"Many People on Wall Street Knew" Bernie Was a Crook, Madoff Author Says

"Many People on Wall Street Knew" Bernie Was a Crook, Madoff Author Says

GE Q2 profit falls, scales down industrial outlook

GE Q2 profit falls, scales down industrial outlook
General Electric's 2Q profit tumbles 49 pct on finance unit struggles, weak demand for goods

General Electric Co.'s second-quarter profit was sliced nearly in half, the company said Friday, as the recession drove down earnings at its finance unit and smothered demand for its wide-ranging industrial goods.
Although earnings beat Wall Street forecasts by a penny, GE's revenue fell $3 billion short of expectations, helping push down shares 6 percent. Quarterly sales fell across its divisions, from health care to broadcasting, suggesting that the recession is still sapping demand for goods and services.

That appeared to be troubling news for the nation's economic health since GE's businesses touch nearly all facets of the economy and investors were hoping sales would show flashes of strength.

The Fairfield, Conn.-based company is also retreating from a more optimistic outlook for its industrial businesses that make everything from microwaves to wind turbines. It's now saying those divisions could break even rather than show a profit this year.

GE 's second-quarter net income totaled $2.6 billion, or 24 cents per share, after paying preferred dividends. That fell 49 percent from $5.1 billion, or 51 cents per share, a year earlier. Revenue declined 17 percent to $39.1 billion.

Analysts polled by Thomson Reuters expected GE to earn 23 cents per share on revenue of $42.16 billion.

The first half of 2009 has been a difficult one for GE, one of the world's largest companies. It cut its dividend sharply to preserve cash, lost its vaunted Triple-A credit rating, and saw its share price plummet on fears that things could get worse for its lending unit.

GE Capital, which lends money on everything from credit cards to commercial real estate, posted a modest profit of $590 million in the second quarter. But those results were 80 percent lower than a year earlier, further proof that GE Capital is struggling with losses on bad loans. GE boosted reserves for loan losses to $6.6 billion during the quarter.

Still, GE Capital "remains on track to be profitable for the full year," Jeff Immelt, GE's chief executive, said.

GE Capital has tried to compensate for its weaknesses by scaling back its reliance on riskier debt and lowering costs through steps like cutting staff. It has also been helped by tax credits that helped it dodge a loss during the first three months of the year.

But GE Capital's second-quarter earnings show that the unit continues to face serious challenges. For example, GE's real estate unit, which owns office buildings and makes loans for commercial properties, posted a $237 million loss compared with $484 million in profits a year earlier.

"We are still very cautious about the real estate outlook," said Keith Sherin, GE's chief financial officer.

The company plans to give a detailed review of GE Capital later this month, the second time this year it will open its books as it tries to convince investors that there are no big losses lurking.

As GE Capital founders, the company has looked to its industrial divisions for stability. But those businesses, which make products like home appliances, train locomotives, diagnostic equipment for hospitals and jet engines, have also struggled during the recession.

GE said Friday that its industrial units should just break even this year. Previously, the company had said earnings could reach $5 billion. Read Article... http://finance.yahoo.com/news/GE-Q2-profit-falls-scales-apf-2602881202.html?x=0&sec=topStories&pos=3&asset=&ccode=


Comment Trendsbridge: Of all the troubling signs the Economy is not back on track and the crisis is not over yet this is one of the worst.

Optimism fading

Optimism fading
(01:53) Report

Jul 2 - The Dow closed lower for the third consecutive week as larger-than-expected job cuts added to signs a U.S. economic recovery could be sluggish.
Conway Gittens reports.

Asia Currencies Head for Best Quarter Since 2004, Led by Rupiah

Asia Currencies Head for Best Quarter Since 2004, Led by Rupiah

June 30 (Bloomberg) -- Asian currencies headed for their biggest quarterly gain since 2004, led by Indonesia’s rupiah and South Korea’s won, as optimism the global economic slump is easing fueled demand for emerging-market assets.

The rupiah extended a quarterly winning streak that started in April 2008 on optimism President Susilo Bambang Yudhoyono will win re-election next month and introduce policies to support growth in Southeast Asia’s largest economy. The won gained as the Kospi Index of equities headed for its best quarter in two years. Crude and palm oil prices rose, boosting the outlook for commodity exporters including Malaysia.

