Archive for April, 2009

Bailed-out banks face probe over fee hikes: report (Reuters)

Monday, April 13th, 2009 | Finance News

(Reuters) –
U.S. banks that received money under the Troubled Asset Relief Program (TARP) are facing a probe over increases in rates and fees, the Wall Street Journal said. The Congressional Oversight Panel, the body named by Congress to oversee the federal bailout, is working on a report examining instances of potentially inappropriate lending by banks that got taxpayer capital, according to the paper.

"The people who are subsidizing the activities of the banks through their tax dollars are the same people who are furnishing the high profits through consumer lending," Elizabeth Warren, chairwoman of the Congressional Oversight Panel told the Journal in an interview.

"In a sense, we're asking taxpayers to pay twice," Warren told the paper.

The U.S. Treasury Department's $700 billion TARP was intended to provide lenders with more capital to spur lending and improve the economy.

Since TARP was launched in October, banks bolstered by capital infusions have boosted charges on a wide range of routine transactions, hiked rates on credit cards and continued making loans criticized as predatory by consumer advocates, the Journal said.

(Reporting by Amitha Rajan in Bangalore; Editing by Muralikumar Anantharaman)

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Asia stocks up, oil slides on demand outlook (Reuters)

Sunday, April 12th, 2009 | Finance News

TOKYO (Reuters) –
Asian stocks rose on Monday on hopes for the global economy, with Taiwan shares hitting a near 7-month closing high, while oil prices slipped below $52 after a dramatic oil demand downgrade by the International Energy Agency.

But trade was thinned with many Asian and European centers still out for the long Easter holiday weekend, and shares were largely directionless as investors waited for U.S. bank results due out this week and the resulting reaction of stock markets.

U.S. banks including Goldman Sachs (GS.N) JPMorgan (JPM.N) and Citigroup (C.N) are set to report first-quarter results this week.

"The world is watching this, and with stock markets likely to move strongly in response, nobody wants to either buy or sell actively today," said Masayoshi Okamoto, head of dealing at Jujiya Securities in Tokyo.

"People remain positive overall, though."

Hopes that the global economy may be over the worst, particularly after a robust rise in Chinese loan data released at the weekend, meant sentiment remained largely positive.

Central bank data on Saturday showed China's banks lent a record amount of new local currency loans, the latest sign that the economy is gaining steam, and helped send Chinese stocks up more than 3 percent in heavy trade.

Taiwan stocks were led higher by property shares such as Cathay Real Estate (2501.T) climbing after parliament approved a special spending budget, while Seoul shares rose on automaker gains after the government said it will inject money to support the car industry through the global downturn.

But Japan's benchmark Nikkei (.N225) underperformed the rest of Asia to close down 0.4 percent, dragged lower by retailers and tech firms such as TDK Corp (6762.T) after a day of seesaw trade that took it in and out of negative territory.

With U.S. markets closed on Friday, local factors took the lead in most Asian markets as investors waited for Wall Street to resume trading later in the day.

"Investors are divided over whether shares at the current level still have room to rise, or whether we need to see clearer signs of a recovery in the U.S. bank sector and the global economy," said Lee Sun-yeob, a market analyst at Goodmorning Shinhan Securities in Seoul.

The Korea Composite Stock Price Index (.KS11) (KOSPI) closed up 0.2 percent at 1,338.16, while Taiwan's main TAIEX share index (.TWII) gained 1.3 percent to 5,857.64.

The MSCI index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) rose 0.5 percent, crawling back toward a six-month high hit a week ago.

OIL SLIDES

The dollar edged up against the yen in quiet trade, gaining 0.2 percent to 100.38 yen.

U.S. crude for May delivery fell 0.75 to $51.49 on Monday, the first day of trade since Thursday's nearly 6 percent gain, as the market waited for confirmation of the grim demand outlook from the U.S. government.

The IEA said on Friday that world oil demand will dive by 2.4 million barrels per day to 83.4 million bpd this year, a one million bpd cut from its previous report.

The U.S. Energy Information Administration is set to release its short-term energy outlook on Tuesday, while OPEC publishes its updated monthly view on Wednesday.

Japanese government bonds were little changed in subdued trading as uncertainty over the outlook for extra JGB issuance kept investors on the sidelines.

The government said on Friday it would issue more than 10 trillion yen ($100 billion) of debt in the year to March 2010 to finance its latest stimulus package, which is worth $154 billion.

(Editing by Kazunori Takada)

(Additional reporting by Jungyoun Park in SEOUL)

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GM told to prep for bankruptcy filing: report (Reuters)

Sunday, April 12th, 2009 | Finance News

WASHINGTON, April 12 (Reuters ) –
The U.S. Treasury Department is directing General Motors to lay the groundwork for a bankruptcy filing by June 1, even though the automaker has publicly stated it could reorganize outside of court, The New York Times reported on Sunday.

GM is operating under emergency U.S. government loans. It has been told by the Obama administration's task force overseeing its bailout that it must cut costs and reduce its debts in order to continue to receive aid.

The White House-appointed autos task force has given GM 60 days to come up with a restructuring plan and it is trying to determine whether the automaker can be a viable company.

Quoting sources who had been briefed on the GM plans, the Times said the goal was to prepare for a fast "surgical" bankruptcy.

The newspaper said preparations are aimed at assuring a GM bankruptcy filing is ready if the company is unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in GM and with the United Automobile Workers union.

A plan under consideration would create a new company that would buy the "good" assets of GM after the carmaker files for bankruptcy, the Times said.

Less desirable assets, including unwanted brands, factories and health care obligations, would be left in the old company, which could be liquidated over several years, according to the paper.

Treasury officials are examining one potential outcome in which the viable GM enters and exits bankruptcy protection in as little as two weeks, using $5 billion to $7 billion in federal financing, a person briefed on the matter told the Times.

The Times sources declined to be identified because they were not authorized to discuss the process. Both GM and Treasury Department officials declined to comment, the newspaper said.

Last week, GM's chief executive said the automaker wanted to restructure out of court, but also preparing for a bankruptcy filing.

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