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DealBook: UBS Reaches Settlement on Mortgage Securities

July 22, 2013 by Leave a Comment

A branch of UBS in Lausanne, Switzerland. The bank reached an agreement in principle with the Federal Housing Finance Agency to settle claims related to mortgage-backed securities.Fabrice Coffrini/Agence France-Presse — Getty ImagesA branch of UBS in Lausanne, Switzerland.

UBS, the Swiss banking giant, said on Monday that it had reached an agreement in principle with a United States regulator to settle claims related to mortgage-backed securities issued between 2004 and 2007.

The Federal Housing Finance Agency sued UBS and 17 other big banks in 2011, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation. UBS was the first, and the agency said it owned $4.5 billion worth of mortgages, with losses totaling $900 million.

While the company did not disclose the amount of the proposed settlement, UBS said in a statement that it was booking about 865 million Swiss francs ($919 million) of pretax charges related to the settlement and a tax agreement between Switzerland and Britain.

UBS is booking about 700 million francs in charges at the business that focuses on its portfolio of noncore and legacy assets, and about 100 million Swiss francs in its wealth management division related to the tax agreement, which requires banks to collect taxes on accounts of British citizens.

The full cost of the settlement will be covered by previous provisions and those taken in the second quarter, UBS said.

The announcement of the proposed settlement came at the same time UBS reported preliminary results for its second quarter. The bank reported that profit rose to about 690 million francs from 425 million francs in the period a year earlier. The company is to report full results on July 30.

Article source: http://dealbook.nytimes.com/2013/07/22/ubs-reaches-settlement-on-mortgage-securities/?partner=rss&emc=rss

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DealBook: Big Banks, Flooded in Profits, Fear Flurry of New Safeguards

July 19, 2013 by Leave a Comment

Jacob Lew, the Treasury secretary, has told Wall Street to accept the rules in the Dodd-Frank financial law or face tougher ones.Saul Loeb/Agence France-Presse — Getty ImagesJacob Lew, the Treasury secretary, has told Wall Street to accept the rules in the Dodd-Frank financial law or face tougher ones.

The nation’s six largest banks reported $23 billion in profits in the second quarter, but they could end up victims of their own success.

In recent weeks, the Treasury Department, senior regulators and members of Congress have stepped up efforts intended to make the largest banks safer. The banks have warned that more regulation could undermine their ability to compete and curtail the amount of money they have to lend, but the strong earnings that came out over the last week could undercut their argument.

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The most pressing concern for banks is a relatively tough new rule that regulators proposed last week that could force banks to build up more capital, the financial buffer they maintain to absorb losses. But the banks did not demonstrate any difficulty in meeting the proposed rules, and the banks now appear to have fewer allies in Washington than at any time since the financial crisis.

This was highlighted on Wednesday when the Treasury secretary, Jacob J. Lew, effectively issued an ultimatum to Wall Street, calling for the swift adoption of rules introduced through the Dodd-Frank financial overhaul law, which Congress passed in 2010. Mr. Lew also said that he might be open to stricter measures if enough had not been done to remove the threat that big banks can pose to the wider economy.

“If we get to the end of this year, and cannot, with an honest, straight face, say that we’ve ended ‘too big to fail,’ we’re going to have to look at other options because the policy of Dodd-Frank and the policy of the administration is to end ‘too big to fail,’ ” Mr. Lew said.

“This is maybe the strongest admission I’ve heard from the administration that we must act further to end ‘too big to fail,’ ” Senator David Vitter, Republican of Louisiana, said in a statement. Along with Senator Sherrod Brown, Democrat of Ohio, Senator Vitter introduced a bill earlier this year that would sharply increase capital levels at the biggest banks. In Congress on Thursday, Ben S. Bernanke, the Federal Reserve chairman, echoed Mr. Lew’s remarks. He said that if the measures already planned did not remove the risks posed by large banks, “additional steps would be appropriate.”