“Most countries are moving along with a refreshing recovery trend that should be good for markets,” said Yeo Chin Tiong, head of treasury at OSK Investmnent Bank Bhd. in Kuala Lumpur. “The economies are chugging along, not fantastic, but stock and currency markets are trading on feel-good sentiment.”

The rupiah strengthened 0.6 percent to 10,210 per dollar as of 9 a.m. in Jakarta, taking its three-month rally to 14.6 percent, according to data compiled by Bloomberg. The won rose 0.5 percent 1,279.60 for an 8.1 percent gain since March 31. The ringgit added 3.5 percent in the quarter to 3.5220, and Taiwan’s dollar climbed 3.3 percent to NT$32.857.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active regional currencies, rose almost 2.8 percent this quarter, the most since 2004. Investors ploughed a net $17.8 billion this year into eight Asian stock markets outside Japan, according Bloomberg data. The MSCI Asia Pacific index of regional stocks rallied 29 percent since the end of March.

Korean Confidence

The dollar weakened 0.2 percent to 95.89 yen and fell for a fourth day against the euro to $1.4115 as investors sought higher-yielding assets. The ICE’s Dollar Index, which tracks the currency against its six major rivals, declined 6.7 percent this quarter as demand for higher yields erodes the dollar’s safe- haven appeal.

The won was poised for its biggest quarterly gain in four years as local manufacturers turned less bearish in their business outlook.

An index measuring expectations for July advanced to 78 from 76 in June, based on a survey of 1,445 producers. The index reached 44 in January, the lowest since the series began in 1991. A score of less than 100 means pessimists outnumber optimists.

“Confidence numbers have picked up certainly, but they’re not yet being matched by real activity,” said Patrick Bennett, Hong Kong-based currency strategist at Societe Generale SA. “Some of the confidence priced into equities is prone to be unwound.”

Commodity Prices

The ringgit strengthened by the most in almost three weeks as stocks rallied and commodity prices extended gains, brightening the outlook for exports.

Higher prices for palm and crude oil, which together account for 10 percent of Malaysia’s exports, may help bring an end to a seven-month drop in overseas sales. Prime Minister Najib Razak may unveil incentives to attract funds from abroad when he opens a two-day investment conference in Kuala Lumpur today, according to a report from HwangDBS Vickers Research Sdn. yesterday. Read Article... http://www.bloomberg.com/apps/news?pid=20601087&sid=aW.mLODOHEXI

Facebook, Twitter and peers for sale - privately

Facebook, Twitter and peers for sale - privately
No acquisition, no IPO, no problem: Private exchanges springing up to combat lack of liquidity

NEW YORK (AP) -- Scott Painter makes his living betting on startup companies, having played a role in launching 29 of them over the years. But with the bad economy choking initial public offerings and acquisitions, Painter is now backing an idea that makes it easier for insiders like him to sell shares in their companies even before they go public.

SharesPost, which was founded by Painter's business partner, Greg Brogger, launched publicly in June. Through SharesPost's Web site, Painter is trying to sell shares in several companies he helped found, including car pricing startup TrueCar.com. He also wants to buy shares in companies that are far from an IPO, like short-messaging site Twitter and business-networking site LinkedIn.

SharesPost is one of a few private stock exchanges that are emerging to fight what venture capitalists call a liquidity crisis. These exchanges give stakeholders an alternative way to trade their shares in hot startups like Facebook for cold, hard cash -- without having to wait years for an IPO.

Employees at startup employees often put in long hours but get salaries that can be 20 percent less than their peers at public companies. In return, they get stock or options that they hope will be a path to sports cars and summer homes after their company goes public or is bought out.

Given this, services like SharesPost could help startup workers get some cash while awaiting a distant IPO that might never even get off the ground. Most people won't be in on the action, though, since these exchanges are only open to a small pool of buyers.

