Wall Street Folly

Federal Reserve Chairman Ben Bernanke said the central bank is examining controversial derivatives transactions that Goldman Sachs Group Inc. and other banks made with Greece.

“We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece,” Mr. Bernanke told the Senate Banking Committee on Thursday. The Securities and Exchange Commission also is exploring the matter, he said.

Mr. Bernanke’s comments came in response to questions from Senate Banking Committee Chairman Chris Dodd (D., Conn.), who said the transactions structured with Greece by “major financial firms are amplifying a public crisis for what would appear to be for private gain.”….

The US central bank is looking into Goldman Sachs’s role in arranging contentious derivatives trades for Greece , which helped the country to massage its public finances, Ben Bernanke, chairman of the Federal Reserve, revealed yesterday.

“We are looking into a number of questions relating to Goldman Sachs and other companies and their derivatives arrangements with Greece,” Mr Bernanke said, apparently referring to Greek currency transactions structured by Goldman…..

Why is Goldman Sachs in the spotlight over its activities in Greece?

Goldman is under attack from regulators and politicians for structuring a series of complex currency swaps that helped Greece trim more than €2bn ($2.7bn, £1.8bn) from its national debt in 2002, just after it was admitted to Europe’s monetary union….

Spain’s Socialist government yesterday struggled to shore up the credibility of its austerity programme, with ministers publicly weighing the merits of a public sector pay freeze and urging opposition politicians to agree common policies against the crisis.

Spain – wary of joining Greece as the next target for investors and speculators concerned about rising levels of sovereign debt – has launched a radical cost-cutting plan to reduce its budget deficit from 11.4 per cent of gross domestic product last year to 3 per cent of GDP by 2013. It has sent the plan to Brussels for approval…..

Bankruptcy for GMAC Inc., the auto and home lender majority owned by the U.S. government, would have cost the government as much as $50 billion, the Treasury Department’s lead auto industry adviser said.

Sending GMAC into bankruptcy would have required the government to inject $40 billion to $50 billion into a newly formed company that would then lend to General Motors Co. and Chrysler Group LLC dealers, said Ron Bloom, chief adviser for the Treasury’s auto task force. Bloom spoke today at a hearing of the Congressional Oversight Panel in Washington……

As he flirts with a challenge to Senator Kirsten E. Gillibrand in the Democratic primary, Harold E. Ford Jr., the former congressman from Tennessee, has been dogged by questions about his compensation on Wall Street, a sensitive issue because of taxpayer-financed bailouts of big banks during the financial crisis.

As a vice chairman at Merrill Lynch, however, Mr. Ford benefited from an unusual arrangement that paid him generously regardless of how he and his firm perform. In 2007, he began working at the firm under a contract that guaranteed him annual compensation of at least $2 million, according to two people with direct knowledge of the deal, who spoke on the condition of anonymity because the agreement is confidential. With a bonus, his pay could well exceed that figure……

A Ford spokesman, Davidson Goldin, declined to comment on what he called “speculation about a private citizen’s pay” and urged Ms. Gillibrand to disclose her pay when she was a corporate lawyer representing tobacco interests……

Bernard M. Madoff’s former operations chief was charged today with helping his boss run a Ponzi scheme that bilked investors and illegally infused $750 million into parts of the business that Madoff insisted was legitimate.

Daniel Bonventre, 63, today became the sixth person charged in the largest-ever U.S. Ponzi scheme. Prosecutors and regulators said he was a key aide to Frank DiPascali, the Madoff lieutenant who is helping the government unravel a fraud that cost investors as much as $65 billion…..

Apple Inc. (AAPL) Chief Executive Steve Jobs defended the company’s huge cash holdings, saying the consumer electronics giant had no plans to pay a dividend and prefers instead to expand its reserves for future use.

Jobs told Apple shareholders at their annual meeting on Thursday that he preferred to “leave the powder dry” for possible acquisitions, though none were in the offing. He added the cash “will come in handy.” At the end of last year, Apple had nearly $25 billion in cash and short-term securities on its balance sheet.

At the meeting, shareholders re-elected Jobs and Apple’s board of directors, which includes former Vice President Al Gore, Genentech Inc. (DNA) Chairman Arthur Levinson and Avon Products Inc. (AVP) Chief Executive Andrea Jung. The election comes just before the company’s iPad, a tablet computer that has been the object of much commentary in the technology press, goes on sale…..

GM Weighs Two Offers for Hummer - Wall Street Journal

General Motors Co. is looking at two long-shot offers for its Hummer brand after a deal to sell the line of sport utility vehicles collapsed this week in the auto maker’s latest failed effort to unload unprofitable assets.

The latest suitors previously submitted bids for Hummer, which GM turned down in favor of a deal with China’s Sichuan Tengzhong Heavy Industrial Machinery, said a person familiar with the situation Thursday who declined to say who the offers are from….

Tags: Apple, Autos, Bankruptcy, Ben Bernanke, Bernie Madoff, Fed, GM, GMAC, Goldman Sachs, Greece, Politics, Sovereign debt, Spain, Steve Jobs, U.S.. Treasury