Well everyone, it’s finally happened—Gary Coleman lost his virginity. The lucky woman was Shannon Price, who not only won the first aforementioned prize, but the second as well, which was Gar’s hand in marriage (third price is a night with Dana Plato). The whole thing happened back in August but was just made public yesterday, when the nuptial photographs were released. The Post notes that though the differentials are staggering—18 years and 11 inches—Price says her husband’s “sweet[ness]” makes him “10 feet tall,” in her eyes. I know what you’re thinking and my answer is this—who cares that there’s no business angle (or one that we can come up with, though I’m sure FBN and Jim Cramer’s US Weekly will shortly)? This is our happy story of the day, except for the part about C to the G possibly being an abusive husband (“He lets his anger conquer him sometimes," Price admitted. "He throws things around, and sometimes he throws it in my direction.") which we’re going to just chalk up to an effort on his part not to get too tall (in her eyes) for the door frame, or unresolved anger stemming from the time he almost got molested by the bicycle store owner who asked him to play 'Tarzan' with him.

The markets have been off to a rocky start this year but maybe the bulls can breath a sigh of relief now that the Sports Illustrated Swimsuit issue is on the newsstands with Marisa Miller on the cover. The folks over at Bespoke Investment have run the numbers and created a Sports Illustrated Swimsuit Issue Indicator. As it turns out, having an American on the cover is a bullish indicator.

“Over the last 30 years, an American has appeared on the cover of the annual Sports Illustrated Swimsuit Issue in 15 different years,” the Bespoken write. “The average performance of the S&P 500 during those 15 years is a gain of 13.9% with 13 positive years (87%). Of the fifteen years where no American appeared on the cover, the S&P 500 has averaged a gain of only 7.2% with 11 positive years (73%).”

The shorts should hope for Spanish speaking cover models. Issues featuring models from Argentina, Mexico and Spain all saw losses for the S&P 500 that year.

(Oh, and click image for a bigger version of the cover.)

2008 Sports Illustrated Swimsuit Issue: It's Research! [Think Big via Eddy]

The above is a clip from Fox Business on which clothing trends don't work at the office. I disagree with all of them.

#1 FBN SAYS: Don't Overaccessorize because too much jewelry can make too much noise and just make you look plain silly. Wrong because: too few investment bankers dress like Mr. T these days. You see it at the hedge funds, because they're a little more, you know, out there, but not enough at the banks. Also, it's nice to announce yourself via jingle jangle instead of the vanilla, "Here I come."

#2 FBN SAYS: Don't Wear Leggings. Don't really say why, just that you should "go old-fashioned with tights or hose." I beg to differ but not for the reason you would think, which is that leggings are stupid, but because, as stated previously, I fully believe the fastest way to get to the top is no pants at all. If it's good enough for Leon Cooperman, it's good enough for you.

#3 FBN SAYS: Be Judicious About Your Shoes "Comfort is key, heels that are too high make you look like a skank blah blah blah." I call bullshit because: Hedge funds (and other financial institutions but for this particular example, HFs) are a dog eat dog world. It is a well known fact that Adam Sender first made a name not by savvy stockpicking, but by wearing KISS boots in the office, and spitting blood. Not only was it kick ass, it also added 13 inches to his height, putting him just under 6 feet.

Earlier: Getting You Promoted, One Pair Of Assless Chaps At A Time (Provided You Work For Larry Robbins)

At the most basic level, the critique of the ratings agencies seem to be that by assigning triple A ratings to riskier credit products, they concealed risk. This dismays the ratings agencies who believe that they never claimed every kind of credit product that bore the same label carried the same risk.

“Credit ratings are relative to the type of credit,” a credit rating official tells DealBreaker. “Different types of products have different inherent risks, and the labels reflect payment expectations within those categories.”

The ratings agencies have all but admitted, however, that by using the same labels for products carrying different levels of risk they may have left themselves open to the critique they now face. This is why they have proposed reforms such as explicit warnings and using different systems of rankings for different types of products.

By and large, Wall Street does not appear to have been fooled by the fact that CDOs and corporate bonds may have both been called AAA. The CDO market typically offered higher yields for triple A paper than the corporate debt market, implying that investors understood the risk profile was different. It wasn’t only the nature of the credit product that was heterogeneous. The pricing was as well.

--Thursday is Steve Schwarzman's birthday. He claims he doesn't want to do anything big, just a few close friends over to the manse, and if it turns be mostly couples, perhaps they'll put some keys in a bowl, but nothing too crazy. He's also supposedly telling people "no gifts"; this is a trap. You know he's full of it and if you don't READ HIS MIND and tally ho on over to Brookstone and snatch up one of those fancy $200 ass-hair trimmers he's been eyeing for months (sources say Crab Hands was just relating the other day how he needs to 'deforest the Schwarzwald') and hand deliver it to l'office, along with the perfectly worded card, you'll be looking at the business end of a hissy fit.

--The Fox Business commercial. Remember? We found out that it only costs $250-$900 to buy a 30-second spot on FBN, depending on when it airs, and delineated tasks to the group. I repeat: You: Make a video and send it to us. We: Pick the best and our publisher will send it to Fox's ad sales team. They: Either a) air it, and earn you a piece of quasi-immortality along such leading FBN lights as Fat Boy Cavuto; or b) shitcan it, and we'll reprint a transcript and audio clip of how Fox, who would blow a goat for a few extra shekels, all of a sudden got all 'integrity' on us. I love the idea of sending the ValueStockTips guy, and it may very well come to that but seriously, show me what you can do.

