WSF Headline Roundup - 1/5/09 - Taxpayers shaft on IndyMac deal?; $300B tax cut?; Levitt on Madoff/SEC; Cox's tarnished image; Richardson withdraws; Fed endorses 'Big stimulus'; Dollar rise;Oil gains in '09?; Venture cap shake-out?; Waterford receivershi

• Is the IndyMac Deal a Little Too Sweet?
• Wall Streeters Flock to IndyMac
• Obama Eyes $300 Billion Tax Cut
• Arthur Levitt: How the SEC Can Prevent More Madoffs
• Cox's reign seen denting own image, SEC's future
• Richardson Withdraws Cabinet Nomination Amid Grand Jury Probe
• Fed Officials Endorse ‘Big Stimulus’ to Battle U.S. Recession
• Dollar Rises Against Euro, Yen on Obama Plan for U.S. Stimulus
• Oil Curve Steeper Than '99 Shows Possible Gain in '09
• Investment fears in venture capital shake-out
• Calls Grow to Cap Property Taxes
• Japan in share buy-back spree
• FSA cracks down on disclosure
• Vegas gadget show gets smaller
• Waterford Goes Into Receivership as No Buyer Emerges

Is the IndyMac Deal a Little Too Sweet? - Wall Street Journal

Is the government charging too little for the remains of failed mortgage lender IndyMac?

Friday, the FDIC announced it had approved the sale of IndyMac to a group of funds run by well-known investors, including John Paulson, who made a killing betting against the U.S. housing market. The positive interpretation of the deal is that savvy investors see a bottom forming in the mortgage market. The more skeptical view is that the buyers couldn't resist the sweet deal terms available.

While the government deserves applause for quickly returning seized bank assets to private hands, it needs to ensure it doesn't spark controversy by underpricing.

How does this deal stack up? The buyers are putting $1.3 billion of equity into a new bank that will hold IndyMac's assets and liabilities. The FDIC values the deal at $13.9 billion -- the amount of assets in the new bank.....

Wall Streeters Flock to IndyMac - Wall Street Journal

Who wants to buy a failed bank at the heart of the country's mortgage crisis? Turns out a lot of Wall Street's "smartest money" has invested in the latest iteration of IndyMac Bank, the failed California institution that the Federal Deposit Insurance Corp. has been trying to sell since July.

The group includes: Dune Capital, founded by former Goldman Sachs Group partner Daniel Neidich and former executive vice president Steve Mnuchin; and J.C. Flowers & Co., the financial-services investing firm founded by preternaturally cautious former partner Christopher Flowers. The others are Stone Point Capital; Paulson & Co.; a fund controlled by billionaire George Soros's Fund Management; a fund controlled by Silar Advisors LP, and MSD Capital, billionaire Michael Dell's financing vehicle.

The 46-year-old Mr. Mnuchin (pronounced Min-OO-chin) will be the new chief executive of the IndyMac holding company, which will receive a $1.3 billion cash injection from the investors. The first thing most Wall Streeters would say about Mr. Mnuchin is that he has deal-making -- and a certain level of Manhattan glamor -- in his blood.....

Obama Eyes $300 Billion Tax Cut - Wall Street Journal

President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion of tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.

The size of the proposed tax cuts -- which would account for about 40% of a stimulus package that could reach $775 billion over two years -- is greater than many on both sides of the aisle in Congress had anticipated. It may make it easier to win over Republicans who have stressed that any initiative should rely more heavily on tax cuts rather than spending.....

Arthur Levitt: How the SEC Can Prevent More Madoffs - Wall Street Journal Opinion

The Bernard Madoff affair is a scandal of epic proportions. It not only has devastated the prominent individuals and institutions who invested in his funds, but it has also further undermined whatever trust investors may have had after this year of bank failures, credit crises, and market meltdowns. The regulatory structure that has been in place for the past eight decades to keep our markets free and fair may no longer be appropriate.....

