United States (ProPublica) – by Cora Currier

According to the Wall Street Journal, the Securities and Exchange Commission has warned a top banker that it may bring civil charges against him for his role in creating a risky collateralized debt obligation, or CDO, that exploded spectacularly as the housing market crashed. It’s the first public evidence that the SEC is considering charges against a top banking executive involved in CDOs, which fueled the financial crisis.

The CDO, from the end days of the boom in 2007, was one of dozens that had been created with the help of the hedge fund Magnetar. As we reported with This American Life and NPR, Magnetar often pushed for riskier assets to be included in CDOs, and placed bets against many of the same investments so that it would profit if those risky assets went sour. (Magnetar has never been charged with any wrongdoing, and has always maintained that it did not have a strategy to bet against the housing market.)

The banker warned by the SEC, Alexander Rekeda, helped create a $1.6 billion CDO for Japanese bank Mizuho called Delphinus CDO 2007-1. Investigators allege that investors were not told Magnetar stood to profit if the investments failed. (Here’s the pitchbook for Delphinus.)

Delphinus is not the first deal involving Mizuho and Rekeda that the SEC has looked into. As the Journal reported last year, the agency has been investigating another CDO that Magnetar created with Mizuho called Tigris. That CDO was a collection of the riskiest bits of other CDOs — as we described it, they were “bundling up the dregs of a CDO,” a “rare, if not unprecedented” strategy. The Tigris deal has not yet resulted in charges.

We’ve reached out to Rekeda, who no longer works at Mizuho, but have yet to hear back. A spokesman for Mizuho told the Wall Street Journal that it “has been asked by the SEC to provide related documents and information, and it’s currently dealing with it.” (We also have reached out to Mizuho.)

The warning sent to Rekeda, called a Wells notice, says that the SEC has made a “preliminary determination…to recommend charges based on alleged misrepresentations in connection with the structuring of a CDO.”

As we noted last fall, the SEC has also warned ratings agency Standard & Poor’s that it also may face civil charges in connection with the Delphinus CDO. Standard & Poor’s abruptly downgraded Delphinus just a few months after the security was issued and received a top rating.

Other banks have been charged by the SEC and settled allegations involving CDOs. In 2010, Goldman Sachs settled with the SEC for more than $500 million. Last June, J.P. Morgan agreed to pay $153 million and in October, Citigroup reached a $225 million settlement.

– Provided by ProPublica.org

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Cairo, Egypt (The Media Line) – Egypt faces a risk-laden game of Beat the Clock as it tries to get its political house in order before its foreign currency reserves sink much more.

Reserves fell to $16.4 billion in January from about $36 million a year earlier, a drop that economists all agree imperils the economy and requires Egypt to seek support from external sources and make difficult decisions to cut back government spending and subsidies. But that will be difficult given the political situation.

Presidential elections are now scheduled for late May, preceded by a six-week election season. Meanwhile, a parliament dominated by Islamists is tussling over who will control the government with the interim military council. A dispute with the United States over foreign human rights activists detained in Egypt is threatening vital American aid to the country. In the meantime, no U.S. assistance is being transferred to the country.

The timetable looks even more challenging when the role of the International Monetary Fund (IMF) is factored in. Egypt’s Ministry of Finance is reportedly counting on the IMF’s executive board to approve a $3.2 billion facility towards mid-March, which will then go to parliament for approval about the time the presidential campaign is getting under way.

“Time is not on Egypt’s side and politics could be the prime suspect to derail or delay an IMF program or exacerbate dollarization and [foreign currency] outflows,” Bank of America Merrill Lynch analyst Jean-Michel Saliba said in a note to investors last week.

Concerns that Egypt’s political trajectory looks to be on a collision course with its financial needs came in the form a downgrade in its bond rating by Standard & Poor’s (S&P) on Feb. 10. S&P lowered its ratings to B from B+ on Friday, five notches into junk territory, and said further downgrades could be on the way.

“The negative outlook reflects our view that a further downgrade is possible if the government fails to stem the decline in reserves, or an uncertain policy environment and weak institutions emerge from the ongoing political transition,” S&P said. Moody’s and Fitch, two other bond-rating agencies, cut their ratings on Egypt earlier.

Diminishing foreign reserves may be the most immediate threat to Egypt’s economy, but it is not the only one. More than a year after the revolution that brought down Hosni Mubarak, economic growth has stalled, the number of visiting tourists has plummeted and foreign investment has evaporated, all of which is exerting huge economic pressure on the government at a time of political flux.

