Citigroup, Morgan Stanley cosy up. Citigroup Inc. and Morgan Stanley are combining their brokerages in a deal that shows how much Citigroup wants to slim down and build up cash. Morgan Stanley is paying Citigroup $2.7 billion for a 51 percent stake in the joint venture. Citigroup’s retail brokerage, Smith Barney, was once the crown jewel in its wealth management business. Citigroup is expected to post a fifth straight quarterly loss next week. The government has already lent it $45 billion — more than other large banks received — and agreed to absorb losses on a huge pool of Citigroup mortgages and other assets. – Associated Press

Treasury Sec’s Nannygate. Sen. Charles E. Grassley, ranking Republican on the Senate Finance Committee, is raising questions about a housekeeper who worked briefly for Treasury Secretary-nominee Timothy Geithner without proper immigration papers, and multiple years when Mr Geithner didn’t pay Social Security and Medicare taxes for himself. According to people familiar with the matter, Mr Geithner employed a housekeeper whose immigration papers expired during her tenure with Mr Geithner, currently president of the Federal Reserve Bank of New York. The woman went on to get a green card to work legally in the country and federal immigration authorities didn’t press charges against her, these people said. — Wall Street Journal

Sony’s $1 billion fail. Japanese consumer electronics companies face mounting headwinds this year, with analysts forecasting few chances of an earnings turnaround soon as debt-laden consumers in their chief export markets tighten spending as the recession deepens. Sony and Toshiba are both forecast to post operating losses for the fiscal year ending March 31, according to media reports. The outlook for Canon, the world’s largest digital camera maker, was also called into question after the chairman said year-end holiday sales were “disappointing” and he expected a difficult year ahead as the recession dampens consumer demand. “I see no real evidence of a turnaround,” said Uwe Parpart, chief Asia strategist with Cantor Fitzgerald in Hong Kong, referring to the sharp drop in Japanese exports. — CNN Money

Drunks in the ATM firing line. Bank customers could face millions of dollars in extra ATM fees — and a smaller choice of free machines — in March. Industry bosses say new Reserve Bank rules will not only mean fewer free ATMs, but most likely soaring fees levied by the owners of Australia’s 13,000 “independent” cash machines in pubs and convenience stores. Fees on independent ATMs are effectively capped at $2, but from March owners will be able to charge whatever they like, raising fears of increased charges to take advantage of drunk pub customers. — Herald Sun

Barclays plans to slash and burn. Barclays is to cut at least 2,100 jobs globally across its investment banking and wealth management businesses, the BBC has learned. The move came as it said it was reducing staff to match the “current market conditions”. It is thought 1,300 jobs will go at investment arm Barclays Capital, 500 axed at Barclays Wealth and 370 trimmed at Barclays Global Investors. The Unite union said that 500 of the total jobs lost would be in the UK. — BBC News

The taxman gets a Second Life. The Internal Revenue Service should start taxing the fledgling virtual economy in Second Life, World of Warcraft, and other virtual worlds according to Taxpayer Advocate Nina Olson. In her annual report published on the IRS website, Olsen said that there are still a number of issues that the IRS should “proactively address” before they get out of control. And now that it’s on the IRS’ radar, it’s likely only a matter of time before Uncle Sam tries to figure out some way to get a cut of your gold. — Ars Technica

Peter Fray

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