(Adds strategists quotes, releads story)
* SP cuts 11 Spanish banks, threatens five more
* Further Spanish sovereign cuts seen hitting markets

By Chris Reese and Kirsten Donovan
NEW YORK/LONDON, April 30 (Reuters) – The Standard Poors
credit downgrade of Spain last week should have little immediate
impact on US money markets, although further downgrades co uld
pressure investors to sell Spanish debt, a JP Morgan
Securities strategist said on Monday.
Following its downgrade of Spains rating by two notches
last week, ratings agency SP on Monday downgraded 11 Spanish
banks and warned a further five that their ratings could also be
cut.
The downgrade of Spains sovereign debt was expected to have
no direct impact on US funding markets as the large Spanish
banks have been inactive in the US money markets for nearly a
year, said Alexander Roever, short-term fixed income strategist
at JP Morgan Securities in New York.
Roever cautioned, however, that any further downgrades could
damage Spains ability to sell debt and impact markets globally.
Any more downgrades that would lead Spain to fall into the
sub-investment grade category would have large implications for
the markets as it will re sult in Spain being excluded from some
bond indices and thereby force passive asset managers to sell,
R oever said.
Spanish banks continued to load up on government bonds in
March, data from the European Central Bank data showed on
Monday, tying the banks ever closer to their indebted sovereign
and raising questions over who will support the government when
cheap central bank funding is exhausted.
The value of Spanish banks holdings of sovereign bonds rose
almost 18 billion euros in March to over 260 billion euros. That
is up around 85 billion euros in total since the end of November
as institutions invested cheap funds from the European Central
Banks two three-year liquidity operations, the long-term
refinancing operations known as LTROs.
Much of the rise is widely believed to be domestic banks
buying their own countrys sovereign bonds, with some of the
increase accounted for by changes in market value of the paper.
Spanish government bonds have sold off sharply in April on
growing concerns about the countrys ability to meet fiscal
targets and its leveraged banking sector.
If Spanish banks continued to be net buyers of the paper in
April, it would indicate that selling by international investors
was picking up pace.
The domestic banks stepped in to bridge the gap which was
left by a fairly sizeable exodus of non-residential bondholders,
which is why the LTRO magic has worn off so quickly, said
Richard McGuire, senior fixed income strategist at Rabobank in
London.
Spain sank into recession in the first quarter, data showed
on Monday.
And on Friday a government source said banks, rather than
the government, would assume the cost of any unprovisioned
losses on real estate assets after they are moved into a special
holding company.
Were still focusing on early cycle losses such as the real
estate loans which come to light quite quickly in a downturn,
McGuire said.
But theres later cycle losses that weve yet to dive into
such as corporate loans as the country returns to recession.
Still, with Spain and other European countries like Italy
and Greece on shaky financial ground, the situation remained
precarious for Europe as a whole.
Even though the LTROs have helped to stabilize Europes
banks and the global interbank markets, they did not fix the
underlying fiscal and political issues, Roever said.
By swapping cash for collateral, the ECB fed the global
liquidity glut that has too much cash chasing too few assets,
he added. If peripheral sovereign markets continue to
deteriorate and political solutions are not reached, palliative
central bank responses like further bond purchases or another
LTRO eventually could be forthcoming, further feeding the
liquidity glut.

(Editing by Leslie Adler)

OTTAWA, Ontario — It seems almost inconceivable, but the Phoenix Coyotes will head into a third straight trade deadline period without the ownership situation being resolved and, as a result, at a competitive disadvantage to other teams in the league.

Although the league, which has been operating the team for almost two years, insists this isnt the case, the failure to find a new owner for the beleaguered franchise makes it impossible for GM Don Maloney to improve his playoff-hopeful team because the league has imposed a strict budget that cannot be modified.

While lots of teams operate under budgets well below the salary cap, the fact that the Coyotes remain under the stewardship of the NHL means the team is in effect competing against its own owners for a highly valued playoff berth. Last season, for instance, Maloney could only make trades that did not alter the teams payroll, so was limited to making dollar-in/dollar-out deals. According to capgeek.com, the Coyotes payroll is about $53 million, which is 23rd in the league.

