Sunday, April 18, 2010
UK's Brown wants investigation into Goldman Sachs
UK's Brown wants investigation into Goldman Sachs
LONDON, April 18 (Reuters) - Prime Minister Gordon Brown said on Sunday he wanted Britain's financial watchdog to investigate U.S. bank Goldman Sachs (GS.N) after it was charged with fraud by U.S. regulators.
Brown, who is fighting an election campaign, piled pressure on Wall Street's most powerful bank, accusing it of "moral bankruptcy" over reported plans to pay big bonuses.
Goldman Sachs was charged with fraud by the U.S. Securities and Exchange Commission on Friday over its marketing of a subprime mortgage product. Goldman has called the U.S. lawsuit "completely unfounded" and has vowed to defend itself.
"I want a special investigation done into the entanglement of Goldman Sachs and the companies there with other banks and what happened," Brown told BBC television.
"There are hundreds of millions of pounds have been traded here and it looks as if people were misled about what happened. I want the Financial Services Authority (FSA) to investigate it immediately," he said.
"I know that the banks themselves will be considering legal action," Brown said, apparently referring to European banks that lost money on the product marketed by Goldman Sachs.
"We will work with the Securities and Exchange Commission in the United States," he said.
A spokeswoman for the FSA declined comment. "We would never confirm or deny we are investigating anybody," she said.
Brown's Labour Party lags in the polls before the May 6 election and a tough stance against bankers is popular with voters angry about high bonuses paid by banks, particularly those that received state bailouts during the financial crisis.
The FSA is operationally independent and the British government cannot order it to launch an investigation.
BIGGEST CRISIS
The civil lawsuit Goldman faces in the United States is the biggest crisis in years for the company that emerged from the financial meltdown as Wall Street's most influential bank.
Goldman shares slid 12.8 percent on Friday, wiping out more than $12 billion of market value.
According to the SEC complaint, Britain's Royal Bank of Scotland (RBS.L) paid Goldman $840 million in August 2008 to unwind a position built up by ABN Amro, some of whose operations RBS had acquired.
RBS is 84 percent owned by the British government after a series of bailouts during the financial crisis.
Brown also attacked Goldman Sachs over a report in Britain's Sunday Times newspaper that the bank planned to pay its staff more than 3.5 billion pounds ($5.6 billion) for three months' work, including 600 million pounds to 5,500 London-based staff.
"I am shocked at this moral bankruptcy. This is probably one of the worst cases that we have seen," he said.
"It makes me absolutely determined we are going to have a new global constitution for the banking system ... a global financial levy for the banks, that all countries that are major financial centres pay, and we quash remuneration packages such as at Goldman Sachs," he said.
"If this is proved to be the case, they have got to return that money. I cannot allow this to continue," he said. (Additional reporting by Tim Castle; editing by Elaine Hardcastle)
source: reuters.com
Toyota to recall 600,000 minivans
Toyota to recall 600,000 minivans
NEW YORK (CNNMoney.com) -- Toyota said Friday it will recall about 600,000 Sienna minivans to address potential corrosion on spare tire cables.
The recall includes certain 1998 to 2010 model years sold in the United States and operated in cold climate areas, the automaker said in a statement.
Toyota (TOYOF) said "prolonged exposure" to road salts may lead to corrosion of the carrier cable in these vehicles, which could in turn cause the spare tire to fall from the car, endangering other motorists.
"In the worst case, the carrier cable may fail and the spare tire could become separated from the vehicle, a road hazard for following vehicles that increases the likelihood of a crash," Toyota said.
The troubled automaker, which has been plagued by a number of other recalls in the past year, said it is "working to develop" a solution to the problem. Until a fix is found, customers will receive a notice telling them to bring their Sienna to a local dealership for inspection.
Vehicles originally sold or currently registered in the following cold climate areas are covered by the recall: Connecticut, Delaware, Illinois, Indiana, Kentucky, Massachusetts, Maryland, Maine, Michigan, Minnesota, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Virginia, Vermont, Wisconsin, West Virginia and the District of Columbia.
source: cnn.com
Volcano May Keep Europe Airports Shut Four More Days
Volcano May Keep Europe Airports Shut Four More Days
April 18 (Bloomberg) -- Northern and central Europe may remain closed to air traffic until April 22 as winds push ash from volcanic eruptions in Iceland across the continent, forecasters said.
European airlines canceled more than 77 percent of their flights yesterday as airports from Dublin to Moscow closed. No planes will operate out of the U.K. until at least 7 p.m. London time today, the National Air Traffic Service said. German airports will remain closed until 2 p.m. Berlin time, the DFS air traffic control agency said.
