tag:blogger.com,1999:blog-25914838643641323722024-03-14T01:48:39.458-04:00Biz ReportingMark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.comBlogger371125tag:blogger.com,1999:blog-2591483864364132372.post-87450221789253199132010-05-21T10:32:00.000-04:002010-05-21T10:32:39.267-04:00SEC investigating brokerage firms role in market selloff<span class="Apple-style-span" style="color: #333333; font-family: Georgia, serif; font-size: 13px;"></span><br />
<div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">The New York Times - WASHINGTON — The enforcement division of the <a class="meta-org" href="http://topics.nytimes.com/top/reference/timestopics/organizations/s/securities_and_exchange_commission/index.html?inline=nyt-org" style="color: #000066; text-decoration: none;" title="More articles about the U.S. Securities And Exchange Commission.">Securities and Exchange Commission</a> is investigating whether market makers and brokerage firms fulfilled their legal obligations to provide liquidity in the markets by buying and selling stock during the sharp market drop of May 6, the chairwoman of the agency said Thursday.</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">The S.E.C. is also looking into whether market makers and brokers executed investors’ trades correctly.</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><a class="meta-per" href="http://topics.nytimes.com/top/reference/timestopics/people/s/mary_l_schapiro/index.html?inline=nyt-per" style="color: #000066; text-decoration: none;" title="More articles about Mary L. Schapiro.">Mary L. Schapiro</a>, the S.E.C. chairwoman, said the agency was also considering whether to establish market participation mandates for professional traders like high-frequency traders who were not obligated to continue trading during periods of extreme market stress.</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">The comments came during testimony to the Senate Subcommittee on Securities, Insurance and Investment, which, like a House subcommittee last week, had called the leaders of various market regulators and exchanges to testify on the causes of the May 6 market plunge.</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">On May 6, stock prices fell by about 6 percent in a matter of minutes before recovering nearly as quickly. Earlier this week, the S.E.C. said that in reaction to the market tumult, circuit breakers would be installed for individual stocks in the Standard & Poor’s 500-stock index on a six-month test basis beginning in June. Those circuit breakers would halt trading for five minutes in stocks that fell or rose by more than 10 percent in a five-minute period.</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">Ms. Schapiro said the commission would also re-examine its rules concerning circuit breakers for the overall market, which were not tripped on May 6 because the Dow Jones industrial average did not drop by 10 percent. In addition to reviewing whether that percentage level was appropriate, Ms. Schapiro said, the agency would examine whether the trigger should be based on a broader stock index, like the Standard & Poor’s 500.</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><a class="meta-per" href="http://topics.nytimes.com/top/reference/timestopics/people/g/gary_g_gensler/index.html?inline=nyt-per" style="color: #000066; text-decoration: none;" title="More articles about Gary Gensler.">Gary Gensler</a>, the chairman of the <a class="meta-org" href="http://topics.nytimes.com/top/reference/timestopics/organizations/c/commodity_futures_trading_commission/index.html?inline=nyt-org" style="color: #000066; text-decoration: none;" title="More articles about Commodity Futures Trading Commission, U.S.">Commodity Futures Trading Commission</a>, said that his agency would also examine its circuit breakers, as well as whether there should be new rules governing the use of computer-driven, or algorithmic, trading.</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">Mr. Gensler noted that while human traders could react to an unusual event like the one that occurred on May 6, computers simply did what they were instructed to do, repeatedly. That, he added, was part of the problem on May 6.</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">During the period of highest market stress on May 6, many institutional investors stopped trading, according to a review of the day’s trading activity by the S.E.C. and the C.F.T.C. .</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">Among those that legally stepped back from the market during that time were several of the firms that employ computer programs to trade millions of shares a second and that are usually the biggest providers of liquidity in the stock market.</div>Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com16tag:blogger.com,1999:blog-2591483864364132372.post-89119110730912663782010-05-21T10:27:00.001-04:002010-05-21T10:29:58.179-04:00Naked Truth on Default Swaps<span class="Apple-style-span" style="color: #333333; font-family: Georgia, serif; font-size: 13px;"><nyt_text></nyt_text></span><br />
