors to gain exposure to Alibaba. But that advantage will disappear when Alibaba goes public. At that point, Mr. Son will have to justify tying up more than a third of his company’s value in a minority stake â€" or find a way to part with his most successful investment.

Una Galani is the Asia corporate finance columnist for Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Another Lesson From the Fed’s Crisis Transcripts

David Zaring is assistant professor of legal studies at the Wharton School of Business at the University of Pennsylvania.

The release of the transcripts of the Federal Open Market Committee meetings held in the midst of the financial crisis has suggested Fed officials care about their critics, and worry about the international economy.

It also a chance to take stock of the way the discipline of “transcript-ology” is changing.

Transcripts of discussions among government decision makers - the tapes President Nixon made of his telephone calls, for example - used to be of particular interest to historians, who used qualitative techniques to make sense of a government decision-making process. They would read the transcripts and fit them into their narratives about government policy. Much of this work was not entirely dissimilar to journalism, although it might involve much more reference to historiography. Hence the idea that journalists might be writing the “first rough draft of history.”

Recently, these sorts of look-backs have developed a quantitative element as well as a qualitative one. Economists have mined the Congressional Record to look for phrases associated with particular ideologies. Political scientists and legal scholars have done similar work on the Supreme Court. Jay Wexler counted the number of times that laughter broke out during Supreme Court oral arguments (Justice Antonin Scalia was, by far, the funniest justice, Mr. Wexler observed).

The numerical, rather than qualitative, approach has been applied to the F.O.M.C. as well, where transcripts and other written materials have been scrutinized to see how Fed officials, who are relatively slow to dissent, at least compared with judges and members of other American agencies, hash out their differences.

Quantitative reviews of transcripts promise to open a new trove of data to Fed watchers. For example, the two decades’ worth of F.O.M.C. meeting transcripts during the years that Alan Greenspan was chairman of the Federal Reserve are available on the agency’s website. With script-reading computer programs, one can tell a story about what happened in the F.O.M.C. meetings during Mr. Greenspan’s tenure, without going through the actual trouble of reading the records.

I know because I have done it. I can report that the F.O.M.C. during the Greenspan era settled into a fairly consistent pattern, where the committee members would first discuss the state of the economy, in seriatim, after receiving reports from the Fed staff. Next, the committee members would discuss whether the federal funds rate ought to be changed in light of their conclusions about the economy. Usually, Mr. Greenspan would begin the discussions of each topic.

Simple quantitative data from those meetings suggests an increasing commitment to bureaucratic imperatives of order, consideration and formality. I can tell you that meetings lengthened as the Greenspan era wore on. They lasted for roughly 50 transcript pages until the mid 1990s; from 2001 to 2006, the average meeting required closer to 100 transcript pages to record.

More people came, as well. During the early years, the average number of attendees of the Greenspan era was less than 50, but after the halfway point in his leadership, the average nosed above that mark.

For what it is worth, the mood lightened as the chairman aged, although the F.O.M.C. certainly went through turbulent times during both the beginning and the end of Mr. Greenspan’s tenure. Meeting transcribers recorded laughter on a per-transcript-page basis increasing from an average of less than 20 percent from 1988 to 1992 to more than 20 percent from 2001 to 2006. In a few years, we will be able to make comparable statements about the F.O.M.C. when Ben S. Bernanke was the Fed chairman. Mr. Greenspan used wit far more than any other single Fed official (although he spoke far more at F.O.M.C. meetings than the others did) - laughter ensued after something he said 556 times over the course of his tenure.

With content analysis software programs and the migration of transcripts online, this sort of counting has only gotten more technical and elaborate; one can now compare quantitative expressions of what happened during the meetings with the decisions made at the conclusion of those meetings, and look for statistically significant correlations.

It will be interesting to see how this sort of analysis is received, however. Many social scientists are suspicious of the idea that we can learn much about the government by looking at what its leaders say to one another. Saying is one thing and doing is another, as anyone who has pored over the Congressional Record would be the first to tell you.