And it's not clear how much -- or how little -- stock has changed hands through them. In its short life, Santa Monica, Calif.-based SharesPost said it has executed one $25,000 transaction, while another service, New York-based SecondMarket, said it has completed about 40 transactions in the past year worth about $150 million.
Still, if they manage to thrive, these exchanges could help the economy. By selling shares on a private exchange, an investor can free up funds to put into other startups. And institutional investors could use these services to broaden their holdings to include fast-growing companies that have yet to go public.

The methods of these private exchanges vary. SharesPost uses an online bulletin board to introduce buyers and sellers. SecondMarket links the parties and lets companies set up their own mini-markets that they control, while Redwood City, Calif.-based XChange is rolling out an online system that will allow buyers and sellers to connect and directly trade shares for cash.

All are open just to institutional investors -- organizations like venture capital firms or pension funds that manage at least $100 million in assets -- and individual accredited investors. That category includes people with a net worth of at least $1 million, or salary of at least $200,000 for the last two years.

The concept is not entirely new. Nyppex, formed in 1998, facilitates private-company stock trades, and a few companies with similar offerings emerged during the last economic downturn but failed to gather much steam. Among the problems: Determining a fair price for a private company's stock is tough without much public information.

This time, however, employees and investors are more aggressively looking for a way to get a return on their dedication and funding. More than a dozen companies have priced IPOs in the U.S. this year, down from 35 in the first half of 2008, according to research firm Renaissance Capital. In the same period of dot-com-crazy 2000, there were 219 IPOs in the U.S.
Read more... http://finance.yahoo.com/news/Facebook-Twitter-and-peers-apf-3349628532.html?x=0&sec=topStories&pos=main&asset=&ccode=

Madoff ruined lives, victims say. Madoff ordered to forfeit over $170 billion

Madoff ordered to forfeit over $170 billion
NY prosecutors: Judge orders disgraced financier Bernard Madoff to forfeit over $170 billion

NEW YORK (AP) -- Disgraced financier Bernard Madoff must forfeit $170 billion, a federal judge ordered Friday.

U.S. District Judge Denny Chin entered a preliminary order of forfeiture, and Acting U.S. Attorney Lev Dassin released a copy of the order Friday night. Madoff was ordered to give up his interests in all property, including real estate, investments, cars and boats.

According to earlier court documents, prosecutors reserved the right to pursue more than $170 billion in criminal forfeiture. That represents the total amount of money that could be connected to the fraud, not the amount stolen or lost.

The government also settled claims against Madoff's wife, according to Friday's order. Under the arrangement, the government obtained Ruth Madoff's interest in all property, including more than $80 million of property to which she had claimed was hers, prosecutors said.

The order makes it clear, though, that nothing precludes other departments or entities from seeking to recover additional funds.

A call to Madoff's lawyer, Ira Sorkin, after hours Friday was not immediately returned.

In his own court filing in March, Sorkin said the government's forfeiture demand of $177 billion was "grossly overstated -- and misleading -- even for a case of this magnitude."
The agreements strip the Madoffs of all their interest in properties belonging to them, including homes in Manhattan, Montauk, and Palm Beach, Fla., worth a total of nearly $22 million. The Madoff's must also forfeit all insured or salable personal property contained in the homes.

Other seized assets include accounts at Cohmad Securities Corp., valued at almost $50 million, and at Wachovia Bank, valued at just over $13 million, and tens of millions of dollars in loans extended by Madoff to family, employees and friends.
The judge's order also authorized the U.S. Marshals Service to sell the Manhattan co-op, properties in Montauk and Palm Beach and certain cars and boats.

Madoff, 71, is due to be sentenced Monday after pleading guilty in March to charges that his exclusive investment advisory business was actually a massive Ponzi scheme.
Federal prosecutors want Madoff to be sentenced to 150 years in prison for orchestrating perhaps the largest financial swindle in history.

Madoff's lawyer has said his client should serve only 12 years.
"The sheer scale of the fraud calls for severe punishment," the prosecutors wrote in response to a defense motion seeking lighter punishment.
Federal sentencing guidelines allow for the 150-year term, prosecutors said. Any lesser sentence, they added, should still be long enough to send a forceful message and "assure that Madoff will remain in prison for life."
The government's papers quoted from letters to U.S. District Judge Denny Chin written by victims of the scheme who are suffering severe hardships.