-- Goldman Sachs is still firing people. So sayeth:

A friend and associate in equity derivatives got let go from GS this morning. He's on his way to Maiden Lane to get his severance package. The reason? "Re-organization"

The source said the last thing he saw was a few schmattas throwing the guy in a car with Eddie Dane, who told him, "Everyone's so goddamn smart. Well, we'll go to Maiden Lane. And we'll see who's smart."

"All of us [banks] are really in the moving, not the storage, business.”

With those words the world learned yesterday that Credit Suisse had sold off its exposure to three closely syndicated loan deals—the buyouts of Harrah’s, Intelsat and Alliance Data Systems. Many in the syndicated loan business were taken aback that Credit Suisse had jumped the gun and sold off its exposure without consulting other syndicate members. Although the details are unclear, the effect today seems to be that others are following suit, bringing to market debt in a way to some say resembles a panic.

"There's a real panicky feel out there. It's become a game of hot potato," one syndicated loan market veteran told DealBreaker.

There's a lot of sensitivity around this issue, and many market players are declining to comment on it at all. There's talk that Clear Channel loans commitments may be in trouble. We're still digging.

Update: "80 is the new 90" for leveraged loans, FT Alphaville reports. This is putting pressure on CLOs, which are falling through the floor. Banks hold a lot of CLOs, especially the triple A CLOs they thought were the safest bets but may turn out to be worth far less than anticipated. They haven't disclosed much of these positions, according to FT Alphaville, because they were fully hedged. But here's the catch--they were fully hedged with swaps from bond insurers.

"Thus as monolines totter, banks are having to writedown the value of the CDS, and so add CLO exposures onto their balance sheets. Just at the wrong time - as CLOs’ paper becomes more distressed. While losses won’t be realised as severely as with RMBS, rating downgrades to CLO paper may well require banks to stump up extra regulatory capital at a time when they can least afford to," FT Alphaville reports.

Wall Street is notoriously a place populated by masters of the universe, big swinging dicks, movers and shakers, ballers and Men Who Make The World Work. Perhaps even more famously, it’s populated by people who believe that they can be fairly described in these terms, folks with egos scaled to match their bank accounts. It’s hardly uncharitable to notice that quite a few of these people can also be fairly described as “assholes.”

In fact, the list of Wall Street assholes is too long for anyone. We need to narrow it down to a list of the top ranks, the biggest assholes on Wall Street. We’re busy evaluating candidates here in the DealBreaker HQ Bunker, putting them up on cork boards like the FBI assembling a mafia management structure. But one of the glories of these here internets is that the communication goes both ways—from the Bunker to the Street, and from the Street to the Bunker. Starting this morning we’re taking your nominations for the first official DealBreaker list of the Biggest Assholes On Wall Street.

Send your nominations to tips@Dealbreaker.com or nominate someone in the comments section. A helpful explanation for why the nominee deserves to be ranked among Wall Street’s Bigs is appreciated. Extra credit will be award for first hand accounts of assholery.

The best-known employee of Avenue Capital announced that she isn’t happy with their health care plan yesterday. Chelsea Clinton, who works for the hedge fund, mentioned that she had problems with Avenue Capital’s health care plan on a MSNBC appearance broadcast from Milwaukee.

"If you have health care and you're not happy with it -- like me who has employer provided health care, but I'm not happy with it -- and if you are one of the 100 million who are uninsured at some point throughout the year... you'll be able to buy into a Congressional health plan," Chelsea Clinton said, according to the Politico blog.

Ouch. You employ the daughter of a former and a prospective president, and this is the thanks you get?

Note to Avenue Capital [Politico]

Ratings agencies are the folks everyone has learned to love to hate as credit markets have deteriorated. They stand accused of damaging Wall Street investors by negligently or corruptly assigning unduly high credit ratings to collateralize debt obligations. But was Wall Street really fooled by the ratings agencies?

There is strong evidence that suggests investors in many CDOs were skeptical that a AAA CDO paper had the same risk premiums of more traditional investment grade debt. Investment-grade CDOs typically offered higher yields than similarly rated corporate bonds. But yield and price are inversely related, so this is just a way of saying that they were priced below similarly rate corporate bonds. The CDOs were rated triple A and structured to have similar payouts but priced lower.

Basic financial theory should tell anyone that this is too good to be true. Excess reward should quickly be priced away, returning profits to average levels. If higher yields continue, there is clearly some kind of discounting going on.

You can think of the higher yield for CDOs as resulting from the assignment by investors of a ratings agency error discount. The market understood that triple A did not mean triple A when it came to CDOs, and it discounted the CDOs for this errant marking.

This is not to say that the high ratings for CDOs weren’t a charade. But clearly the investors in CDOs weren’t fooled.