It is not a stretch to suggest that the Coyotes owners — ie, the owners of the other teams — might be better off if the team was not successful and did not make the playoffs. And whether that sentiment is ever publicly uttered, the Phoenix situation remains a sore spot for the league.

Im not sure I agree with that, deputy commissioner Bill Daly said when asked by ESPN.com about the competitive issues surrounding the team.
I really dont think its materially different. There are some clubs who are very strict with their budget. Ill admit that the league office has given [Maloney] strict parameters and we dont expect him to vary from those, but I dont think thats different from how two-thirds of our clubs, at least, operate.

One league GM agreed with Dalys assessment, telling ESPN.com he doesnt see the Phoenix situation as being materially different than a team such as Nashville, for instance, that has a strict budget under which it operates.

Although the league had hoped to have a new owner installed long before now, it seems almost certain this will be the last season this will be an issue.

Commissioner Gary Bettman sounded optimistic, speaking after the board of governors meeting here, that the twisted ownership tale might finally be nearing a conclusion with an unnamed group of investors currently looking at buying the team.

We hope, based on the things that are ongoing, to have the sale in place before the end of this season that would keep the team in Glendale, Bettman said.

Although the league has been tight-lipped on the identity of this group — a group that almost certainly represents the last best shot at keeping the team in Arizona — Daly was likewise positive in his comments about them.

Theyre legitimate; theyve been working at it for a while, Daly said. Theyve been spending money. Theyve been doing due diligence. So those are all positive signs. It doesnt mean theyre going to buy the franchise, so well see how it plays out.

The City of Glendale has recommended ponying up another $25 million to help cover operating costs for next season in the absence of a new owner, but multiple sources told ESPN.com that the league has no intention of continuing this current relationship. Either an owner will be found who will keep the team in Arizona or the league will move the team to another market.

Two individuals who stole a chow puppy froman Orange Countypet store sent an apology and $600 in cash to the business, but a law enforcement spokesman said Friday the two are still wanted for
theft.

The puppy was shoplifted from the Pet City store in Stanton on Thursday afternoon, authorities said. Orange County sheriffs deputies released surveillance tape of the heist Friday.

Sheriffs Department spokesman Jim Amormino told City New Service that a shopper was approached by a woman Friday evening who offered $20 if the shopper would carry an apology note and $600 cash into the store.

The shopper walked into the store and called the Sheriffs Department. Detectives were called, they confiscated the money as evidence, and the dog is still missing, Amormino said.

The woman who offered the cash and apology disappeared by the time deputies arrived.

During Thursdays theft, a woman distracted employees while a male accomplice extracted the puppy from a locked cage. Pups have been stolen twice before in recent years from the shop but were returnedafter surveillance video was shown on TV, authorities said.

We want people to know that even an apology note and paying for the dog doesnt the settle the crime, Amormino told City News Service. The money has to be booked as evidence, so the store has not been paid.

Amormino said many tips had been phoned in with clues as to the identity of the puppy-nappers.

Anyone with tips about the incident may call detectives at (855) TIP-OCCS.

ALSO:

Lily the Chihuahua dies after being hit with golf club

TSA mistakes insulin pump for gun, causing LAX security scare

Winds force closure of Cal State San Bernardino; fire fears rise

– Martha Groves

Finance Minister Tendai Biti, under police investigation as to how the controversial $500-million Zimbabwe received from the International Monetary Fund (IMF) in 2009 was used, says the funds were spent on infrastructure projects and alleviating the chronic liquidity crisis in the financial market.

Biti said part of the money was specifically used to fund infrastructure projects, lines of credit, boosting the Reserve Bank of Zimbabwe (RBZ)s lender of the last resort position, agriculture and clearing debts.