<div id="articleBody"><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="color: #333333; font-family: Georgia, serif; font-size: 13px; line-height: normal;"><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><i>Great column on credit-default swaps by Floyd Norris. - MT</i></div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">The New York Times - Should people be able to bet on your death? How about your financial failure?</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">In the <a class="meta-org" href="http://topics.nytimes.com/top/reference/timestopics/organizations/s/senate/index.html?inline=nyt-org" style="color: #000066; text-decoration: none;" title="More articles about the U.S. Senate.">United States Senate</a>, Wall Street won one this week when the Senate voted down a proposal to bar the so-called naked buying of <a class="meta-classifier" href="http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_default_swaps/index.html?inline=nyt-classifier" style="color: #000066; text-decoration: none;" title="More articles about credit default swaps.">credit-default swaps</a>. If that were the law, you could not use swaps to bet a company would fail. The exception would be if you already had a stake in the company succeeding, such as owning a bond issued by the company.</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">On the other side of the Atlantic, Germany announced new rules to bar just such betting — but only if the creditors were euro area governments.</div></span><span class="Apple-style-span" style="font-family: Georgia, serif; font-size: 16px;">None of this argument would be taking place if regulators had done their jobs years ago and classified credit-default swaps as insurance.</span> </div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">Credit-default swaps are, in reality, insurance. The buyer of the insurance gets paid if the subject of the swap cannot meet its obligations. The seller of the swap gets a continuing payment from the buyer until the insurance expires. Sort of like an insurance premium, you might say.</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;">But the people who dreamed up credit-default swaps did not like the word insurance. It smacked of regulation and of reserves that insurance companies must set aside in case there were claims. So they called the new thing a swap.</div><div style="color: black; font-size: 1.2em; line-height: 24px; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><span class="Apple-style-span" style="font-size: 16px;"><a href="http://www.nytimes.com/2010/05/21/business/economy/21norris.html">http://www.nytimes.com/2010/05/21/business/economy/21norris.html</a></span></div></div>Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com20tag:blogger.com,1999:blog-2591483864364132372.post-38517471119761741552010-05-15T10:00:00.001-04:002010-05-15T10:02:09.154-04:00Close Call<span class="Apple-style-span" style="color: #444444; font-family: Baskerville, Georgia, 'Times New Roman', Times, serif; font-size: 12px;"></span><br />
<div style="font-size: 1.3em; line-height: 1.4em; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Last Wednesday, Arkansas Senator Blanche Lincoln took to the Senate floor and delivered about as fiery a speech as you’ll hear in the chamber, at least on the subject of financial reform. “Currently, five of the largest commercial banks account for ninety-seven percent of the [derivatives market],” she said. “That is a huge concentration of economic power, which is why I am in no way surprised that several individuals are seeking to remove it from the bill.”</div><div style="font-size: 1.3em; line-height: 1.4em; margin-bottom: 1em; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">The “it” these unnamed individuals were bent on removing is a provision Lincoln wrote that would force banks to spin off their derivatives business if they want access to federal deposit insurance and other safeguards. Lincoln stunned the financial world when she unveiled the hawkish proposal last month and promptly pushed it through the Senate Agriculture Committee, which she chairs. (Derivatives are essentially a bet on the direction of financial data, like bond prices and interest rates.)</div><br />