Madoff "ruined lives," one letter said. "He deserves no mercy."

At the time of Madoff's arrest, fictitious account statements showed thousands of clients had $65 billion. But investigators say he never traded securities, and instead used money from new investors to pay returns to existing clients.
Prosecutors said Friday that the total losses, which span decades, haven't been calculated. But 1,341 accounts opened since December 1995 alone suffered loses of $13.2 billion, they said.
Sorkin argued in court papers last week for a 12-year term. He said his client deserved credit for his voluntary surrender, full acceptance of responsibility and meaningful cooperation efforts.
"We seek neither mercy nor sympathy," Sorkin wrote. But he urged the judge to "set aside the emotion and hysteria attendant to this case" as he determines the sentence.

Bernanke vs. Buffett: Who's Right on the Economy?

Bernanke vs. Buffett: Who's Right on the Economy?

The Challenge of Regulating Derivatives

High & Low Finance
The Challenge of Regulating Derivatives
By FLOYD NORRIS Published: June 26, 2009
The derivatives industry has started a public relations campaign arguing that it is helpful to businesses, especially smaller ones.
http://www.nytimes.com/2009/06/26/business/26norris.html

New jobless claims rise unexpectedly to 627K

New jobless claims rise unexpectedly to 627K
New jobless claims jump unexpectedly to 627,000; continuing claims rise to 6.74 million

WASHINGTON (AP) -- The number of Americans filing new jobless claims jumped unexpectedly last week, and the total unemployment benefit rolls rose to more than 6.7 million.
The Labor Department data released Thursday show jobs remain scarce even as the economy shows some signs of recovering from the longest recession since World War II.

The department said initial claims for jobless benefits rose last week by 15,000 to a seasonally adjusted 627,000. Economists expected a drop to 600,000, according to Thomson Reuters.
Several states reported more claims than expected from teachers, cafeteria workers and other school employees, a department analyst said.
The number of people continuing to receive unemployment insurance rose by 29,000 to 6.74 million, slightly above analysts' estimates of 6.7 million.
The four-week average of claims, which smooths out fluctuations, was largely unchanged, at 616,750.
Economists expect the number of initial unemployment insurance claims, which reflects the level of layoffs, to slowly decline over the coming months as the economy bottoms out.

Stocks open lower after rise in jobless claims
Stocks open lower after surprise increase in last week's jobless claims

NEW YORK (AP) -- An unexpected rise in jobless claims is causing investors to sell again.
The government says new jobless claims rose by 15,000 to 627,000 last week. The market had been expecting a decline. Unemployment affects many drivers of the economy -- most importantly, consumer spending.

Uncertainty about when the economy will turn around, and how fast it will grow when it finally does, have weighed on the market this month. The Dow Jones industrial average remains up 26.8 percent from its 12-year low hit on March 9, but is down about 5.7 percent from a June 12 high.

In the first few minutes of trading, the Dow is down 19 to 8,280. The Standard & Poor's 500 index is down 2 to 898, while the Nasdaq composite index is down 8 to 1,783.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
http://finance.yahoo.com/news/Stocks-open-lower-after-rise-apf-15617326.html?x=1&sec=topStories&pos=1&asset=&ccode=

ECB Lends Record $622 Billion in Bid to Ease Crisis

ECB Lends Record $622 Billion in Bid to Ease Crisis

(Source WallStreet Journal) FRANKFURT -- The European Central Bank pumped a record €442 billion ($622 billion) into euro-zone money markets Wednesday in its first-ever offer of one-year funds as it battles the Continent's recession.
Euro-zone banks borrowed the one-year funds, the largest amount the central bank has ever dispersed in a single shot, at the ECB's current key rate of 1%. Much of the total likely substituted for amounts banks had been borrowing from the ECB for shorter periods, so the net stimulus to the economy is less than it appears at first sight.
The novelty lies more in the length of time over which the ECB is prepared to offer unlimited funding, reflecting a desire to bring longer-term money-market interest rates down. Although the risk premium that banks charge each other for funds has fallen since the dramatic days of September, it still appears big enough to strain the economy.