There aren’t many government committees more important than the F.O.M.C, though, and a lot of people in the finance industry would be willing to look at any source of information that might help them predict what the committee might do.

If “transcript-ology” in either its qualitative or its quantitative form proves to be of interest to these people, or to those in the ivory tower, it will suggest that some think that specific meetings and decisions are worth considering even apart from the general sweep of the impersonal market, social and political forces that those meetings are trying to control.

For Carlyle’s Founders, a $750 Million Payday

The three founders of the Carlyle Group collectively earned about $750 million in 2013, benefiting from a banner year for the private equity giant.

The earnings, a mix of investment profits, dividends and base salary, which were disclosed in a regulatory filing on Thursday, underscore the recent success of Carlyle, which took advantage of buoyant stock markets last year and reaped big gains from selling its investments.

David M. Rubenstein, Daniel A. D’Aniello and William E. Conway Jr., who founded Carlyle in 1987, each received $92.6 million in dividends on their partnership units for 2013, the filing showed. Each man earned base compensation, including 401(k) matching contributions, of $281,375.

But the largest portion of their income came from their investments in Carlyle’s funds. Mr. Rubenstein made $108.1 million from his investments, Mr. D’Aniello made $109.5 million and Mr. Conway made $252.8 million, the filing showed.

In addition, Carlyle paid about $1.1 million for the use of private airplanes owned by the three founders.

Carlyle, which is based in Washington, makes money by raising funds to buy companies, with the aim of eventually selling them at a profit. Investors in the funds include pension funds, sovereign wealth funds, insurance companies and other institutions.

The firm’s employees also invest in and alongside these funds, and such commitments totaled $1.1 billion last year. As for the founders, Mr. Rubenstein invested $98.2 million in and alongside the funds, Mr. D’Aniello invested $110.6 million and Mr. Conway invested $207.4 million.

The rewards due to private equity founders tend to dwarf the compensation of the heads of big banks. Jamie Dimon, the chief executive of JPMorgan Chase, made $20 million last year, while Lloyd C. Blankfein, the chief executive of Goldman Sachs, likely made about $23 million.

Another private equity giant, Kohlberg Kravis Roberts, reported this week that its co-founders Henry R. Kravis and George R. Roberts earned $161.4 million and $165.5 million, respectively, for 2013.

Earlier this month, Carlyle said its profit in the fourth quarter of last year, measured as economic net income before taxes, tripled to $576 million. The firm was helped when seven of its funds crossed a threshold for investment performance that allowed Carlyle to start collecting profit from them.

Versace Agrees to Sell Stake to Blackstone

PARIS - Versace on Thursday became the latest luxury label to be successfully courted by a Wall Street investor, confirming that it had agreed to sell a 20 percent stake to the Blackstone Group, an American private equity firm, in a deal that values the Italian fashion house at nearly $1.4 billion.

It a joint statement, the two companies announced that Blackstone would invest a total of 210 million euros, or $287 million, in Versace through a combination of €150 million cash and the purchase of €60 million euros in shares from GIVI, a holding company controlled by the Versace family.

With its eye-catching gowns favored by pop idols like Madonna and Lady Gaga, Versace has long been one of the best-known presences on the runway. But while it had fiercely guarded its independence, Versace has seen itself eclipsed by rivals like Prada, Salvatore Ferragamo and Michael Kors, which have recently tapped outside investors to fuel their global expansion.

The brand, which struggled financially for years after the 1997 murder of its founder, Gianni Versace, returned to profit in 2011. Under the leadership of Gian Giacomo Ferraris, a fashion industry veteran who became chief executive in 2009, Versace slashed its debt and ended a number of franchising and licensing agreements that had allowed control of its key brands to slip away.

With the restructuring firmly behind it, Mr. Ferraris set his sights on expansion, with the understanding that Versace had few alternatives other than to sell a minority stake. The company tapped Goldman Sachs and Banca IMI in 2012 to begin sounding out private investors. The list of rumored suitors was long, including the government-backed Fondo Strategico Italiano, Investcorp of Bahrain as well as the Wall Street buyout firm KKR and Permira Advisers, whose stable of global brands includes Hugo Boss and Dr. Martens.