<a href="http://www.tnr.com/articles/Economy">Economy | The New Republic</a>Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com8tag:blogger.com,1999:blog-2591483864364132372.post-68134777062462870952010-05-14T18:35:00.000-04:002010-05-14T18:35:06.180-04:00More Corruption: Bear Stearns Falsified Information as Raters ShruggedThe Atlantic - Made up FICO scores? Twenty-minute speed ratings to AAA? If government prosecutors like New York Attorney General Andrew Cuomo want answers to why the mortgage-backed securities market was so screwed up, they should talk to Matt Van Leeuwen from Bear Stearn's servicing arm EMC. <br />
<a href="http://www.theatlantic.com/business/archive/2010/05/does-cuomos-case-against-wall-street-have-a-shot/56670/" target="_blank">Reports indicated</a> on Thursday that Cuomo is pursuing a criminal investigation surrounding banks supplying bad information to rating agencies about the quality of the mortgages they signed off on. But so far he hasn't been able to prove where in the chain of blame the due diligence for the ratings broke down.<br />
What Cuomo needs to establish is: whose shoulders does it fall on to verify the information lenders were selling to investment banks about the quality of their loans? And who was ultimately responsible for the due diligence on the loans that created toxic mortgage securities that were at heart of our financial crisis?<br />
<br />
<br />
<strong>False Information and the Grey Area</strong><br />
Employed during the go-go years of 2004-2006, and speaking in an interview taped by BlueChip Films for a documentary in final production called Confidence Game, Van Leeuwen sheds some light onto the shenanigans going on during the mortgage boom that might surprise even Cuomo. As a former mortgage analyst at Dallas-based EMC mortgage, which was wholly owned by Bear Stearns, he had first-hand experience working with Bear's mortgage-backed securitization factory. EMC was the "third-party" firm Bear was using to vet the quality of loans that would purchase from banks like Countrywide and Wells Fargo. <br />
Van Leeuwen says Bear traders pushed EMC analysts to get loan analysis done in only one to three days. That way, Bear could sell them off fast to eager investors and didn't have carry the cost of holding these loans on their books.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com8tag:blogger.com,1999:blog-2591483864364132372.post-21835912662744021742010-05-10T07:50:00.002-04:002010-05-10T07:50:58.528-04:00Jim Cramer During the Market Meltdown<object height="385" width="480"><param name="movie" value="http://www.youtube.com/v/i4jotxBOhNI&hl=en_US&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/i4jotxBOhNI&hl=en_US&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="480" height="385"></embed></object>Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com4tag:blogger.com,1999:blog-2591483864364132372.post-8519948180501386982010-05-10T07:50:00.000-04:002010-05-10T07:50:07.330-04:00YouTube For Traders - Searchable News Video Streams<span class="timestamp published" title="2010-05-10T06:35:04+00:00"></span><!-- The Content --> <i>One reason why local TV can start packing its bags. Video will be big and dominate the landscape, but it will be video streamed via the Internet as NYT media writer David Carr points out in this column. Journalism schools need to start training students for this market.</i> -MT<br />
<br />
New York Times -For half an hour last Thursday afternoon, CNBC was the most exciting place on television. Watching Erin Burnett and Jim Cramer <a href="http://www.youtube.com/watch?v=i4jotxBOhNI&feature=player_embedded">try not to freak out</a> — they acquitted themselves nicely — while the market tumbled like a drunken rag doll down a long staircase was amazing television, David Carr writes in The New York Times.<br />
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The rest of the time, as when the market is not suffering the largest drop within a single day of trading? Um, not so much. Even if you are an avowed business bobble-head, most of the time, CNBC and other financial channels are a kind of wallpaper. Business people mostly live in narrow verticals. If you follow and trade in uranium, it’s not going to pop up all that often on the linear channels of television.<br />
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So <strong>Thomson Reuters</strong> is trying to change television. Its new product, Reuters Insider, is a Web-based video service that captures myriad streams of information produced by the company’s reporters and 150 partners. The service, which will begin Tuesday, is something like a You Tube for the financially interested, albeit one that is available only to Reuters subscribers, who pay as much as $2,000 a month.<br />