“Expect ongoing interruptions for the next four or five days,” Teitur Atlason, at the Icelandic meteorological office, said in a telephone interview yesterday. “The eruption is still in full swing, and the volcano is spewing pretty dark ashes as high into the air as 5 to 6 kilometers.”
Flights were grounded after April 14 when an eruption at the Eyjafjallajökull volcano spewed dust across thousands of miles of European airspace. Canceled flights are costing carriers about $200 million a day, the International Air Transport Association estimates. People hoping to travel should check first with their airline, NATS said.
“The jet stream winds, which extend from 10,000 feet up to 40,000 feet, show no signs of change through Wednesday,” Accuweather.com Inc. said in a statement. “Any ash plume that is released from the volcano will continue to threaten northern Europe and the British isles.”
Melt and Congeal
Flights have been halted because of concerns that the ash plume could damage engines and speed sensors. The finest material from the blast is formed of dust akin to glass, which can melt and congeal in a turbine, causing it to stop, said Sue Loughlin, head of vulcanology at the British Geological Survey.
“The (air) current in the height the ashes are reaching remains a strong northwesterly wind, which blows the ashes to Scotland and South Scandinavia,” Atlason of the Icelandic Met Office said. “Once the ashes reach those places, other more complex wind systems take over, which spread the ashes across North and Central Europe. This will continue until Wednesday.”
Asia Routes
Airlines in the Asia-Pacific region canceled most Europe-bound flights, with Qantas Airways Ltd. saying it won’t fly to European destinations before April 20 and can’t confirm when service on those routes will resume.
Carriers including Air China Ltd., Japan Airlines Corp., Korean Air Lines Co., Cathay Pacific Airways Ltd. shut down service to Europe, while Singapore’s Changi Airport reported cancellation of 34 arrivals and departures, including Singapore Airlines Ltd. flights to nine European destinations.
Volcanic eruptions may continue for months and curtail European air traffic, said Sigrun Hreinsdottir, a geophysicist at the University of Iceland in Reykjavik. “It could erupt, pause for a few weeks, and then possibly erupt again,” he said.
The last eruption of Eyjafjallajökull in December 1821 continued until January 1823. The current blast has sent ash to as high as 7 kilometers (4.5 miles), according to Gudrun Larsen, a vulcanologist at the University of Iceland. The magma had to pierce 200 meters of ice before reaching the air, she said.
Leaders to Miss Funeral
“We really don’t know if this eruption is going to last as long as the previous one, but we can’t say it’s not a possibility,” Larsen said by telephone.
The volcanic ash cloud also led world leaders, including Barack Obama and German Chancellor Angela Merkel, to cancel plans to attend the funeral of Polish President Lech Kaczynski, killed with 95 others in an April 10 plane crash.
Airline stocks, including British Airways Plc, Deutsche Lufthansa AG and Ryanair Holdings Plc, fell on Friday as fleets were grounded.
British Airways Plc, which halted flights from the U.K. from midday on April 15, said no service to and from London will operate today. Its shares tumbled 3.1 percent in the U.K. capital on April 16, the most since Feb 12.
Paris, Rome
Paris airports will remain shut until 8 a.m. tomorrow, a government official said yesterday. Belarus closed airspace amid predictions the ash will linger for as many as three days, Interfax reported.
Italy will keep airspace in the north of the country closed until at least 8 a.m. tomorrow and may curtail flights in the south, ENAC, the nation’s civil aviation authority, said in an e-mailed statement yesterday. Japan Airlines canceled its flight to Rome today due to closure of the city’s Fiumicino Airport, according to the carrier’s Web site.
Because of the wind direction, Iceland’s Keflavik airport is open, and North American flights are running on schedule.
U.S.-Europe
The U.S.-based Air Transport Association said yesterday that 282 of 337, or 84 percent, of the day’s nonstop flights between the U.S. and Europe were scrubbed.
Delta Air Lines Inc., the world’s largest carrier, scrubbed 91 flights yesterday to and from Europe, said spokesman Anthony Black. AMR Corp.’s American Airlines canceled 56 flights between the U.S. and Europe, the company said in a recorded message. American was able to operate flights into and out of Spain and Italy, spokesman Tim Smith said.
Karen Pride, a spokeswoman for Chicago’s Department of Aviation, which operates O’Hare International Airport, Midway International Airport and Gary-Chicago International Airport, said 22 flights bound for Chicago from Europe were canceled.
The eruption began on March 20 with a lava flow on the eastern flank of the Eyjafjallajökull volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it resumed early on April 14, directly under the icecap that covers most of the mountain.