It was recently suggested by someone too close to the matter for objectivity that I, as in Bess Levin, am "unnecessarily harsh" on Steve, as in Steve Cohen. "You're always calling him fat or bald" said the person with eyes. Obviously, my initial reaction was "watchu talkin' about Willis?" because I can't remember the last time I called the Big Guy (BG) fat. "Fine, rotund, portly. You called him 'portly' just today," his mother countered. In his mind, he had won this "You're too mean to Steve" argument and there was nothing I could do to sway him (he didn't believe me when I said I described the BG as rotund so as to paint him as a distinguished gentlemen, a man of wealth and taste, or that I just wanted to know, not for fat reasons but just because I was interested, if the BG ordered out three Monte Cristos and a coke yesterday or four, in light of the circumstances, those being that SAC had really shitty offerings for lunch), so I did what any person faced with an insurmountable obstacle of words placed before her would do, and signed offline. Dramatically. Without saying goodbye. I had won the war.

But now, thinking about it, I wonder, am I unnecessarily harsh on Steve Cohen? One could theorize that with these posts I'm doing the whole "pull the BG's ponytail on the playground," but that doesn't really work, for several but one notable reason in particular.

What the leading light complaining to me doesn't realize is something the Big Guy surely does and appreciates: With a few exceptions (Timmay, Blarney, Alexey), being mocked by Ms Levin is one of the great trappings of big-swinging-dickdom that very few ever achieve (Crab Hands, Fatty, ValueStockTipguy). I know nothing about Wall Street, so if I have heard of you, you're big. But Stef-Boy (people think he is called Stevie, but his true friends know otherwise) won't come out of his hermetically-sealed full-body condom to clarify this matter on my behalf so I'll leave it to all of you to decide by poll. Am I too mean to him? If yes, you had better come up with somebody else for me to mock or I will find you and make you my next bitch. If no, congratulations, you answered correctly.

(Eff the Vizu poll. And not because it doesn't let you use curse words -- though you know that grinds my gears -- but because I want a forum. The Internet is a collaborative medium; as far as I can tell I'm the only one doing the work here. Except this guy:)

Despite rapid changes in the management structure at Merrill Lynch, Greg Fleming has held onto his position as the president of the firm. He has insisted that he will remain the sole president, and resisted any plans to elevate others at the firm to be co-president. But his inflexibility on this point may be imperiling his position, according to people familiar with the situation.

“He’s on the verge of a nervous breakdown,” a source tells DealBreaker. Others dispute this characterization however, saying that Fleming shows no signs of anything like "a nervous breakdown."

When John Thain took over as chief executive of the bank, one of the very first changes he announced was a flatter management structure. More executives now report directly to Thain, in effect circumventing Fleming’s office. Under Stan O’Neal, the risk management executives did not report directly to the top—a situation which has been blamed for some of the excesses that lead to enormous losses over the last several months.

Fleming, who also serves as chief operating officer and oversees the investment banking business, is said to have dug in as president, and told others that he will not accept a co-presidency with others at the firm. This is seen by many as resisting the flatter structure Thain is putting in place, and may be alienating him from others at Merrill. Perhaps more important, Thain is thought to be chagrined by Fleming’s stance.

“Fleming could have been a team player. He’s still got the investment bank under him,” said one person with knowledge of the dynamics within the firm. “But he went the other way. He saw moving back to being just head of investment banking as a demotion.”

Some feel that the flatter management structure has effectively demoted Fleming already. With the new head of risk management, the top spokesperson, their general counsel, the chief financial officer and the brokerage head of the brokerage arm, among others, reporting directly to Thain, the office of the bank’s president may be superfluous. Last week, both Market Watch and Bloomberg referred to Fleming as the “chief operating officer” of Merrill without mentioning his role as president.

Fleming remains respected as an investment banker at the firm, even by those who are surprised at his alleged inflexibility. He remains youthful, plain-spoken and full of energy, according to people at Merrill Lynch. He is known as a perfectionist and an investment banking star—which is all the more reason his continued grasping to the title of sole president has some feeling “mystified.”

Merrill Lynch would not comment on this story.

He's Warren Buffett, and he's here to help.

This morning Buffett revealed on CNBC's Squawk Box that he's extended an offer to tottering bond insurers to provide re-insurance of on up to $800 billion in municipal bonds. The offer does not, of course, cover the more complicated derivative instruments that have been the source of so much profit and trouble for the bond insurers.

Speaking on the phone with CNBC's Ancient Billionaire Correspondent Becky Quick, the Oracle of Omaha, said Berkshire Hathaway a week ago made the reinsurance offer to bond insurers Ambac, MBIA and FGIC. One firm has already rejected his offer to insure the safest part of their business. We're guessing that's MBIA, which is newly flush with Warburg Pincus cash. The other two haven't returned his calls are still considering the offer. The offer is ticking: he gave them 30 days to respond.

Buffett's plan would likely insure ensure that the covered municipal bonds would not be affected by a downgrade in the ratings of MBIA, Ambac or FGIC. According to Buffett, the trouble with the bond insurers is producing strange price discrepancies, with some uninsured bonds trading above insured bonds. "Essentially, they've already lost their triple A. They're trading as if they had lost it," Buffett said. "In the market the triple A has gone away a long time ago."

Shares of these insurance companies will initially spike on the news, although by satisfying some of the concerns of government insurance regulators it could wind up contributing to the demise of a industry-wide bailout plan. In short, this "bailout" could spell the end of the insurers if the CDO situation gets bad enough. Buffett noted that the CDO exposure for these companies would not be covered, adding that "we can't figure it out" when asked about the extent of that exposure. He described the "natural course" of the CDO insurance as "disastrous."