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Using the main window of the service, called Channel One, subscribers can navigate by sector, date, markets or region, or apply filters to create their own personalized channels.<br />
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Thomson Reuters, which was formed in a merger in 2008, creating a $30 billion behemoth in financial news and information, is making a big bet on Insider, about $100 million. While its chief competitor, Bloomberg, is making inroads into consumer media with its purchase of Businessweek, Thomson Reuters is going in the opposite direction.<br />
<br />
Why try to sell advertisers on a broad television network when you can get subscribers — investment banks, analysts, market players — to pay and pay dearly for the information ginned up by 2,800 reporters from 200 bureaus around the world, not to mention lots of other technical business intelligence from a curated group of partners?<br />
The effort also tells us something about the place online video now occupies. “The trend that we are seeing in professional information is not all that different than consumer media,” said Devin Wenig, chief executive for the markets division of Thomson Reuters. “People are increasingly visual, and they expect to access information in that way. They want to be able to look at a chief executive and see the expression on the analyst’s face.”<br />
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Of course, just about anybody could go out on the Web and find gobs of people spouting off about financial matters. But Reuters Insider also produces almost real-time transcripts through voice recognition technology — the renderings are pretty rough, but useful — and then humans come behind and clean up some of those transcripts, while adding additional tags, links and other relevant information.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com3tag:blogger.com,1999:blog-2591483864364132372.post-6180139664672086292010-05-08T08:31:00.000-04:002010-05-08T08:31:10.967-04:00Exxon Valdez Lessons<object height="363" id="wsj_fp" width="512"><param name="movie" value="http://online.wsj.com/media/swf/VideoPlayerMain.swf"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><param name="flashvars" value="videoGUID={FB23CFD2-DE01-42A6-9ADB-F55517E967F2}&playerid=1000&plyMediaEnabled=1&configURL=http://wsj.vo.llnwd.net/o28/players/&autoStart=false" base="http://online.wsj.com/media/swf/"name="flashPlayer"></param><embed src="http://online.wsj.com/media/swf/VideoPlayerMain.swf" bgcolor="#FFFFFF"flashVars="videoGUID={FB23CFD2-DE01-42A6-9ADB-F55517E967F2}&playerid=1000&plyMediaEnabled=1&configURL=http://wsj.vo.llnwd.net/o28/players/&autoStart=false" base="http://online.wsj.com/media/swf/" name="flashPlayer" width="512" height="363" seamlesstabbing="false" type="application/x-shockwave-flash" swLiveConnect="true" pluginspage="http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash"></embed></object>Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com2tag:blogger.com,1999:blog-2591483864364132372.post-49144550568850437392010-05-08T08:24:00.000-04:002010-05-08T08:24:14.152-04:00Regulators Warnings Weren't Act OnWASHINGTON — Federal regulators warned offshore rig operators more than a decade ago that they needed to install backup systems to control the giant undersea valves known as blowout preventers, used to cut off the flow of <a class="meta-classifier" href="http://www.nytimes.com/info/oil/?inline=nyt-classifier" title="More articles about oil.">oil</a> from a well in an emergency.<br />
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The warnings were repeated in 2004 and 2009. Yet the <a href="http://www.mms.gov/">Minerals Management Service</a>, the <a class="meta-org" href="http://topics.nytimes.com/top/reference/timestopics/organizations/i/interior_department/index.html?inline=nyt-org" title="More articles about Interior Department, U.S.">Interior Department</a> agency charged both with regulating the oil industry and collecting royalties from it, never took steps to address the issue comprehensively, relying instead on industry assurances that it was on top of the problem, a review of documents shows.<br />
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In the intervening years, numerous blowout preventers and their control systems have failed, though none as catastrophically as those on the well the Deepwater Horizon drilling rig was preparing <a href="http://topics.nytimes.com/top/reference/timestopics/subjects/o/oil_spills/gulf_of_mexico_2010/index.html" title="Times Topics page on the 2010Gulf of Mexico oil spill.">when it blew up on April 20,</a> leaving tens of thousands of gallons of oil a day spewing into the Gulf of Mexico.<br />
