Wall Street Folly

• BofA Directors Continue to Support Lewis
• Individual "stress tests" may be unveiled
• U.S. Bank Test Results Delayed as Conclusions Debated
• Libor May Fall to 1% for First Time Since 2003 as Markets Thaw
• Buffett fans set for 'capitalist Woodstock'
• Here's the Story on Berkshire's Munger
• Citi Sells Nikko Cordial to SMFG
• Fed Said to Be Close to Offering Five-Year TALF Loans
• AIG Gave Liddy $460,000 to Cover Legal, Housing Costs
• UBS Says U.S. Wants Bank to Break Swiss Criminal Law
• Citadel Starts Banking Unit, Hires Three From Merrill
• MBIA sues Merrill over CDO losses
• Ex-Citigroup Banker Indicted In Insider-Trading Scheme
• Disney's Hulu Deal Raises Questions About YouTube Model
• Souter Said to Be Retiring, Giving Obama Court Choice

BofA Directors Continue to Support Lewis
- Wall Street Journal

Bank of America Corp. directors showed no sign Thursday of losing faith in Chief Executive Kenneth Lewis despite outside pressure on the board to accelerate its search for a potential successor.

A person familiar with the deliberations said the 18-member board isn't considering pushing out or easing aside the 62-year-old Mr. Lewis following Wednesday's shareholder vote to strip the CEO of his duties as chairman. The subject of succession didn't come up during a board meeting Wednesday or in recent discussions with regulators.

The board's continuing support for Mr. Lewis is likely to cause even more friction with shareholders who pushed successfully to split the chairman and CEO positions….

Individual "stress tests" may be unveiled
- Reuters

U.S. officials are leaning towards announcing the "stress test" results of individual banks next week instead of just summary results, a source familiar with administration talks said on Thursday.

The markets are anxiously anticipating the results and the banks' recapitalization plans, which could dilute common shareholders at some firms. Regulators are expected to encourage some of the banks to boost their capital buffers by converting preferred shares to common equity……

U.S. Bank Test Results Delayed as Conclusions Debated
- Bloomberg

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The Federal Reserve will postpone the release of stress tests on the biggest U.S. banks while executives debate preliminary findings with examiners, according to government and industry officials. 

The results, originally scheduled for publication on May 4, now may not be revealed until toward the end of next week, said the people, who declined to be identified. A new release date may be announced as soon as tomorrow, they said. 

Regulators and bank executives are concerned about how the disclosure is handled because weaker institutions could suffer a collapse in their stock prices…..

Libor May Fall to 1% for First Time Since 2003 as Markets Thaw
- Bloomberg

The London interbank offered rate that financial companies charge for three-month dollar loans may fall to as low as 1 percent today for the first time in six years as central banks and governments unlock credit markets. 

Libor may drop 1.6 basis points today, said Peter Chatwell, a fixed-income strategist in London at Calyon, the investment- banking unit of Credit Agricole SA. It was 1.016 percent yesterday, according to the British Bankers’ Association. The last time Libor fell to 1 percent was in June 2003…..

Buffett fans set for 'capitalist Woodstock'
- Fortune

Warren Buffett's Berkshire Hathaway had its worst year ever in 2008. But for the throng gathering in Omaha for Saturday's annual shareholder meeting, that's ancient history. 

Berkshire fans are far more interested in learning how Buffett sizes up the investing opportunities arising out of the global economic slowdown, and how the downgrade earlier this month of Berkshire's credit rating might affect the firm….

Here's the Story on Berkshire's Munger
- Wall Street Journal

Warren Buffett is synonymous with Berkshire Hathaway Inc., getting credit for billions of dollars in big deals that have made him an icon to investors around the world. But on the one day a year when he faces his shareholders, at his side will be his longtime partner, Vice Chairman Charles Munger.

On Saturday, the partners will take their decades-old act back to the stage in Omaha, Neb., telling thousands of loyal shareholders that they see huge opportunities amid the financial crisis that drove Berkshire to its worst performance since Mr. Buffett took it over 44 years ago…..

Citi Sells Nikko Cordial to SMFG
- Wall Street Journal

Citigroup Inc. said Friday it sold its Japanese retail brokerage to Sumitomo Mitsui Financial Group Inc., bringing to a close the U.S. firm's ambitions of creating a full-service bank in the world's second largest economy.

The deal will turn Sumitomo Mitsui into a major player in Japan's securities industry, behind Nomura Holdings Inc. SMFG already owns a second-tier broker called SMBC Friend Securities, as well as an investment banking joint venture with Daiwa Securities Group named Daiwa SMBC Securities……

Fed Said to Be Close to Offering Five-Year TALF Loans
- Bloomberg

The Federal Reserve is close to offering investors five-year loans to buy commercial mortgage- backed securities, granting an industry request, a person familiar with the matter said. 

