Unstructured Finance

Cleveland Fed leads in measuring stress

By Matthew Goldstein

 When you think of Cleveland, finance isn’t the first thing that comes to mind.

 If you’re old enough or a rock-and-roll historian, you might say DJ Alan Freed (and i don’t mean DJ as in electronic dance music).1 Or maybe, the old adage  “mistake by the Lake” comes to mind.

But the Cleveland Fed is breaking some new ground with its new and improved financial stress index. In time, I wouldn’t be surprised if the Cleveland Financial Stress Index becomes a regular go to index for traders–especially macro and volatility types. And it probably won’t be long before someone is modeling some algo to track the CFSI performance if it hasn’t already been done.

The first notable innovation with the Cleveland stress index which previously had been published monthly, is now being updated daily. The daily updates will give economists and traders a better real-time look at what is going on in the financial landscape with risk building up in the system.

It’s worth noting that the better-known St. Louis Fed Financial Stress Index is updated weekly. The Kansas City Fed Financial Stress Index is updated monthly.


Some important events in the week ahead:

 Monday, April 22

* New York University program on the future of pass-through entity taxation. 12:30 – 1:30 p.m. ET, Furman Hall, NYU. New York.

 Tuesday, April 23

* Internal Revenue Service hearing on proposed regulations providing guidance on large employers’ health insurance coverage responsibilities. 10 a.m. ET, IRS Auditorium. Washington.

* Cory A. Johnson, Senior Litigation Counsel, U.S. DOJ Tax Division is a panelist discussing tax cases at the Court of Federal Claims Barr Association lunch. Noon, offices of Caplin & Drysdale. Washington.

Essential reading: Verizon seeks way around tax bill, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Not-so-taxing talk at Verizon. Miriam Gottfried – The Wall Street Journal. Nothing is certain but death and taxes. Yet Verizon Communications seems to think it has a way around the latter. Link 

* Advisers, IRS help on taxes after Boston bombings. Arden Dale – The Wall Street Journal. The IRS has told Boston-area taxpayers they have until July 15 to file 2012 returns and pay taxes that would normally be due on April 15. Link

* On whether the rich pay too little in taxes. Catherine Rampell – The New York Times. The share of the nation’s total tax bill that is paid by the wealthy has been growing — but that’s because the incomes of the wealthy have increased so strikingly, faster than the individual tax rates they face have fallen. Link

Essential reading: Tax extension after Boston attack, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* IRS announces three-month tax extension after attack. Laura Saunders – The Wall Street Journal. The Internal Revenue Service announced a three-month tax filing and payment extension for Boston-area taxpayers following Monday’s explosions during the Boston Marathon. Link    

* The tax implications of starting a business with retirement money. Josh Patrick – The New York Times. Retirement money is being used to finance thousands of businesses, but it has yet to receive the full blessing of either the Internal Revenue Service or the Department of Labor. Link   

* IRS auditors targeting small business owners – but there are ways to protect your company. J.D. Harrison – The Washington Post. A new study used by the Internal Revenue Service to determine its auditing priorities shows small business owners in a handful of metropolitan areas are particularly likely to cheat Uncle Sam. Link    

Essential reading: Swiss lawyer charged in tax-evasion, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Prosecutors charge Swiss lawyer, banker in tax-evasion case. Reed Albergotti – The Wall Street Journal. In the latest move in their crackdown on overseas tax evasion, federal prosecutors filed criminal charges against a lawyer and a banker from Switzerland and accused them of helping Americans hide assets. Link  

* FATCA emerging as global standard. C.M. Matthews – The Wall Street Journal. If you didn’t report assets held overseas, it’s looking like you may regret it. The United States’ Foreign Account Tax Compliance Act appears to be emerging as an international standard. Link  

* Tax plan may provide boost. Sarah Krouse – The Wall Street Journal. Despite the austerity mood in Washington, President Obama’s proposed budget would provide tax relief to some foreign investors, a move the U.S. real-estate industry has been seeking for years. Link  