Still, some analysts remain skeptical that the Fed and the Treasury would really lend their weight to the sort of aggressive measures some lawmakers are contemplating. The recent comments may be an attempt to gain some political benefit from looking tough on the banks. And the remarks may be aimed at reducing any momentum that the more draconian pieces of bank legislation are gaining in the Senate.

“I wonder how much of this is a serious policy change and how much is positioning by the administration to take on a more populist mode going into 2014,” Nolan McCarty, a professor of politics and public affairs at Princeton University, said. “It’s a little bit surprising that, three years after Dodd-Frank and five years after the financial crisis, people are concerned not enough has been done.”

Still, the stronger words from government officials could shift the balance of power away from the banking industry.

“I sense a sea change in this,” Sheila C. Bair, a former chairwoman of the Federal Deposit Insurance Corporation, a primary bank regulator, said. “It’s not moving with the banks, it’s moving against them.”

The resurgence in bank profits appears to have been an important factor in persuading regulators to do more. The earnings revival did not take place just at the banks that emerged from the crisis in a position of relative strength, like JPMorgan Chase and Wells Fargo. This week, both Bank of America and Citigroup, which faltered badly after the financial crisis, reported healthy profits. The stocks of both banks have nearly doubled over the last 12 months, highlighting that investors’ faith in the behemoths is also returning.

“The regulators are doing this because they can,” Michael Mayo, a banking analyst at CLSA, said. “And they can at this time of relative stability.”

The six largest banks now dominate the industry, accounting for more than half the sector’s assets. Since the crisis, this has helped them make profit from mortgages and credit card loans, as well as Wall Street activities, like trading securities and underwriting deals. Their second-quarter profits were up 40 percent compared with those in the period a year earlier. Over the last 12 months, their combined profits were more than $70 billion. Over that period, Morgan Stanley, Goldman Sachs and JPMorgan’s investment bank, all big presences on Wall Street, paid compensation of $41 billion.

Regulations planned or put in place in the crisis may also have helped banks by making them more resilient to shocks. The banks have less risky assets on their balance sheets, which helped them get through the recent rout in the bond market without big losses.

“You had major dislocations in currencies, commodities and interest rates and so far the industry has passed with flying colors,” Mr. Mayo said.

Still, Mr. Mayo and others question how healthy the banks are. While profits are up, and trading profits are buoyant, the pace of lending is not picking up. “Loans are down year to date. That’s the issue at the moment,” he said. “This is not the stuff robust recoveries are made of.”

The industry contends that, with economic growth still relatively weak, more regulation of banks would be wrong.

“You have to be cautious about what layering on additional things can do to our prospects for economic growth, job creation and credit availability, in light of this economic fragility,” said Robert S. Nichols, president of the Financial Services Forum, an industry group that represents large banks. “We have to have more robust growth to get Americans back to work.”

While banks have made big profits under stiffer rules since the crisis, some analysts warn that adding more to the overhaul could really start to hurt.

“We’ve reached a point now where we have a balance,” John R. Dearie, who oversees policy at the Financial Services Forum, said. “We have a fortress balance sheet banking system. Our concern is that we don’t overdo it.”

Still, some banking experts think the banks are bluffing when they say more regulation could hamper lending. “They can’t see that it is in their long-term interests to have a credible regulatory process,” Ms. Bair said.

Article source: http://dealbook.nytimes.com/2013/07/18/big-banks-flooded-in-profits-fear-flurry-of-new-safeguards/?partner=rss&emc=rss

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DealBook: Quarterly Profit Doubles at Goldman Sachs

July 16, 2013 by Leave a Comment

Lloyd Blankfein, chief of Goldman Sachs, at the White House in February.Brendan Smialowski/Agence France-Presse — Getty ImagesLloyd Blankfein, chief of Goldman Sachs, at the White House in February.

Goldman Sachs posted second-quarter profit on Tuesday that was twice what it reported in the period a year earlier, fueled by strong trading and investment banking results.

