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Los Angeles Times - Financial giants and other large firms now being bailed out by the government spent millions underwriting the Democratic and Republican conventions last summer, just weeks before coming to Washington seeking multibillion-dollar handouts.
The big donors included AIG, Ford Motor Co., Citigroup, Goldman Sachs and Freddie Mac.
In all, major corporations, labor unions and individual millionaires poured $118 million into the nominating conventions for Barack Obama and John McCain, according to reports from the Campaign Finance Institute and the Center for Responsive Politics. The nonpartisan private groups compiled the numbers from filings required under federal law.
Los Angeles Times - In a typical recession, stocks start recovering about six months before the economy does. The crisis we’re in right now, however, is anything but typical: Lending is frozen, hedge-fund selling is happening on a massive scale, and economic troubles have spread all over the globe.
As a result, it’s possible the economy will need to show signs of strength before the stock market stabilizes and regains steam. So with readings getting darker by the day, expect more of the same this week: extreme volatility.
Los Angeles Times - Traders and investment bankers might have more to worry about than dwindling bonus pools this year as mass firings on Wall Street are set to hit a record.
The fallout from this year’s global credit crisis has claimed jobs throughout Wall Street, from hedge fund managers to floor traders and beyond. More than 110,000 people have lost their jobs so far this year, and some industry experts forecast it could come close to 200,000 before the year is over.
Even the financial industry’s biggest name isn’t immune. Goldman Sachs Group Inc., the world’s biggest investment bank, made plans Thursday to cut 3,200 positions from its staff of 32,000. Barclays Capital is in the midst of purging 3,000 jobs as part of its takeover of Lehman Bros., and Bank of America Corp.’s acquisition of Merrill Lynch & Co. is sure to add thousands more.
Los Angeles Times - Big Wall Street investment banks have designed and marketed schemes enabling non-U.S. taxpayers, including offshore hedge funds, to evade millions of dollars in taxes each year on U.S. stock dividends, Senate investigators have found.
Some banks have been crafting for more than 10 years transactions designed to enable their foreign clients to dodge U.S. taxes on dividends, while the Internal Revenue Service failed to act to prevent the abuse, two senators say.
A yearlong investigation by a Senate Homeland Security and Governmental Affairs subcommittee, whose results are to be made public Thursday, found that the evasion of dividend taxes adds up to billions of dollars in revenue lost to the U.S. Treasury over the past decade.
IRS Commissioner Douglas Shulman is scheduled to testify on the issue at a hearing Thursday by the investigative subcommittee. Executives of Lehman Brothers Holdings Inc., Morgan Stanley and Deutsche Bank, and from several hedge funds also are expected to appear as witnesses.
Reuters - Final bids for the Chicago Cubs will likely be due late September or early October, two sources said on Thursday, as owner Tribune Co seeks to sell the storied baseball team by the year end.
The next stage in the drawn-out sale of the team, its landmark stadium and a cable TV network stake will be management presentations starting next week to give bidders more information on the assets, the sources said.
Those will likely take about two weeks, after which final bids will be sought.
Tribune, which owns the Chicago Tribune and Los Angeles Times newspapers, put the Cubs assets on the block in April 2007 when it announced it would be bought by a group led by real estate magnate Sam Zell. It is selling the Cubs to cut debt it took on as a result of the leveraged buyout.
Zell said last month that of 10 groups that bid, five made it through the first round for the package of assets — the Cubs, Wrigley Field and an interest in SportsNet Chicago.
Los Angeles Times - Regulators had long classified a private Swiss energy conglomerate called Vitol as a trader that primarily helped industrial firms that needed oil to run their businesses.
But when the Commodity Futures Trading Commission examined Vitol’s books last month, it found that the firm was in fact more of a speculator, holding oil contracts as a profit-making investment rather than a means of lining up the actual delivery of fuel. Even more surprising was the massive size of Vitol’s portfolio — at one point in July, the firm held 11% of all the oil contracts on the regulated New York Mercantile Exchange.
The discovery revealed how an individual financial player had gained enormous sway over the oil market without the knowledge of regulators. Other CFTC data showed that a significant amount of trading activity was concentrated in the hands of just a few speculators.
The CFTC, which learned about the nature of Vitol’s activities only after making an unusual request for data from the firm, now reports that financial firms speculating for their clients or for themselves account for about 81% of the oil contracts on the Nymex.
Los Angeles Times - The state bill, AB 2321, which would allow a half-cent sales tax to be placed on the November ballot, was put in the suspense file in the State Senate’s Appropriations Committee last night. I’m not sure whether it was a purely bureaucratic move or had something to do with elected officials still unhappy with the bill. The only clue was a statement that there were some issues that needed to be worked out.
Either way, it now gets a full hearing in Appropriations on Thursday, and my guess is that Senators Gil Cedillo and Jenny Oropeza will have something to say about funding for the Green Line and an extension of the Eastside Gold Line, respectively.
Damien Newton — a masochist like me who actually watched the hearing on his computer all day — has a bitingly nice post at Streetsblog Los Angeles. Mr. Newton notes that it only took 10 hours for the State Senate committee to do nothing. I kind of suspect the State Leg has taken much, much, much longer to do nothing.
Los Angeles Times- Wall Street regulators are examining whether securities firms adequately police rumor-mongering used to manipulate stocks after shares of Lehman Bros. Holdings Inc., Fannie Mae and Freddie Mac tumbled last week.
The Securities and Exchange Commission’s inspections unit; the Financial Industry Regulatory Authority, which monitors brokerages; and the New York Stock Exchange’s regulatory arm are checking whether firms have controls in place to prevent the intentional spread of misinformation, the SEC said Sunday. The agencies also will look at whether employees have been adequately trained.
"The examinations we are undertaking with FINRA and NYSE Regulation are aimed at ensuring that investors continue to get reliable, accurate information about public companies," SEC Chairman Christopher Cox said.
Regulators already are hunting for traders who may have sought to profit illegally from the credit crisis by falsely stoking panics about the stability of such companies as Bear Stearns Cos., which collapsed in March amid speculation that clients were pulling out their business.