Right on time, The Wall Street Journal has an "analysis" that shows Libor doesn't actually reflect banks' borrowing costs.

Kareem Serageldin, the former head of Credit Suisse's CDO business arrested in London on Wednesday, said he will fight extradition to the U.S. When Mr. Serageldin was charges in February for running a scheme to falsify trading positions, he expressed surprise over the indictment, noting through lawyers that he was cooperating with attorneys. When he was nabbed outside the U.S. embassy in London this week, he said through a lawyer that he was working on a plea deal, and that his capture was the result of "miscommunication."Investors pulled capital from Spain for the 13th straight month.

Treasury Secretary Tim Geithner is wading into the void left when the Securities and Exchange Commission decided not to propose new rules for money market funds.

The White House is circulating a draft executive order on cyber-security after a string of DDoS attacks on the consumer banking websites of Bank of America, JPMorgan Chase, Wells Fargo and other financial firms.

Former Lehman Brothers CFO Erin Callan is flying her East Hampton coop.

A forgery suit against Allen & Co. CEO Herb Allen—who was being sued on claims that he had conspired to forge a dying cousin's will—has been dismissed.

True story? A British oil trader got blotto, bought $520 million in oil futures in the middle of the night, had no recollection of any of it. The Financial Services Authority suspended him for five years, commented dryly: “Mr Perkins poses an extreme risk to the market when drunk.”

Would you give money to a hedge fund called POOF? Would you be surprised to learn that said fund's manager just coughed up $6.8 million to settle cherry-picking charges—that he stuck clients with losing trades and moved profit-making trades to his wife's account?

“This is a great day for the art world and all those who seek order and justice in our society": Bond king Jeffrey Gundlach's Mondrian has been recovered.

Tadahiro Matsushita, the Japanese official leading a recent crackdown on insider trading, died yesterday in what police concluded was a suicide. Mr. Matsushita's investigation, which Bloomberg reports was not yet complete, led to the resignations of Nomura Holding's chief executive officer.

With the government reducing its stake in AIG, Andrew Ross Sorkin and Neil Barofsky had a telephone conversation about how taxpayers have fared in the bailout.

A German court will rule tomorrow on the legality of the European Central Bank's new bond-buying program.

With the ECB set to start buying sovereign debt, investors' bets on European bonds are looking pretty smart.

Deutsche Bank will cut costs by $5.8 billion in order to meet new regulatory capital requirements, the bank said.

Carl Icahn called the board of directors at Navistar International, the truck and diesel engine maker, a “poster child for abysmal business decisions and poor corporate governance.” Navistar answered that despite Mr. Icahn's “unproductive tactics of threats, attacks and disruption,” the board knows what it's doing.

Court bailiffs in Hong Kong evicted Occupy protestors from HSBC headquarters.

Treasury Secretary Tim Geithner finished ninth in the 50 to 54 age group at a recent triathlon.

There's a 4 percent chance Ron Paul is the next chairman of the Federal Reserve, according to Morgan Stanley (via Business Insider).

Canadian banks! Hiring amid cutbacks at financial firms elsewhere.

Reuters jumped on the Wall Street job-cuts theme last night, forecasting more firings in months to come. From the story: "It's just the perfect storm: You've got zero rates which are unheard of, squashing net interest margins like never before in history; the greatest regulation ever limiting fees, raising costs, demanding more capital; and then you've got a brewing economic disaster in Europe," said [JPM Securities analyst David] Trone.

Felix Salmon suggests investment bank cutbacks aren't really news.

The payback: Timothy J. Mayopoulos was named Fannie Mae's next CEO, which should do little to ease tensions between the government-sponsored entity and Bank of America. Mr. Mayopoulos was fired from his role as BofA's general counsel in 2008. The two companies have been grappling over whether BofA will buy back billions in mortgages with faulty underwriting that it sold to Fannie.

Whale inquest: Officials from the Office of the Comptroller of the Currency, the Treasury Department and the Federal Reserve will testify at a Senate Banking Committee hearing today on trading losses in JPMorgan's chief investment office.

Whither Europe: Germany is working on a plan to recapitalize Spanish banks with European rescue funds without burdening Spain with the stringent economic reforms placed on bailed-out neighbors such as Greece and Ireland.

Trustees clash: Tensions were already high between Louis Freeh and James Giddens, the two trustees seeking to recover claims arising from MF Global's collapse last fall. Then Mr. Freeh, who's responsible for recovering funds for the parent company's bondholders, demanded $2.3 billion from MF Global's brokerage unit—a move Mr. Giddens said would force him to set aside funds that might otherwise go to MF Global customers.

Complaint box: Treasury Secretary Tim Geithner pressed bank executives to spell out specific objections to Dodd-Frank.