Perhaps still smarting from DealBreaker's "Will Warren Buffett Go To Hell?" feature, the Oracle stressed that he would "not be presenting this deal to Saint Peter" when he shows at the pearly gates. "We're doing this to make money," Buffett said. "I did not dream this up in one of my pro-bono moments."

We thought we should let you know about this development since the odds are your attention was riveted on Fox Business. While Becks was talking to Buffett, FBN's "Money for Breakfast" co-anchor Peter Barnes wasinterviewing an M&M in a Split-Screen from Candyland. Candyland! Who wants a gumdrop!

We began yesterday by announcing that the ratings agency scandal was showing signs of becoming overwrought. Ratings agencies, including S&P, Moody's Investors Service and Fitch Ratings, have been criticized and mocked in recent months as credit markets have deteriorated. More recently, regulators and prosecutors have announced investigations into the role of the ratings agencies in the subprime bubble and meltdown.

At the heart of the critiques, mockery and investigation is the sense that ratings agencies damaged the market by assigning investment grade ratings to securities that are now considered to assigned far lower values by much of the market. Many regard certain types of CDOs that were highly rated by the agencies as toxic or simply worthless. In the moveable feast of blame, the ratings agencies are being made to eat some humble pie and admit they made errors.

But how much of the damage to CDO investors is really the fault of the ratings agencies? Were sophisticated investors—banks, hedge funds and other institutional investors—really fooled into over-investing in these risky credit products by the high ratings assigned by the agencies? There’s good reason to be skeptical of some of the criticism coming from banks and regulators.

We explain why after the jump.

Allianz Shares Fall on Concern About AIG's Accounting Problems (Bloomberg)
The old market for lemons in action: AIGs accounting appears to have been lemonish, so Allianz SE's might be too. Shares of Europe's biggest insurer fell 4.3 percent following news that the American insurance giant didn't know how to value its assets. Allianz recently put out numbers, but they haven't been certified by auditors. Apparently there's a reason to pay attention to that caveat.

Feds to Unveil New Mortgage-Help Plan (AP)
A group of banks and the federal government are expected to announce today some sort of aid plan to troubled homeowners that will allow them to try sticking it out in their homes and forestall foreclosure by 30 days. Our first assumption, of course, is that it's just a band aid over a gaping gash. But we also wonder how the banks can offer this to homeowners when the banks are rarely holding the mortgages. Presumably, either the banks or the federal government will be making that extra month's payment themselves to the mortgage holder, though we don't really know how that works.

Dow gurus may wish for one last puff (Tribune)
A long time ago (like eight years ago), we were watching an interview with Maria Bartiromo (she was the interviewee) and she was talking about the mania for markets in the public consciousness at the time. So she related some anecdote about getting into a cab and the driver immediately asked her where the DJIA was it. The story was meant to convey the fact that a) even cabbies know what the Dow Jones is and b) even they can recognize Maria Bartiromo. But what struck us was c) that the driver was mainly interested in the Dow, as opposed to say the S&P 500 or the Wilshire. Anyway, we still wonder why people get so excited about the Dow, when everyone know its measurements is bizarre and its components are somewhat arbitrary.

Dem. Pres. Primaries (Intrade)
As always, our election-morning check of the political markets. Today we've got the so-called Chesepeake Primaries, though apparently Potomac Primaries are more geographically meaningful. Whatever, we're not seeing much value here. Obama is priced for a big win in all three states, trading above $.90 in Virgina and Maryland, and there's not even any trading in DC... just can't make a market for it. The CW is that he'll win in these states pretty handily and the market reflects that without hesitation.

$$$ Deals: Off the Record? An Intriguing Week
In our M&A Roundup for the week ended Feb. 10, activity is light, with only two billion-dollar deals. But interest in Yahoo and Alcoa's purchase of Rio Tinto shares keep dealmakers buzzing. [CFO.com]

$$$ Seth Tobias Death Involved No Crime, Prosecutors Say [Bloomberg]

$$$ HOMG [WSJ]

$$$ HIV [WallStrip]

Today we thought we’d give you something extra special to start the week—namely a new job. We usually do this at the end of the week but why not deliver a bonus job offering as a way of getting over those Monday blues. So we spent part of the afternoon combing through our Career Center in search of the most interesting jobs. There are dozens to choose from, all categorized according to specialization. But one special one has been selected as our Job of The Week.

This morning AIG announced that its accountants had informed them that the losses from credit default swaps were three times worse than they had previously assessed. Now everyone on Wall Street is wondering whether a new round of loss declarations might be on the way as accountants drill down into the CDS positions of various banks and insurers.

Only you can stop this from happening again. A New York based financial firm is looking for someone with experience analyzing CDO and CDS transactions. Your role will be to analyze the structural risks associated with CDO and CDS derivative transactions and to help both internal and external clients understand the underlying risks.

You’ve got to have brains and the right papers to get this one. Applicants should have a PhD in a quantitative field, strong financial econometrics skills, and experience working with mathematical modeling and valuation. The candidates will need 5+ years of relevant structured finance experience, a passion for analyzing complex derivative transactions and strong speaking and writing skills.

With great power comes great responsibility. Don’t shirk your job as a CDS superhero!

A last minute change in a software industry group’s meeting has raised questions about whether famed and infamous tech stock analyst and Silicon Alley Insider founder Henry Blodget may have a highly placed enemy among the traders at JP Morgan.