Mr. Ferraris, in a statement, said Versace was “incredibly excited” by Blackstone’s investment, which he said “recognizes the work done over the past years to put the company on solid ground.’’

Versace said Blackstone’s investment would be used primarily to finance an expansion of its retail networks, as well as its product offerings in both existing and emerging markets, as well as to enhance its e-commerce business.

Under the terms of the agreement announced Thursday, Blackstone will gain a seat on Versace’s six-member board.

Versace said family members would retain “important,’’ though as-yet unspecified, roles within the new company. Donatella Versace has until now served as the brand’s creative director, while her brother Santo has been chairman. Donatella’s daughter, Allegra Versace Beck, is a non-executive director.

Analysts said Versace would do well to seize the moment to revive and update the brand for an era of fast-changing tastes, particularly in key growth markets like Asia.”

“I think Donatella has done a great job of keeping the DNA of the brand alive,’’ said Luca Solca, a luxury analyst at Exane BNP Paribas in London. “But every brand has to adapt. I think fresh creative talent can do that and bring new ideas.’’ he said.

“The brand is potentially quite important,’’ Mr. Solca added. “It just hasn’t managed to be center stage or relevant for the present time.’’

Michael de la Merced contributed reporting from New York.

Credit Suisse Under Scrutiny

SENATE SCRUTINIZES CREDIT SUISSE OVER HIDDEN ASSETS  |  A Senate panel criticized Credit Suisse at a hearing on Wednesday, contending that the Swiss bank helped as many as 22,000 Americans hide an estimated $10 billion to $12 billion in assets from the United States tax authorities, Annie Lowrey writes in DealBook. The Senate hearing, the result of a two-year investigation into practices at the bank from 2001 through 2008, followed a scathing report issued on Tuesday by the Senate Permanent Subcommittee on Investigations that at times read like a legal thriller for its bizarre details on the lengths the bank went to aid Americans in tax evasion.

But Brady W. Dougan, the chief executive of Credit Suisse, said that only a small number of employees were involved in actively recruiting American clients and helping them hide money offshore. “Some Swiss-based private bankers went to great lengths to disguise their bad conduct from Credit Suisse executive management,” Mr. Dougan told the panel. “While that employee misconduct violated our policies and was unknown to our executive management, we accept responsibility for and deeply regret these employees’ actions.” The bank said that Swiss law prevented them from disclosing certain client information.

The Swiss bank wasn’t the only entity under attack at the hearing. Senators also criticized the Justice Department for dragging its feet in prosecuting or settling with Swiss banks under investigation.

R.B.S. POSTS $15 BILLION LOSS  |  The Royal Bank of Scotland Group on Thursday reported a net loss of 9 billion pounds â€" about $15 billion â€" for 2013, nearly 50 percent larger than the £6.1 billion loss it reported a year earlier, David Jolly writes in DealBook. The loss grew as the bank set aside £3.8 billion for possible legal bills and wrote down the value of assets by £4.8 billion.

The bank said it would cut £5.3 billion from costs over the medium term, partly by simplifying its operating structure to focus on its home market in Britain. It also said it had reduced its bonus pool for 2013 by 15 percent. “Even by recent standards, 2013 was a difficult year,” Ross McEwan, the bank’s chief executive, said in a statement.

TAMING BITCOIN  |  For its entire existence, Bitcoin has been free from the tethers of formal oversight. But now, after the collapse on Monday of the prominent Bitcoin exchange Mt. Gox, authorities around the world are scrambling to figure out how to regulate the virtual currency, Hiroko Tabuchi and Rachel Abrams write in DealBook.

