House Speaker John Boehner’s appearance before Wall Street leaders tonight challenges him to provide reassurance that Congress will raise the U.S. debt limit without undercutting Republican demands for spending controls…”The stakes are high for Speaker Boehner,” Senator Chuck Schumer told reporters on a conference call today. He called on Boehner to provide “unwavering reassurance” to the credit markets that House Republicans won’t allow the U.S. to default on its obligations. “The markets do not want to hear more threats,” Schumer said. “The time for brinkmanship is over. There is a lot on the line.” [Bloomberg]

Article courtesy of Dealbreaker

Catch Andrew Ross Sorkin’s column about Goldman Sachs this morning? Charlie Gasparino did and he didn’t like it. Noting Goldman Sachs’ desire not to make a big deal about the money it made correctly predicting the housing market crash, perhaps in an attempt not to attract anymore attention from Senator Carl “Goldman Sachs is a financial snake pit rife with greed, conflicts of interest, and wrongdoing” Levin, Sorkin encouraged the Masters of the Universe to stop denying their success. Rather, ARS would like to see them “take a bow,” as their housing call is something they should be proud of and which shareholders and taxpayers alike should be happy about, since it meant the latter didn’t have to bail the firm out to the extent it did Citi and AIG.  And that pissed Gasparino off something fierce.

Normally he wouldn’t say anything (“‘I’m not and never have been in the Goldman is the root-of-all-evil-camp,” CG prefaces) but after last month’s antics wherein the firm dared to deny his report Lloyd Blankfein’s friends claim he’s thinking of retiring, Chaz can no longer bite his tongue. Not to get too off-topic, but it still baffles CG as to how GS spokesman Lucas vP “can deny someone’s impression from a private conversation.” Sorry, he just had to get that out there. But back to the suggestion that Goldman should be taking any bows– bull shit, Gasparino says. Bull, shit.

“The last thing Goldman should be doing right now is taking a bow and telling the world it’s a great firm, because when it comes down to it, Goldman isn’t really a great firm.

“What is it then,” CG asks fuming. Not being here to simply raise questions without providing answers, Gasparino goes on, attributing a well-known saying to a guy he gets drunk with.

“Well, in the words of a drinking buddy who is a frequent consumer of financial news, ‘Goldman is like the tallest midget in the room.’”

How did Goldman become the tallest among short people?

Standing the tallest among these little men is Goldman, the firm most adept at exploiting the corrupt system that puts the government in bed with the big banks. Just today, Goldman announced that it earned $1.64 billion in the first quarter of 2011 even after repaying Warren Buffett the $5 billion he lent them in 2008 when the firm was teetering with the rest of Wall Street. Seems like a pretty amazing feat until you consider how Goldman earned all that cash. Low interest rates from the Fed over the past two-plus years means Goldman can basically borrow at next to nothing to place its market bets.

Those bets, it turns out, really aren’t bets at all. Firms like Goldman began buying depressed mortgage bonds in 2009 because they knew prices would rise. How did they know something like that? The Fed instituted a program to buy these bonds in the open market as a way to support the housing market. Like most things tried by the Obama administration to jump-start the economy, the plan didn’t work for Main Street. But not long after the buy-back program commenced, Wall Street — and Goldman in particular — began announcing record profits and bonuses to its bankers and traders. All of which transpired as Blankfein and his team tried to convince the world that Goldman really didn’t need all that bailout money in late 2008 and that they accepted the $10 billion in cash from then Treasury Secretary Hank Paulson because they were forced to do so by a government more worried about the health of entire financial system than the financial condition of Goldman Sachs. Sounds like a very modest gesture until you calculate how the taxpayer bailout of the giant insurer AIG was in actuality a back-door bailout of Goldman Sachs.

It didn’t have to come to this, Gasparino says, this being his exposing GS, and it wouldn’t have, if everyone had just listened to Uncle Charles way back when.

As all this came to light back in late 2009, I wrote a column here on HuffPost saying Blankfein should just resign and save the world the trouble of holding him accountable for explaining why Goldman is such a large midget.