Shortly after noon today, the New York Software Industry Association changed the location of its monthly meeting from JP Morgan’s headquarters at 270 Park Avenue to 277 Park Avenue, a building that is also occupied by JP Morgan and is directly across the street. An email from the NYSIA said the meeting was being moved “due to a flood at the JPMorgan HQ at 270 Park.” But a JP Morgan spokesperson denies that there has been a flood at the building. Others at JP Morgan also said that they hadn’t heard anything about a flood.

So if the flood hadn’t occurred, why was the meeting being moved? JP Morgan Chase didn’t offer any further comment on the subject, and NYSIA did not immediately return our call. But some of the emails recipients have begun to speculate that the meeting may have been moved because Blodget, who was accused of securities fraud in connection with his stock recommendations in the 1990s and was scheduled to speak at the monthly meeting, could be persona non grata at 270 Park Avenue.

“I'd wonder if maybe some high-up didn't want Blodget around,” a person familiar with the situation told DealBreaker.

The meeting has been moved from one JP Morgan office to another, which might imply that it is a very particular group or person within JP Morgan who has declared the premises off-limits to Blodget. Although a variety of units within JP Morgan Chase are scattered throughout it’s various Park Avenue offices, the 270 Park is home to a large number of its traders while 277 Park is home to many investment bankers. So does some high level trader have a problem with Henry Blodget?

Our research couldn't produce a credible account of who might be feuding to Blodget or why. Many in the securities industry, however, still resent what they see at Blodget's role in besmirching their business. Blodget's first book, The Wall Street Self-Defense Manual, did not paint Wall Street in a particularly flattering hue.

Neither Henry Blodget nor JP Morgan Chase could be reached for comment on this important question irresponsible speculation.

You've obviously read the story on Bloomberg about the big art robbery in Zurich; paintings by Cezanne, Degas, Monet and Van Gogh worth more than $163 million were stolen. It's a big deal if you give a shit about obscure art museums in third-rate European cities. Reporters Marc Wolfensberger and Linda Sandler note that three burglars--packing heat and wearing ski masks--lifted Monet's ``Poppies Near Vetheuil,'' Degas' ``Count Lepic and his Daughters,'' Van Gogh's ``Blossoming Chestnut Branches'' and Cezanne's ``Boy in the Red Vest'' from the Buehrle Foundation half an hour before closing yesterday afternoon. Scandalous, we thought, and yet, not really enough information to solve the case.

Then, a lightbulb—we'd made friends with a well-placed guard at that very museum during our semester abroad junior year. We made a call, and after about ten minutes of bullshitting and acting like we were just calling to see how he was doing and not for a favor, we casually mentioned the incident. He was reluctant at first to give up any details—he said the burglar later called from a secure line (203-890-2000) and through heavy breathing that would seem to imply the person on the other end wasn't in the best of shape, told him, "If you tell anyone about this I’ll fucking kill you," but I assured him nothing he told me would end up in the public record. Here’s what he said:

"All points bulletin described the third suspect as a portly gentleman, late 40s or early 50s, dressed in black, coke-bottle glasses visible beneath ski mask. Distinguishing features: cookie crumbs cascading down the front of his zip-up sweater, haunting blue eyes. When confronted by gawking, photo-taking tourists at the gallery, the fleeing suspect promised to 'pay good money for the rights to those snapshots.' A small shark figurine was found at the scene."

Draw your own conclusions. We've drawn ours.

Zurich Gang Grabs $163 Million Art Haul From Museum [Bloomberg]

Political contributions are one of the big mysteries in American politics. Why would anyone give to their favored candidate or political party when they could simply free-ride on the donations of others? It’s even more of a mystery than voting, which strikes most political scientists as irrational since the chance of any one vote making a difference is minuscule. Big donors are making an even larger sacrifice than voters, yet the chance of any individual donor’s contribution making a difference is probably just as minuscule.

The most likely answer is that political giving isn’t like voting—whereas voting is anonymous, giving is disclosed. This means political giving can have effects that voting cannot, such as winning favor with politicians receiving the contributions. This, in turn, suggests that giving patterns should differ from voting patterns because the two actions are differently motivated. Voting is a symbolic act whereby voters express a political preference and engage in solidarity with other citizens. You don’t get points for voting for winners or losers (unless it just makes you feel good to have voted for a winner). Giving is a self-serving act—so it makes a lot more sense to give to winners than losers. Think of it this way: voting is like praying or hoping; giving is like betting. Or investing.

And this year hedge funds and private equity firms have been piling into the same trade they did in 2004 and 2006: betting on the Democrats. Hedge fund and private equity donations totaled $6.4 million in 2007 for presidential candidates, with the Democrats getting 59.7 percent of the loot and 40.3 percent going to the Republicans.
These numbers are heavily skewed by the Democratic Senator Christopher Dodd’s role in the presidential race.

Although a little known candidate that few believed had a realistic chance of becoming his party’s nominee, Dodd garnered as much support from the alternative investment category as one-time Republican front-runner Mitt Romney. Dodd is widely believed to have a fund raising advantage as the Senator from Connecticut, where many funds have offices. If we net out contributions to Dodd, the fund raising contest narrows dramatically. Democrats retain an edge over Republicans of just 50.6% to 49.4%.