Gotcha: After burying its head in the sand for years when it came to a ponzi scheme that cost investors billions, the government appears to be tying up loose ends such as this one—a former Bernard L Madoff Securities employee named Craig Kugel pled guilty yesterday to tax fraud. On one hand, Mr. Kugel was aware that the firm paid salaries and benefits to people who did not actually work for the firm. On the other, Mr. Kugel "charged more than $200,000 in personal expenses, including luxury clothes, jewelry, and vacations for himself and his family, to a corporate American Express card but did not report it as income on his tax returns." Mr. Kugel faces up to 19 years in prison.

Tim Geithner's McDonald's Rejection Letter:

Geithner's Soverign Debt Ratings for Dummies:

The Standard and Poor's ratings models, explained:

And of course, the especially disturbing Photoshop of Tim Geithner as a dog. Because, why not, is why. Note that this one was "on request":

Can't say we didn't warn you with that one. More where those came from here, and no doubt, more to come.

fkamer@observer.com | @weareyourfek

Mr. Geithner told a bailout watchdog group that the Treasury expects a positive return on its remaining support for banks, automakers, credit markets and the insurance giant, American International Group, as part of the $700 billion Troubled Asset Relief Program.

"The cost of TARP is likely to be no greater than the amount spent on the program's housing initiatives," Mr. Geithner said in prepared testimony to the Congressional Oversight Panel.

Geithner wasn't all three cheers and ticker tape, though. He acknowledged that the financial system is still a huge mess, as are the jobs and housing markets. We'll supplement that assessment with a little SNL Financial study reported yesterday by Fortune: The number of financial institutions that owe dividends to the government on its TARP investment has risen to 123 in November. As cheap as the bailout might eventually prove to be, if the banks were obeying the rules and making their scheduled payments, it could be a lot cheaper right now.

See 2010's Most Jaw-Dropping Business Quotes.>>

mtaylor [at] observer.com | @mbrookstaylor

Treasury Secretary Timothy Geithner has been admitted to a hospital where he will undergo minor surgery to deal with a kidney stone.

Treasury spokesman Steve Adamske said Geithner began experiencing severe pain from a kidney stone during the night and was admitted to George Washington University hospital Friday morning.

Adamske said that Geithner will have what he called a "minor surgical procedure" performed Friday afternoon and expects to be back at work on Monday.

The real question in all this is: will the Treasury Department's Flickr photographer come along to document the experience?

mtaylor [at] observer.com | @mbrookstaylor

Come Along On Tim Geithner's Trip to Asia! >>

But "blogs" are sort of passe these days; any brand manager worth his or her salt knows there's much more to online engagement than just occasional missives posted to an RSS. Thankfully, Mr. Geithner is aware of this:

And to expand our dialogue with citizens like you, we've set up accounts on Facebook, Twitter, MySpace, Flickr and YouTube; added an Open Government forum; and created this blog.

"On his first day in office," Mr. Geithner continues, "President Obama called for increased openness, participation and collaboration between the taxpayers and their government." It only took almost two years for the Treasury to do something so "transparent." 

Too bad Tumblr has been down; Treasury could've gotten into some great discussions with Newsweek, BlackBook, and Katy Perry.

(via Barry Ritholz)

mtaylor [at] observer.com | @mbrookstaylor

His daughter had decided to send her Tamagotchi toy pet to work with him, and it was hungry. Mr. Calello stopped the meeting, according to Wilson Ervin, one of the other executives there, took the pet out, smiled and fed it a digital hamburger.

The financier, who became chief of Credit Suisse's investment bank in 2007, when cuts to risk and costs helped make the giant one of the few that weren't bailed out, died on Nov. 16 of non-Hodgkin's Lymphoma. He was 49.

There is something about Wall Street executives who are as important as Mr. Calello--who four years ago helped arrange Industrial & Commercial Bank of China's record-setting $21.9 billion IPO--that makes them difficult. People who dominate high finance do not tend to enchant outside of it. "He's the heart of our family, center of the swirl, itchy instigator of the well spent day, pied piper of not just adventure, but intellectual curiosity and passion," one of his three sisters, the poet Cathy Staples, wrote. "Passionate engagement in the world has never been a solo adventure for Paul, he's intent upon bringing us all with him."

"He didn't sacrifice other parts in order to do what he did well," said his brother-in-law, Alex Gibney, the documentarian who made Enron: The Smartest Guys in the Room and Taxi to the Dark Side. "He was just generous as a person, always thinking about other people. It sounds so corny to say, but that's what was so miraculous."

He was short-listed to replace Tim Geithner at the New York Fed last year. Two of his neighbors in Beaverkill, N.Y., the conservationist Laurance Rockefeller Jr. and the former Massachusetts governor Bill Weld, both said he could have eventually been secretary of the Treasury.