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Agency records show that from 2001 to 2007, there were 1,443 serious drilling accidents in offshore operations, leading to 41 deaths, 302 injuries and 356 <a class="meta-classifier" href="http://topics.nytimes.com/top/reference/timestopics/subjects/o/oil_spills/gulf_of_mexico_2010/index.html?inline=nyt-classifier" title="More articles about oil spills.">oil spills</a>. Yet the federal agency continues to allow the industry largely to police itself, saying that the best technical experts work for industry, not for the government. <br />
Critics say that, then and now, the minerals service has been crippled by this dependence on industry and by a climate of regulatory indulgence. <br />
“Everything that’s done by the oil industry is done for profit,” said Senator Bill Nelson, Democrat of Florida, who demanded this week that the Interior Department investigate these backup safety systems. “Throw in the fact that regulators have taken a lax attitude toward overseeing their operations, and you have a recipe for catastrophe.”<br />
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Last year, <a class="meta-org" href="http://topics.nytimes.com/top/news/business/companies/bp_plc/index.html?inline=nyt-org" title="More information about BP P.L.C.">BP</a>, the owner of the well that blew up in the gulf, teamed with other offshore operators to <a href="http://www.mms.gov/federalregister/PublicComments/AD15SafetyEnvMgmtSysforOCSOilGasOperations.htm" title="Industry objections to proposed safety rule.">oppose a proposed rule that would have required stricter safety and environmental standards</a> and more frequent inspections. BP said that “extensive, prescriptive” regulations were not needed for <a class="meta-classifier" href="http://topics.nytimes.com/top/reference/timestopics/subjects/o/offshore_drilling_and_exploration/index.html?inline=nyt-classifier" title="More articles about offshore drilling and exploration.">offshore drilling</a>, and urged the minerals service to allow operators to define the steps they would take to ensure safety largely on their own.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com1tag:blogger.com,1999:blog-2591483864364132372.post-23338125569406439842010-05-08T08:20:00.000-04:002010-05-08T08:20:06.306-04:00Computer meltdown on Wall Street still baffles officials<div class="separator" style="clear: both; text-align: center;"><a href="http://4.bp.blogspot.com/_MXDkSktwuFY/S-VW7IjklZI/AAAAAAAAGHg/ZPK2zfjCG3g/s1600/08trading_CA0-popup.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="410" src="http://4.bp.blogspot.com/_MXDkSktwuFY/S-VW7IjklZI/AAAAAAAAGHg/ZPK2zfjCG3g/s640/08trading_CA0-popup.jpg" width="640" /></a></div><span>Traders applauding Duncan L. Niederauer, chief of NYSE Euronext, on Friday. He had defended his exchange in an interview.</span><br />
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<span> </span>The New York Times - A day after a harrowing plunge in the stock market, federal regulators were still unable on Friday to answer the one question on every investor’s mind: What caused that near panic on Wall Street?<br />
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Through the day and into the evening, officials from the <a class="meta-org" href="http://topics.nytimes.com/top/reference/timestopics/organizations/s/securities_and_exchange_commission/index.html?inline=nyt-org" title="More articles about the U.S. Securities And Exchange
Commission.">Securities and Exchange Commission</a> and other federal agencies hunted for clues amid a tangle of electronic trading records from the nation’s increasingly high-tech exchanges.<br />
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But, maddeningly, the cause or causes of the market’s wild swing remained elusive, leaving what amounts to a $1 trillion question mark hanging over the world’s largest, and most celebrated, stock market.<br />
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The initial focus of the investigations appeared to center on the way a growing number of high-speed trading networks interact with one another and with venerable exchanges like the <a class="meta-org" href="http://topics.nytimes.com/top/reference/timestopics/organizations/n/new_york_stock_exchange/index.html?inline=nyt-org" title="More articles about the New York Stock Exchange.">New York Stock Exchange</a>. Most investors are unaware that these competing systems have fractured the traditional marketplace and have displaced exchanges like the Big Board as the dominant force in stock trading.<br />
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The silence from Washington cast a pall over Wall Street, where shaken traders returned to their desks Friday morning hoping for quick answers. The markets remained on edge, as the uncertainty over what caused Thursday’s wild swings added to the worries over the running debt crisis in Greece.<br />
