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Sausage Made in Europe: Leaders of the eurozone countries at the debt summit in Brussels made progress on several issues, including a writedown of Greece’s debt – they agreed on a plan that could cut bondholders’ payments in half. The creditors, understandably, were still balking late Wednesday. But as were working off the old gut on the elliptical machine this morning CNBC informed us the private sector had agreed to the 50% haircut. This was an important piece of the puzzle, without which it would be “almost impossible to finalise” how much money the eurozone bailout fund will need, the FT had said. Deliberations went on into the night, and it looks like the process could stretch into November. Interestingly, the Europeans are now talking about setting up a special fund with money from the BRICs – Brazil, Russia, India and China. French President Nicholas Sarkozy was to meet with his Chinese counterpart today. The eurozone governments also agreed on a plan to make about 70 of their banks raise close to $150 billion of capital by June. Additionally, there’s talk of “an EU-wide plan to build up guarantees on bank liabilities to help banks access funding,” according to the Journal’s blog “The Source.” (An EU-DIC?) Back in the U.S., MF Global, the brokerage house run by former Senator and Goldman Sachs alum Jon Corzine, is close to facing “a full-blown panic,” in no small part because of its exposure to European debt, according to the Times’ “Dealbook.” The Journal reports MF has hired investment bankers to explore a possible sale. Finally, our favorite headline about Europe today comes from the blog ZeroHedge, and speaks for itself: “Italy Concedes To Full Blown Austerity: To Raise Retirement Age From 65 To 67 By 2026.” We don’t even have room here to tell you all about the fisticuffs that broke out on the floor of the Italian Parliament over this. Here’s the full text of the EU agreement.
Vacancy at Freddie: Charles Haldeman, Jr., Freddie Mac's second CEO since it was placed into conservatorship in 2008, will step down sometime in the coming year. We wonder how much it matters who fills the post nowadays since the Federal Housing Finance Agency, led by perennial "acting" director Edward DeMarco, more or less calls the shots at Freddie and Fannie Mae. The FT quotes a cheeky anonymous Democratic congressional aide as saying that "a more useful reshuffle would include the departure of Mr. DeMarco, whom liberals believe is standing in the way of more aggressive measures to refinance the mortgages of struggling homeowners."
Where They Want to Be: Well, someone out there is spending money. Profits at Visa "rose 14% in the fiscal fourth-quarter as consumers spent more using its credit and debit cards and the volume of transactions it processed grew," the Journal says. Separately, the Journal reports some good news for the world's largest payment network and for its biggest competitor (or third-biggest, if you buy that old saw about cash and checks): "After years of allowing only its proprietary card or American Express, Neiman Marcus will let customers pay using Visa and MasterCard."Wall Street Journal, Financial Times
Wall Street Journal
An article takes a broad look at friction between banks and regulators over returning capital to shareholders. The news peg is the Fed's recent rejection of MetLife's request to raise its dividend, but the piece adds a juicier tidbit: JPMorgan informally discussed a share buyback but decided not to submit an application to regulators when told "it might not get the answer it wanted."
"Encore Capital Group, the nation's largest buyer of consumer debts, said North Carolina regulators launched an investigation of its debt-collection practices."
An article looks at how credit-scoring firms like Fair Isaac and Experian are using data to predict other kinds of behavior aside from debt payment - for example, the likelihood that a patient will take prescribed medication. (We know this much: whenever the scrip's for Vicodin, our score should be perfect.) "We know what you're going to do tomorrow," Mark Greene, Fair Isaac's chief executive, is quoted as saying, reminding us a bit of the film "Minority Report." A companion article notes that these new scores aren't subject to the Fair Credit Reporting Act.
Paul Volcker says the rule named after him is not as complicated as the hype makes it out to be. "The actual rule itself is not 250 pages. The lobbyists want to find some bacon to take home to their friends - 'oh, we found a loophole here' - so the regulators try to make things as precise as they can." The former Fed chairman dusted off the old Glass-Steagall Act and found that though simpler, it was much tougher in restricting proprietary trading at banks. "You can do zilch. … So if the banks want to make it simple and go back to Glass-Steagall - let's go!" Volcker also weighs in on Occupy Wall Street and how to remake the mortgage market in an interview with the FT.
New York Times
The SEC adopted a rule requiring the biggest hedge funds to report their financials to regulators. "But hedge funds and their advocates, after intense lobbying, won several important concessions from the commission's earlier proposal. The changes call for only the largest funds to report the most detailed information, eliminate any penalty of perjury for misleading reports and delay for six months the initial reports for all but the largest funds." Plus the data will be for regulators' eyes only, not for public consumption. No doubt this will keep some hedge-fund newsletters in business.
Writing in "DealBook," ProPublica's Jesse Eisinger ridicules the SEC's settlements with securities firms like Goldman and Citi over CDOs the firms sold while betting they would fail. "Based on the major cases the S.E.C. has brought, a pattern has emerged. It is making one settlement per firm and concentrating on only the safest, most airtight cases. The agency's yardstick seems to be, who wrote the stupidest e-mail?"
The paper's "Room for Debate" section features a discussion among four experts of the Obama administration's efforts to help struggling homeowners. Lots of readers comments, naturally.
Speaking of Obama and consumer debt relief, the president announced a plan "to make college loans more affordable and easier to repay for millions of economically trapped borrowers."
And, Lastly ...
Global Post: This award-winning international news site, run out of Boston, is a serious operation, so we don't want to give you the wrong impression. But we couldn't resist this one from their "Weird Wide Web" blog: Next month, Canada plans to begin issuing new currency made out of polymer. The banknotes are two to three times more tear-resistant than paper, and have a number of security features making them harder to counterfeit. They also have a smooth texture, tactile raised ink, transparent "windows" and metallic images that change color when you tilt the note. Australia's had polymer money for years. Now for the weird part: in focus groups, Canadians thought they saw pornographic images on the notes, prompting some redesigns. (Shades of those old Camel cigarette box rumors.) But the central bank "wasn't about to alter the plastic polymer the notes are made from, despite focus groups describing the new bills as looking like 'Monopoly money.'"