(BN) Legg Mason’s Bill Miller Will Exit Main Fund After It Falls Behind Peers

Fall of a Titan...it could happen to anyone. 

Bloomberg News, sent from my iPad.

Legg Mason's Miller to Exit Main Fund After Falling Behind Peers

Nov. 17 (Bloomberg) -- Bill Miller, the Legg Mason Inc. manager known for beating the Standard & Poor's 500 Index for a record 15 years through 2005, will step down from his main fund after trailing the index for four of the past five years.

Miller, 61, will be succeeded by Sam Peters as manager of Legg Mason Capital Management Value Trust on April 30, the Baltimore-based firm said today in an e-mailed statement. Miller will remain chairman of the Legg Mason Capital Management unit while Peters will assume the role of chief investment officer.

Miller, known for picking stocks he deems cheap based on financial yardsticks such as earnings, became mired in the worst slump of his career as he wagered heavily on financial stocks during the 2008 credit crisis. Value Trust lost 55 percent that year as the S&P 500 dropped 37 percent, including dividends, prompting a wave of withdrawals. The fund's assets have plunged from a peak of $21 billion in 2007 to $2.8 billion as of Nov. 15, according to data compiled by Bloomberg.

Miller, who has been a manager of Value Trust since its 1982 inception, in 2010 named Peters, a former Fidelity Investments stockpicker who joined the firm in 2005, to become his co-manager and eventually his successor. Miller initially co-managed Value Trust with Ernie Kiehne, then took sole responsibility in 1990, the year before his winning streak started. Research firm Morningstar Inc. named him fund manager of the decade for his performance in the 1990s.

Betting on Recovery

As markets rebounded in 2009 and 2010, Miller bet the U.S. economy would return to its old strength by investing in financial stocks and consumer-oriented companies. The fund topped peers and the S&P 500 with a 41 percent return in 2009 as markets rebounded, only to fall behind benchmarks again last year with a 6.7 percent gain. Value Trust declined 5.5 percent this year through Nov. 16, trailing 60 percent of similar funds, according to data compiled by Bloomberg.

Over the past five years, the fund has fallen at an average annual pace of 9.6 percent, ranking near the bottom of his peer group.

The inability of famed stock pickers such as Miller to protect investors from the market declines has spurred withdrawals from actively managed equity funds as clients shift money into bonds and index products.

Rival firms have revamped their portfolio-management teams this year in an effort to improve returns and win back customers. In September, Boston-based Fidelity named Jeffrey Feingold to run the Magellan Fund, replacing Harry Lange after the stock fund trailed 85 percent of competitors over the previous five years.

Miller worked in the research unit of Legg Mason before being named portfolio manager of Value Trust. He earned an economics degree from Washington & Lee University, where he graduated in 1972. After graduating, Miller served as a military intelligence officer overseas and then pursued graduate studies in philosophy in the Ph.D. program at Johns Hopkins University.

To contact the reporter on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/

Sent from my iPad

(BN) Biggest Oil Find in Decades, Kashagan Becomes $39 Billion Cautionary Tale

Will mongolia go this way too?

Bloomberg News, sent from my iPad.

Biggest Find in Decades Becomes $39 Billion Cautionary Tale

Nov. 17 (Bloomberg) -- After 11 years and $39 billion of investment, Exxon Mobil Corp., Royal Dutch Shell Plc and their partners have yet to sell a drop of oil from what was touted as the world's biggest discovery in four decades.

Centered on a man-made island 70 kilometers (44 miles) from Kazakhstan's coast, the Kashagan project is just months away from completion, $15 billion over budget and 8 years behind schedule. As the milestone of first oil nears, the Kazakh government is pressuring the group for a commitment on an even- bigger second phase, a project the oil companies are undecided on and one analyst says may not make money.

"The biggest worry is whether the project can ever be profitable given the huge cost escalation and start-up delays," said Julian Lee, a senior analyst for the Centre for Global Energy Studies in London. It may be "impossible for investors to earn a return on any investment in a second phase before their contract for the field expires" in 2041.