Net income was $1.93 billion, or $3.70 a share, compared with $962 million, or $1.78 a share, in the period a year earlier. It was also well ahead of analysts’ expectations of $2.82 a share, according to Thomson Reuters.

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Revenue in the quarter rose to $8.6 billion from $6.6 billion in the year-ago period.

“The firm’s performance was solid, especially in the context of mixed economic sentiment during the quarter,” Goldman’s chairman and chief executive, Lloyd C. Blankfein, said in a statement.

Goldman clearly benefited from an improving economy in the second quarter. The period was dominated by a sudden and sharp rise in interest rates after the Federal Reserve indicated it might wind down its big bond purchase program, which has helped the economy recover from the financial crisis. Unlike JPMorgan Chase, Goldman is not a big player in originating residential mortgages, but it does trade mortgage products; the rise in rates can both help and hurt firms like Goldman, depending on the businesses they are in.

Goldman Sachs

The rates move was felt most in Goldman’s fixed-income, or bond, department. Net revenue in the unit was $2.46 billion, up 12 percent from the period a year earlier, reflecting what the company said was significantly higher net revenue in currencies, credit products and commodities. Still, these increases were offset in part by significantly lower revenue in mortgages and interest-rate products, the company said.

The bank reduced the risk it was taking in products related to interest rates. The firm’s so-called value-at-risk in rates declined to an average of $59 million in the second quarter from $83 million in the period a year earlier and $62 million in the first quarter. Value-at-risk is a yardstick of the amount of losses that could be experienced in one trading day.

The firm’s annualized return on equity was 10.5 percent, down from 11.5 percent in the period a year earlier. It was far below its performance in boom years like of 2006, when its return on equity was 41.5 percent.

Revenue from investing and lending activities came in at $1.42 billion for the second quarter, up from just $203 million in the period a year earlier. The firm had a rather rocky second quarter in 2012, and its results in that quarter included a big loss on a significant investment in this unit.

Investment banking revenue rose 29 percent, to $1.6 billion, helped by significantly higher net revenue in debt and equity underwriting. Equity underwriting was a particular standout, jumping 51 percent, to $371 million. Debt underwriting rose 45 percent, to $695 million.

Goldman also disclosed that it set aside $3.7 billion in the quarter for compensation, up 27 percent from the period a year earlier. The current accrual represents 43 percent of revenue, which is in line with other years. Banks like Goldman set aside compensation during the year but do not pay it out until they determine earnings for the full year.

Over the last year, Goldman has reduced its payroll to 31,700 employees, down 2 percent from the period a year earlier, as the firm continues to focus on cutting costs.

Article source: http://dealbook.nytimes.com/2013/07/16/quarterly-profit-doubles-at-goldman-sachs/?partner=rss&emc=rss

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DealBook: 4 Years After Crisis, Ireland Strikes Deal to Ease a Huge Debt Load

February 7, 2013 by Leave a Comment

A branch of Anglo Irish Bank in Belfast, Northern Ireland.Peter Muhly/Agence France-Presse — Getty ImagesA branch of Anglo Irish Bank in Belfast, Northern Ireland.

LONDON — The Irish government, trying to lighten the staggering debt burden of bailing out some of its biggest banks four years ago, reached a deal on Thursday with the European Central Bank to give the country more time to repay some of those loans.

The agreement, which came after 18 months of negotiations with the central bank, will enable Ireland to swap 28 billion euros ($38 billion) of high-interest promissory notes — a form of i.o.u.’s — that were used to bail out Anglo Irish Bank in 2009 for long-term government debt.

Although crucial details of the agreement were not disclosed, it appeared to be another important milestone in Ireland’s slow emergence from a banking and real estate crisis that had cut living standards, caused unemployment to soar and left cities scarred by half-finished building projects.

