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Wall Street Whispers - Not So 'Safe' Zones

Foreign locales might be friendlier to Wall Street firms when finreg gets enacted but the definition of 'safe havens' is changing.

NEW YORK (

TheStreet

) -- Before derivatives reform came close to being a "hot topic" in financial media circles, lawyers and traders and bankers and PR folks radiated a belief that no matter what happened with finreg they'd just take their business elsewhere if U.S. rules got too tough. They mentioned Luxembourg, the Caymans, Tokyo and other foreign hot spots as potential safe zones for derivatives arms to relocate and continue in business-as-usual fashion.

Perhaps not anymore.

Safe Zone, Meet Danger Zone

Luxembourg is pissed off that it has to take care of its profligate, overleveraged neighbors. The Caymans are struggling from a serious downturn in the two industries that supported the little Caribbean island: tourism and financial services. China recently caved to Western demands to revalue its currency, indicating that it will be less open to providing loopholes to politically sensitive issues on the domestic front.

Essentially, the message to Wall Street is that while those areas will remain friendlier to banks than other hard-hit Western locales, the definition of a "safe haven" is changing.

Combined with the recent change to how off-balance sheet entities are treated, and the fact that G-20 nations appear to support a general bank tax that the industry has opposed, it seems like one-time safe havens are no longer so safe. In the long term, this appears to be a good thing for investors even if it causes short-term pain.

Private Equity's Private Success Story

It's unfortunate that private equity is so media-shy because

OneWest's

story seems to be one that many of us would love to tell.

OneWest was once known as a bunch of separate entities: IndyMac met J.C. Flowers & Co.,

Paulson & Co.

, Dune Capital Management,

Soros Fund Management

and MSD Capital in late 2008. Then they all met First Federal Bank a year later, and continued on their mutual path of profitability, additional M&A and better underwriting standards in order to grow the business and prep it for a larger acquisition or initial public offering way down the line.

There are a couple of homeowners and others in the industry who have gotten attention in the press and created a negative storyline about where OneWest is headed. (Whether that's because they've been treated unfairly, have lost out on buyout offers, generally don't like the people running the bank or have legitimate complaints is another matter.)

But, by and large, the firm has done pretty well with its collective of crappy souring mortgage loans and overpriced deposits that it's working to wind down, with the help of the Federal Deposit Insurance Corp. It's done so well, in fact, that

Bank of America

(BAC) - Get Report

recently tapped its CEO Terry Laughlin as a key executive in its home-loan division.

The executives at OneWest are very selective about which media outlets they will engage with, and when. I've reached out at times, and they've indicated interest at other times, but never have the twain met. In fact, OneWest executives have very sparingly appeared in the media since the time of the acquisition. That's unfortunate because it seems like they have a good story to tell.

Odds & Ends

Hedge Funds:

When recent monthly reports showed that hedge funds weren't just down poorly, but underperforming the market, it gave me significant room for pause. We're undoubtedly sitting in a bear market, but it's not the height of the crisis. Why isn't the alpha team doing well?

TheStreet Recommends

According to various commentators, as well as a

Wall Street Journal

story highlighting certain

banks' exposure

, it seems like natural gas is the enemy. Combine this news with reports that trading activity was down and the fact that

Morgan Stanley

(MS) - Get Report

-- whose hedge funds were significantly exposed to natural gas -- seems to always be playing catch-up with

Goldman Sachs

(GS) - Get Report

, it seems to portend a worse quarter for Morgan than the rest.

Advertising:

Compare the latest news about Goldman's

potential advertising campaign

to what I mentioned Tuesday about Merrill Lynch's latest

overture to investors

, and see how all of it stacks up.

Greener Pastures?:

Is Jamie Dimon planning to head to some blissful oasis apart from financial services where no one requires advice on residential-mortgage exposure?

Probably not.

But he is clearly "Swiffering" the decks for whichever manager he and the board select to take over the post-crisis, post-finreg reins of

JPMorgan Chase

(JPM) - Get Report

. Good luck to potential top gun Doug Braunstein and others that management is eyeing for the top spot. But one has to ask: Are any of them ready to take over for Jamie? And if not, what will propel them to that position?

-- Written by Lauren Tara LaCapra in New York

.