Kashagan, which may hold enough oil to supply the world for six months, has become a cautionary tale for oil companies worldwide as they spend an estimated $20 trillion through 2035 finding supplies in ever more difficult places. Expenses mounted as engineers underestimated the complexity of drilling under a region of the Caspian Sea that's frozen almost half the year. The government accused the partners, which are allowed to recoup spending before sharing the oil, of inflating costs.

'Colossal' Work

Nursultan Nazarbayev, Kazakhstan's leader-for-life, toured Kashagan in September and declared it a "colossal" work defining his 20-year rule since the Soviet Union's collapse, which included building a new capital city in the middle of the country's steppe. When the oil project starts production it will be a milestone for the Central Asian republic of 16.5 million that's four times the size of Texas.

The project is vital to Nazarbayev because the country relies on oil for 18 percent of gross domestic product and is rebuilding the economy after a devastating banking crisis. Kazakhstan's national oil company believes expansion can be achieved by 2017. The partners in the project aren't so ready to rush in.

"We will finish phase one and then we will look at phase two afterwards," Peter Voser, chief executive officer of The Hague-based Shell, said in an interview at the Group of 20 Summit in Cannes, France. "It's not immediate."

Christophe de Margerie, CEO of France's Total SA, echoed his sentiments, saying "let's start Kashagan one" when asked about prospects for the second phase.

Lethal Concentration

Kashagan has proved potentially lethal as well as complicated. The crude oil, locked 4,200 meters (2.6 miles) below the seabed in a highly pressurized reservoir, has a high concentration of poisonous "sour gas," according to North Caspian Operating Co., or NCOC, the venture formed to manage the project.

Gas sensors dot the island, scanning for any leaks of the vapor, which has a 15 percent concentration of flammable hydrogen sulfide. Weekly emergency drills are carried out with the 5,500 people living and working on the biggest of five islands. That number will drop to about 250 when the first phase becomes operational.

The project's structures are wrapped in impermeable membranes to keep contamination from the Caspian, home to seals and caviar-bearing sturgeon, and surrounded by barriers to fend off ice. The water at the site is only 3 to 6 meters deep and with low salinity and winter temperatures below minus 30 degrees Celsius (minus 22 Fahrenheit), the northern Caspian Sea freezes for almost five months of the year.

Main Partners

The geology, islands and ice and have inflated costs for the first phase to $39 billion from $24 billion estimated by the government in 2008.

The prize for the five main partners is as much as 252,000 barrels of crude a day each from peak output once the second phase is running. That kind of production is growing harder to find worldwide as existing fields age and governments in the Middle East, Russia and Latin America reserve control for state companies.

Exxon, Shell, Total, Rome-based Eni SpA and KazMunaiGaz National Co., the state oil company, hold 16.8 percent of NCOC each. Houston-based ConocoPhillips has 8.4 percent and Japan's Inpex Corp. 7.6 percent.

'Big Beasts'

"The fact you had big beasts with equal shares in the project who were thus able to slow down areas where they had different views shows the Kazakh model hasn't been an optimal one," Stuart Joyner, an oil industry analyst at Investec Securities Ltd. in London, said. "The cost, complexity and delays have significantly impacted the economics."

The partners aim to find a "preferred" expansion plan by the end of this year that can be sent to the government for approval, according to NCOC.

"We don't have clarity either about the time-frame and cost or about the planned production volumes at the second stage," Kazakh Oil and Gas Minister Sauat Mynbayev said last month.

One option is building more islands, similar to the existing 1.9 square-kilometer (0.7 square mile) manned collection hub and four surrounding structures, NCOC said. The cluster was built from 7 million metric tons of rock carried 300 kilometers from an ice-free port to the south.

Makes Sense

Expanding Kashagan makes more sense economically than halting at the first phase, KazMunaiGaz's former Chief Executive Officer Kairgeldy Kabyldin said on Oct. 4, before he stepped down from the post. Still, there are signs that some partners may be willing to cut their losses.

ConocoPhillips Chief Financial Officer Jeff Sheets said on an Oct. 26 conference call that Kashagan is in the "general category of looking around our portfolio in places where we have maybe not long-term strategic good opportunities."

Oil & Natural Gas Corp., India's largest energy explorer, and GAIL India Ltd., the nation's biggest natural-gas distributor, have made a non-binding offer for Exxon Mobil's 16.8 percent stake in Kashagan, two people with direct knowledge of the matter said in June.