Japan’s top government spokesman said in Tokyo on Wednesday that agencies there were collecting information on the country’s Bitcoin trade with an eye toward regulatory action. Federal prosecutors in Manhattan have formed a partnership with the Internal Revenue Service and other federal agencies to crack down on companies using Bitcoin exchanges to support drug trafficking. In addition, New York State’s top financial regulator, Benjamin M. Lawsky, has also been vocal about regulating the virtual currency, and the Commodity Futures Trading Commission and the F.B.I. are examining their authority over Bitcoin exchanges.

From Senator Joe Manchin III of West Virginia, in a letter: “I write to express my concerns about Bitcoin. The virtual currency is currently unregulated and has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy. For the reasons outlined below, I urge regulators to take appropriate action to limit the abilities of this highly unstable currency.”

“While it is disappointing that the world leader and epicenter of the banking industry will only follow suit instead of making policy, it is high time that the United States heed our allies’ warnings. I am most concerned that as Bitcoin is inevitably banned in other countries, Americans will be left holding the bag on a valueless currency.”

From Felix Salmon at Reuters: “As far as the public is concerned, Mt. Gox was Bitcoin. Most of us who never bought any Bitcoins in the first place feel as though we likely dodged a bullet. And we have no particular desire to enter that war zone now, even if it is marginally safer than it was before.“

ANOTHER HEADACHE FOR OCWEN  |  Ocwen Financial, one of the nation’s largest mortgage servicing companies, is facing scrutiny over conflicts of interest. The claims are the latest hurdle for a company that has increasingly come under regulatory fire as large banks have sought to shed the servicing of their most problematic subprime loans, Michael Corkery writes in DealBook. The concerns were disclosed in a letter to Ocwen released on Wednesday by New York State’s top financial regulator, Benjamin M. Lawsky.

Mr. Lawsky wrote that potential conflicts of interest between Ocwen and four other publicly traded companies of which William C. Erbey is chairman could “harm borrowers and push homeowners unduly into foreclosure.” Ocwen has said that it maintains an arm’s-length business relationship with other companies, which rent foreclosed houses and sell houses online and that Mr. Erbey has recused himself from any discussions where the businesses of the five companies overlap.

ON THE AGENDA  |  Janet L. Yellen, the chairwoman of the Federal Reserve, testifies in front of the Senate Committee on Banking, Housing, and Urban Affairs on monetary policy at 10 a.m. Weekly jobless claims are out at 8:30 a.m. January’s durable goods orders are released at 8:30 a.m. Richard W. Fisher, the president of the Dallas Fed, is on a panel in Frankfurt, Germany, at 10:30 a.m. discussing the post-financial crisis role of central banks. Dennis P. Lockhart, the president of the Atlanta Fed, and Esther George, the president of the Kansas City Fed, speak at the Atlanta Fed’s annual banking conference at 3:15 p.m. Frank Keating, president and chief executive of the American Bankers Association, is on CNBC at 7 p.m. Kevin Roose, the author of “Young Money,” is on “The Daily Show with Jon Stewart” at 11 p.m.

BLACKSTONE FALLS UNDER VERSACE’S SPELL  |  The Italian fashion house Versace has long dazzled the fashion industry. Now, it seems to have caught the fancy of the Blackstone Group. News emerged on Wednesday that Versace was in advanced talks to take on Blackstone as a minority investor “in the latest sign that the finance industry’s interest in high fashion shows few signs of abating,” Michael J. de la Merced writes in DealBook. Blackstone on Thursday agreed to buy a 20 percent stake in the company at a valuation of about 1 billion euros, or $1.37 billion, Reuters reports.

Mergers & Acquisitions »

Judge Expedites Men’s Wearhouse Lawsuit  |  A Delaware judge ordered Jos. A. Bank to quickly submit documents relating to its proposed acquisition of Eddie Bauer, which is seen as a defensive measure to stop a takeover bid by Men’s Wearhouse.
DealBook »

China’s Tencent Considers Stake in Online Retailer  |  Tencent Holdings, the Chinese social networking and gaming company, has selected Barclays to advise it on a potential purchase of a stake in the Chinese online retailer JD.com, previously called 360Buy, The Wall Street Journal writes. JD.com is preparing for a $1.5 billion initial public offering in the United States.
WALL STREET JOURNAL