Zimbabwe got a Special Drawing Rights (SDR) allocation of 324.4-million, an equivalent of $512.3-million in 2009, after the IMF injected $283-billion into the global economy to provide liquidity and boost member countries dwindling foreign exchange reserves at the height of the financial crisis.

In a bid to fend off secret police investigations into the case, Biti said the money was put to good use.

The balance in Zimbabwes general SDR allocation account at the IMF, net of the $142.1-million owed to the IMFs poverty reduction and growth fund facility account, currently stands at $212-million, he said.

This balance is after Zimbabwes drawdown of $50-million in December 2009 and a further $100-million in February 2010 in support of various infrastructure projects.

The minister said he allocated the money to refurbish Zimbabwes dilapidated infrastructure. To augment resources allocated in the 2012 budget, treasury is withdrawing resources amounting to $110-million from Zimbabwes general SDR allocation account at the IMF in support of the following: infrastructure, lines of credit, lender of last resort and agriculture, he said.

Biti said he used $40-million to finance priority infrastructure projects which could not be accommodated in the 2012 budget. About $30-million was used for lines of credit for the productive sectors of the economy currently operating at low capacity. This is part of governments contribution under the Distressed and Marginalised Areas Fund, to which Old Mutual has already contributed $20-million.

At least $20-million was directed towards the $100-million announced in the 2012 budget to augment $7-million already made available to the RBZ for its lender of last resort mandate. Another $20-million was moved to support agriculture, the backbone of Zimbabwes economy, ruined by state-sponsored land invasions which started in 2000.

Police are probing Biti over how the IMF money was used with an intention to arrest him if they find traces of fraud.

The probe of Biti follows another recent attempt by police last year to arrest Prime Minister Morgan Tsvangirai and his nephew Hebson Makuvise, Zimbabwes ambassador to Germany, over an alleged $1.5-million fraud case.

It was alleged Tsvangirai had double-dipped into state funds by securing first $1.5-million and then $1-million later to buy an upmarket house in Harare.

Money Watch, a new column that runs every Saturday, features a financial planner from the National Association of Personal Financial Advisors answering reader questions about saving, protecting and growing your money. To submit a question, e-mail USA TODAY personal finance reporter Christine Dugas at:cdugas@usatoday.com.

The Grey, directed by Joe Carnahan, is overperforming after scoring generally good reviews. Audiences gave the action-thriller a B- CinemaScore, with males making up 60 percent of the audience.

Tom Ortenbergs Open Road Films is handling The Grey, about a group of men stranded in the Alaskan wilderness after a plane crash (the cast also includes Frank Grillo and Dermot Mulroney). The $25 million pic was produced by Liddell Entertainment and Scott Free Productions.

PHOTOS: Man on a Ledge Screening Arrivals

Fueled by older women, Katherine Heigl starrer One for the Money opened No. 2 on Friday with a better than expected $4.1 million. If business holds, the Lionsgate and Lakeshore Entertainment pic should gross $11 million to $12 million for the weekend.

One for the Money–based on the popular Stephanie Plum detective novels by author Janet Evanovich — likewise received a B- CinemaScore. Females made up 75 percent of the audience, while 80 percent of those going to see the film Friday were over the age of 25 (including 30 percent over the age of 50).

Lionsgate and Lakeshore are partners on the $42 million film, with much of the budget covered through foreign presales.

PHOTOS: Academy Awards 2012 Nominees

Lionsgate raised eyebrows among some of its rivals when pacting with Groupon to offer discounted tickets for One for the Money. Roughly 20 million Groupon members were offered the chance to buy one ticket for $6, and $12 for two tickets.

The weekends third new film, action-thriller Man on a Ledge, starring Sam Worthington and Elizabeth Banks, couldnt boast the same good news. The Summit Entertainment pic grossed $2.5 million on Friday for a projected $7.5 million weekend.

Man on a Ledge came in No. 5 behind holdovers Underworld: Awakening ($3.4 million) and Red Tails ($2.8 million). However, the pic scored the best CinemaScore of the three new films, a B+.