Goldman Sachs: The Tallest Midget In The Room [HuffPo]

Article courtesy of Dealbreaker

Bloomberg’s Richard Rubin and Steven Sloan this morning write that some top republicans in key tax positions in both houses of Congress are reluctant to push a tax holiday advocated by Cisco Systems (CSCO) and others to repatriate foreign cash hordes.

Instead, Representative Dave Camp, Senator Orrin Hatch, and Representative Patrick Tiberi wish to focus on repatriation of cash through “a comprehensive look at rewriting the U.S. tax code,” the authors write.

A report by ISI Group on Tuesday argued that the chances of a repatriation tax holiday this year are “below 50%,” in part because there’s no clear “legislative vehicle” — no existing measure to which the initiative could be attached to gain passage.

Article courtesy of Tech Trader Daily

Bank Profits Depend on Debt-Writedown `Abomination’ (Bloomberg)
In the first quarter, the four biggest U.S. lenders — Bank of America, JPMorgan Chase & Co., Citigroup and Wells Fargo & Co. — produced combined profit of $13.5 billion, the most since the second quarter of 2007. That figure probably fell by 28 percent in the second quarter, based on a Bloomberg survey of analysts’ estimates. The banks are scheduled to announce results over the next two weeks, led by JPMorgan on July 15. The second-quarter results may include gains taken under a U.S. accounting rule known as Statement 159, adopted by the Financial Accounting Standards Board in 2007, which allows banks to book profits when the value of their bonds falls from par. The rule expanded the daily marking of banks’ trading assets to their liabilities, under the theory that a profit would be realized if the debt were bought back at a discount. In practice, it’s an accounting “abomination” because fluctuations in the value of the debt don’t change the amount the banks owe, said Chris Kotowski, an analyst at Oppenheimer & Co. in New York.

Octopus Outshines Investment Banks as Spain Wins (CNBC)
Paul the Octopus proved correct once more as Spain indeed won the World Cup against the Netherlands, as he predicted. Paul, who now has his own Facebook page, was flawless in his picks, contrasting sharply with predictions made by banks ahead of the tournament.

Money Managers Express Cautious Optimism (WSJ)
“The majority of people certainly understand that for the foreseeable future we’re going to be in a subpar environment,” said Marc Harris, co-head of global research at RBC Capital Markets. That translates into what is being seen in the stock market, he said. “At the first sign of economic numbers being a little disappointing, it’s really taken the market down by a significant degree.”U.S. markets will improve in the year ahead, 66% of respondents indicated. Just 19% indicated they expect U.S. markets will move lower. Still, 57% indicated they believe that the risks associated with stocks in general is higher this year than last.

Republican Senator Sees Wall Street Bill Passing (Reuters)
“It’s a question of when,” Republican Senator Judd Gregg said on CNBC. Democrats need to secure 60 votes in the Senate in order to clear a procedural hurdle. So far, they can count on 57 votes for the bill, which would create new rules for the financial services industry and shine light on the over-the-counter derivatives market.

Russian Oligarchs Mull Succession (Bloomberg)
For Alexander Lebedev, hardly a week goes by without a call from a crooked security-services agent or cop angling for a chunk of his $3.4 billion fortune. It’s not a lifestyle he wishes for his son, Evgeny. “Business in our country is like wrestling with bears,” Lebedev said in an interview with Bloomberg Businessweek for its July 12 issue. “I’m not sure you’d want to pass that on to your son — would you?”

Diversifying A Portfolio With Timber (NYT)
Jeremy Grantham, co-founder and chief investment strategist at GMO, the asset manager based in Boston, calls timber “a perfect investment” for someone with a time horizon of, say, 20 years or more. “Timber is safer than stocks but not quite as safe as Treasury inflation-protected bonds,” he said. “And as long as the sun shines and the rain rains, trees grow.” Timber also acts as an inflation hedge. “If you look at commodities, you find a pattern that all of them, except timber, had a declining real price up until 10 years ago,” Mr. Grantham said. “But standing timber has a long-term record of modestly rising prices.”