‘Not Good News’
“The problem here is we have magma interacting with glacier ice, and that leads to explosions,” Hreinsdottir said. “That causes the material to go much higher in the air.”
Mike Burton, a researcher at the Italian National Vulcanology Institute who has studied the ash from the latest explosion, said it presents more of a threat to aircraft than would the dust from a typical eruption.
“It’s likely that ash production will continue long after all the ice is melted in the volcano as this kind of magma can produce ash without water,” Burton said. “Fine ash is easier to transport long distances and goes higher into the atmosphere. This is not good news for flights.”
source: bloomberg.com
Toronto-Dominion Buys Three Failed Banks as 2010 Toll Hits 50
Toronto-Dominion Buys Three Failed Banks as 2010 Toll Hits 50
April 17 (Bloomberg) -- Toronto-Dominion Bank, Canada’s second-largest lender, agreed to buy three Florida-based financial institutions as those and five other failures brought the number of 2010 closures to 50.
Toronto-Dominion added $3.1 billion in deposits to the $117 billion it holds in two other U.S. lenders, according to a company statement. The lender picked up 69 branches in yesterday’s purchases, bringing its total in Florida to 100.
“These were all in locations that were in our master plan,” for new branches, Toronto-Dominion Chief Executive Officer Edmund Clark said yesterday in a telephone interview. “It would have taken us five years to have built that many branches, so it just speeds up our development.”
Lenders are collapsing amid losses on residential and commercial real estate loans which pushed the FDIC’s list of “problem” banks to the highest level since 1992 in the fourth quarter. Banks in Michigan, Massachusetts, California and Washington state were also closed yesterday by U.S. and state regulators, who named the Federal Deposit Insurance Corp. as receiver, according to statements on the agency’s Web site.
FDIC Chairman Sheila Bair said on Feb. 23 that the pace of failures may exceed last year’s total of 140.
Toronto-Dominion, which has about 1,000 U.S. branches, has spent more than $15 billion over five years buying Portland, Maine-based TD Banknorth and Cherry Hill, New Jersey-based Commerce Bancorp.
The Toronto-based lender acquired the Florida assets and deposits of Clement-based AmericanFirst Bank, First Federal Bank of North Florida in Palatka and Riverside National Bank of Florida of Fort Pierce.
People’s United
People’s United Financial Inc., which has $21.6 billion in assets, purchased Butler Bank of Lowell, Massachusetts, to expand its footprint, according to a company statement. People’s CEO Philip Sherringham said in July that the bank had been in contact with the FDIC on buying a failed lender.
Regulators also closed Innovative Bank, of Oakland, California, and sold its operations to Los Angeles-based Center Bank, the FDIC said.
Tamalpais Bank of San Rafael, California, was also shuttered and its operations were turned over to San Francisco- based Union Bank, which paid a two percent premium to acquire $487.6 million in deposits. City Bank of Lynnwood, Washington was closed by regulators who moved its deposits and the majority of the assets to Whidbey Island Bank. Coupeville, Washington- based Whidbey paid a one percent premium to the FDIC to assume $1.02 billion in deposits.
State regulators and the FDIC were unable to find a buyer for Lakeside Community Bank, of Sterling Heights, Michigan, which was closed and deposits paid out, the FDIC said.
source: bloomberg.com
April 17 (Bloomberg) -- Toronto-Dominion Bank, Canada’s second-largest lender, agreed to buy three Florida-based financial institutions as those and five other failures brought the number of 2010 closures to 50.
Toronto-Dominion added $3.1 billion in deposits to the $117 billion it holds in two other U.S. lenders, according to a company statement. The lender picked up 69 branches in yesterday’s purchases, bringing its total in Florida to 100.
“These were all in locations that were in our master plan,” for new branches, Toronto-Dominion Chief Executive Officer Edmund Clark said yesterday in a telephone interview. “It would have taken us five years to have built that many branches, so it just speeds up our development.”
Lenders are collapsing amid losses on residential and commercial real estate loans which pushed the FDIC’s list of “problem” banks to the highest level since 1992 in the fourth quarter. Banks in Michigan, Massachusetts, California and Washington state were also closed yesterday by U.S. and state regulators, who named the Federal Deposit Insurance Corp. as receiver, according to statements on the agency’s Web site.
FDIC Chairman Sheila Bair said on Feb. 23 that the pace of failures may exceed last year’s total of 140.
Toronto-Dominion, which has about 1,000 U.S. branches, has spent more than $15 billion over five years buying Portland, Maine-based TD Banknorth and Cherry Hill, New Jersey-based Commerce Bancorp.
