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Anger at Goldman Still Simmers - (www.nytimes.com) Just before the financial crisis began in September 2008, a prominent hedge fund appeared well positioned to take advantage of any turmoil in the markets. That fund, Copper River Partners, had made sizable bets months earlier against companies whose stocks it expected to suffer. Within weeks, however, Copper River, once a successful $1.5 billion hedge fund, was out of business, having unexpectedly absorbed losses on the very bets it thought would be profitable. While the market turmoil contributed to its problems, Marc Cohodes, head of Copper River, says that a significant force behind the failure was Goldman Sachs, which for years had been the firm’s broker. Testifying recently in a lawsuit that is unrelated to Copper River’s closing, Mr. Cohodes maintained that actions taken in the fall of 2008 by Goldman in the handling of trades for Copper River had done irreparable damage to the fund. His testimony, which has not been made public, was obtained by The New York Times. Copper River relied on Goldman to handle its negative bets, known as short sales, in compliance with securities laws. These regulations require that before a short sale can be made, the shares must be borrowed; Mr. Cohodes said his fund had paid Goldman approximately $100 million to borrow shares over many years. In his testimony, Mr. Cohodes said he and his partners at Copper River had even come to wonder if Goldman had in fact borrowed the shares for the firm. Without the shares, Copper River faced losses, while Goldman could have come under regulatory scrutiny.
U.S. regulator feels pressure over Freddie, Fannie: report - (www.reuters.com) Mortgage giants Fannie Mae and Freddie Mac are being pushed to reduce borrowers' mortgage balances in order to shield U.S. banks from taking losses on distressed housing debt, the companies' regulator said in a Financial Times interview published on Sunday. "If you do principal forgiveness, who is it benefiting? ... Doing principal forgiveness is what would protect the big banks," said Edward DeMarco, the acting director of the Federal Housing Finance Agency. DeMarco argued that writing down the principal on first mortgages would amount to a transfer of taxpayer wealth to the biggest U.S. lenders, whose "second mortgages" are normally subordinate to the primary mortgages backed by Fannie Mae or Freddie Mac.
BOJ Crosses Rubicon With Desperate Monetary Policy, Hirano Says- (www.bloomberg.com) The Bank of Japan’s decision to expand bond purchases and set a 1 percent inflation goal was a step too far that leaves the monetary authority likely to finance government deficit spending, a former executive said. “They looked like really desperate measures,” Eiji Hirano, 61, who was a BOJ executive directorin charge of international affairs from 2002 to 2006, said in an interview last week in Nagoya, central Japan. The yen weakened and stock prices rose in the world’s third-largest economy after Governor Masaaki Shirakawa and his policy board unexpectedly pledged on Feb. 14 to buy 10 trillion yen ($121 billion) in government debt and set the inflation target.
Court Opens Health-Care Debate With Law That Might Derail Case- (www.bloomberg.com) The U.S. Supreme Court opened today its historic review of President Barack Obama’s health-care law, three days of arguments that might result in the president’s premier legislative achievement being found unconstitutional in the middle of his re-election campaign. The court will determine the fate of a measure designed to extend insurance to about 32 million people and revamp an industry that accounts for 18 percent of the U.S. economy. The six hours of planned debate that began this morning is the most on a case in 44 years. The core dispute -- the law’s upcoming mandate that uninsured people purchase coverage --comes on the second day. First, the justices today hear arguments on a seemingly arcane question: Does the penalty for failing to get insurance amount to a tax?
Psychologists Have Identified Another Reason Why People Holding Guns Are Dangerous - (www.businessinsider.com) Before the tragic shooting of unarmed Florida teenager Trayvon Martin, researchers from the University of Notre Dame and Purdue had been looking into how gun-holders perceive their surroundings differently from those who are not armed. Researchers found that holding a gun makes that person more likely to mistake seeing a gun in the hands of another person. In the study, which will be published in the Journal of Experimental Psychology: Human Perception and Performance, subjects held toys guns or a ball while they were shown computer images of people holding either a real gun or an innocuous object like a soda can or a cell phone.
Hedge Funds Capitulating Buy Most Stocks Since 2010 - (www.bloomberg.com)
Hedge Funds Make Wrong-Way Bets for a Fourth Week: Commodities - (www.bloomberg.com)
German Ifo Business Confidence Unexpectedly Increases - (www.bloomberg.com)
Bernanke Hesitates to Extol Economy to Keep Reputation - (www.bloomberg.com)
Former China bank regulator says loan demand weak - (www.marketwatch.com)
Bernanke Says Accommodative Policy Needed to Cut Joblessness - (www.bloomberg.com)
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