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<br />
In a joint statement issued after the close of trading, the S.E.C. and the <a class="meta-org" href="http://topics.nytimes.com/top/reference/timestopics/organizations/c/commodity_futures_trading_commission/index.html?inline=nyt-org" title="More articles about Commodity Futures Trading Commission, U.S.">Commodity Futures Trading Commission</a> said they were continuing their review. And the two agencies indicated they were looking particularly closely at how different trading rules on different exchanges, which temporarily halted trading on some markets while activity in the same stocks continued on other markets, might have contributed to the problem.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com2tag:blogger.com,1999:blog-2591483864364132372.post-78836600936212160622010-04-24T14:45:00.000-04:002010-04-24T14:45:01.304-04:00Derivatives Dividing DemocratsThe Wall Street Journal - WASHINGTON—Ahead of a pivotal vote Monday on financial regulation, divisions are emerging among Senate Democrats over how best to strengthen oversight of the market for the exotic financial instruments known as derivatives.<br />
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All 59 members of the Democratic caucus are still expected to stand together Monday on whether to begin action on legislation overhauling regulation of the financial system. But the differences underscore the complexity of the coming debate, and will have to be resolved later this spring.<br />
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At issue is whether the derivatives oversight bill written by Senate Agriculture Chairman Blanche Lincoln (D., Ark.) will be folded into the broader regulatory overhaul. The Lincoln measure would beef up oversight and increase transparency of the market, and includes a proposal that could push Wall Street banks to spin off their derivatives trading operations.<br />
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"I want to make sure that without a doubt...I have a privileged ability to be able to be a part of this bill," Sen. Lincoln said in a statement forwarded Friday by her office.<br />
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Sen. Chris Dodd (D., Conn.), who is leading the broader overhaul effort, has pushed a competing proposal that would increase oversight but not push banks to spin off derivative operations. He's opened negotiations with Sen. Lincoln.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com1tag:blogger.com,1999:blog-2591483864364132372.post-86300753829125778152010-04-24T14:40:00.000-04:002010-04-24T14:40:54.371-04:00Arizona signs tough new immigration lawThe New York TImes - PHOENIX — Gov. <a href="http://www.governor.state.az.us/" title="Jan
Brewer’s Web site.">Jan Brewer</a> of Arizona signed the nation’s toughest bill on illegal <a class="meta-classifier" href="http://topics.nytimes.com/top/reference/timestopics/subjects/i/immigration_and_refugees/index.html?inline=nyt-classifier" title="More articles about immigration.">immigration</a> into law on Friday. Its aim is to identify, prosecute and deport illegal immigrants.<br />
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The move unleashed immediate protests and reignited the divisive battle over immigration reform nationally. <br />
Even before she signed the bill at an afternoon news conference here, <a class="meta-per" href="http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per" title="More articles about Barack Obama.">President Obama</a> strongly criticized it. <br />
Speaking at a naturalization ceremony for 24 active-duty service members in the Rose Garden, he called for a federal overhaul of immigration laws, which Congressional leaders signaled they were preparing to take up soon, to avoid “irresponsibility by others.”<br />
<br />
The Arizona law, he added, threatened “to undermine basic notions of fairness that we cherish as Americans, as well as the trust between police and our communities that is so crucial to keeping us safe.”<br />
<br />
The <a href="http://www.nytimes.com/2010/04/22/us/22immig.html" title="Times article.">law</a>, which proponents and critics alike said was the broadest and strictest immigration measure in generations, would make the failure to carry immigration documents a crime and give the police broad power to detain anyone suspected of being in the country illegally. Opponents have called it an open invitation for harassment and discrimination against Hispanics regardless of their citizenship status.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0tag:blogger.com,1999:blog-2591483864364132372.post-70164635454956173232010-04-19T10:03:00.001-04:002010-04-19T10:03:44.099-04:00Work Force Fueled By High Skilled ImmigrantsST. LOUIS — After a career as a corporate executive with her name in brass on the office door, Amparo Kollman-Moore, an immigrant from Colombia, likes to drive a Jaguar and shop at Saks. “It was a good life,” she said, “a really good ride.”<br />