Lorenzo di Bonaventura and Mark Vahradin produced Man on a Ledge, about a hard-living police negotiator (Banks) who tries to talk down an ex-cop and fugitive (Worthington) who is standing on the ledge of a New York high-rise.

One twist — Lionsgate and Summit dated Man on a Ledge and One for the Money long before Lionsgate bought Summit (the marriage was consummated earlier this month). Normally, one company wouldnt date two films on the same weekend.

Summit also offered discounted tickets for Man on a Ledge via Living Social.

Projections show box office revenues up 10 percent over the same weekend last year.

Like the rest of America, I laughed until my ribs hurt at the antics of Jon Stewart and Stephen Colbert as they brought the issue of corporate money in politics into the national spotlight. The Definitely Not Coordinating with Stephen Colbert Super PAC, which viewers can tell you is definitely NOT coordinating with Stephen Colberts presidential campaign, has shown the true hypocrisy of the Super PAC phenomenon that was set in motion by the Supreme Court ruling two years ago last week.

In case you arent yet aware, Super PACs are the barely regulated version of the traditional political action committees that existed before the Citizens United v. Federal Election Commission decision. Before the 2010 Supreme Court ruling there was more transparency of donor disclosure and limitations on the size of contributions: $5,000 maximum per election for PACs associated with businesses and unions and much less for individuals. Super PACs can raise unlimited donations from corporations, unions and individuals, and as of January 20, over 200 Super PACs have reported total expenditures of $33 million dollars in the 2012 cycle. Its not a coincidence that South Carolina primary winner Newt Gingrich has a Super PAC that is buying up as much advertising as it can. I hope voters in Florida are ready for the onslaught.

The rules governing the interactions between candidates and their Super PAC directors (for Romney, his lawyer; for Gingrich, his former aide) are truly laughable. When Messrs. Colbert and Stewart sit down to write satire of campaign finance law, they need not think too hard. Observing the two comedians cheek to cheek not coordinating where Colberts — er Stewarts — Super PAC targets its advertising, it becomes painfully clear that its not just satirical coordination between Super PACs and candidates that is occurring. Its not just Republican primary opponents who are taking advantage of Super PACs. President Obamas Super PAC Priorities USA has so far raised $5 million and is run by Sean Sweeney, a former aide to then White House Chief of Staff Rahm Emmanuel.

Others are getting in on the joke too. Click here if you want to generate your own generically patriotic and meaninglessly obscure Super PAC name! My favorite was Cure the Purple Mountain Majesty Coalition.

The Citizens United ruling creating Super PACs only exacerbated a trend that has been building for 3 decades. When I began my first term in Congress in the late 1970s the growth of outside money in politics had just begun in earnest. Each year until I left I observed more and more money spent on elections from a broader range of donors, especially corporations. And each year my colleagues and I had to spend more of our time fundraising and less of our time educating ourselves on issues, talking to constituents, and working together to find bipartisan solutions to our problems. The problem of too much money in politics isnt new, but it is worse than it has ever been. And, the impact of all the money on public policy is clear. This money is not being donated to advance a charitable agenda.

Super PACs only serve to enrich broadcasters and worse, relentlessly assault Americans with negativity and the ugly side of politics. Public confidence in government is at record lows and unlimited Super PAC expenditures on campaigns further erode Americans belief in the effectiveness of their democracy. We need to restore Americans belief that their government can work together to find solutions to overcome the obstacles confronting the nation. How can we restore public trust in government when a South Carolina voter watching a 30-minute span of television last week could see up to 13 mostly negative political ads?

But thanks in part to Stephen Colbert, Americans are finally getting sick of all the Super PAC funded negativity. According to a January 17 Pew Research Center poll 65 percent of a bipartisan group of voters aware of the Citizens United ruling believe that Super PACs have had a negative effect on campaigns. Not every politician is welcoming the enormous influx of money with open arms. Elizabeth Warren and Scott Brown recently signed an informal agreement to keep Super PAC money out of their Senate race. While this is an important first step, I think its time for Congress to act and restore some sensibility to our frayed campaign finance regulations. At a minimum, in the age of the power of the internet its time for the citizenry to rise up, reject this political chicanery of Super PACS, and in the words of Peter Finch in the movie The Network, announce with their collective voices, Im mad as Hell, and Im not going to take this anymore!