The deal could also be an important step for the euro zone, showing that it is possible for a member to survive the painful financial adjustments needed to recover from the crisis without leaving the currency union. Besides Ireland, Greece and Portugal have borrowed huge sums from the central bank and other international organizations to bail out their governments, while Spain has done likewise to rescue its banks.

By exchanging the promissory notes for government debt, Enda Kenny, the Irish prime minister, and his governing party, Fine Gael, have secured more time for Ireland to put itself on a firmer financial footing.

They have also won a significant concession from the central bank, which had repeatedly rejected Ireland’s plans to restructure some of its debt. The central bank, based in Frankfurt, has been concerned that a refinancing deal for Ireland would set a precedent that could be followed by other countries that have also bailed out big lenders.

Mario Draghi, the central bank’s president, declined to comment on the Irish deal during a news conference Thursday, suggesting that reporters direct their questions to Irish officials.

Mr. Kenny was more than happy to trumpet the deal. “The promissory notes represent a highly onerous and unfair legacy of the banking crisis,” Mr. Kenny told the Irish Parliament on Thursday. “The legacy banking debt hoisted on the Irish taxpayer is a heavy burden.”

Analysts said the debt restructuring was an important step in Ireland’s recovery because the government could either repay existing debt faster than previously expected or pump the extra cash directly into the local economy.

“Ireland has been pushing hard for this deal,” said Jonathan Loynes, the chief European economist at Capital Economics in London. “It’s a victory for Ireland over the European Central Bank.”

After stepping in to save many lenders that made too many bad loans during the 2000s, Dublin eventually had to turn to the European Union and the International Monetary Fund in 2010, which provided a 67.5 billion euro rescue package.

One big part of that bailout, the nationalization of the giant bank Anglo Irish, had left Dublin with onerous annual interest payments of 3.1 billion euros. The figure is about the same amount that Irish politicians have said they need to make in additional cuts in yearly government spending to reduce the country’s debt levels. The hefty interest payments caused widespread anger across Ireland, whose population has already endured several years of tax increases and government spending reductions.

The interest rate on the new government debt is expected to average about 3 percent, instead of rates above 8 percent on the promissory notes. The restructuring also will cut the country’s budget deficit by one billion euros a year, according to a statement from the Irish Finance Ministry, though Ireland’s deficit as a percentage of its overall economy will still be one of the highest in the euro zone.

As part of the deal, the Irish government passed emergency legislation on Thursday to liquidate Anglo Irish Bank, which fell into trouble in the buildup to the financial crisis by lending billions of euros to real estate developers. Many of those loans went bad after Ireland’s real estate bubble burst. The bank had been renamed the Irish Bank Resolution Corporation after its failure and bailout.

Under the terms of the liquidation, Anglo Irish’s loans will be transferred to the National Asset Management Agency, the so-called bad bank set up by the local government. Other assets could be sold to outside investors.

Anglo Irish had been at the center of controversy since the beginning of the financial crisis. Three of its former executives, including its former chief executive, Sean FitzPatrick, are facing fraud charges in connection with loans that authorities have said were granted improperly.

The new legislation, which was signed into law after an all-night parliamentary session, had been rushed through because details of the debt-restructuring plan were leaked on Wednesday. Even as lawmakers were debating the Anglo Irish liquidation, the hashtag #promnight — in reference to the promissory notes — started to trend on Twitter as the Irish public eagerly awaited the outcome.

Politicians had hoped to wait to announce the liquidation after agreeing on new terms with the European Central Bank.

“I would have preferred to be introducing this bill in tandem with a finalized agreement with the European Central Bank,” the Irish finance minister, Michael Noonan, said in a statement.

Despite persistent questioning at a Frankfurt news conference on Thursday, Mr. Draghi resolutely declined to offer any information about the central bank’s role, if any, in helping Ireland reduce its interest payments.

He said the bank’s governing council, which concluded its monthly meeting Thursday, merely “took note” of the Irish action. Mr. Draghi may have wanted to avoid any impression that the central bank was giving a financial break to the Irish government because its charter prohibits it from financing euro zone governments.