EBay Leads $134 Million Investment in India’s Snapdeal  |  EBay is leading a $133.7 million investment in Snapdeal, an online shopping site based in India, that could result in a buyout of the company, which is considered the eBay of India, ReCode writes. EBay also led a $50 million investment in Snapdeal last spring.
RECODE

Patton Boggs in Merger Talks With Squire Sanders  |  The Washington law and lobbying firm Patton Boggs is in preliminary merger talks with the global law firm Squire Sanders, only months after merger talks between Patton Boggs and the law firm Locke Lord fell through, Reuters writes. A combination of the two law firms could create a global entity with about 1,700 lawyers.
REUTERS

A Plan for Facebook to Justify WhatsApp Deal  |  “Sooner rather than later, Facebook will become a hybrid â€" WhatsBook or FaceApp or however the chattering classes will malign it right up until its ad sales machine blows away Wall Street’s expectations. It also means, for Facebook’s sake, it’s going to have to come to resemble its competitors, not just by bolting a messaging service onto Facebook, but by truly integrating the two,” Quartz writes.
QUARTZ

INVESTMENT BANKING »

JPMorgan Said to Plan Move of 2,000 Workers to Brooklyn  |  JPMorgan Chase is said to be planning to move about 2,000 employees from several of its business units to offices in Brooklyn’s MetroTech Center, Bloomberg News writes, citing an unidentified person familiar with the situation. The move is part of the bank’s efforts to cut expenses.
BLOOMBERG NEWS

In a Retirement, a Loss for Barclays  |  Hans-Joerg Rudloff’s retirement as chairman of investment banking at Barclays comes at an unhelpful time for the British lender, writes Dominic Elliott of Reuters Breakingviews. The new chief executive could use his help as a continuity figure and mentor.
DealBook »

@GSElevator Cashes In on a Cultural Moment  |  The publisher of a new book by @GSElevator, whose author this week was exposed as John Lefevre, a Texas bond trader, failed to mention Mr. Lefevre’s credibility and “apparently felt no need to,” The New York Times writes in an editorial.
NEW YORK TIMES

Citigroup Alums Take on Washington  |  The number of Obama administration picks who have worked at Citigroup illustrates “how quickly the banking giant’s reputation has recovered in Washington since it was bailed out during the financial crisis,” Politico writes.

POLITICO

Fewer Banks Share Rising Profits  |  American banks raked in profits of $154 billion in 2013, up 10 percent from 2012 and up 6 percent from the $145 billion in profits banks posted in 2006, even as the number of banks has decreased, Quartz writes.
QUARTZ

PRIVATE EQUITY »

House Proposal Would Raise Taxes on Private Equity Income  |  The investment profits generated by private equity, long a subject of debate in Washington, would be taxed at a higher rate under a proposal on Wednesday by the chairman of the House Ways and Means Committee.
DealBook »

The So-Called Blackstone Bill, Resurrected  |  If a proposal by Representative Dave Camp goes through, publicly traded private equity firms would either have to take themselves private again or pay corporate-level taxes, Victor Fleischer writes in the Standard Deduction column.
DealBook »

Carlyle’s Co-Founder Says More Private Equity Firms Likely to Go Public  |  The wave of public offerings of private equity firms is likely to continue as smaller firms begin to follow public floats by the industry’s largest players in recent years, said David M. Rubenstein, the co-founder of the Carlyle Group.
DealBook »

Private Equity Leaders See Opportunities in Europe  |  Europe is ripe for investments as the economic recovery continues there, private equity investors said at the SuperReturn International gathering in Berlin.
DealBook »

Warburg Pincus Considering More E.T.F. Deals  |  The private equity firm Warburg Pincus said it might pursue further acquisitions in Europe’s exchange-traded fund market following its purchase in January of a majority stake in Source, an E.T.F. provider based in London, The Financial Times writes. Warburg Pincus has created an $11.2 billion fund to expand its asset management presence.
FINANCIAL TIMES