Even though Super PACs can legally say nice things, I have yet to see a Super PAC advertisement proclaiming all the great presidential qualities of their favored candidates. Maybe thats an issue the candidates can raise with their Super PACs next time they arent coordinating. And if you still believe they arent coordinating, I have a great piece of beach front property to sell you in my home state of Kansas.

Soon after he began running for Congress in 2009, Michael G. Grimm, a Staten Island Republican, needed to convince party leaders in Washington that he could raise enough money to become a viable candidate. Seeking help, he turned to an unlikely source: followers of an Orthodox rabbi and mystic from Israel.

Follow @NYTMetro

Connect with us on Twitter for breaking news and headlines in New York.

Enlarge This Image

Yossef Ben Yossef

Ofer Biton, a former aide to Rabbi Yoshiyahu Yosef Pinto, is said to have helped raise money for Mr. Grimm’s 2010 House campaign.

Mr. Grimm, a former agent for the Federal Bureau of Investigation and a Roman Catholic who regularly attends Sunday Mass, traveled around the New York region with one of the rabbi’s top aides, Ofer Biton, to raise campaign money from the rabbi’s followers. In all, the Grimm campaign collected more than $500,000 from the followers, according to numerous interviews and an analysis of Mr. Grimm’s campaign records.

That money — more than half of the total that Mr. Grimm raised from individuals — proved instrumental in his upset of the Democratic incumbent in November 2010. Since then, Mr. Grimm has established a profile as a rising Republican star.

But now, Mr. Biton, an Israeli citizen, is being investigated by the F.B.I. and federal prosecutors in Brooklyn over accusations that he embezzled millions of dollars from the rabbi’s congregation. And an examination by The New York Times has highlighted Mr. Biton’s unusual role in the Grimm campaign — as well as questionable donations that the rabbi’s followers said Mr. Grimm had accepted.

The examination of Mr. Grimm’s fund-raising was based on more than 15 interviews with followers and associates of the rabbi, Yoshiyahu Yosef Pinto, who divides his time between Israel and Manhattan, where he has a large congregation.

Mr. Grimm would not respond to questions about Mr. Biton and his campaign finances beyond issuing a general statement.

“Any suggestion that I was involved in any activities that may run afoul of the campaign finance laws is categorically false and belied by my life of public service protecting and enforcing the laws of this country,” Mr. Grimm said in the statement on Friday.

In interviews, followers of the rabbi spoke repeatedly about the close ties between Mr. Grimm and Mr. Biton.

“Grimm and Biton were together all the time during the campaign,” said one of the followers, Yossi Zaga, a real estate investor who donated $4,800, the legal limit, to Mr. Grimm at Mr. Biton’s urging. “They would drive around together to the homes and offices and ask for contributions.”

Three of the rabbi’s followers said in separate interviews that Mr. Grimm or Mr. Biton told them that the campaign would find a way to accept donations that were over the legal limit, were given in cash or were given by foreigners without green cards.

Congressional campaigns are not allowed to accept cash donations of more than $100. Foreigners without green cards are barred by law from giving to political campaigns. They are also not allowed to solicit contributions for campaigns.

One follower of the rabbi said in an interview that Mr. Grimm pressed him for $20,000. The follower said Mr. Grimm instructed him to meet him “near the F.B.I. building,” in Lower Manhattan, in summer 2010 to give the money. The follower said he handed over $5,000 in cash in an envelope to Mr. Grimm in Mr. Grimm’s car.

Within a week, the follower said, he gave Mr. Grimm a $5,000 check from a friend. Mr. Grimm then repeatedly called the follower and demanded another $10,000, the follower said.