Ireland’s multibillion-euro lifeline in 2010 came with strings attached. International creditors demanded that Ireland adopt austerity measures that would cut public spending by $20 billion by 2015.

Salaries for many public sector workers, including nurses and teachers, have been reduced about 20 percent. Welfare programs like social protection and child benefits have been cut. And a series of new taxes has been introduced to refill the government’s coffers.

At first, the cuts plunged Ireland’s economy into recession, but the country’s gross domestic product is expected to grow 1.1 percent this year, much better than the mere 0.1 percent growth projected for the entire euro zone.

Despite the gradual recovery and now a reduction in the country’s debt burden, the Irish prime minister cautioned that more work had to be done to revive the country’s economy.

“Let there be no doubt, this is no silver bullet to end all our economic problems,” Mr. Kenny said on Thursday. “There is still a long way to travel in our country’s journey back to prosperity and full employment.”

Jack Ewing contributed reporting from Frankfurt

Article source: http://dealbook.nytimes.com/2013/02/07/ireland-to-liquidate-anglo-irish-bank/?partner=rss&emc=rss

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Bits Blog: Despite Economic Slump, Europe Gets More Tech Start-Ups

December 7, 2011 by Leave a Comment

Google's European HeadquartersPeter Muhly/Agence France-Presse —Getty Images Ireland’s tax rates have attracted tech companies like Google.

While Europe as a whole continues to suffer major economic troubles with slow fiscal growth and abnormally high unemployment rates, one industry continues to grow steadily: tech.

This is apparent at the annual LeWeb conference, a gathering of more than 3,500 — up from 2,800 last year — entrepreneurs, programmers and journalists gathering in Paris this week to meet with hundreds European start-ups, and a few American ones, too.

It’s also illustrated throughout Europe with the dozens of start-ups that are successfully becoming part of the wider cultural fabric. For example, Angry Birds, Spotify, SoundCloud, Last.fm and Cut the Rope are all incredibly successful start-ups that began in Europe and are dominating in the United States.

Yet until recently, there were very few technology products that made their way across the pond to the United States. Most innovations only traveled in the opposite direction.

“There has been a dramatic shift in the last few years with European entrepreneurs who are no longer trying to be copycats of American tech, which was pretty sad. Europeans are now really innovating on their own.” said Loïc Le Meur, a co-founder of the LeWeb conference, during a phone interview from Paris. For several years, European start-ups tried to emulate Silicon Valley, he said, creating products similar to Twitter, Facebook and the whatever was the hot new tech theme of the year in the United States.

Innovation is happening all across Europe. Dublin, for example, has seen the growth of its own mini-Silicon Valley, with Google and Facebook opening up European headquarters there. This is partly driven by the country’s low corporate tax rates.

“It’s completely countercyclical to what’s happening with the rest of the European economy. Technology here is completely uncorrelated and is growing rapidly,” Mr. Le Meur said. “Last year, for example, we had 300 start-up submissions at LeWeb; this year it’s already up to 600,” he said, referring to the new European tech companies that will make presentations at the show this week.

Venture investments have also been on the rise in recent years. And there is incentive for start-ups to begin in Europe. For example, some European countries, including Ireland and Germany, impose fewer restrictions on new companies than the United States does, as the Economix blog reported earlier this year.

Venture Capital as a percentage of GDPSource: Organization for Economic Cooperation and Development

European technology and economic experts also note that technology innovation is not centralized in one European country.

Joe Haslam, a professor of entrepreneurship at IE Business School in Madrid, describes the European growth of technology start-ups as a “cluster rather than a hub.”

“Science has eliminated distance. It is now possible to be plugged into what is happening in the Valley without actually being there,” he wrote in an e-mail interview. “The success stories out of France, Spain or the Nordic countries are the result of the leadership of exceptional individuals rather than something nurtured by an ecosystem.”