BP Mulls Selling Off Billions In Assets (WSJ)
The company is in talks with U.S. independent oil and gas producer Apache Corp. on a deal worth as much as $10 billion that could include stakes in BP’s vast Alaska operations, according to people familiar with the matter.

Playboy Says Hefner Proposes To Take Company Private (Bloomberg)
Playboy said Hefner, who founded the company in 1953, is concerned about the company’s brand and Playboy magazine’s editorial direction and isn’t interested in a merger or sale to a third party. Playboy has combined units and slashed jobs to cope with a circulation plunge caused by Internet competition.

Blackstone To Manage BofA Fund (WSJ)
Blackstone is set to take over management of Bank of America Corp.’s Asian real-estate fund, a person familiar with the situation said. Merrill Lynch & Co. raised $2.65 billion before it was bought by Bank of America Corp. in January 2009 and invested all of it in Asian property deals. This is BofA ML’s only property fund in Asia. The Charlotte, N.C., lender will keep its one-third stake in the portfolio of assets called the Asia Opportunities Fund.

Article courtesy of Dealbreaker

Cohen Expands SAC Trading Team as Hedge Funds Groom Successors (Bloomberg)
Adding the four senior traders will allow him to focus on fewer investments, mentor employees on portfolios and manage risk, according to an April 28 letter sent to investors. “I have always felt that one of the keys to the firm’s success over the years has been our ability and willingness to change the organization,” Cohen, who turns 54 on June 11, said in the letter. The traders selected by Cohen each has responsibility for an industry — energy, technology, media and health care — and for discussing investments with the rest of the firm’s managers and analysts, according to the letter. The sector heads, whom the letter didn’t name, will also continue to run their own portfolios.

Germany, France Urge EU to Eye Short Selling Ban (Reuters)
In a joint letter published by Berlin on Wednesday, Chancellor Angela Merkel and French President Nicolas Sarkozy told European Commission President Jose Manuel Barroso the EU executive needed to accelerate the pace of financial reform. “In particular we think it’s imperative to improve the transparency of short-selling positions on shares and bonds, particularly sovereign bonds,” the letter said. The Commission should also look at the possibility of an EU-wide ban as introduced in Germany, it added.

Fed’s Finding Status Quo In Bank Pay (NYT)
Officials have found, for example, that risk managers at several of the biggest banks still report to executives who have influence over their year-end bonuses and whose own pay might be constricted by curbing risk. In many cases, risk managers do not have full access to the compensation committee of the banks’ boards. The review also revealed that banks tend to set similar bonus formulas for broad sets of employees and often do not adjust payouts to account for risks taken by traders or mortgage lending officers. Bank executives and directors, meanwhile, are often in the dark on the pay arrangements of employees whose bets could have a potentially devastating impact on the company.

SAC Capital Hires Anil Stevens to Run Unit Trading Financials (BW)
Stevens, who worked at SAC until 2003, returned last month and will run the division together with Glenn Shapiro, 36, another SAC alumnus who rejoined last month after a stint at Balyasny, said the people, who asked not to be identified because the information is private. The new unit, Parameter Capital Management LLC, is based in New York and has 12 employees.

Moore’s Bacon Feels Market’s Wrath (WSJ)
Bacon, who has scored annual gains of about 20% on average over the past two decades, shouldered losses of 9.2% in May in his biggest hedge fund, according to investors. That’s the fund’s weakest one-month performance in its history; it makes him one of the higher-profile investors recently snared in the European debt crisis.

“Volcker rule” at issue as reform bill nears finale (Reuters)
And someone is none too pleased about that: “I absolutely oppose any such modification” of the Senate bill, Volcker said in his May 17 letter sent to Senator Dodd. “Allowing a bank to invest in a speculative fund goes against the very intent of the (Senate) bill as we seek to define those activities that are worthy of government protection,” he said in the letter.