HEDGE FUNDS »

A Hedge Fund Manager Says SAC Taint Is Manageable  |  Dmitry Balyasny’s hedge fund Balyasny Asset Management has hired three people who used to work for SAC Capital Advisors and, he said, would consider hiring more.
DealBook »

Soros Tops List of 2013 Hedge Fund Earners  |  Prominent hedge fund managers and traders did not have to match the 32 percent return of the Standard & Poor’s 500-stock index to make a lot of money in 2013, Forbes reports.
FORBES

Former Hedge Fund Manager Selling Florida Home for $13 Million  |  Alberto Franco, a former hedge fund manager at Quantek Frontier, is selling his steel-and-glass beachfront home near Miami for $13 million, The Wall Street Journal reports.
WALL STREET JOURNAL

Elliott Takes 11% stake in F&C  |  The hedge fund Elliott Management disclosed an 11 percent stake in the British asset manager F&C, worth about £80 million, The Financial Times writes. Analysts expect Elliott to use its stake to attract new bidders and push for a higher sale price.
FINANCIAL TIMES

I.P.O./OFFERINGS »

Biomet Chooses Banks for I.P.O.  |  Biomet, a medical device unit that was taken private by private equity firms in 2007 for $11.4 billion, is said to have selected Bank of America Merrill Lynch, Goldman Sachs and JPMorgan Chase as the lead underwriters for the company’s initial public offering, expected this year, Reuters writes, citing unidentified people familiar with the situation.
REUTERS

Foreign Banks’ Share of China’s I.P.O. Market Hits 5-Year High  |  Foreign investment banks’ securities joint ventures have underwritten 8 percent of the initial public offerings in China so far this year, a five-year high, The Wall Street Journal reports.
WALL STREET JOURNAL

VENTURE CAPITAL »

Sequoia Capital Leads Investment in Kahuna  |  Sequoia Capital, the venture capital firm now known for being the sole investor in WhatsApp, has led an $11 million round of funding in Kahuna, a start-up that helps companies bolster use of their mobile applications, ReCode writes.
RECODE

Collaborative Raises $33 Million Venture Fund  |  Collaborative Fund has raised a $33 million venture capital fund from investors including the artist Shepard Fairey to focus on the shared economy, which allows people to rent out personal property and services, Reuters writes.
REUTERS

Zefr Raises $30 Million  |  Zefr, a start-up that helps companies track their videos on YouTube, has raised $30 million in a funding round led by Institutional Venture Partners, ReCode writes. The new funding brings Zefr’s total to $60 million.
RECODE

LEGAL/REGULATORY »

A Top Financial Prosecutor to Leave  |  Mythili Raman, an acting assistant attorney general overseeing some of the biggest investigations into Wall Street misdeeds, will soon depart the Justice Department.
DealBook »

Foreign Exchange Firm Fined in Britain  |  The Financial Conduct Authority said that the British units of FXCM, a retail foreign exchange trading firm, withheld nearly $10 million in profits from its customers but passed on any losses.
DealBook »

Bernanke to Testify in A.I.G. Suit  |  Ben S. Bernanke, the former chairman of the Federal Reserve, will give a deposition on Thursday in a lawsuit over the 2008 bailout of the American International Group, The Wall Street Journal writes. Mr. Bernanke is one of at least 50 witnesses, including the former Treasury secretaries Henry M. Paulson Jr. and Timothy F. Geithner.
WALL STREET JOURNAL

Borrowing Bill Faces Challenge From Puerto Rico Senators  |  Puerto Rico senators are opposing language from pending legislation over the island’s impending bond sale that would allow investors to sue the beleaguered island in United States court rather than going through the island’s local legal system if problems arise, The Wall Street Journal writes.
WALL STREET JOURNAL

British Trading Houses to Come Under Increased Scrutiny  |  The Financial Conduct Authority, Britain’s financial watchdog, will focus more attention on trading houses as commodity markets come under increased political and regulatory scrutiny, The Financial Times writes.
FINANCIAL TIMES