The ECB's move signals the central bank remains committed to bolstering the euro-zone economy even as policy makers world-wide discuss how best to unwind the welter of monetary and fiscal stimulus pumped into the global economy over the course of the crisis. The ECB believes the 16-nation euro-zone economy will start growing again by the middle of 2010.

The ECB said in May that it would begin offering banks funds for one year. Before Wednesday, the longest period banks could borrow from the central bank was six months.

Fears of big bank problems return

Fears of big bank problems return
A key market measure of credit risk is deteriorating again, as investors fret over the side effects of giant federal bailouts for the nation's largest banks.

NEW YORK (Fortune) -- Betting against the banks is back in fashion.

A key market measure of the health of the biggest global financial institutions has deteriorated this month, after showing sharp improvement in April and May.

The price of betting that big banks will default on their debt -- made via derivatives known as credit default swaps -- has risen 17% in June, according to data from New York-based Credit Derivatives Research.

The uptick in wagers against banks such as Bank of America (BAC, Fortune 500), Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) comes as the spring's scorching stock market rally peters out and doubts about the health of the global economy and the banking sector re-emerge.

The blue-chip S&P 500 has dropped 6% over the past two weeks, with half of that loss coming this week. The KBW Bank index has slid 20% since hitting a recent high May 11.

Some selling is no doubt inevitable after a strong rally. But a World Bank report Monday that predicted the global economy will shrink 2.9% this year "touched a raw nerve," said Mauro Guillen, director of the Lauder Institute at the University of Pennsylvania's Wharton School.

"We have been too optimistic for too long, and we still haven't done the dirty work of fixing the financial system," he said.

Guillen said the U.S. will have to take action to restore the credit system before the economy can resume expanding in earnest.

That will mean actually implementing plans such as the one the government proposed this spring to attract private sector buyers of troubled bank assets, Guillen said. Regulators shelved one such program earlier this month.

Guillen also advocates pushing financial regulatory reform program through Congress.
But Robert Claassen, chair of the derivatives and structured products practice at international law firm Paul Hastings, said he senses the momentum for sweeping change has ebbed in recent weeks.
"There's a lot less public outrage right now," he said.
Guillen shares that view, and said it bodes ill for the long anticipated economic rebound. He notes that the economy must start growing again before unemployment -- rapidly approaching 10% -- comes down to a more moderate level.
"We have reached this period of apathy, and there's a real danger that the economy will languish with the underlying problems unaddressed," he said.

Fear of failure replaced by fear of weak earnings. Read on...
http://money.cnn.com/2009/06/24/news/companies/banks.bets.fortune/index.htm?postversion=2009062404

OECD Week: Where next for the world economy?

OECD Week: Where next for the world economy?

Debate at the OECD Forum and the forecasts and analysis in the latest edition of the OECD’s twice-yearly Economic Outlook will set the tone for recommendations and decisions at the OECD’s annual ministerial meeting.
Restoring stability, confidence and sustainable growth is the priority. The OECD is working with governments and international organisations to cut short the crisis and lay the foundations of a stronger, cleaner and fairer global economy.

OECD sees strongest outlook since 2007
The Organisation for Economic Co-operation and Development has revised its World Economic Outlook upwards for the first time in two years, as its latest review concludes that the global economic slide is nearing a bottom.
In its report, published on Wednesday, the OECD revised its growth forecast for 2009 to a decline of 4.1 per cent, down from a contraction of 4.3 per cent. It said that in 2010, it expects very modest growth where earlier it expected none.
Weak recovery in sight but damage from crisis likely to be long-lasting, says OECD
http://www.oecd.org/document/41/0,3343,en_2649_34109_43123241_1_1_1_37443,00.html

The OECD Forum on 23-24 June, and the OECD ministerial meeting on 24-25 June mark the annual high point in the Organisation’s calendar. Ministers from governments from around the world, as well as leading representatives of business, labour, NGOs, academia and the media, will thrash out ideas and seek solutions to global problems.
>> Read this Key Information brochure to find out more about the issues that will be debated.