So hedge funds may have "elected" the Democrats in 2007, as the headline says, but the contest looks a lot more like the closely contested elections of 2000 and 2004 when you take away the Dodd factor.

Hedge Funds 'Elect' Democrats in '08 Race [International Business Times]

The above clip is gay pimp Billy Ash’s deposition for the Seth Tobias murder case, sent to us by gay pimp Billy Ash. There aren’t many new details, but everything feels so much more intense when it’s conveyed through a dramatic reading (the line “If you eat [this Ambien-laced pasta], I’ll call someone and we’ll have kinky sex out by the pool” seems so one-dimensional on the page compared to hearing it come out of the mouth of gay pimp Billy Ash, quivering voice and all), so I think it warrants a look-see. If I can take the time to watch it over and over and over again, you can at least watch it once, and then we can discuss it, like we’re in a book club. A gay, coked-out book club. (Or as Larry Robbins* calls it, “a book club. What?”)

Plus, DealBook is claiming the whole story was “first blown out by The New York Times,” which is so rich. Obviously they’re not going to relinquish the faux credit for blowing the sordid tale of a gay hedge fund manager who may have been killed by his wife because she was crazy and wanted money and was jealous of her husband’s boyfriend named Tiger who danced at local strip club Cupid’s and couldn’t “recall” whether or not they’d had sex, only that the two went to “the tracks together,” but damn if we’re not going to get recognition for finishing the job.

Last thing and then watch—the first time I went through this thing, I couldn’t help but thinking, how did Billy Ash ever have a successful career as a pimp? Call me shallow but how?? I was still asking this question during the second and third viewings but by the fourth, when I actually watched the clip in its entirety, and really let Ash’s award-winning tears (at 4:25) sink in? I was kind of buying it. Not that Filomena killed Tobias because I’m sure we’ll find out at the 11th hour that nuts as she may be, it wasn’t Fil. but someone completely random like, I don’t know, Carney (kidding..., emphasis on the "..."), but that this guy could sell some ass. Let me know if he wins you over, too.

*We went with L-Train for kicks, but we're told by many that he's an all around good guy. Who should we be making fun of in hedgefund land for this sort of thing? Give me some suggestions.

The French do not exactly have their croissants in a twist over the alleged misdeeds of Jerome Kerviel, the Societe Generale trader who is blamed for enormous losses at the banks. While jokes about France—including the idea that Kerviel felt pressured into making his 'rogue' trades by an exhausting 30 hour work week—have been making their way around the globe for weeks, traders and bankers in Paris do not see Kerviel as one of theirs. Subsequently, they don't see the scandal as a black mark on their markets and institutions.

He went to the wrong schools, worked in the wrong part of the bank and, most importantly, he was from the wrong part of France.

"Everyone whose name begins with 'Ker' is from Brittany," said a banker recently returned from France. "And Brittany is different."

What might look like bigotry to foreigners comes naturally to many in France and is serving as a psychological firewall against the spreading scandal. Authorities recently picked up Moussa Bakir, a broker at Newedge, which is owned by another French bank, Calyon. But his name also has many in Paris holding up cigarette accented scare quotes with their fingers when they describe him as "French."

We've joined the cacophonous critical chorus on the failure of the ratings agencies to anticipate the risks involved in structured credit products and the much mocked reform proposals. But conversations we had over the weekend have us wondering whether this scandal might have become overwrought.

At the heart of the scandal is the idea that the errors of ratings agencies damaged the market by convincing investors of the safety of credit products that have turned out to be far more risky than the ratings issued for them seemed to imply. This idea of harm on the market assumes that the products did not originally trade at a discount for ratings agency error. Should we really assume the market did not price in a discount for error? Was the market really priced for ratings agency perfection? What's the evidence for this contention?

Prior to the meltdown in the CDO market, there were many who warned that the markets contained hidden dangers. Are we to believe that there was no discount priced into even highly rated CDOs for risks so publicly discussed? The proposal from MBIA that ratings for credit products come with warning labels implies that such ratings should be priced with a higher discount for error than other types of credit. But since when do our institutional investors and much vaunted efficient market need warning labels to tell it that complex and little understood investments may be riskier than simpler credits? Wasn't there an implied warning label in the very nature of many CDOs?

The fact that CDOs may now be trading lower than they did in the past is not evidence of the absence of a discount, of course. As risks become more apparent, the discount for those risks often becomes heavier. This is a risk pricing issue but it doesn't imply that those who bought under the earlier discount were misled.

This question of a discount for agency error matters. Last week we learned that New York Attorney General Andrew Cuomo was investigating the ratings agencies, and possibly considering using the dreaded Martin Act to allege fraud. The Martin Act is a powerful tool for the attorney general because it does away with many of the evidential requirements to prove fraud in the securities markets. But, from our reading, it does require the attorney general to show that the conduct of the accused caused harm to investors. A discount for rating agency error might create a powerful defense for the agencies.

It might be time to take a deep breath. It's starting to look like the ratings agencies are in danger of being scape-goated for the indulgences of the credit markets over the past few years.

Societe Generale Plans Offer to Raise EU5.5 Billion (Bloomberg)
So SocGen will replenish itself with a big Blue Light Special on its stock. The bank plans to raise about $8 billion, by selling shares at a 40 percent discount from its last closing price. Existing shareholders will have the right to buy one share for every four they own. Analysts, apparently, had been expecting a 30 percent off sale, so this would be a little steeper than that. With the latest slide in shares, the company has a EU35 billion market cap.