Debrahlee Lorenzana had two boob jobs, wanted to be stacked like Playboy Playmate (NYDN)
Debrahlee Lorenzana, the bombshell banker who says Citigroup canned her because men couldn’t stop gawking, repeatedly went under the knife to get her brick-house build. A Discovery Health Channel series chronicled Lorenzana’s pursuit of plastic surgery perfection, in which she described her desire to be stacked like a Playboy Playmate. “That’s what I want to be: t— on a stick,” she titters in “Plastic Surgery New York Style.” Her ultimate goal, she says, is to be a cross between Pamela Anderson and Carmen Electra.

Former Citadel Execs Start Fund (Reuters)
The executives are Matthew Andresen, former co-head of a Citadel equity market-making group; Jason Lehman, head of the global options business; and Neil Fitzpatrick, responsible for operations at a Citadel equities and options trading unit. The fund, called Headlands Technologies, may include trading in stocks, options and futures markets, the newspaper reported.

SEC Putting In New Market Rules Soon (NYT)
There would be a six-month trial period for the new ”circuit breakers,” which were worked out by the SEC and the major exchanges following the May 6 market plunge.

He’s So Vain: Carly Simon and The Wannabe Madoff (NYO)
An hour later, the agents were about to use a master key when Ms. Starr, a former erotic dancer, opened the door: “He’s,” she whispered, “upstairs.” The 66-year-old financial adviser, whose clients have included Henry Kissinger, Caroline Kennedy, Bunny Mellon and Martin Scorsese, was found hiding in a closet, his shoes sticking out.

Showdown On Fund Taxes (WSJ)
The section of the bill that most rankles financiers is the enterprise-value tax. Lawyers and lobbyists for investment-management partnerships describe the provision as punitive and having no precedent. The sale of a grocery store, manufacturer or bank would still be taxed at lower capital-gains rates. Matthew Beck, spokesman for the House Ways & Means Committee, said the enterprise value tax provision “does not represent a change of basic philosophy about the taxation of partnership sales.” He said the House had no plans to impose the tax on other partnerships beyond those specified.

Article courtesy of Dealbreaker

Mark Heesen, who leads the venture industry’s main lobbying group, said today that there have been pluses and minuses about President Obama’s approach to regulation and taxes. Heesen said the federal government is considering some anti-venture legislation, but he sounded pretty confident that most of it won’t get passed.

Heesen is president of the National Venture Capital Association, and he made today’s remarks on-stage at the group’s annual meeting. The good thing about Obama is that “this is a president and an administration that understands technology,” he said. The downside, however, is that Obama’s adminsitration took on too much, too quickly.

“I think they’re suffering the backlash from that right now,” Heesen said.

Perhaps the biggest issue for venture capitalists is a proposal to reclassify carried interest, the money that partners earn on investment profits, from capital gains to regular income. That would dramatically increase taxes for VCs. This is a recurring issue that we’ve covered in the past, and one that was previously defeated, but it’s being considered again as a way to help pay for health care reform. The problem, Heesen said, is that the government is rapidly running out of ways to generate new revenue, so carried interest is “the lowest-hanging fruit right now.”

The NVCA continues to campaign against these changes. It plans to run advertising on political website Politico emphasizing venture capital’s importance to job creation, and has also launched “>includes new restrictions on angel investing. The NVCA and the Angel Capital Association have explained their objections to Senator Chris Dodd, who authored the bill, and Heesen said the senator understands that he was “not working on the side of the angels.” Those restrictions will be changed into something more favorable, Heesen said.

Beyond government policy, Heesen also commented on broader changes to the venture industry. It has almost become a cliche that the venture capital industry is shrinking, but Heesen said that doesn’t mean that most firms will disappear. If you look at the past year or so, firms that previously raised $300 million funds are now raising funds of $100 million or $150 million, he said.

“Those firms are going to stay, but instead of having three partners they’re going to have two partners,” Heesen said.

Tags: national venture capital association

People: Mark Heesen

Article courtesy of VentureBeat » Deals & More

Many of you have likely done things you should be embarrassed about in the name of getting laid. Given. For the most part, though, that embarrassment (and second hand embarrassment) remains contained to a relatively small group of people. Your friends, onlookers at the bar, cab drivers and so on and so forth. It’s likely that tens of millions of people will never see the depths to which you’ve sunk to put your d in a v. Such is not the case for Fabrice Tourre, who in one of the many emails released by Senator Carl Levin (no relation) over the weekend, has him begging off the ‘fabulous’ title in a message to lady-friend Marine Serres, a Goldman colleague. There’s nothing NSFW about this, but it should be considered NSFThoseWho’veJustFinishedLunch.