The forecasts in the Economic Outlook, to be published at 10:30 on 24 June, and discussions at the Forum will feed directly into the ministerial meeting which will be chaired by Korean Prime Minister Han Seung-soo

Joaquín Almunia, EU Commissioner, on next steps in the crisis



OECD Annual Report 2009 Download http://www.oecd.org/dataoecd/38/39/43125523.pdf

22-Jun-2009
This Annual Report highlights some of the OECD's achievements in 2009 and describes how it is helping its member countries respond to new challenges ahead.
Also available:

* Rapport annuel de l'OCDE : 2009 , pdf, (French)

Barron's Editor Michael Santoli speaks about the slump in trading during the summer.

Eerie Calm of Summer Trading
6/22/2009
Barron's Editor Michael Santoli speaks about the slump in trading during the summer.

Is the recession over?

Is the recession over?
Some experts point to stabilization in the housing and job markets as signs the recession has ended. Others continue to see weeds - not green shoots.

NEW YORK (CNNMoney.com) -- The recession began in December 2007. Did it end sometime this spring?

It's a provocative question that's tough to answer. It's tempting to say the recession is over when that seems to be what the stock market is telling us.

But Wall Street hardly has a perfect track record: There were numerous bear market rallies during the Great Depression, for example.

Stocks also enjoyed a nice run last spring after Bear Stearns almost imploded, even though the collapses of Fannie Mae (FNM, Fortune 500), Freddie Mac (FRE, Fortune 500), Lehman Brothers and AIG (AIG, Fortune 500) were still yet to come.

"With all due respect to Mr. Market, it is highly fallible as a forward looking barometer," said David Rosenberg, chief economist & strategist at Gluskin Sheff + Associates, a Toronto-based wealth management firm.
The bear case: 'Less bad' does not equal good

The jump in stocks also poses another chicken-versus-egg question: Is the market rallying because people think the recession is over or do people think the recession is over because the stock market is rallying?

If it's the latter, that's not necessarily great news. Rosenberg said he thinks it's "beyond bizarre" to say the recession is over. The economy may have pulled out of the free fall that took place from September through February, he said, but that shouldn't be confused with a bottom.
http://money.cnn.com/2009/06/19/markets/thebuzz/index.htm?postversion=2009062008

Roubini: New Regulations "Go in the Right Direction," But Not Far Enough

Roubini: New Regulations "Go in the Right Direction," But Not Far Enough

The new Wall Street regulations announced by President Obama yesterday "go in the right direction" but only accomplish about "75% of what needs to be done," says Nouriel Roubini, professor at NYU's Stern School and chairman of RGE Monitor.

For example, making the Fed the systemic risk regulator makes sense from an institutional standpoint, "but have to have individuals committed to making sure the systemic risks are controlled," Roubini says, recalling the Greenspan Fed had the power -- but not the will -- to regulate mortgage lending during the housing boom.

"They allowed all this toxic underwriting because they did not believe in supervision," he says of the Greenspan Fed. "They were in favor of any kind of financial 'innovation'."
http://finance.yahoo.com/tech-ticker/article/266396/Roubini-New-Regulations-%22Go-in-the-Right-Direction%22-But-Not-Far-Enough?tickers=XLF,FAS,FAZ,SKF,AIG,BAC,JPM

Nouriel Roubini's Three Reasons Why Stocks Are Bound to Fall

Bailout Nation: Was TARP Just a Ruse to Protect Citigroup?

Bailout Nation: Was TARP Just a Ruse to Protect Citigroup?

http://finance.yahoo.com/tech-ticker/article/264931/Bailout-Nation-Was-TARP-Just-a-Ruse-to-Protect-Citigroup?tickers=MS,JPM,C,BAC,XLF,FAS,FAZ,

With JPMorgan, Morgan Stanley and other big banks reportedly set to start repaying TARP funds as early as tomorrow, many are ready to turn the page on this sordid chapter in our nation's financial history.

But Barry Ritholtz, CEO of Fusion IQ and author of Bailout Nation, is still trying to figure out why we went through the whole exercise in the first place.