Graft Paper (The American)
The key sentence: Olken and Jones discovered that a country was “more likely to see democratization follow­ing the assassination of an autocratic leader,” but found no substantial “effect following assassinations—or assassination attempts—on democratic leaders.” They concluded that “on average, successful assassinations of autocrats produce sustained moves toward democracy.”"

An inglorious anniversary (NakedShorts)
It's been a long year. And it's been one year since the IPO of Fortress Investment Group. That first day of trading: "back in the days when sub-prime meant finding gristle in a filet at Smith & Wollensky, it opened at $35, traded up to $37—still an all-time high—and closed at $31."

Theory Gains That Trader Had a Helper (NYT)
This is going to sound totally asinine, but we, at the Opening Bell, are actually getting a little tired of the SocGen rogue trader story. Yes, it should be endlessly interesting. You know, $7.2 billion and all, but... something... hard to say. Even rumors about a conspiracy and it "going all the way to the top" don't animate us as it should. Maybe cause it's French, but maybe not. Anyway, he might've had a friend. If so, does that mean the two only get credit for $3.6 billion each? They can't both get credit for the full $7.2 billion, obviously.

$$$ Liev Schreiber to the big house. [DealBook]

$$$ I've spent the last several years chasing a mirage, with little time or desire to have anything lasting. I've done the bar scene, but usually the women – while physically attractive – are flakey, superficial, or a few fries short of a Happy Meal. That's not hot. [Craigslist]

$$$ Trader Monthly employee [WallStrip]

We talk shit about Fox Business all the time, implying that they’re all drunken idiotic sluts but it’s the kind of ridicule that points to something deeper and darker, which is that we’re more or less obsessed with FBN. We cannot get enough of them with their gaffes and their pratfalls and their car wrecks and their discount 'hos. We are insatiable wantons for Rupert Murdoch’s business channel. “Love...soft as an easy chair...Love...fresh as the morning air...” does not even begin to describe how we feel. Every time Alexis Glick confuses Apple for Abu Dhabi, or Rebecca Gomez embarrasses herself in front of a bunch of prostitutes or Cody Willard’s breast pops out of his red dress, we want to bite them, but in a good way, like you want to bite a baby’s arm. Gnom gnom gnom. So, uh, anyway. It’s always been our dream to inject a little piece of ourselves in our idols, in the same way that, I don’t know, a Mets fan would want to carve his initials into a seat in Shea Stadium, or a porn enthusiast on the bed post featured in Backdoor Sluts 9. But we never actually thought the opportunity would arise. Until ten minutes ago.

We just learned the cost to buy a 30-second spot on FBN runs from $250-$900, depending on when it airs. That's right, folks-- for only slightly more than the total amount Cody managed at his hedge fund, you can achieve Foxtastic glory for 30 seconds to the delight of 6,300 or so of your closest friends. Here's the rub: While $250 is pequeno dinero, it's about twice Dealbreaker's budget and 3x Blarney's annual take home, so we can't afford both the ad and the production budget. You idiots are going to have to start manning up and doing your part -- I can't do everything around here. You: Make a video and send it to us. We: Pick the best and our publisher will send it to Fox's ad sales team. They: Either a) air it, and earn you a piece of quasi-immortality along such leading FBN lights as Fat Boy Cavuto; or b) shitcan it, and we'll reprint a transcript and audio clip of how Fox, who would blow a goat for a few extra shekels, all of a sudden got all 'integrity' on us. Either way, this shit is about to get heavy.

Being otherwise detained last evening and unable to attend, we found the only assholes in New York who weren't participating in the greatest spectator of all time, i.e. PocketChangeNYC's Speed Date II, for "Sugar Mamas and Boy Toys"...and sent them to watch. This is their recap.

The evening started off as any other, 4 guys tenting for some poon - what was different was what we were after. The patina of time had rendered this particular target as soft as cordovan and the flavor as intense as Peter Lugers finest prime. Tonight was going to be glorious, not easy, but glorious nonetheless. As any successful hunter knows, the lure has to be tailored to match the prey - in this case, we were armed with a near encyclopedic knowledge of the contemporary art scene, latest Palm Beach fashions, and the bat-phone numbers of the best cosmetic artists in the city. Or so we thought.

Jim Chanos, the legendary hedge fund manager who shorted Enron when the company was flying high, is predicting a "huge spike in defaults" of leveraged loans, according to Reuters.

"I don't know what crack pipes these guys were smoking, but some of the valuations were absolute madness," said Chanos, speaking to hundreds of investors, referring to private equity firms and their portfolio companies.

Short-seller Chanos sees raft of new opportunities [Reuters]

Bear Stearns has more than $1 billion of short positions on subprime, up $400 million from the end of November, Bloomberg reports. Of course, since Bear Stearns got the subprime trade so wildly wrong last year, people are already wondering if this might be a signal that it is time to go long subrime.

Over at The Big Picture, Barry Ritzholz writes, “While I do not expect us to be done with the subprime slime yet, I do get a ‘Is this a bottom indicator?’ sense from Bear on this.”

JPMorgan Chase, which emerged relatively unscathed from the credit market debacle, is apparently taking the opposite position. Yesterday Jamie Dimon was reported to have said that the bank plans to expand its role in the subprime mortgage business. Goldman is also rumored to have reversed it’s position on subprime, taking a net long position.

