Archive for December, 2009

Banks with political ties got bailouts, study shows (Reuters)

Monday, December 21st, 2009 | Finance News

NEW YORK (Reuters) –
U.S. banks that spent more money on lobbying were more likely to get government bailout money, according to a study released on Monday.

Banks whose executives served on Federal Reserve boards were more likely to receive government bailout funds from the Troubled Asset Relief Program, according to the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan's Ross School of Business.

Banks with headquarters in the district of a U.S. House of Representatives member who serves on a committee or subcommittee relating to TARP also received more funds.

Political influence was most helpful for poorly performing banks, the study found.

"Political connections play an important role in a firm's access to capital," Sosyura, a University of Michigan assistant professor of finance, said in a statement.

Banks with an executive who sat on the board of a Federal Reserve Bank were 31 percent more likely to get bailouts through TARP's Capital Purchase Program, the study showed. Banks with ties to a finance committee member were 26 percent more likely to get capital purchase program funds.

As of late September, nearly 700 financial institutions had received bailouts of $205 billion under the capital purchase program, the study said.

The banking industry has long been criticized for using political influence to obtain bailouts.

Scott Talbott, a senior vice president with industry lobbying group The Financial Services Roundtable, said the study was skewed because it did not exclude nine of the largest banks that were "strongly asked" by the government to take bailouts.

Those banks included Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N), and Morgan Stanley (MS.N) -- all of which repaid their bailouts in June.

Bank of America Co (BAC.N) and Citigroup Inc (C.N) more recently announced plans to pay back taxpayers.

Talbott also noted that $116 billion has been repaid with interest.

"This demonstrates the banks were excellent stewards of the taxpayer's money," Talbott said.

But a watchdog for the government's bailout, the special inspector general for TARP, said last month that the broader $700 billion bailout program "almost certainly" will result in an overall loss for taxpayers.

President Obama said in October that despite the bailout, there was still too little credit flowing to small businesses.

(Reporting by Steve Eder; Editing by Gary Hill)


Banks weigh on Asian shares, dollar steady (Reuters)

Monday, December 21st, 2009 | Finance News

TOKYO (Reuters) –
Asian share markets struggled to hold early gains on Monday, with bank shares pressuring some lower even as tech stocks gained, while the dollar held steady on the yen and hovered near a three-month high on the euro.

In Europe, Britain's FTSE 100 (.FTSE), Germany's DAX (.GDAXI) and France's CAC-40 (.FCHI) were expected to open as much as 0.7 percent up, reassured by export data out of Japan, which rose the most in seven years last month.

Shares in Hong Kong (.HSI) and Shanghai (.SSEC) slid as financial and property stocks fell on concern China would take steps to cool the property market, while banks such as HSBC (0005.HK) eased on worries they made need to make provision against exposure to debt in Dubai.

Debt-ridden conglomerate Dubai World is expected on Monday to ask key creditors for more time to pay off loans.

Seoul shares ended 0.17 percent lower, with banks including KB Financial Group (105560.KS) weighing but gains in technology exporters such as LG Electronics (066570.KS) lending support.

"Banks are under pressure amid recent news flows pointing to a tighter regulatory environment, potentially worsening net interest margins," said Kwak Joong-bo, a market analyst at Hana Daetoo Securities.

Banks face having to set aside more funds or raise fresh capital in as little as three years, according to proposals by a global regulatory body that could change the way they do business.

The MSCI index of Asian stocks excluding Japan (.MIAPJ0000PUS) fell 0.5 percent.

Bucking the trend were Japan and Taiwan, which both finished higher, while

The Nikkei average (.N225) closed up 0.4 percent as stocks such as chip-tester maker Advantest Corp (6857.T) gained.

"Investors welcomed solid earnings results from Oracle and (BlackBerry maker) Research in Motion over the weekend, as well as a weaker yen," said Norihiro Fujito, general manager of investment research at Mitsubishi UFJ Securities in Tokyo.

"But trading volume is becoming thin as the year-end draws near and the market could easily turn south if the yen strengthens again."

Upbeat results from Oracle (ORCL.O) and Research In Motion (RIM.TO) (RIMM.O) helped boost the Nasdaq (.IXIC) on Friday, which ended up 1.45 percent.

The Dow Jones industrial average (.DJI) closed up 0.20 percent and the Standard & Poor's 500 Index (.SPX) rose 0.58 percent. (.N)

Australian stocks slipped 0.3 percent (.AXJO) but top airline Qantas Airways Ltd (QAN.AX) jumped after flagging a return to profit.

Banking shares were mostly lower after leading a rise of nearly 47 percent in the benchmark share index from a five-year low reached in early March.


The dollar hovered near its highest point in more than three months against the euro as traders anticipated more year-end dollar short-covering until the Christmas break later this week.

A brighter outlook for the U.S. economy after stronger figures on the job market and retail sales earlier this month has helped the dollar pull back from a long-running downtrend.

"The dollar may extend gains a little more as momentum buyers could chase the dollar up while it stays in an uptrend," said Masafumi Yamamoto, chief FX strategist for Barclays Capital in Japan.

The euro was steady at $1.4344 after dipping to $1.4262 on Friday, its lowest since early September. The dollar was unchanged at 90.40 yen, after touching its strongest level for six weeks on Friday.

U.S. crude futures edged down, paring Friday's 1 percent rise after news Iranian troops had partly withdrawn from a disputed oil area claimed by both Tehran and Baghdad, easing tensions between two major crude exporters. NYMEX crude for January delivery was down 13 cents at $73.23 a barrel.

U.S. Treasury debt prices were steady while Japan's five-year government bond yield fell to a four-year low, following comments last week by the Bank of Japan that it would not tolerate deflation.

(Additional reporting by Jungyoun Park in Seoul, Denny Thomas in Sydney; Editing by Kazunori Takada)


Citadel Broadcasting files bankruptcy protection (Reuters)

Sunday, December 20th, 2009 | Finance News

NEW YORK (Reuters) –
Citadel Broadcasting Corp (CTDB.OB), the third-largest U.S. radio broadcaster, said on Sunday it filed for the bankruptcy protection, as the radio industry continues to be hard hit by depressed advertising revenue.

Citadel, whose network consists of 165 FM stations and 58 AM stations, filed for Chapter 11 bankruptcy protection under a prenegotiated deal with more than 60 percent of its senior lenders.

The deal would convert its $2.1 billion secured credit facility into a new term loan of $762.5 million, meaning about $1.4 billion of debt would be extinguished, it said.

As part of the deal, senior lenders would receive a share of the new term loan and 90 percent of the new common stock in reorganized Citadel. The company filed for bankruptcy protection in Manhattan.

Farid Suleman, Citadel's chief executive officer, said the company's "business will continue as usual" and it would seek to emerge from restructuring as quickly as possible.

Citadel, also the owner of ABC Radio Networks, which it took on debt to buy from the Walt Disney Co (DIS.N) in 2006, has struggled along with the rest of the industry.

In the latest quarter, it reported a 14 percent drop in revenue to $183 million, and a quarterly loss of 8 cents per share versus a profit of 10 cents per share a year earlier.

Citadel said that to fund its restructuring it has reached an agreement with lenders to access about $36 million of cash on hand. It will also use all cash flow from operations, it said.

The company listed total assets of $1.4 billion and debts of $2.5 billion, according to a bankruptcy court document.

Buyout firm Forstmann Little & Co holds 28.7 percent of the company's shares, according to the document.

(Reporting by Paul Thomasch, additional reporting by Megan Davies, editing by Matthew Lewis and Carol Bishopric)