Current SEC Chairman Christopher Cox, who recently said that "credible and specific allegations . . . were repeatedly brought to the attention of SEC staff," is right to investigate whether the commission failed in some way to protect investor interests. Any potential conflicts of interest, including the fact that Mr. Madoff's niece married an SEC official last year, will likely be high on Mr. Cox's list of priorities.

Yet contrary to what some commentators have said, the Madoff affair doesn't prove that the SEC is a failed institution that must be shuttered. Nor does it show that all it needs is more money to do its job. Rather, this scandal underscores the need for a 21st century regulatory approach.....

Cox's reign seen denting own image, SEC's future - Reuters

Christopher Cox will most likely be remembered as the regulator who was unable to do enough to protect investors during the worst financial crisis since the Great Depression.

When the 28th chairman of the U.S. Securities and Exchange Commission steps down early this year, he will leave behind an agency tarnished by regulatory missteps and threatened with being reorganized out of existence by a reform-minded Congress.

Under Cox's watch the investment banks that the SEC loosely supervised either collapsed or reorganized as bank holding companies in 2008 and the agency was criticized for interfering with free markets when it temporarily stopped investors from making bearish bets on financial stocks.....

Richardson Withdraws Cabinet Nomination Amid Grand Jury Probe - Bloomberg

New Mexico Governor Bill Richardson withdrew his name from consideration to be President-elect Barack Obama’s commerce secretary amid a federal investigation into how a political contributor won state financial business. 

Richardson cited the probe in a statement released by Obama’s transition team, saying that it “promises to extend for several weeks or, perhaps, even months,” and “would have forced an untenable delay in the confirmation process.” 

The governor realized that “as long as there is a pending investigation, the confirmation would be very difficult,” said Edward Romero, a former U.S. ambassador to Spain and the national finance chairman for Richardson’s 2008 presidential campaign. “He knew the investigation was, I guess, taking longer than what it should have.”...

Fed Officials Endorse ‘Big Stimulus’ to Battle U.S. Recession - Bloomberg

Federal Reserve officials, after taking the historic step of cutting the benchmark interest rate to as low as zero, are calling for greater government spending to help revive the U.S. economy. 

San Francisco Fed President Janet Yellen said yesterday at an economics conference in San Francisco that “it’s worth pulling out all the stops” with an economic recovery package. Charles Evans, president of the Chicago Fed, told the same gathering he believes a “big stimulus is appropriate.” 

The remarks underscore the view of many economists that unprecedented fiscal measures are needed to combat the yearlong recession, and come ahead of meetings this week between President-elect Barack Obama and congressional leaders. They also reflect the failure of Fed efforts so far, including record rate cuts, emergency lending programs and backstops for debt markets, to halt the crisis.....

Oil Curve Steeper Than '99 Shows Possible Gain in '09 - Bloomberg

The steepest plunge in crude prices on record may be setting up oil investors for a rally this year, if history is any guide. 

The so-called forward curve of futures contracts traded on the New York Mercantile Exchange suggests oil will rise 28 percent to $60.10 a barrel by December. The curve looks almost the same as 10 years ago, after Russia’s default and the collapse of the Long-Term Capital Management LP hedge fund raised concerns that a global economic slowdown would reduce energy demand. Crude prices fell 25 percent in the final quarter of 1998, the steepest drop in seven years. 

Bets on a recovery paid off then as the Organization of Petroleum Exporting Countries cut production 6.9 percent, causing prices to more than double in 1999. Now, OPEC is pledging to reduce supply 9 percent, companies from Royal Dutch Shell Plc to Valero Corp. are postponing new energy projects and central banks are cutting interest rates to end the worst financial crisis since World War II.....

Dollar Rises Against Euro, Yen on Obama Plan for U.S. Stimulus - Bloomberg

The dollar rose against the euro and the yen on speculation President-elect Barack Obama’s fiscal stimulus will help the U.S. economy recover from the recession. 