Bank of America Merrill Lynch estimated that Egypt’s drawdown of its foreign currency would slow to what it called a “more manageable” $500 million a month because the foreign capital that has been responsible for much of the decline has been nearly drained out of the country.

On the other hand, Egypt could also get a boost from a rare instance of foreign investment if France Telecom goes ahead with the purchase of a $2 billion stake in the Egyptian Company for Mobile Service, popularly known as Mobinil, which it agreed to buy from Egyptian entrepreneur Naguib Sawiris last week. If the transaction goes through, that money might be transferred to Egypt in March.

But Merrill also noted that Egypt’s finances look more precarious than the headline foreign reserves figures show. Taking out Egypt’s holdings of gold, reserves fall to $13.6 billion, which are equal to just 2.8 months of imports, Saliba wrote in the Feb. 16 note. Meanwhile, Egypt’s external financing needs could reach some $11 billion through June 2013, Finance Minister Momtaz el-Saieed said Feb. 10.

But accepting aid is politically problematic because the public looks askance at foreign assistance, especially from the U.S. Only 26 percent favor accepting American aid, according to a Gallup poll taken in December. The proportion willing to accept international aid rises to 50 percent (with 42 percent opposing) and those willing to accept it from fellow Arabs reaches 68 percent (28 percent opposing), Gallup found.

Egyptians don’t like aid because it usual comes with strings attached, such as unpopular economic reforms in the case of the IMF and maintaining the 1979 peace treaty with Israel, in the case of American assistance. Political opposition to foreign assistance caused the interim military government to reject the original offer of an IMF credit last spring, a decision many economists say has exacerbated the financial troubles in which Egypt now finds itself.

Parliament must approve an IMF loan, but Essam el-Erian, a leader of the Muslim Brotherhood’s Freedom and Justice Party, which dominates parliament, said his group may vote against it because it might impinge on Egyptian sovereignty. “Look at Greece,” el-Erian said in an interview with Bloomberg News this week. “Everybody is telling it what to do.”

Above and beyond accepting foreign financial assistance, the other remedies for Egypt’s foreign reserves ailment are all painful for politicians and the public alike.

One is bringing down the budget deficit. As the economy has shrunk and the government boosted handouts in the early days of the revolution to try and palliate the population, Egypt’s fiscal deficit has ballooned. Officials recently revised upward their forecast for the budget deficit for the fiscal year ending June 30 to 9.4 percent of gross domestic product.

The solution would be to cut spending, particularly costly and wasteful subsidies on food and energy. Indeed, the military government recently announced plans for $4 billion in spending cuts and the IMF and others providing aid will have their own list of fiscal measures. But political analysts suggest that will inevitably mean cuts to popular energy and food subsidies of the kind that have set off riots in the past.

Another remedy is devaluing the Egyptian pound. In spite of Egypt’s mountain of economic woes, the pound had shed only about 1 percent of its value over the past year as the central bank acted to shore up its value by raising interest rates and drawing down on reserves. But the bank’s options are narrowing as it is forced to devalue the pound, which will almost certainly lead to higher inflation.

Analysts see some positive elements in the Egyptian political scene. Saliba notes that the decision to move up the presidential vote to May reduces the length of the campaign season and the opportunity for grandstanding by candidates. Ahmed Galal, managing director of the Economic Research Forum in Cairo, maintains that the Muslim Brotherhood has taken a pragmatic line on subsidiary reform and supports free markets.

©2012. The Media Line. All Rights Reserved.

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New York, NY, United States (AHN) – Men are at it again. They are buying more–for themselves.

The male shopper, who laid low at the onset of the recession, is back. He is buying more and spending more, and retailers are delighted.

Men are not just purchasing suits, dress shirts, ties and shoes. They are rivaling their female counterparts by loading up on accessories. They are buying bracelets, bags, hats, umbrella, belts, scarves, pocket squares, caps, metal cuffs –you name it.

Some industry forecasters predict sales growth for men’s clothing and accessories during the first three months of 2012 will set a 20-year high.

In a move to make traditional women’s accessories more appealing to men, some designers are giving them manly monikers. A bracelet is dubbed wristwear, and a purse is called a holdall.

Men were well represented at last week’s New York Fashion Week, and male adornments took center stage.

Spending on accessories is driving the men’s category. In the last half of 2011, sales grew 14 percent to about $6 billion, according to market research firm NPD Group. The trend is expected to continue.

The return of the male shopper could help pick up retail sales. And, the rebound in male shopping may also bode well for the unemployment rate. It may reflect an improved jobs picture for men.