The stake may cost $6 billion, the Financial Chronicle said Oct. 17, citing an unidentified official involved in talks. D.K. Sarraf, managing director of ONGC Videsh Ltd., ONGC's overseas unit, declined to comment on Kashagan.

Exxon 'Speculation'

Exxon plans to remain a major investor in Kazakhstan and reports of a Kashagan exit are "speculation," Charlie Engelmann, a Houston-based spokesman for the Irving, Texas-based company said in a statement.

There are no talks about any partners leaving the project, Andrey Sukhov, Shell's regional head of taxation in Russia and the Caspian region, said Oct. 21.

Kashagan's delays already forced one reorganization of the project. In 2008, Rome-based Eni gave up operatorship of the project to the newly formed NCOC, which agreed to pay higher royalties to Kazakhstan.

"After many difficulties and setbacks, and in the face of ballooning costs and much acrimony and debate, the companies had to start over and reallocate roles," oil industry historian Daniel Yergin said in his book The Quest, published in September. "All of this has infuriated the Kazakh government, which is having to wait years longer that anticipated for Kashagan revenues to flow."

Double Production

Kashagan may initially produce 370,000 barrels a day, which will rise to 450,000 barrels a day by 2016, Kazakhstan's Mynbayev said Oct. 4. The expansion would more than triple that to 1.5 million barrels a day, according to President Nazarbayev. That's almost double Kazakhstan's current production of about 1.6 million barrels a day, about the same as Libya produced before the revolt against Muammar Qaddafi.

Completing the expansion as early as 2017 is only possible if the partners choose a plan by early next year, KazMunaiGaz National CEO Bolat Akchulakov said in an interview in Astana, the capital, on Oct. 25.

"Phase two won't move ahead simply, it will be later than people anticipate," Investec's Joyner said. "Kashagan will be a million-barrel-a-day field, but from a value perspective it's been disappointing."

To contact the reporter on this story: Nariman Gizitdinov in Almaty at ngizitdinov@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/

Sent from my iPad

(BN) Corzine Lived Up to Risk-Taking Reputation at MF Global Before Bankruptcy

Risk taking with OTHER PEOPLES MONEY, thats the difference between being a trader and A BLOODY CHEAT!!

Bloomberg News, sent from my iPad.

Corzine Lived Up to Risk-Taking Reputation at Helm of MF Global

Nov. 3 (Bloomberg) -- In his 24-year career at Goldman Sachs Group Inc., Jon Corzine made a name for himself as an intrepid trader who pushed the limits of risk.

So it makes sense that when Corzine, after almost a decade as a U.S. senator and governor, was named chairman and chief executive officer of MF Global Holdings Ltd. in March, 2010, his plan for expanding the futures and commodities trader involved taking more risk, Bloomberg Businessweek reports in its Nov. 7 issue. Less than 20 months later, the company is bankrupt, days after posting a $192 million quarterly loss and disclosing $6.3 billion in bets on European government bonds.

"This goes back to the myth of Goldman people being the best risk takers," says Janet Tavakoli, who once worked at Goldman Sachs and is now president of Tavakoli Structured Finance, a Chicago-based firm that advises institutional investors.

Wall Street applauded Corzine's appointment. MF Global shares rose 15 percent the week his hiring was announced.

"It was like, 'Here's Jon Corzine: very connected, very successful ex-Goldman guy. Take him at his word that he's going to build a world-class, full-service investment bank,'" said Rob Rutschow, an analyst at investment bank CLSA.

And Corzine struck a statesman-like chord on taking the job. "MF Global is a firm with tremendous potential and excellent talent," he said. "Profitability and responsibility must go hand in hand with growing our franchise."

Yet the bankruptcy exposed a lack of internal controls. The day it filed for Chapter 11 protection, New York-based MF Global disclosed a shortfall in customer accounts that people with knowledge of the matter said may be about $700 million.

Customers' Money

On Nov. 1, a lawyer for MF Global told a bankruptcy judge that all customer money has been accounted for. That same day, Craig Donohue, CEO of CME Group, which has regulatory authority over MF Global, said the company violated requirements that it keep clients' collateral separate from its own accounts.