The Toronto-based lender acquired the Florida assets and deposits of Clement-based AmericanFirst Bank, First Federal Bank of North Florida in Palatka and Riverside National Bank of Florida of Fort Pierce.
People’s United
People’s United Financial Inc., which has $21.6 billion in assets, purchased Butler Bank of Lowell, Massachusetts, to expand its footprint, according to a company statement. People’s CEO Philip Sherringham said in July that the bank had been in contact with the FDIC on buying a failed lender.
Regulators also closed Innovative Bank, of Oakland, California, and sold its operations to Los Angeles-based Center Bank, the FDIC said.
Tamalpais Bank of San Rafael, California, was also shuttered and its operations were turned over to San Francisco- based Union Bank, which paid a two percent premium to acquire $487.6 million in deposits. City Bank of Lynnwood, Washington was closed by regulators who moved its deposits and the majority of the assets to Whidbey Island Bank. Coupeville, Washington- based Whidbey paid a one percent premium to the FDIC to assume $1.02 billion in deposits.
State regulators and the FDIC were unable to find a buyer for Lakeside Community Bank, of Sterling Heights, Michigan, which was closed and deposits paid out, the FDIC said.
source: bloomberg.com
China’s Rules to Curb Property ‘Madness’ Will Take Effect Now
China’s Rules to Curb Property ‘Madness’ Will Take Effect Now
April 17 (Bloomberg) -- China’s central bank pledged to immediately implement new lending rules to cool real-estate speculation and one of its policy advisers said the market is having its “last madness.”
The central bank commented in a statement on its Web site last night. Li Daokui, a newly appointed academic adviser to the monetary policy committee, spoke in an interview broadcast by state television on April 15.
Asset-price bubbles inflated by a credit boom could derail the recovery of the world’s fastest-growing major economy, which expanded 11.9 percent in the first quarter from a year earlier. China’s cabinet, the State Council, announced higher mortgage rates and down-payment ratios for second homes on April 15 after property prices jumped by a record in March.
Investors “don’t realize how strong and resolute the political will is among top leaders to curb price gains,” Li said on Central Television. The market is having its “last madness” and speculation may dissipate in a year or 18 months on extra action by local authorities and an increased supply of low-price, so-called policy homes, Li said.
Cheung Kong (Holdings) Ltd., the Hong Kong developer controlled by billionaire Li Ka-shing, said yesterday that efforts to cool the Chinese property market are “timely.”
“You want to take action before the market gets too hot,” Justin Chiu, executive director of Cheung Kong, said in a Bloomberg Television interview. “Prices have gone up really quite a lot; people buying for their own use should do it within their means. If they invest, they need to be cautious about interest rates.”
Stocks Fall
Under the new rules, down payments for second homes must be at least 50 percent, up from 40 percent, and mortgage rates can’t be lower than 110 percent of benchmark rates, the State Council said. Banks should also raise down payment ratios and rates for third homes “by a broad margin,” it said.
The Shanghai Composite Index fell 1.1 percent yesterday on concern that measures to cool the real-estate market may hurt economic growth and companies’ profits.
“We don’t think that’s the end of the policy crackdown on the property market and some shoes have yet to drop,” said Larry Wan, deputy chief investment officer at KBC-Goldstate Fund Management Co., which oversees about $583 million. “Property accounts for a big proportion of fixed-asset investment and if the property industry is down, the whole economy will get hurt. So will related industries such as banking and resources.”
Surging Prices
Property prices in 70 major cities surged 11.7 percent in March from a year earlier, the most since records began in 2005, government data showed last week.
In an April 15 statement after the release of first-quarter numbers for gross domestic product, the State Council said that local governments have failed to control speculation. Besides limiting the risk of price bubbles, policy makers want to keep housing affordable.
The government has yet to take another step which could help to cool the property market: raising benchmark interest rates. Instead, officials are targeting a 22 percent reduction in new loans in 2010 from last year’s record of $1.4 trillion.
In an April 14 statement, the State Council said first- quarter growth was largely driven by stimulus policies and a comparison with a low level a year earlier, signaling that officials may be cautious in withdrawing stimulus.
China’s economy is showing signs of overheating and officials may face a “grim” and difficult task in holding full-year inflation to a targeted maximum of 3 percent, said Li, a professor at Tsinghua University in Beijing. He was appointed as one of three academic advisers to the People’s Bank of China last month.
source: bloomberg.com
Home Sales, Goods Orders Probably Climbed: U.S. Economy Preview
Home Sales, Goods Orders Probably Climbed: U.S. Economy Preview
April 18 (Bloomberg) -- Home sales and orders for long- lasting goods probably climbed in March, increases that enhance the odds the U.S. recovery will be sustained, economists said before reports this week.