“Every day, he used to call me, over and over,” the follower said.

The follower said he ignored the calls and did not give again.

A second follower recalled that Mr. Grimm came to his office in Manhattan to solicit a legal contribution. As he was handing over the check, the second follower said, Mr. Grimm confided in him that there were ways of working around the campaign rules.

“Grimm wanted you to supply the money, and if someone wants to give and cannot give, you have to find a friend to give it through,” the second follower recalled. “Let’s say someone is not legal to give because he’s not American. Grimm wants this guy, Joe A, to give the money to Joe B so Joe B can make the contribution to the campaign.”

A third follower said he picked up, at Mr. Biton’s behest, $25,000 for Mr. Grimm’s campaign from a single Israeli.

“I give the checks to Ofer, and he gives them to Michael,” the third follower said.

• 1
• 2

Next Page »

Alain Delaquérière and Griff Palmer contributed reporting.

Winning our Future, the Newt Gingrich-allied super PAC, is set to release another anti-Mitt Romney short documentary, this time focused on Bain Capitals involvement with a company guilty of Medicare fraud.

The video will be much shorter than the groups previous effort — a nearly 30-minute long video titled King of Bain, which focused broadly on Romneys private equity days. This one will be seven to eight minutes in length, according to Winning our Futures executive, former Gingrich press secretary Rick Tyler.

And it will focus strictly on Damon Corporation, Tyler added.

Damon Corp. was a Massachusetts-based medical testing company that pleaded guilty to defrauding the government to the tune of $25 million. Bain purchased controlling interest in the company in 1989 and Romney personally sat on the board of directors. By the time Damon Corp. paid a $119 million fine (in 1993), Bain had sold the company to Corning Inc.

Tyler would not reveal his methods for shooting the film. But he did say that there were designs to turn it into 30-second or minute-long commercials to air either in Florida or other primary states. On Thursday afternoon, Winning our Future released a trailer for the film (see above), a rapid-fire clip reminiscent of a feature-film trailer.

In a statement to the The Huffington Posts Jon Ward, Romney spokesperson Gail Gitcho noted that the last Winning our Future documentary ended up being a flop, buried by accusations that it misquoted its subjects and misled on its material.

Well, we know that the last Gingrich group film went down as a spectacular failure, Gitcho said. If they want to keep attacking free enterprise, thats fine. We will have that debate.

That said, Damon Corp. presents a more acute political problem for Romney than his private equity career at large. Already, the union AFSCME is up with ads in Florida going after the former Massachusetts governor for his service on the companys board. The spot fails to note that a federal investigation into the matter never implicated Romney. But the fact that Romney did make $473,000 during his time with Damon Corp. underscores the charge that he profited on top of a Medicare-fraud mess.

I see Stephen Hesters bonus is still dominating the news agenda. I wrote on the politics of it yesterday, but today Ive had another thought. What Ive found myself wondering is this: who on earth needs that much money anyway? Mr Hesters pay is called an incentive, but at some level of pay, it must stop being an incentive and start being a disincentive. At some point, you must start accumulating wealth so quickly that you want to stop working and start spending.

Since starting at RBS in 2008, Mr Hester has been paid something like £4.8 million in basic pay, before we even consider his bonuses. Surely he has something better to do with all that money than carrying on working as a banker? He could write a novel, travel across the world in opulent style, go heliskiing every day for an entire ski season (these are only my immediate ideas). He could live out the wildest dreams of the 99 per cent of the worlds population who have to work simply to have somewhere to sleep and something to eat. Instead, he chooses to go to an office in London and work in a difficult job for long hours every day. What a colossal bore he must be.

It is an irony of our society that wealth seems to flow most efficiently to people who have no idea how to use it; the sorts of people who are most likely to make an awful lot of money are also least likely to care about it. Ultimately, people like Stephen Hester dont work for money, but for status. As Donald Trump wrote in his memoirs, money was never a big motivation for me, except as a good way to keep score. Perhaps what we need is a better way of scoring.