Top 10 at 10: 'Auckland cabal' targets CBS Canterbury; South Canterbury and Fortress?; Dilbert

Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments below or please send suggestions for Tuesday's Thursday's Top 10 at 10 to bernard.hickey@interest.co.nz 1. 'Cabal of Auckland investors' - Rob Stock at the Sunday Star Times has an excellent piece on how a 'cabal of Auckland investors', led by Elevation Capital's Chris Swasbrook, has challenged building society CBS Canterbury to improve its performance, possibly through a merger with Southern Cross Building Society. Swasbrook has stakes in both companies. CBS is open to the idea, but is wary of the 'Auckland cabal'.

Criticising the CBS management for "inertia and the lack of any clear strategic direction", the Elevation Capital fund manager has lost patience and is demanding a better deal for shareholders. "The current returns to shareholders are currently unacceptable and we have yet to see clear evidence on how profitability can be restored," he said. Sparked by a report in the Sunday Star-Times that Australian community bank Bendigo had registered trademarks for "New Zealand Community Bank", Swasbrook fears Ashburton-based CBS Canterbury, formed from the merger of the Canterbury Building Society and Loan and Building Society in early 2008, risks being gazumped from overseas. "What concerns us is that the opportunity that we see for CBS in creating a New Zealand-owned bank servicing numerous communities within New Zealand looks set to be taken away from us, by an Australian corporation, due to the board's inertia and reluctance to engage in meaningful merger discussions to begin to create requisite scale to better compete in the market," Swasbrook said. The merger Swasbrook has in mind is with the unlisted Southern Cross Building Society and his outburst appears designed to get CBS Canterbury's shareholders, predominantly loyal elderly Cantabrians, to start asking questions of their board, which he believes has to change as it lacks the experience and skill set to grow the business.

2. Chart du Jour Un - Here's a chart pointed to by Calculated Risk showing the depth of the employment debacle in the United States compared with previous ones.

3. 'Don't worry, we'll print if we need to' - The US Federal Reserve is now openly talking about extending its programme of mortgage bond buying (money printing) beyond the US$1.25 trillion limit that has almost been used up, The Washington Post reported over the weekend.

The Federal Reserve would consider reopening its program to support the mortgage market if interest rates spiked or the economy showed new weakness, Federal Reserve Bank of New York President William C. Dudley said in two new interviews. In interviews with the Nightly Business Report and the Associated Press, Dudley said the time is right to end the program because the economy is growing and because expanding the purchases would make it harder for the Fed to unwind its support down the road. But he said the Fed might reconsider if rates rose sharply. "Obviously, if mortgage rates were to back up a lot and if that had a big consequence for the economy, then we very well could rethink the issue about whether we wanted to buy more mortgages," Dudley told the Nightly Business Report. He made a similar comment in the AP interview. The Fed said after its policymaking meeting last week that it "will continue to evaluate its purchases of securities in light of the evolving economic outlook and conditions in financial markets."

4. Fortress to buy South Canterbury loans? - Greg Ninness at the Sunday Star Times reports reliable sources as saying South Canterbury Finance is trying to sell hundreds of millions of dollars worth of loans to Australian investors and vulture funds, potentially including Fortress Capital. Fortress is one of those funds that has become something of a grim reaper of the New Zealand finance company sector. It turned up just before the deaths of Capital and Merchant and Hanover. South Canterbury Finance is certainly on the hunt for large amounts of cash in a short period of time. South Canterbury Finance CEO Sandy Maier told me last week the plan was for Forsyth Barr to raise fresh equity or convertible debt or debt in a "much shorter, much sharper and much quicker" timeframe than the earlier capital raisings talked about late last year. South Canterbury have a battle on their hands to get the capital infusions they need to get a guarantee extension and survive beyond the end of this year.

5. End of the guarantee - The government guarantee for wholesale debt issued by banks looks like to withdrawn fairly shortly. Australia announced on the weekend its guarantee would end on March 31 and Bill English said New Zealand's wholesale guarantee was also likely to be withdrawn. The wholesale guarantee hasn't been used this year by New Zealand's banks so it's unlikely to change the landscape too much, but it will be another factor making it slightly harder and more expensive to find funds in the longer term. This pressure is likely to be passed on in the form of higher fixed mortgage rates and (potentially) higher term deposit rates as banks compete hard for local retail funds. The last guaranteed wholesale  bond issue by a New Zealand bank was in August last year. Couldn't resist this photo. HT Yves Smith at Naked Capitalism.

6. Chart du Jour Deux - Why isn't the UK in the 'bad club' of the PIIGS (Portugal, Ireland, Iceland, Greece and Spain). This chart courtesy of FTAlphaville suggests it should be.

7. Change of mood? - The US Federal Reserve may be changing its spots on whether 'Too Big to Fail' banks should be allowed to exist, Simon Johnson at Baseline Scenario says, pointing to a speech by a key Fed official.

The debate over Ben Bernanke's reappointment, and his approach to the financial system, may after all have had some impact. In a speech yesterday, Kevin Warsh "“ the Federal Reserve Board Governor who liaises between Ben Bernanke and financial markets "“ signaled a major change in Fed thinking regarding "too big to fail". Warsh was much blunter than we have heard from the Fed in a long while: "Moral hazard in the financial system is higher than any of us should countenance"; "eradicating the too-big-to-fail problem should be the predominant policy goal"; and "in the new regime, no firm should be too big to fail."

8. 'Every single human being should short US Treasuries' - That's what Nassim 'Black Swans' Taleb is saying, Bloomberg reports.

It's "a no brainer" to sell short Treasuries, Taleb, a principal at Universa Investments LP in Santa Monica, California, said at a conference in Moscow today. "Every single human being should have that trade." Taleb said investors should bet on a rise in long-term U.S. Treasury yields, which move inversely to prices, as long as Bernanke and White House economic adviser Lawrence Summers are in office, without being more specific. Nouriel Roubini, the New York University professor who predicted the credit crisis, also said at the conference that the U.S. dollar will weaken against Asian and "commodity" currencies such as the Brazilian real over the next two or three years.

9. Totally irrelevant picture - I've discovered this fun site called Moggit.com showing unusual bits of furniture. Isn't the Internet a wonderful thing... HT LanceWiggs via Twitter.

10. Totally irrelevant video - A special report on the Ural mountains is strangely alluring for Homer Simpson.