Purchases of new and existing homes rose to a combined 5.63 million annual rate, the first gain in four months, according to the median estimate of economists surveyed by Bloomberg News. Bookings for goods meant to last several years may have advanced for a fourth straight time.
The advances in durable goods would be the longest since 2005, highlighting how manufacturing is at the forefront of the economic rebound as global demand strengthens. The improvement in housing, meanwhile, is more dependent on help from the federal government as buyers rush to beat a deadline to qualify for a tax credit, indicating the industry will take time to rally.
“Business spending does seem to be picking up and I think that is going to be one of the key elements for the expansion,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. On housing, “anything we get on the positive side would be an improvement.”
Reports last week showed builders turned less pessimistic in April and housing starts for March were at the highest level in more than a year.
Sales Breakdown
Sales of previously owned houses probably rose to a 5.3 million annual rate in March from a 5.02 million pace a month earlier, an April 22 report from the National Association of Realtors may show. A day later, data from the Commerce Department may show purchases of new homes climbed 5.5 percent to a 325,000 rate, according to the survey median.
The Obama administration in November extended a credit for first-time homebuyers and expanded it to include some current owners. The deadline for signing purchase contracts is the end of this month, and transactions must be completed by June 30.
“There is potential for sales to jump a bit” in coming months ahead of the deadline, said Aaron Smith, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania.
After that, the state of the labor market, mortgage rates and developments surrounding foreclosures, which are depressing property values and adding to already bloated inventories, will determine housing’s fate, Smith said.
The outlook for factories is less ambiguous as improving economies overseas propel exports and rising U.S. demand prompts companies to update equipment and boost stockpiles. Orders for durable goods probably increased 0.2 percent last month after rising 0.9 percent in February, a Commerce Department report on April 23 may show.
Growing Exports
Sales overseas rose in February to the highest level since October 2008, the Commerce Department reported last week. Manufacturing last month expanded at the fastest pace since 2004, according to a national survey of purchasing managers.
General Electric Co. “saw encouraging economic signs,” in the first quarter, Chief Executive Officer Jeffrey Immelt said in a statement April 16. The company expects results this year to be little changed from 2009 with “upside potential,” Immelt said.
GE now gets more than half of its revenue from outside the U.S. Immelt increased the research budget in total by about 7 percent and has said he plans to boost it more this year. In the first quarter, GE raised its research and development investment by 16 percent, Immelt said.
Shares Rally
GE has been the biggest contributor to the advance in the Standard & Poor’s 500 Index so far this year, boosting the gauge by 4.3 points. The S&P Supercomposite Machinery Index, which includes Caterpillar Inc. and Deere & Co., is up 16 percent since Dec. 31, more than double the 6.9 percent gain in the broader 500 index.
A report tomorrow may show the economic recovery is gaining momentum. The index of leading indicators, a measure of the outlook over the next three to six months, probably rose 1 percent last month, a 12th consecutive advance, according to the survey median before figures from the New York-based Conference Board.
Finally, another report this week may show inflation is contained. Economists surveyed projected wholesale prices excluding food and energy costs rose 0.1 percent in March, the same as the prior month, according to the survey median.
Volatility in fuel costs, may have caused overall producer prices to rise 0.5 percent after falling 0.6 percent in February, the survey showed. The Labor Department’s report is due April 22.
Bloomberg Survey
================================================================
==
Release Period Prior Median
Indicator Date Value Forecast
================================================================
==
LEI MOM% 4/19 March 0.1% 1.0%
PPI MOM% 4/22 March -0.6% 0.5%
Core PPI MOM% 4/22 March 0.1% 0.1%
PPI YOY% 4/22 March 4.4% 6.0%
Core PPI YOY% 4/22 March 1.0% 0.9%
Initial Claims ,000’s 4/22 17-Apr 484 450
Cont. Claims ,000’s 4/22 10-Apr 4639 4600
Exist Homes Mlns 4/22 March 5.02 5.30
Exist Homes MOM% 4/22 March -0.6% 5.6%
Durables Orders MOM% 4/23 March 0.9% 0.2%
Durables Ex-Trans MOM% 4/23 March 1.4% 0.7%
New Home Sales ,000’s 4/23 March 308 325
New Home Sales MOM% 4/23 March -2.2% 5.5%
================================================================
==
source: bloomberg.com
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