"We are investigating the circumstances of the firm's failure," he said. Corzine didn't respond to requests for comment.

While Corzine is known for making aggressive bets, at Goldman Sachs he had to operate within a larger, more cautious corporate culture because partners' own capital was on the line. At MF Global, Corzine had fewer people looking over his shoulder.

"MF Global was a case of, 'Ratchet up the risk. Let us Goldman guys fix this,'" said William D. Cohan, author of "Money and Power: How Goldman Sachs Came to Rule the World" and a contributor to Bloomberg View.

Stuck With Trades

At Goldman Sachs, Corzine was known for having the nerve to stick with his trades even when they seemed doomed. In 1986, he was responsible for a bet on Treasuries that was losing $150 million, according to several published reports. For five months he refused to cut his losses and ultimately made the firm $10 million when the market changed course.

In 1994, traders working for Corzine were losing $100 million a month on bad interest-rate wagers, according to Cohan's book, prompting several partners to depart. Corzine again resisted calls to stanch the losses, which contributed to pretax profit plunging 80 percent that year. Even so, by Christmas he was running all of Goldman Sachs.

"I could never figure out why out of that he became senior partner," said Cohan. "He's the only guy who became head of Goldman who makes me scratch my head."

In January 1995, at a management meeting, Corzine challenged fellow partners to take more risk with the firm's own capital and to lift Goldman Sachs's profits to $2 billion a year for the next five years, according to Cohan.

Achieving Returns

"You can't achieve the kinds of returns we want just by buying on the bid and selling on the offer," Corzine told Institutional Investor magazine in September 1995.

Goldman Sachs rode a lucrative wave of mergers and acquisitions and winning trades in the '90s bull market. Then in mid-1998 came Russia's financial crisis.

The bank suffered $1 billion in trading losses in the ensuing global stock and bond sell-off and failure of hedge fund Long-Term Capital Management. By the end of the year, Corzine was pushed out of Goldman Sachs by Henry Paulson, who had been co-CEO for six months and later served as Treasury secretary.

Risk taking is not confined to Corzine's financial career. At least $400 million richer from Goldman Sachs's 1999 initial public offering, he spent $60 million of his own money on a successful bid for a U.S. Senate seat in New Jersey, which he then parlayed into his 2005 election as governor.

'Should Be Dead'

In April 2007, he was critically injured in a car crash north of Atlantic City while being driven in an SUV going 90 mph. He wasn't wearing a seat belt. In a public service announcement recorded after the accident, he said, "I'm New Jersey Governor Jon Corzine, and I should be dead."

After losing his 2009 gubernatorial re-election bid to Chris Christie, Corzine returned to Wall Street.

J. Christopher Flowers, a friend and former Goldman Sachs banker who had a stake in MF Global, recruited Corzine to transform the small futures and commodities dealer into a full- service broker. That would mean taking greater risks by having the company make more and bigger bets with its own capital.

As recently as May, a company announcement touted "significant sales and trading hires" from rival banks, including new heads of mortgage-backed and asset-backed securities sales and a head of equity derivatives sales.

Taking Risks

Risk taking began to account for a greater share of the company's revenue. In reporting results for the quarter ended in June 2011, MF Global said that revenue from trading with the firm's own money and from taking the other side of client trades rose to 42 percent of sales, from 23 percent a year earlier.

Rutschow, the CLSA analyst, not convinced the brokerage was moving in the right direction, put a "sell" rating on the shares when they traded at $8 a year ago.

"You were looking at a company with so little capital taking on billions in risks," he said.

Sean Egan, managing director of credit rating-firm Egan- Jones Ratings, said MF Global had put itself in a perilous position: It was using so much borrowed money to make investments that a mere 2.5 percent fall in the value of its assets could bankrupt the company. The day before announcing its record quarterly loss, MF disclosed it owned $6.3 billion of bonds issued by Ireland, Italy, Spain, Belgium, and Portugal.

After MF Global's announcement, other banks, hedge funds, and even its own clients stopped dealing with the company. MF Global's board met through the weekend of Oct. 30 to consider options including a sale, a person with direct knowledge of the situation said.

