The paper says Wall Street is concerned that the changes could trigger widespread dumping of structured debt assets and quotes a Wall Street group saying it would come “at a time when our financial markets can ill afford such an unnecessary shock.”

The new rules would prohibit firms like Moody’s and Standard & Poor’s from rating debt they helped structure and ban gifts above $25.

Bloomberg neatly sums up why the firms, which are as responsible for the financial crisis as anybody, need more regulation:

Moody’s, Standard & Poor’s and Fitch Ratings are under fire after the collapse of the subprime market exposed flaws in their AAA rankings on mortgage bonds. The three companies are paid to grade securities by underwriters who want to sell them, prompting regulators and lawmakers to question their independence.

Damn the tanking economy, I say!

The Los Angeles Times writes that the super-mega-ultra rich are sloughing off the economic woes and going ahead with eye-popping mansions in L.A. Actually, mansions doesn’t quite cut it. We’ll call them “palace-like complexes” as the paper does in its sub-headline. The lede:

In Beverly Hills, a 32,000-square-foot beaux-arts mansion that will be sheathed in Portuguese limestone and adorned with gold-plated doorknobs fashioned in France is rising on Sunset Boulevard.

A few miles away in Bel-Air, businessman Eri Kroh has requested permits to lop off the top of a hill, fill in a canyon and then, after moving some 68,000 cubic yards of dirt, replace the chaparral-covered lot with a 30,000-plus square-foot single family home with Pacific Ocean views.

The LAT reports there are at least twenty “homes” under construction that are bigger than 20,000 square feet. That would add a third to current supply of such estates. One builder says “People are spending much more time at home… They want to be comfortable.”

L.A. is considering putting zoning limits on huge houses, though, so our lords and ladies better get grandfathered in if they want to truly live well before the dirty masses rise up.

Here’s the Quote of the Day:

“Does anybody need 40,000 square feet?” asks real estate agent Stephen Shapiro of the Westside Estate Agency. “No, [but] these are our current-day aristocrats and feudal leaders … and this is what they want.”

D’oh! Citi to shutter hedge fund founded by CEO

The Journal says on A1 that Citigroup will close its struggling Old Lane hedge fund, an embarrassing move since it was co-founded by the company’s current CEO Vikram Pandit and Citi bought it for $800 million less than a year ago.

The bank considered bailing out the fund, but is so strapped for cash it thought better of it.

Old Lane’s demise is the latest embarrassment for banks that operate hedge funds or have bought stakes in them. Bear Stearns Cos., Goldman Sachs Group Inc. and UBS AG also have stumbled badly in hedge funds during the credit crunch, piling up billions of dollars in losses for themselves or their clients. The problems suggest that hedge funds, typically known for their independence and entrepreneurial spirit, may have trouble thriving within huge financial institutions.

It seems like most anything has trouble thriving within Citigroup.

On C1, the Journal says the whole hedge-fund industry is preparing for a “wave” of withdrawals at the end of June, but glaringly neglects to tell us why. It does say it could add to the “tumult” in the financial sector of the stock market, which we assumes means “send shares down further.”

Dirty CEO living large in Namibia

The Journal on A1 follows up on ex-Comverse Technology CEO Jacob “Kobi” Alexander, who fled with his family to Namibia after the feds used the Journal’s massive stock-backdating scoops to accuse him of fraud two years ago.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.