Although Mr. Haslam sees exciting new European entrepreneurship in recent years, he still believes there is a long way to go to.

“I very much regret how Europe has lost the clear lead she had in mobile. I expected that we would be much further along the way in things like cashless payments and location awareness,” he wrote. “Maybe it’s the carriers’ fault, not the start-ups. But billion-dollar companies should have come out of that.”

Mr. Haslam also said that he hopes entrepreneurs stop looking for fame as their goal, but should look for other affirmations. He pointed to Israel, where the ultimate goal of start-ups is to be on the Nasdaq exchange.

Article source: http://bits.blogs.nytimes.com/2011/12/07/as-europes-economy-slumps-a-rise-in-successful-tech-start-ups/?partner=rss&emc=rss

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DealBook: Best Buy Pays $1.3 Billion for Cellphone Business

November 7, 2011 by Leave a Comment

The deal ends a profit-sharing agreement with Carphone Warehouse that Best Buy signed in 2008.Shaun Curry/Agence France-Presse — Getty ImagesThe deal ends a profit-sharing agreement with Carphone Warehouse that Best Buy signed in 2008.

9:53 a.m. | Updated

LONDON — The electronics retailer Best Buy agreed on Monday to pay $1.3 billion for full ownership of a fast-growing American cellphone joint venture from its British partner, the Carphone Warehouse Group.

Best Buy also said it was abandoning plans to expand its so-called big-box stores across Europe as the sovereign debt crisis continued to weigh on consumer spending across the Continent. The company is set to close all 11 of it existing big-box stores in Britain, which employ about 1,000 people.

Under the terms of the deal, Best Buy will take full control of Best Buy Mobile, a cellphone business that has expanded rapidly in North America, partly as a result of the rise of smartphones, including the Apple iPhone. The acquisition is expected to close by March 2012, and will increase Best Buy’s pre-tax profits by up to $140 million in 2013.

“We wanted to use the Best Buy Mobile team to sell connections to consumers,” Best Buy chief executive Brian J. Dunn said on a conference call with investors. “There’s no doubt we can go faster in the U.S. and Canada to unleash the team.”

The deal ends a profit-sharing agreement with Carphone Warehouse that Best Buy signed in 2008 as it sought to expand its presence in the cellphone market. As part of the sale, both companies have the option to buy the other out of their European joint venture, Best Buy Europe, in 2015.

The two companies will continue to work together through a new venture targeted at expanding their cellphone business into emerging markets, particularly China and Mexico.

“We are aggressively ramping up our growing connections capability to support consumers’ increasingly connected lives across the entire range of devices entering the marketplace,” Best Buy’s Mr. Dunn said in a statement. “Over the past four years we have built unsurpassed expertise and depth of offerings in mobile.”

A Best Buy store in Manhattan.Chris Goodney/Bloomberg NewsA Best Buy store in Manhattan.

The cash influx bolstered Carphone shares, which rose more than 11 percent on Monday in morning trading in London. The share price, however, fell back down by the afternoon and was trading 1.16 percent up at 2:36 p.m. GMT.

The company said the money from the Best Buy Mobile sale would be returned to shareholders.

Carphone Warehouse also announced Monday a 78 percent annual decline in net profit to £5.5 million, or $8.5 million, during the six months through September.

The British firm blamed the drop on Europe’s struggling economy and low consumer confidence.

The tough economic climate also has affected Best Buy. While the company plans to expand its cellphone operations in North America, it has faced cutthroat competition from domestic rivals as well as a deteriorating economic environment that has led many consumers to cut back on spending.

After opening its first British big-box store in 2010, Best Buy had planned to open more than 100 large stores in the country as an initial expansion into Europe. The company said it would now focus on its 2,500 small European stores, mostly to sell cellphones.

The failure to crack the European electronics market follows similar troubles in emerging markets, including Turkey and China, where the company faced tough local competition and ongoing regulatory delays.