Seeking Buyers

The firm was in discussions with five potential buyers for all or parts of the company, including banks, private-equity firms, and brokers. Discrepancies over the client funds sent Interactive Brokers Group fleeing from a potential acquisition.

"The board certainly considered that purchase and stepped away from it at a point where it became clear there were lots of uncertainties about the accounts and segregated funds," said Hans R. Stoll, an Interactive Brokers director and professor of finance at Vanderbilt University.

With Corzine unable to find a buyer, MF Global filed for protection from creditors on Oct. 31. With $41 billion in assets, it was the eighth-largest U.S. bankruptcy ever and may well mark the end of Corzine's investing career.

"Ironically, it was his misjudgments of major trades which have been highly costly to both Goldman and now MF," said Egan. "We have seen this before: Traders fall in love with their trades and have little ability to take a measured, dispassionate view."

To contact the reporters on this story: Roben Farzad in New York at rfarzad@bloomberg.net Matthew Leising in New York at mleising@bloomberg.net

To contact the editors responsible for this story: Eric Gelman at egelman3@bloomberg.net Alan Goldstein at agoldstein5@bloomberg.net .

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/

Sent from my iPad

(BN) Top Gold Forecasters See Bullion Rallying to Record by March: Commodities

Bloomerg calls the top forecasters based on 2 fuxking years?? What about 2 decades, if any has still survived?

Bloomberg News, sent from my iPad.

Top Gold Forecasters See Rally to Record by March: Commodities

Nov. 2 (Bloomberg) -- The most accurate forecasters say gold will rebound from its biggest monthly plunge since 2008 and reach a record by March because economic growth is stagnating and Europe's debt crisis is unresolved.

Futures traded in New York may rise 12 percent to $1,950 an ounce by the end of the first quarter, according to the median of estimates compiled by Bloomberg. The predictions are from eight of the top 10 analysts tracked by Bloomberg over the past eight quarters. Two declined to give forecasts.

Holdings in exchange-traded products backed by bullion rose the most in three months in October, and the most-widely held option gives owners the right to buy gold at $2,000 by Nov. 22. Demand for the metal accelerated since May as slowing growth and mounting concern that European leaders will fail to contain the region's debt crisis caused $7.5 trillion to be erased from the value of global equities.

"There is a loss of trust in the entire financial system and urgent need for safe-haven investment," said Ronald Stoeferle at Erste Group Bank AG in Vienna, the second most- accurate forecaster in the past three months. "The environment for gold is just perfect."

ETP holdings expanded 1 percent to 2,271.2 metric tons last month, a pile now valued at $126.6 billion and greater than the reserves of all but four central banks, data compiled by Bloomberg show. Bullion bought for investment accounted for 38 percent of total demand in 2010, compared with about 4 percent a decade earlier, the London-based World Gold Council estimates.

Paulson Buys Gold

Paulson & Co., founded by John Paulson, remains the largest shareholder in the SPDR Gold Trust, the biggest ETP backed by gold, according to an Aug. 15 filing with the U.S. Securities and Exchange Commission. Paulson, who made $15 billion betting against subprime mortgages, bought the 31.5 million shares in the first three months of 2009. Their value increased to $5.3 billion from $2.84 billion since then.

Gold has risen 22 percent this year, beating the 2.2 percent advance in the Standard & Poor's GSCI gauge of 24 commodities, the 9.3 percent decline in the MSCI All-Country World Index of equities and the 8.8 percent return on Treasuries calculated by Bank of America Corp. indexes. The metal has appreciated more than sixfold in its 11-year run of annual gains.

Prices climbed 6.3 percent in October, rebounding from the bear market in September after dropping more than 20 percent from the record $1,923.70 reached Sept. 6. Gold futures for December delivery rose 1.4 percent to $1,735.90 as of 12:51 p.m. in New York. A close at that level would be the biggest advance since Oct. 25.

Hedge Funds

Hedge funds and other speculators increased their bets on higher prices by 8.7 percent to 138,846 futures and options in the week ended Oct. 25, Commodity Futures Trading Commission data show. It was the biggest gain in almost three months.

The rally may fade because the swings in prices undermined the perception of gold as a haven, said Dean Junkans, an analyst at Wells Fargo & Co. in Minneapolis. In an Aug. 16 report, three weeks before the plunge began, he characterized the market as a "bubble that is poised to burst."