The dollar climbed to the highest level in almost three weeks against the European single currency and gained against 13 of its 16 most actively traded counterparts monitored by Bloomberg. Obama crafted a package of infrastructure spending and tax cuts to create three million jobs. The euro fell after European Central Bank Vice President Lucas Papademos said further interest-rate reductions may be necessary should inflation keep slowing. 

“Obama’s stimulus package came in at a higher end of expectations, and is skewed more towards tax cuts than has been expected,” said Adam Cole, London-based head of global currency strategy at Royal Bank of Canada Ltd., the nation’s largest lender. “That’s positive for dollar sentiment. But moves might be exaggerated a bit because trading volumes in the market are still quite thin.”....

Investment fears in venture capital shake-out - Financial Times

The US venture capital industry, which has become an important source of capital for technology start-ups around the world, is facing a severe shake-out that will lead to a contraction in future investments, according to some of Silicon Valley’s leading financiers.

These warnings follow one of the weakest years ever seen for profit-taking by start-up investors, and come amid predictions of an even worse period ahead. Only six companies that were backed by venture capital went public last year, the lowest numbers since the 1970s......

Calls Grow to Cap Property Taxes - Wall Street Journal

Support for property-tax rollbacks is building from Arizona to New York, fueled by angry homeowners in some locales who are seeing rising tax bills despite plunging home prices.

Legislatures in New York, Georgia, Oklahoma and Wyoming are considering taking up proposals to curb property taxes in their 2009 sessions. In Indiana, a cap on property taxes enacted last year became effective Jan. 1, and lawmakers are planning to vote this year on whether to put before voters a constitutional amendment that would cap taxes permanently at 1% of a property's value.

In recent months, citizen groups in Montana, Nevada and Arizona have organized to get property-tax-relief measures on state ballots. Florida voters last year amended the state's constitution to increase a number of property-tax exemptions, lowering their assessments.....

Japan in share buy-back spree - Financial Times

The stock market slump has driven Japanese companies to buy back their own shares in near-record numbers, in spite of their reputation for hoarding investors’ cash.

There were buy-backs at 587 listed companies last year – a 33 per cent increase on 2007, according to figures from I-N Information Systems data provider......

FSA cracks down on disclosure - Financial Times

Leading companies are being probed by the financial watchdog over possible failures to disclose key trading data to the stock market, in a wide-ranging crackdown that threatens fines and criminal prosecutions.

Top City lawyers say they have seen a surge in inquiries by the Financial Services Authority about whether businesses – including Rentokil Initial, the support services company, and Rok, the building group – kept investors properly informed ahead of profits warnings that sent shares tumbling.....

Vegas gadget show gets smaller - Reuters

Even amid the flash and sizzle of the world's premier showcase for consumer electronics, the reality of the economic recession will be hard to ignore.

With shoppers in a funk and companies scaling back, the annual Consumer Electronics Show extravaganza in Las Vegas this week is likely to be subdued, with fewer manufacturers, retailers and people expected in attendance.

The focus is likely to be on smaller, more connected and greener devices that can help consumers save on bills. That is a change from years past, when companies trafficked in excess, offering items such as massive 150-inch TVs that were beyond the financial reach of most consumers......

Waterford Goes Into Receivership as No Buyer Emerges - Bloomberg

Waterford Wedgwood Plc received protection from creditors after losing money for five years and failing to find a buyer, threatening an Irish crystal-making heritage that dates back to 1759. 

As many as 1,900 Irish and British jobs may be at risk if no buyer emerges. Deloitte Ireland was appointed as receiver for the company and some local units, Dublin-based Waterford said today in a statement. Its shares were suspended in Dublin. 

Sales wilted under the dollar’s drop against the euro, which eroded the value of revenue from the company’s main U.S. market. Luxury-goods spending is slumping as the credit crunch weighs on incomes. Factory closings and job cuts in Ireland weren’t enough to revive Waterford, which had to appoint receivers after banks declined to suspend a financial-covenant test for a fourth time.....