Essential reading: Tax filings slow as collection rises, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

 * Tax filing is slow, but collections rise. John McKinnon – The Wall Street Journal. The fiscal-cliff deal continues to slow tax filing, thanks to changes that required the Internal Revenue Service to delay the tax season’s opening. Link

 * House votes to crack down on tax-delinquent contractors but not individuals. Josh Hicks – The Washington Post. The House on Monday unanimously backed legislation to bar federal funding for contractors that fall behind on taxes but rejected a proposal to prohibit tax-delinquent individuals from working for the federal government. Link 

* UK moves to end extreme tax avoidance. Vanessa Houlder – The Financial Times. Tax planners who exploit defects in poorly drafted laws will fall foul of the new general anti-abuse rule (GAAR), according to guidance issued on Monday that aimed to sweep away the idea that taxation was a “game” in which taxpayers could use their ingenuity to reduce their tax bills by any lawful means. Link 

Goldman, AIG and the government renew their friendship

Scanning Goldman Sachs’s newly published interactive annual report on Monday, Unstructured Finance had to do a double-take upon seeing American International Group highlighted as a client success story.

Yes, that’s right. AIG.

Goldman’s site features a 3-minute, 47-second video with two investment bankers, Devanshu Dhyani and Andrea Vittorelli, talking about their work on various AIG deals to help repay the U.S. government.

It also has photos of bankers around the globe who were involved with AIG stock sales, stock buybacks and assets sales, including Chris Cole, co-chairman of investment banking; Yan Liu, Ed Byun Dan Dees and Phyllis Luk, bankers based in Hong Kong; and Michael Tesser and Terence Lim, bankers based in New York.


U.S. Park Police Officer Calvin Covington with his horse Harper mails his income tax returns at a mobile post office in Washington. April 15, 2010. REUTERS/Jonathan Ernst

Some important events in the week ahead:

 Monday, April 15

* 2012 U.S. income tax returns must be post-marked before midnight.

* Urban Institute forum on government-nonprofit relationships and the charitable giving tax deduction. 9:30 a.m. – 1:30 p.m. ET, Urban Institute, Washington, D.C.

 Tuesday, April 16

* Internal Revenue Service Acting Commissioner Steven Miller and National Taxpayer Advocate Nina Olson testify at Senate Finance Committee hearing on tax fraud and identity theft. 10 a.m. ET, Dirksen Senate Office Building, Washington.

Essential reading: Derivatives tax plan concerns industry, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

*Derivatives-tax plan concerns industry. John D. McKinnon and Siobhan Hughes – The Wall Street Journal. The Obama administration’s proposal this week to change the way some derivatives are taxed signals common ground with Republicans on a potentially difficult and divisive tax issue that could have far-reaching implications for investors. Link

* Ex-KPMG auditor freed on $150,000 bond in tips-for-cash scheme. Emily Flitter – Reuters. U.S. authorities filed criminal and civil charges on Thursday against Scott London, who is accused of passing non-public information about five of KPMG’s clients to a friend. Link

* KPMG says it plans legal action. Michael Rapoport – The Wall Street Journal. KPMG LLP plans to take legal action against Scott London, its ex-partner accused of insider trading, said John Veihmeyer, the Big Four accounting firm’s chairman and chief executive. Link

Insider trading—it’s not just hedge funds

Sometimes it seems that insider trading cases are all about hedge funds. After all, the overwhelming majority of the federal government’s multi-year crackdown on insider trading has netted dozens of traders and analysts working in the $2.25 trillion hedge fund industry.

But this week’s escapades involving a former top audit partner at KPMG and his golfing buddy are reminder that the temptation to profit from inside information exists in many industries and professions.

Still, senior hedge fund reporter Svea Herbst-Bayliss reminds us in the following post,  a recent survey found a good portion of people who labor for hedge funds harbor private doubts about the integrity of their colleagues. If the numbers expressed in this survey are anything close to accurate, law enforcement should be busy for quite a while longer.