Goldman Prop Traders Jump to Hedge Funds


New Stress Tests for U.S. Banks [Financial times] US Financial institutions will face another round of stress tests. The tests come amid calls for banks to begin returning profits to investors. "The exercise, mirroring the tests of May 2009 when the sector was reeling from the crisis, comes as investors have been pressing banks to return part of their surging profits. The calls have gone unanswered, contributing to the low valuation of many bank stocks, because after injecting billions of dollars to recapitalise the sector, regulators have been wary of sanctioning capital returns."

ECB Purchases Support Portuguese Bonds As Bailout Pressure Mounts [Reuters] "The European Central Bank threw Portugal a temporary lifeline on Monday by buying up its bonds, traders said, as market and peer pressure mounted for Lisbon to seek an international bailout soon. A senior euro zone source told Reuters on Sunday that Germany, France and other euro zone countries were pushing Portugal to seek an EU-IMF assistance program, following Greece and Ireland, in a bid to prevent contagion spreading to much larger Spain, the fourth biggest economy in the euro area. The interest rate premium on Portuguese sovereign debt fell on Monday after rising sharply late last week as traders said the ECB intervened to buy government bonds on the secondary market."

Goldman Prop Traders Jump to Hedge Funds [Financial times] "The last big proprietary trading team at Goldman Sachs has begun raising money to start a new hedge fund independent of the bank, for launch in the second quarter of this year. The team – led by two senior members of Goldman Sachs’ Principal Strategies desk, Daniele Benatoff and Ariel Roskis – has already secured a $300m investment from one of Europe’s biggest hedge funds, Brummer & Partners, people familiar with the team’s plans said. The launch will mark the final big set of departures from GSPS, which at its peak traded as much as $11bn of Goldman’s own capital and was one of the bank’s most lucrative operations."

Seven Major Pension Funds — Led by New York City Comptroller — Call for Foreclosure Practices Review [New York City Comptroller's Office] "A coalition of seven major public pension systems called on the boards of directors of Bank of America , Citigroup, JP Morgan Chase , and Wells Fargo to immediately undertake independent examinations of the banks' mortgage and foreclosure practices. Led by New York City Comptroller John C. Liu on behalf of the five NYC Pension Funds, the coalition also includes the Connecticut Retirement Plans and Trust Funds, the Illinois State Board of Investment, the Illinois State Universities Retirement System, the New York State Common Retirement Fund, the North Carolina Retirement Systems, and the Oregon Public Employees Retirement Fund. The coalition of pension funds called for the banks' Audit Committees to launch independent examinations of their loan modification, foreclosure, and securitization policies and procedures." (Hat Tip: Christopher Whalen)

Tragic Aftermath of Tucson Attacks [Wall Street Journal] "Bouquets, candles and handwritten notes piled up Sunday in public memorials across this city as residents struggled with the attack that killed six and wounded more than a dozen others, including Rep. Gabrielle Giffords. The victims at the "Congress on Your Corner" event outside a Safeway supermarket Saturday included a federal judge who had just come from Mass and a 9-year-old girl who had recently been elected to her student council and wanted to see politics up close.

A young social worker, engaged to be married, was killed in the attack, as was a great-grandmother who stitched aprons to sell at church craft fairs and gathered her family around a huge turkey dinner each Christmas."

Duke Energy Acquisition of Progress Energy to Create Nations Largest Utility [DealBook — New York Times] "Duke Energy agreed to pay $47.48 a share for Progress Energy on Monday, in a deal valued at $13.7 billion." Total combined revenue is expected to reach $22.7 billion, with more than seven million customers, in the following states: North Carolina, South Carolina, Florida, Indiana, Kentucky and Ohio. "The boards of both companies unanimously approved the all-stock deal, which is expected to increase profit in the first year."

Once Again — Nearly Naked on the Subway — "'Strip'-hangers" [New York Post] "Some daring — and baring — souls ride the train in their undies yesterday for the 10th annual No Pants Subway Ride."