"It's not risk free and is not a currency, even though too many people think of it that way," Junkans said in an interview. "It can go down to $1,300, and could also rise to $2,000, but there is definitely a downside potential."

Gold also retreated in September as the Dollar Index, a measure against the currencies of six trading partners, jumped 6 percent, the most in almost three years. The 30-day correlation coefficient between gold and the index is now at -0.45, compared with 0.23 in March, data compiled by Bloomberg show. A figure of -1 means the two move in opposite directions, and 1 means they move in lockstep.

Financial System

The Dollar Index rose 3.3 percent in the past three sessions on mounting concern that European leaders will fail to contain the debt crisis, spurring demand for what are perceived to be the safest assets, including the dollar and Treasuries.

Some forecasters expect the dollar's rally to fade because of concern that a slowing global economy may force the Federal Reserve to pump more money into the financial system. The U.S. currency will end next year at $1.40 a euro, compared with $1.3703 now, according to the median of 30 economists surveyed by Bloomberg.

Fed Vice Chairman Janet Yellen said on Oct. 21 that a third round of large-scale securities purchases may become warranted to boost the economy. The central bank bought $2.3 trillion of housing and government debt during two rounds of so-called quantitative easing from December 2008 to June 2011, spurring a 70 percent jump in the price of gold.

Bear Markets

The metal's plunge in September may signal it is poised to keep rising. The last time bullion had a bigger drop was in October 2008, when prices tumbled 18 percent as the worst global recession since World War II drove equities and commodities into bear markets. The metal rose 23 percent in the next two months.

Investors aren't the only ones buying bullion. Thailand, Bolivia, Kazakhstan and Tajikistan were among nations adding gold to their reserves in September, International Monetary Fund data show. Central banks are expanding reserves for the first time in a generation. Switzerland's central bank said Oct. 31 it returned to a profit in the first nine months as gold holdings helped counter losses on currency reserves.

"There's huge potential for gold in the coming years," said Jochen Hitzfeld, the analyst at UniCredit SpA in Munich who was the most accurate tracked by Bloomberg in the past two years. "Investors are buying gold. That's reinforced by buying from central banks. Prices did run up a little bit too fast, but the drop was just a breather."

Fourth Quarter

Hitzfeld forecast on Oct. 12 that gold would average a record $1,900 in the fourth quarter of next year.

A measure of the combined earnings of the 16-member Philadelphia Stock Exchange Gold and Silver Index will rise 8.3 percent this year and almost 27 percent in 2012, according to analyst estimates compiled by Bloomberg.

Barrick Gold Corp., the world's biggest producer and the largest member of the index, will report net income of almost $4.8 billion this year, compared with $3.27 billion in 2010, the mean of 12 estimates shows. Shares of the Toronto-based company declined 5.3 percent this year.

"When we look at gold five years from now, we will say gold was wildly cheap," said Jason Schenker, the president of Prestige Economics LLC in Austin, Texas, and the fifth-best forecaster tracked by Bloomberg. "What happens to gold is going to hinge on what happens to the dollar, and that is going to be influenced by what happens in Europe and monetary policy."

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net .

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/

Sent from my iPad

(BN) Corzine Steak Dinner Speech to Traders Gave No Hint of MF Global’s ‘Doom’

I cant believe the rubbish David shiels just said...people go through bad times and he is a member of the community??

No wonder people find wall street bankers sickening. 

Bloomberg News, sent from my iPad.

Corzine Steak Dinner Speech Gave No Hint of MF Global's 'Doom'

Nov. 2 (Bloomberg) -- The night before MF Global Holdings Ltd. posted its biggest quarterly loss, triggering a 48 percent stock plunge, Chairman and Chief Executive Officer Jon Corzine appeared at a steak dinner at New York's Helmsley Park Lane Hotel for a speech to a group of bankers and traders.

"There was no sense at all that there was impending doom," Kenneth Polcari, a managing director of ICAP Corporates, said of Corzine's Oct. 24 address to the National Organization of Investment Professionals. "He gave a spectacular speech" about his decades at Goldman Sachs Group Inc., life as a U.S. senator and New Jersey governor and his return to the private sector. "He's had a full life, up until now."