<br />
As a member of this city’s economic elite, Ms. Kollman-Moore is not unusual among immigrants who live in St. Louis. According to a <a href="http://www.fiscalpolicy.org/immigration.html" title="The analysis">new analysis of census data</a>, more than half of the working immigrants in this metropolitan area hold higher-paying white-collar jobs — as professionals, technicians or administrators — rather than lower-paying blue-collar and service jobs.<br />
<br />
Among American cities, St. Louis is not an exception, the data show. In 14 of the 25 largest metropolitan areas, including Boston, New York and San Francisco, more immigrants are employed in white-collar occupations than in lower-wage work like construction, manufacturing or cleaning.<br />
<br />
The data belie a common perception in the nation’s hard-fought debate over <a class="meta-classifier" href="http://topics.nytimes.com/top/reference/timestopics/subjects/i/immigration_and_refugees/index.html?inline=nyt-classifier" title="More articles about immigration.">immigration</a> — articulated by lawmakers, pundits and advocates on all sides of the issue — that the surge in immigration in the last two decades has overwhelmed the United States with low-wage foreign laborers.<br />
<br />
Over all, the analysis showed, the 25 million immigrants who live in the country’s largest metropolitan areas (about two-thirds of all immigrants in the country) are nearly evenly distributed across the job and income spectrum.<br />
<a href="http://www.nytimes.com/2010/04/16/us/16skilled.html"> http://www.nytimes.com/2010/04/16/us/16skilled.html</a>Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com1tag:blogger.com,1999:blog-2591483864364132372.post-57038332668263826632010-04-19T10:02:00.001-04:002010-04-19T10:02:22.908-04:00ST. LOUIS — After a career as a corporate executive with her name in brass on the office door, Amparo Kollman-Moore, an immigrant from Colombia, likes to drive a Jaguar and shop at Saks. “It was a good life,” she said, “a really good ride.”<br /><br />As a member of this city’s economic elite, Ms. Kollman-Moore is not unusual among immigrants who live in St. Louis. According to a <a href="http://www.fiscalpolicy.org/immigration.html" title="The analysis">new analysis of census data</a>, more than half of the working immigrants in this metropolitan area hold higher-paying white-collar jobs — as professionals, technicians or administrators — rather than lower-paying blue-collar and service jobs.<br /><br />Among American cities, St. Louis is not an exception, the data show. In 14 of the 25 largest metropolitan areas, including Boston, New York and San Francisco, more immigrants are employed in white-collar occupations than in lower-wage work like construction, manufacturing or cleaning.<br /><br />The data belie a common perception in the nation’s hard-fought debate over <a class="meta-classifier" href="http://topics.nytimes.com/top/reference/timestopics/subjects/i/immigration_and_refugees/index.html?inline=nyt-classifier" title="More articles about immigration.">immigration</a> — articulated by lawmakers, pundits and advocates on all sides of the issue — that the surge in immigration in the last two decades has overwhelmed the United States with low-wage foreign laborers.<br /><br />Over all, the analysis showed, the 25 million immigrants who live in the country’s largest metropolitan areas (about two-thirds of all immigrants in the country) are nearly evenly distributed across the job and income spectrum.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com3tag:blogger.com,1999:blog-2591483864364132372.post-21298669574233887022010-04-13T10:38:00.001-04:002010-04-13T10:39:22.805-04:00Lehman Hid Risks by Channeling Billions of Dollars Through Alter Ego<div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/_MXDkSktwuFY/S8SCBQORGHI/AAAAAAAAGEw/XeUepDmGEdk/s1600/13lehman_337-395-popup.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="424" src="http://1.bp.blogspot.com/_MXDkSktwuFY/S8SCBQORGHI/AAAAAAAAGEw/XeUepDmGEdk/s640/13lehman_337-395-popup.jpg" width="640" /></a></div>Lehman Brothers’ headquarters in Midtown Manhattan in 2008. It is now the offices of Barclays Capital. <br />
<br />