Bear Stearns Is `Short' Subprime Mortgages $1 Billion [Bloomberg]

Former* hedge fund manager John Devaney, pictured here with the yacht he had to sell several months back when United Capital Markets lost a boatload (heh) of money, threw a lavish party at the Venetian in Vegas this week for a bunch of finance guys in town for the 5th annual conference of the American Securitization Forum. No expense was spared, and JD even managed to get the Blue Man Group to perform, which was no easy feat, considering Tobias Fünke’s jam-packed schedule. Now I know what you’re thinking—isn’t it sort of crazy for a guy who had to not only sell his yacht but his helicopter, waterfront mansion in Miami and ski lodge in Aspen, as well, to spend the last of his life’s savings feting himself for being a huge loser**? Yeah, it’s kind of nuts. But it’s also indicative of what Devaney has become, which is Tim Sykes.

“As a trader, if you make money for too many years you lose sight of risk unless you get sucker- punched. In a funny way I want to thank the market for dealing me a direct hit."

We almost expect him to add, “Which you can read about in my self-published book, An American Hedge Fund," and then go into an apoplectic rant about how the SEC “raped” him and DealBreaker readers are plotting, so far unsuccessfully, to kill him.

We appreciate the fact that Robert Rodriquez, chief expecutive of First Pacific Advisors, was on hand to knock some sense into Devaney (and others, but mostly just Devaney), telling the crowd, “In my 38 years this has been the worst capital destruction and the worst rating decline in history. All of you should be ashamed of yourself,” we just fear it’s too late.

Creators of Credit Crisis Revel in Las Vegas [NYT]

*I know it’s not exactly accurate but it just feels so right.

** Professionally speaking of course, though you have to wonder what someone whose favorite activity is to pose in front his toys is like in his personal life.

Yesterday we heard two discordant voices on the possibility of the monolines getting downgraded. Jamie Dimon, the chief executive of JPMorgan Chase, said that he does not think downgrades of the insurers would be “a big deal.” Deutsche Bank chief Josef Ackerman, however, described the potential downgrades as “a tsunami-like event comparable to subprime.”

So who is right? Well, maybe both chiefs are. As Yves Smith has explained, the European banks were major buyers of CDOs and RMBS. Operating under Basel II, which links reserve requirements to the riskiness of a bank’s investments, the Euro banks were able to treat triple A paper as basically risk free investments they could hold without impacting their reserve requirements. But a downgrade of the insurance on this paper could result in the banks having to bolster their reserves, possibly worsening the credit crunch or requiring a firesale of the CDOs

“A downgrade to AA increases the reserve requirements markedly, and CDOs are generally downgraded more than a mere grade or two when they fall (I wish I could be more crisp here, but Basel II makes matters more complicated). Thus a loss of the bond guarantor AAA has a quick and nasty impact on bank capital adequacy,” Smith writes.

Which is to say, because Basel II requires banks either to hold highly rated (and, on paper at least, less risky) portfolios, or to hold high levels of capital in reserve, the banks could be forced to slow lending in order to accumulate capital, go hunting for additional capital injections or sell off their now risky CDO portfolios.

In the US banks had less incentive to invest in highly rated paper because they have been required to hold the same amount of capital against AAA-rated paper as they do against BBB-rated paper. This is the most likely explanation for why the European banks are more worried about a downgrade of the monolines than their US counterparts.

Deutsche Bank CEO: Bond Insurer Downgrade Will Create Debt " Tsunami" [Naked Capitalism]

Unusual perks: Goldman Sachs covers sex changes [Fortune]

We're not crazy- we understood full well the tough times that mortgage lender Countrywide has lately fallen on would mean a battening down and tightening of the company belt. We just assumed the streamlining would be contained to firing a ton of employees and screwing a few more people on their home loans, and not impinge on the really important stuff, like flying Ang. Moz.’s leathery goodness around the world in style.

So we were extremely disappointed to hear that the company put its Gulfstream IV on the market, for $21.5 million, which really isn’t that much money when you factor in how sad the sale will make the old crocodile, who’s had some great times in that thing. Making spur of the moment visits to Fresno for the ego boosts derived from thinking about how many people he and his associates fucked in town. Entertaining tanning bed distributers at the cabin bar during the flight to Dubuque, Iowa for their missionary work (if ever there was a population comprised solely of pasty individuals in need of a little “face paint,” as Moz likes to call it, it was in Dubque). Throwing $500,000 in small bills out the window over a cattle ranch in Montana, and making 100 Countrywide staffers pick up and return every last dollar. Shit like that.

And now he's being involuntarily stripped of these memories, like the chemical peel he so desperately needs but refuses to get. Anyway. I’m not sure there’s anything any of us can do about it, but I just felt you should know. If I'm wrong, and you do have the scratch, there's contact information for some Countrywide guy named Patrick Johnson who I guess is handling the sale. Give him a buzz in the office at (818) 778-1770, or try him on his cell at (203) 890-2000. This is important.

1990 GULFSTREAM IV [Controller]

* Yeah I know he "said" he wouldn't use the company plane but we're talking about Angelo Mozillo here and need to take everything that comes out of his mouth with a giant grain of If I'd screw you for a nickle, you don't even want to know what I'd do to you for a free ride on the corporate jet^TM salt.