Article source: http://feeds.nytimes.com/click.phdo?i=cc9e5607e3d0604a47f0ff776caad0b9

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DealBook: Soros to Close His Fund to Outsiders

July 26, 2011 by Leave a Comment

George Soros, the Hungarian-born billionaire financier.Fabrice Coffrini/Agence France-Presse — Getty ImagesGeorge Soros, the billionaire financier.

George Soros, the famed investor who broke the Bank of England and came to represent the swashbuckling style of hedge fund managers and then their entry into the world of global affairs, has decided to return money to outside investors in his hedge fund.

Mr. Soros is the latest hedge fund magnate to forgo managing the money of outsiders in favor of his own, though the move is more symbolic than substantive. Of the roughly $26 billion the fund manages, less than $1 billion belongs to outside investors.

The decision comes as the Obama administration has been taking steps to bring the secretive hedge fund industry into the regulatory fold. Soros Fund Management will become a so-called family office, defined as an entity managing an individual family’s money. The move will enable it to avoid impending hedge fund regulations like registration, according to a letter the fund sent to investors on Monday.

“An unfortunate consequence of these new circumstances is that we will no longer be able to manage assets for anyone other than a family client as defined under the regulations,” according to the letter from Jonathan and Robert Soros, co-chairman of the funds. “As a result, S.F.M, will ask Quantum’s board to return the relatively small amount of nonqualifying capital to outside investors before the registration deadline, most likely at year end.”

The fund, which has existed in many iterations in its more than 40-year history, has returned about 20 percent a year on average, according to a person familiar with the matter. This year, the fund is down 6 percent, said the person, who spoke on condition of anonymity because the information was private.

When it transitions into a family office, the operation, which now has more than 200 employees and 100 investment professionals, will continue to employ some 100 people. In the letter to investors, the firm also said that Keith Anderson, chief investment officer at Soros since 2008, would be leaving to seek other opportunities.

Forbes magazine has pegged Mr. Soros’s net worth at $14.5 billion this year. But the relatively small amount of outside money in the fund suggests that the majority of the $25 billion remaining belongs to Mr. Soros — an indication that his net worth could be much higher than previously estimated.

Mr. Soros’s funds have been closed to outsiders since 2000, when Stanley Druckenmiller, his former chief investment officer, left the firm to start Duquesne Capital Management. But last year, Mr. Druckenmiller himself decided to close his fund to outside investors and continue managing his own substantial wealth.

The decision came as Mr. Druckenmiller, considered among the best investors in the industry, sought to escape the burden of managing outside money.

Since then, two other prominent managers have decided to hand back money to outside investors and go it alone, including Chris Shumway and the activist investor Carl C. Icahn.

News of Mr. Soros’s decision was reported earlier by Bloomberg News.

Article source: http://feeds.nytimes.com/click.phdo?i=06d29dedddcc1375351109ca8213b90b

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Room For Debate: Who’s Going to Pay for Greece?

June 21, 2011 by Leave a Comment

Introduction

Greek debt crisisLouisa Gouliamaki/Agence France-Presse — Getty Images Protesters outside Parliament in Athens last week with banners depicting Prime Minister George Papandreou as an I.M.F. “employee of the year.”

Europe’s finance ministers on Monday said they would hold off in sending a new infusion of aid to Greece until July, demanding that the Greek government first agree to spending cuts and financial reforms.

Greece needs the money to stay solvent. The International Monetary Fund was asking the European Union to effectively keep the Greek government afloat if its financing plan fell short over the next year. A Greek default would be twice the size of the two largest defaults in history put together — Argentina and Russia.

What form should an I.M.F. intervention in Greece take, who stands to gain, and what lessons have been learned from Argentina and other national financial crises?

 Read the Discussion »

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Topics: Argentina, Economy, Europe, Greece, International Monetary Fund

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Article source: http://feeds.nytimes.com/click.phdo?i=bb9abf6bc8e8beb5b91b6f4043ac2a28

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