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New York, NY, United States (AHN) – Actress Susan Sarandon has donated $75,000 to the New York public school system to support the improvement of children’s table tennis. Sarandon, who co-owns ping-pong franchises SPIN, presented the NYC Department of Education on Wednesday with the sizable check. The funds will be used to pay for proper equipment and coaching.

The “Dead Man Walking” star and New York native, has long believed in and touted the benefits of ping-pong. Sarandon is convinced the sport relieves stress, is a great form exercise, and helps children learn to focus.

Ping-pong started as a social hobby in England in the late 1800s by army officers who used rounded wine corks for balls and old cigar boxes as handles. It lingered as a popular party game for the rich until it officially became a competitive sport in 1927.

Ping-pong became an official Olympic event in 1988 at the Summer Games in Seoul.

Table tennis is recognized as the most popular racket sport in the world, and is ranked second in terms of participation. Over 10 million players compete in sanctioned ping-pong tournaments every year.

The world’s top tennis players can smash the ball at speed of more than 100 miles per hour.

Jackie Bellinger and Lisa Lomas set a world record in 1993 by hitting 173 balls back and forth in 60 seconds.

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Washington, D.C., United States (AHN) – Congress Friday swiftly passed a deal to extend the payroll-tax cut through the end of 2012, continue paying unemployment benefits and avoid a steep cut in Medicare doctors’s fee, moving forward from a lengthy fight that had tied up legislators for months.

The House voted 293-132 to pass the measure. The Senate quickly followed with a 60-36 vote.

The move averts a tax increase on millions of Americas and the end of this month.

Under the deal, the tax paid by workers to Social Security will remain at 4.2 percent instead of reverting to 6.2 percent on March 1.

The deal also avoids a 27 percent cut in payments to doctors who serve Medicare patients, and extends through year’s end payment rates for Medicare doctors. The costs will be offset in part by taking $5 billion from a prevention and public health program established under President Obama’s signature and hotly debated health-overhaul bill.

Both parties are claiming victory.

Lawmakers now head out of town for a week-long recess.

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Auburn Hills, MI, United States (AHN Sports) – JaVale McGee made a statement Sunday night. He’s hoping to make a few more before the NBA season comes to a conclusion.

The Washington Wizards 7-foot center was 10-of-13 from the floor and 2-of-3 from the free-throw line for 22 points and also had 11 rebounds and two blocks in his team’s 98-77 domination of the Detroit Pistons at The Palace of Auburn Hills.

“He had a great effort,” said Detroit’s Ben Gordon. “He finished a lot of lob passes around the rim.”

Detroit coach Lawrence Frank admitted that McGee had an affect on his team’s performance through intimidation.

“That’s just what he does,” Frank said. “He is the (No. 2) shot blocker in the league. So you know that coming in. Obviously, he is not a new player but yet at the same time, there are other facets to it, but you have to give him credit.”

It was only the Wizards’ second road win of the season, as Washington improved to 6-22.

“It was definitely great getting a road win,” McGee said. “We don’t have a lot of those. Hopefully, it carries over to the next game.”

“He had eight dunks, but even though he had one or two blocked shots, he impacted the game on the defensive end,” Frank said. “I think we were 8-for-26 in the paint, maybe more, but he impacted the game tremendously.”

McGee has started all 28 Wizard games and is averaging 11.6 points. 9.0 rebounds and has 79 total blocked shots.

In recent action, McGee had 24 points and 13 rebounds against Miami. In a January game against the Sixers, he became the first player this season to have at last 23 points, 18 rebounds and five blocks in the same game. He’s also the last NBA player to collect those numbers in the same game.

He had four fouls against the Pistons but still logged 35 minutes on the court, the second most for the team.

“I was trying not to get into foul trouble,” he said. “We got the win, that’s what matters.”

One of his best performances came at Golden State March 27, 2011, when he compiled 28 points, 18 rebounds and five blocks.

Coming up this week, the Wizards go out west for games at Portland, Los Angeles Clippers, Utah and Phoenix.

“We’re playing some good playoff teams,” McGee said. “We have to go out there and show them what we’ve got and come out aggressive on the road.”

McGee said his doctors recently gave him different medicine to use for his asthma.

“I’ve definitely been feeling better on the breathing,” he said. “It really shows. I feel a lot better and want to stay out there longer. I just have to keep taking my medicine.”

Last season, McGee was in a career-high 79 games and career-high 75 starts and averaged career highs in points (10.1 per game), rebounds (8.0), blocks (2.4) field goal percentage (55.0), and minutes played per game (27.8). He led Washington in total rebounds at 634 and offensive rebounds at 223.

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