In his new book Bailout Nation, Ritholtz discusses the possibility that TARP was all a giant ruse, "a Hank Paulson engineered scam to cover up the simple fact that Citigroup was teetering on the brink of implosion," has he writes in his popular blog The Big Picture. "A loan just to Citi alone would have been problematic, went this line of brilliant reasoning, so instead, we gave money to all the big banks."

We delve further into this theory in the accompanying video. While it can never be fully proven, Ritholtz's "just a ruse to protect Citi" idea seems plausible given:

* The reaction of many other banks forced to take TARP funds;
* The extraordinary level of bailouts and debt guarantees aimed specifically at Citi;
* Regulators' fears last fall about the "systemic risk" if a big bank were allowed to fail.

Standard & Poor's cuts ratings on 22 banks S&P cuts ratings on 22 banks amid concern over further weakening in financial sector

Standard & Poor's cuts ratings on 22 banks
S&P cuts ratings on 22 banks amid concern over further weakening in financial sector

NEW YORK (AP) -- Credit ratings agency Standard & Poor's on Wednesday cut ratings and revised outlooks on 22 banks amid concern about further weakening in the financial sector.
S&P said the changes reflected its assessment that volatility will remain in the financial sector and the industry is expected to face tighter regulatory oversight. S&P also said loan losses, which have plagued the industry for more than a year, are likely to continue to increase and could grow beyond expectations.

BB&T Corp., Capital One Financial Corp., PNC Financial Services Group Inc., Regions Financial Corp. and Wells Fargo & Co. were among the largest banks that saw their ratings cut by S&P.

Widescale changes to the industry because of the credit crisis and ongoing recession will dramatically alter the banking landscape, S&P credit analyst Rodrigo Quintanilla said in a release.

"We believe the banking industry is undergoing a structural transformation that may include radical changes with permanent repercussions," Quintanilla said. "Financial institutions are now shedding balance-sheet risk and altering funding profiles and strategies for the marketplace's new reality. Such a transition period justifies lower ratings as industry players implement changes."

S&P did note that recent capital raising efforts in the sector will help defray some of the losses banks are facing.

Lower credit ratings make it more expensive for companies to borrow money and can sometimes lead to difficulty accessing credit. Low ratings can also affect investments in a company's debt as some institutional investors are required to only hold debt rated at a certain level.

Ratings were also cut on Associated Banc Corp., Astoria Financial Corp., Carolina First Bank, Citizens Republic Bancorp Inc., Comerica Inc., Fifth Third Bancorp, First National Bank of Omaha, Huntington Bancshares Inc., KeyCorp, M&T Bank Corp., Susquehanna Bancshares Inc., Synovus Financial Corp., U.S. Bancorp, Valley National Bancorp, Webster Financial Corp., Whitney Holding Corp., and Wilmington Trust Corp.

The ratings of Carolina First Bank, Citizens Republic Bancorp, Huntington Bancshares, Synovus Financial and Whitney Holding were cut to junk status from investment-grade levels. The other banks all saw their ratings remain at investment-grade levels.

Big banks still not lending

Big banks still not lending
Loan volume at the 21 largest recipients of government funding fell 7% during the month of April, according to a survey by the Treasury Department.

NEW YORK (CNNMoney.com) -- Lending at the nation's top banks slowed in April, according to a government report published Monday, driven in part by continued deterioration in the U.S. economy.

The dollar amount of new loans issued by the 21 biggest recipients of taxpayer funds under the government's Troubled Assets Relief Program, or TARP, fell 7% to $273 billion from nearly $295 billion during the month of March.

Regulators attributed part of the decline to lower demand for new commercial and industrial loans, which fell nearly 29% during the month as U.S. businesses broadly avoided acquisitions, building plants and buying inventory.