Corzine, 64, excused himself before the main course was served, saying he had to prepare for an earnings call the next day, said David Shields, vice chairman of New York-based brokerage Wellington Shields & Co. and a former chairman of the organization. The group seeks to foster "a favorable regulatory environment," according to its website.

Timothy Mahoney, CEO of New York-based Bids Trading LP, said Corzine's speech was "delightful."

The next day, MF Global reported a $191.6 million net loss tied to its $6.3 billion wager on European sovereign debt. On Oct. 27, after the company's bonds dropped to 63.75 cents on the dollar, Moody's Investors Service and Fitch Ratings cut the firm to below investment grade, or junk. Unable to find a buyer, the company filed for bankruptcy on Oct. 31, the first major U.S. casualty of the European debt crisis.

'Serve the Public'

At least two dozen U.S. lawmakers and regulators, including Representative Joe Barton, a Texas Republican, Carolyn Maloney, Democrat of New York, and former Securities and Exchange Commission Chairman Harvey Pitt have addressed the group, according to its website.

"There are many people in the group that do lobby and talk to regulators," Shields said. "You talk to regulators, you talk to lawmakers and you try to get the points forward, things that will help the marketplace, that will serve the public."

The group's board includes head traders at firms such as Waddell & Reed Financial Inc., whose futures trade triggered the flash crash of May 6, 2010, according to a study by the SEC and the U.S. Commodity Futures Trading Commission.

Its members' firms "trade approximately 70 percent of the institutional volume transacted daily in the New York and Nasdaq markets," according to the website.

'Difficult' Day

The group's current chairman, Dan Hannafin of Boston-based investment manager Wellington Management Co., declined to comment on the dinner. Corzine and Diana DeSocio, an MF Global spokeswoman, didn't reply to an e-mailed request for comment.

Mahoney said he appreciated Corzine's ability "to compartmentalize" and speak engagingly last week. Mahoney's firm, Bids, runs a private trading venue known as a dark pool, and is a joint venture of banks including Goldman Sachs.

Before the speech, Moody's cut MF Global's credit ratings to the lowest investment grade. Polcari said there was one reference to Corzine's "difficult" day.

While he was "cordial" and "positive," the MF Global chief lacked his typical "sharp bounce," Shields said. Corzine is "a member of the community," and could be invited back after the bankruptcy, he said. "People go through bad times."

To contact the reporter on this story: Max Abelson in New York at mabelson@bloomberg.net .

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net .

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/

Sent from my iPad

(BN) European Union Bank Recapitalization Plan Has ‘Serious Problems,’ IIF Says

Sorry who is this IIF? Yet another fly by night operator seeking free publicity? Sure there are problems, and sure you are brainy to come with solutions. 

Bloomberg News, sent from my iPad.

EU's Bank Capital Plan Has 'Serious Problems,' IIF Says

Nov. 2 (Bloomberg) -- The European Union's plan for recapitalizing banks has "serious problems" that will hurt economic growth and make it harder for some nations to borrow, the Institute of International Finance said.

There is a "clear need" to restore confidence in Europe's banks, IIF Managing Director Charles Dallara said today in a letter to the Group of 20 nations on the eve of a summit in Cannes, France. Yet the extra capital requirements at the center of the EU's strategy will come with "considerable cost" because of a flawed scope and approach, he said.

European leaders are gathering today before the Nov. 3-4 summit to prevent their crisis-fighting plans from unraveling less than a week after they were hammered out. The euro area's debt crisis will likely take center stage at the G-20, raising the stakes for banks poised to play a greater role in Greece's next bailout.

The EU plan calls for Greece to adopt further austerity measures in exchange for a new infusion of official funds and a subsidized bond exchange. It also increases the firepower of the EU's main rescue fund in a bid to limit contagion to Spain, Italy and other euro-area nations.

Banks would not consider providing debt relief to other countries such as Portugal caught up in the crisis, Dallara said on a conference call with reporters today. Greece's circumstances justify a "unique approach" that should not apply to other sovereigns.

No Need

"We do not see the need, nor would we be willing to be involved in or engaged in, discussions of debt reduction for other countries," Dallara said, speaking from Washington. He said the debt swap and official rescue program for Greece is needed to give Greece a chance to adjust its economy more gradually and ease the hardships on Greek citizens.