But those neighbors also talk about the Calello house's musicales, where the executive and one of his sisters played guitar and their father sang in a self-taught operatic voice. "Uproarious fun," Mr. Rockefeller said. Others brought Dobros and 12-strings. They played songs like Lowell George's "Willin'" and John Prine's "Angel from Montgomery."

He sang with his family a few days before his death.

BORN TO SOCIAL workers, Mr. Calello was raised outside of Boston. He burst with energy, Mr. Gibney said, causing a bit of a ruckus on school bus rides. It was suggested that he and a friend run to school, which they found too boring, so they would run past it and back, ready for the day. "I'd watch him out the school bus window, running," Ms. Staples wrote, "swag of dirty blond hair crossing his eyes, stride loose and easy, and, if he saw me or my sisters, that grin." He tried to run the Boston Marathon at 11 and 12, and succeeded at age 13. He gave up marathons after that.

He met his wife, Jane DeBevoise, at Bankers Trust in Tokyo, where they bonded over a 20-year yen-dollar amortizing swap for United Airlines. Mr. Gibney was living a more bohemian life when he first met the banker. "I looked at him: tassel loafers, no socks. I thought, 'Oh, brother,'" he said. "I underestimated the depths of the man on that first encounter, but I never did it again."

Mr. Calello left Bankers Trust to co-found Credit Suisse Financial Products, a derivatives giant. "He was the first industry leader to advocate consistent, effective regulation of derivative instruments globally," a memo to staff from Credit Suisse CEO Brady Dougan says, "at a time when this was highly controversial."

By 2002, he'd become CEO of the investment bank in Asia. "We've been on holidays together," Ronald Arculli, the chairman of the Hong Kong stock exchange, said. "Occasionally my wife would joke and say, 'I wish you'd sound like Paul.'"

At a family trip to Mr. Weld's house in Keene Valley, the governor's wife, Leslie Marshall, woke up at 5 a.m. "There was Paul, sweeping the kitchen and making sandwiches," she said, "ready to launch everybody on the day."

"Family was paramount and work was just work, and that's not the vibe you feel with most senior executives. Some don't even talk about their families, as if they're invisible, or verboten," said Credit Suisse's Grace Koo, who heads a team that structures derivatives for clients. "He's let me scroll through his digital camera when we were on conference calls."

He came back to New York in 2007 to helm Credit Suisse's investment bank. Mr. Ervin, then the firm's chief risk officer, and now a senior adviser to Mr. Dougan, said that Mr. Calello understood the intensity of what was happening, and what was about to happen. In September 2008, as Lehman and AIG quaked, he was one of the senior executives brought to the New York Fed to work on saving the system.

In December, he and Mr. Dougan announced that executive bonuses would be paid in toxic assets. "He was one of the executives who really did lament the excesses of Wall Street," Ms. Koo said. "And really did say so."

In the middle of 2009, he mentioned to colleagues that he wasn't feeling well. "He said, 'I haven't been feeling up to my game,' which is unusual for Paul; he was one of those guys that needed about 15 minutes of sleep and was game," Mr. Ervin said. "We attributed that to the strain he was under."

In September, after his cancer diagnosis, the bank announced he was stepping down temporarily. "You could see it slow him down emotionally once or twice, briefly," Mr. Ervin said, "but then he would climb back in, and say, 'How about you? How are you doing?'"

This year, he was named chairman of the investment bank. He was still coming to Credit Suisse about a month before his death. "He was thinner, his hair was gone, but his voice was strong, his intellect was strong," Mr. Ervin said. "He'd take his Vespa in."

"What did occur," Mr. Rockefeller said, "was a very full life of great success."

He is survived by Ms. DeBevoise, a daughter, triplet sons, three sisters and his parents.

mabelson@observer.com

• The Feds are wrapping up a three-year project aimed at cracking down on insider trading. Some of the biggest names in finance (Goldman Sachs, SAC, Janus) are being bandied about, as are the following phrases: Criminal and civil; three-year investigation; bankers; hedge funds; analysts. This should be a lot of fun to watch. [WSJ]
• Ireland has accepted a $100 billion - plus bailout. Greece has also been rescued; will Portugal and Spain be next? [NYT]
• The Federal Reserve should continue to pursue a goal of low unemployment, says Treasury Secretary Tim Geithner. Some Republicans had been saying that maybe the Fed should just stick to fighting inflation. [AP]
• Economists are not super excited about the economy's prospects in 2011; they expect the unemployment rate to drop to a still-discouraging 9.2 percent. [Bloomberg]
• When Bank of America and PNC sold shares of asset-management behemoth BlackRock, Mexican billionaire Carlos Slim and Norway's central bank were lining up to buy. [FT]

mtaylor [at] observer.com | @mbrookstaylor