Weakness was also notable across a wide variety of consumer loan categories, including first mortgages and credit cards. Of the 21 banks that took part in the survey, 15 reported a decline in loan originations, according to the Treasury Department.
Banks have been under pressure to increase lending since the government provided billions of dollars in aid to help prop up the industry last fall.
Consumers and businesses continue to argue that credit remains tough to come by, but banks maintain they are lending even as the appetite for new loans has dropped.
Instead, consumers seemed to be focused on paying down debt in April, regulators said Monday. The total amount of outstanding loans in the survey fell 0.8% to $4.34 trillion from $4.38 trillion in March.
One new feature of the monthly survey was a reading on small business lending. The government said that the amount of new small business loans was roughly $8 billion in April, although it did not provide numbers for small business lending from the previous month.
http://money.cnn.com/2009/06/15/news/companies/tarp_banks_lending/index.htm?postversion=2009061516

ECB Says Euro-Region Banks May Lose a Further $283 Billion

ECB Says Euro-Region Banks May Lose a Further $283 Billion

June 15 (Bloomberg) -- Commercial banks in the 16-nation euro region may lose a further $283 billion by the end of next year as the financial crisis forces them to write off bad loans, the European Central Bank said.

“Hard-to-value assets have remained on bank balance sheets and the marked deterioration in the economic outlook has created concerns about the potential for sizeable loan losses,” the Frankfurt-based ECB said in its June Financial Stability Report today. ECB staff estimates suggest the total amount of potential write-downs over the period 2007 to 2010 “could amount to around $649 billion.” Some $365 billion have already been reported, it said.

Deutsche Bank AG, Germany’s biggest bank, has booked about $14.9 billion in writedowns and credit losses since the U.S. subprime-mortgage crisis began in the middle of 2007, less than $2 billion of which were related to subprime loans. Worldwide losses tied to distressed loans and securitized assets may reach $4.1 trillion by the end of 2010 amid the worst global recession since World War II, the International Monetary Fund said on April 21.

“There is no room for complacency because the risks for financial stability remain high, also bearing in mind that the credit cycle has not yet reached a trough,” ECB Vice President Lucas Papademos said at a press briefing in Frankfurt today. “Policy makers and market participants will have to be especially alert in the period ahead.”

The ECB expects the euro-region economy to contract by around 4.6 percent this year and 0.3 percent in 2010. Inflation is expected to average just 0.3 percent this year, the bank’s latest projections show.

“Banks should be encouraged to take advantage of the governments’ commitments for support and strengthen their capital buffers,” Papademos said. Still, because buffers have been maintained well above the minimum regulatory requirements, euro-area banks “appear to be sufficiently well capitalized to withstand severe but plausible downside scenarios,” he said. Read Article... http://www.bloomberg.com/apps/news?pid=20601087&sid=a9OppHNsK.I4

Commodities Stocks Lead Declines

Commodities Stocks Lead Declines

European stocks headed lower Monday, hit by profit-taking in the oil and mining sectors.

(Source Wall Street Journal) The pan-European Stoxx 600 was down 1.6% at 210.83. London's FTSE 100 Index was off 1.8% to 4358.32, Frankfurt's DAX fell 2% to 4965.38, and the CAC-40 Index in Paris was down 1.9% at 3262.24.

The oil market has had the longest bull move with no serious retracement since January/July last year, said Simon Denham at capital Spreads, boosting oil equity stocks. "It must be mentioned that there is now room for a bit of a fall." Also gold is falling in harmony with everything else Monday morning, hitting the mining stocks.

"The weakness of the dollar has helped in recent weeks to send the precious metal higher," said Mr. Denham, "but there is a distinct feeling that investors now have more important things to worry about than getting sucked into another yellow metal bubble."

Shares in Royal Dutch Shell slid 2.9% while shares in ArcelorMittalwere 3.6% lower. The Dow Jones pan-European Stoxx 600 oil & gas index traded down 2% to 299.7, while the Dow Jones pan-European Stoxx 600 basic resource index was off 3.1% to 368.7.
Among other stocks to watch, TomTomdeclined 6.6% after the navigation-products maker said it plans to raise about $607 million by selling new shares to alleviate a heavy debt burden.

In Asia, share markets were mostly lower in subdued Monday trade, with energy and mining stocks falling. Japan's Nikkei index closed down 1%, while South Korea's Kospi Composite closed 1.1% lower. The Hang Seng index in Hong Kong was last seen 1.9% lower. Read Article... http://online.wsj.com/article/SB124504751817214641.html