Darling you should take a look at this article … Very insightful … More and more leverage in the system, l’edifice entier riqsue de s’effondrer a tout moment … Seul survivant potentiel, the fabulous Fab (as Mitch would kindly call me, even though there is nothing fabulous abt me, just kindness, altruism and deep love for some gorgeous and super smart French girl in London), standing in the middle of all these complex, highly levered exotic trades he created without necessarily understanding all the implications of these monstruosities !!! Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer will more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job amazing how good I am in convincing myself !!!

Sweetheart, I am now going to try to get away from ABX and other ethical questions, and immediately plunge into Freakonomics … I feel blessed to be with you, to be able to learn and share special things with you, I love when you advise me on books I should be reading. I feel like we share a lot of things in common, a lot of values, topics we are interested in and intrigued by … I just love you !!!

If there’s anything Tourre should be ashamed of it’s this. Hopefully someone will take him to take for it tomorrow on the Hill.

Fabulous Fab Is a Player in More Than One Way [Daily Intel]

Article courtesy of Dealbreaker

And frankly, it’s insulting. Not unlike the fact that the Cliff Asness donated $71,600 to Republicans this year and $409 to the Senator from Connecticut.

Article courtesy of Dealbreaker

Angel investors don’t usually stay up at night worrying about Capitol Hill. But a financial reform bill proposed by Chris Dodd, the Democrat chairing the Senate Banking Committee, includes new restrictions on startups and angels.

Not surprisingly, investors aren’t happy about it, saying it’s “insane,” “frankly ridiculous,” and aims to “destroy Silicon Valley.”

There are three changes that should have a particular effect on angel investors, a catch-all category which includes everyone from friends and family members who invest in a startup, to unaffiliated wealthy individuals, to side investments made by venture capitalists acting on their own.

Frist, Dodd’s bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an “accredited investor” who can invest in startups — if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states.

Several investors have written pointed critiques of the bill:

• Fred Wilson of Union Square Ventures said startups will be “hit by shrapnel” from the bill.
• Robert E. Litan of the Kauffman Foundation, which researches entrepreneurship, wrote, “It is difficult to know why these provisions are in a much larger bill whose primary aim is to address the fundamental causes of the recent financial crisis.”
• Mike Masnick at tech policy site Techdirt described the restrictions as “somewhat horrifying.”

Investors offered more criticism on Twitter, with Slide vice president Keith Rabois Chris Sacca, an angel investor and former Googler who campaigned for Obama, also “>a petition against the investing regulations.

I asked Sacca for more details about his opposition. In a voicemail, he said:

Obviously, I’m deeply concerned about Senator Dodd’s proposal to place these restrictions on angel investing. I think angel investing is undeniably one of the largest engines for job creation as well as innovation and competitiveness on the global scale for the United States. There’s no doubt about it that the restrictions that he’s proposing would absolutely chill investing.

Specifically, one of the things we need to take into account is while 10 years ago it may have taken years to build a company, companies are now built in a matter of weeks. So this 120-day waiting period is frankly ridiculous. I have companies with tens of thousands and hundreds of thousands of users that are built in a matter of weeks. They’re generating actual dollars of revenue, creating jobs, investing in real estate office space, capital equipment, etc. If they had to wait 120 days to actually apply for the ability to obtain financing it absolutely just crush that market.

I think this is a very short-sighted proposal. It seems far afield from the problems that the banking committee is actually trying to address.

This outrage may not be futile, either. A source in the Senate Banking Committee told PEHub that the committee is talking the complaints seriously.

You can read a summary of the bill here.

Tags: angel investing, angel investors, angels, politics

Companies: Slide

People: Chris Dodd, Chris Sacca, Keith Rabois

Article courtesy of VentureBeat » Deals & More