Portugal is on a "path of adjustment" and making changes that will lead to renewed growth and investment, he said. Dallara also was optimistic that Spain's new government "will be able to build on the progress that has been made, particularly over the last year" after the Nov. 20 elections.

The People's Party, which has pledged deeper austerity measures without specifying where it will axe spending, is set to win the largest majority any Spanish government has secured since 1982, a poll in El Mundo showed yesterday. Prime Minister Jose Luis Rodriguez Zapatero isn't seeking re-election.

'Grim' Outlook

Dallara called on the G-20 to look for ways to promote economic growth, noting a "grim" unemployment outlook in the U.S. and Europe. He also urged the European Central Bank and others to provide more liquidity support for Greek banks, who he said have helped to finance Greece's economy through bond purchases and private-sector lending.

The bank-recapitalization accord sets a June 30, 2012, deadline for lenders to reach core capital reserves of 9 percent after writing down their sovereign-debt holdings. Banks below that target would face "constraints" on paying dividends and awarding bonuses.

Banks are likely to decide that the costs of raising capital are "prohibitive," Dallara said in his letter to the G-20. Rather than accept forced injections, banks are more likely to sell risky assets and cut back on lending, which will make it harder for countries on Europe's periphery to access capital markets.

"The market value of the debt of the countries most under scrutiny is likely to decline further as banks unload sovereign bonds," Dallara said. "This is contrary to the goal of stabilizing and underpinning the outlook for sovereign debt in Europe."

New Requirements

If banks acted to meet the new requirements relying only on retained earnings and a reduction in credit supply, "overall credit exposure to the euro-area private sector would need to decline by at least 5 percent," he said. "It is essential that the higher European capital requirements are a temporary measure as intended, not sustained over time and not seen as a new standard to be imposed more widely."

BusinessEurope, a federation of European employers, today endorsed last week's bank plan as well as the EU's overall crisis-fighting strategy. The group also said the plan is the "best opportunity" for Greece to right its economy.

"We continue to believe the agreements regarding bank recapitalisation, extending the EFSF and improving the sustainability of Greek borrowing alongside commitments from all member states to implement recommendations regarding budgetary policy and structural reform, represent essential steps," wrote Jürgen Thumann, president of the employers' group, in a joint letter with Laurence Parisot, president of the business lobby Medef.

'New Investment Capital'

The IIF renewed its call to continue work on the debt swap, even as Greek Prime Minister George Papandreou seeks to put the new rescue program to a parliamentary vote and a popular referendum. The debt swap, combined with Greece's budget reforms and more EU and International Monetary Fund money, would help Greece return to a more sustainable and independent debt path.

"This would also help bring in new investment capital and unlock market access -- possibly as early as 2015," Dallara said. "This would greatly reduce the burden on the official sector and the European taxpayer of providing perpetual support for Greece."

The outline of the bond exchange calls for banks and other investors to exchange their holdings at 50 percent of their face value. The new bonds would be partially backed by collateral guaranteed by the European Financial Stability Facility or another AAA rated lender. Details on timing, eligible maturities and coupon rates haven't been decided.

'Significant' Risk

As Europe proceeds with its crisis-fighting efforts, the European Central Bank needs to continue its secondary-market purchases of government bonds so markets and the economy can recover , Dallara said. The IIF said the ECB should consider lower interest rates as Europe faces a "significant" risk of recession that could spill over to the world economy.

"It is essential that all parties come together behind the continued active role of the ECB in the secondary government bond market," Dallara said. "We would also emphasize that lower ECB policy rates at this point would enhance market stability as well as help bolster faltering regional economic growth."

The U.S. budget debate is an area of "significant concern," and some major emerging-market nations face slower growth and more inflation, the IIF said. The G-20 will need to coordinate its economic and regulatory policy objectives to put the world on sounder economic footing.

"It is essential for the official sector to begin viewing the banking system as an indispensible partner in fostering recovery, rather than an adversary on which it is necessary to impose ever more punitive measures," Dallara said.

To contact the reporter on this story: Rebecca Christie in Cannes at rchristie4@bloomberg.net Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/

Sent from my iPad