The decision on extending the term of such loans under the Fed’s Term Asset-Backed Securities Loan Facility isn’t final yet, said the person, who spoke on condition of anonymity. The Wall Street Journal reported the state of the decision earlier today. In December, the Fed lengthened the term of TALF loans to three years from one year……

AIG Gave Liddy $460,000 to Cover Legal, Housing Costs
- Bloomberg

American International Group Inc. Chief Executive Officer Edward Liddy, who receives $1 a year in salary, got compensation valued at about $460,000 last year to cover housing, travel, taxes and legal fees following an emergency bailout of the insurer. 

Liddy, named CEO of New York-based AIG less than a week after its near collapse in September, got benefits including $38,368 for a New York apartment and $162,686 for legal counseling, the firm said today in a regulatory filing. His expenses included $47,578 to reimburse commercial flights between New York and Chicago, $180,431 to cover tax obligations and $31,348 tied for car services, AIG said……

UBS Says U.S. Wants Bank to Break Swiss Criminal Law
- Bloomberg

A U.S. lawsuit to force Zurich- based UBS AG to reveal names of 52,000 American customers would require the bank to violate Swiss criminal law that bars such disclosures, the company said in a court filing. 

UBS, Switzerland’s largest bank by assets, responded today in federal court in Miami to the Feb. 19 lawsuit, saying the U.S. action seeks to trample on Swiss sovereignty by trying to enforce summonses from the Internal Revenue Service. Such a request also would violate tax treaties between the U.S. and Switzerland, according to the filing…..

Citadel Starts Banking Unit, Hires Three From Merrill
- Bloomberg

Citadel Investment Group LLC, following losses by its hedge funds last year, plans to expand into investment banking and has hired three former Merrill Lynch & Co. executives to staff the unit. 

Todd Kaplan, 44, who joined Chicago-based Citadel in March, is the head of the investment-banking unit, the company said today in an e-mail. Kaplan had worked at Merrill Lynch as the head of global leveraged finance, the statement said…..

MBIA sues Merrill over CDO losses
- Reuters

MBIA Inc (MBI.N: Quote, Profile, Research), the world's largest bond insurer, sued Merrill Lynch & Co on Thursday seeking damages for losses from complex debt securities it insured for the bank.

The lawsuit, filed in New York State Supreme Court in Manhattan, seeks to void certain credit default swaps and related insurance contracts that
MBIA, through a special purpose vehicle, wrote on the securities held by Merrill.

The insurer wrote $5.7 billion in guarantees on these securities, which were packages of mortgages known as collateralized debt obligations
(CDOs), it said in a statement…..

Ex-Citigroup Banker Indicted In Insider-Trading Scheme
- Wall Street Journal

Former Citigroup Inc. (C) investment banker Maher Kara has been indicted on charges of securities fraud for his alleged role in an insider-trading scheme in which he tipped off his brother about upcoming mergers. 

Maher Fayez Kara, a 37-year-old former director in Citigroup's Global Market's investment banking division in New York, stands accused of providing his brother Mounir "Michael" Kara, 48, with information about upcoming merger deals involving Citigroup's health-care industry clients. 

Michael Kara and his friend Emile Youssef Jilwan, 54, both of whom were also indicted on securities fraud charges, then allegedly used this information to make illegal profits by trading stocks and options, according to an indictment unsealed Thursday in a San Francisco-based U.S. District Court…..

Disney's Hulu Deal Raises Questions About YouTube Model
- Wall Street Journal

Walt Disney Co.'s (DIS) deal to put ABC TV shows on Internet video site Hulu suggests Google Inc.'s (GOOG) YouTube may have to rethink its revenue-sharing business model. 

Google is under increasing pressure to add more premium content to YouTube in order to attract advertisers – and revenue – from the site. But on Thursday, rival Hulu scored a big victory when Disney agreed to take a nearly 30% stake in Hulu and put full episodes of its ABC TV shows on the site…..

Souter Said to Be Retiring, Giving Obama Court Choice
- Bloomberg

U.S. Supreme Court Justice David Souter is planning to retire, giving President Barack Obama his first chance to shape the nation’s highest court, a person familiar with the decision said. 

Souter, 69, a Republican appointee who became a supporter of abortion rights and affirmative action on the court, plans to step down when the court’s term concludes in late June or early July, the person said. The White House was informed of his intentions, the person said…..