The New York Times - It was like a hidden passage on Wall Street, a secret channel that enabled billions of dollars to flow through <a class="meta-org" href="http://topics.nytimes.com/top/news/business/companies/lehman_brothers_holdings_inc/index.html?inline=nyt-org" title="More articles about Lehman Brothers.">Lehman Brothers</a>.<br />
<br />
In the years before its collapse, Lehman used a small company — its “alter ego,” in the words of a former Lehman trader — to shift investments off its books.<br />
<br />
The firm, called Hudson Castle, played a crucial, behind-the-scenes role at Lehman, according to an internal Lehman document and interviews with former employees. The relationship raises new questions about the extent to which Lehman obscured its financial condition before it plunged into bankruptcy.<br />
<br />
While Hudson Castle appeared to be an independent business, it was deeply entwined with Lehman. For years, its board was controlled by Lehman, which owned a quarter of the firm. It was also stocked with former Lehman employees.<br />
<br />
None of this was disclosed by Lehman, however. <br />
Entities like Hudson Castle are part of a vast financial system that operates in the shadows of Wall Street, largely beyond the reach of banking regulators. These entities enable banks to exchange investments for cash to finance their operations and, at times, make their finances look stronger than they are.<br />
<br />
Critics say that such deals helped Lehman and other banks temporarily transfer their exposure to the risky investments tied to subprime mortgages and commercial real estate. Even now, a year and a half after Lehman’s collapse, major banks still undertake such transactions with businesses whose names, like Hudson Castle’s, are rarely mentioned outside of footnotes in financial statements, if at all.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com1tag:blogger.com,1999:blog-2591483864364132372.post-24062132434840233732010-04-12T16:55:00.000-04:002010-04-12T16:55:01.848-04:00Distorted Jobless Numbers Loom<object height="363" id="wsj_fp" width="512"><param name="movie" value="http://online.wsj.com/media/swf/VideoPlayerMain.swf"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><param name="flashvars" value="videoGUID={001EB93C-0DFC-4D89-86AE-E53DD14639E7}&playerid=1000&plyMediaEnabled=1&configURL=http://wsj.vo.llnwd.net/o28/players/&autoStart=false" base="http://online.wsj.com/media/swf/"name="flashPlayer"></param><embed src="http://online.wsj.com/media/swf/VideoPlayerMain.swf" bgcolor="#FFFFFF"flashVars="videoGUID={001EB93C-0DFC-4D89-86AE-E53DD14639E7}&playerid=1000&plyMediaEnabled=1&configURL=http://wsj.vo.llnwd.net/o28/players/&autoStart=false" base="http://online.wsj.com/media/swf/" name="flashPlayer" width="512" height="363" seamlesstabbing="false" type="application/x-shockwave-flash" swLiveConnect="true" pluginspage="http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash"></embed></object>Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0tag:blogger.com,1999:blog-2591483864364132372.post-47846187776191563932010-04-11T20:36:00.002-04:002010-04-11T20:36:54.207-04:00Greek Debt Fears<object height="363" id="wsj_fp" width="512"><param name="movie" value="http://online.wsj.com/media/swf/VideoPlayerMain.swf"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><param name="flashvars" value="videoGUID={F175F09C-8B69-41F9-98F5-A4854A71B23D}&playerid=1000&plyMediaEnabled=1&configURL=http://wsj.vo.llnwd.net/o28/players/&autoStart=false" base="http://online.wsj.com/media/swf/"name="flashPlayer"></param><embed src="http://online.wsj.com/media/swf/VideoPlayerMain.swf" bgcolor="#FFFFFF"flashVars="videoGUID={F175F09C-8B69-41F9-98F5-A4854A71B23D}&playerid=1000&plyMediaEnabled=1&configURL=http://wsj.vo.llnwd.net/o28/players/&autoStart=false" base="http://online.wsj.com/media/swf/" name="flashPlayer" width="512" height="363" seamlesstabbing="false" type="application/x-shockwave-flash" swLiveConnect="true" pluginspage="http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash"></embed></object>Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0tag:blogger.com,1999:blog-2591483864364132372.post-88317057501353825592010-04-11T20:33:00.000-04:002010-04-11T20:33:25.689-04:00European Nations Offer $40 Billion to Help GreeceThe New York Times - BRUSSELS — European leaders sought Sunday to quash any doubts about their resolve to help Greece, offering the country a one-year aid package of up to €30 billion at a much lower interest rate than investors have been demanding.<br />
<br />
The plan, under which countries in the euro zone would lend Greece money at 5 percent interest — compared with as much as 7.5 percent the government paid on the bond markets last week — brought the currency union significantly closer to what would be the first rescue of a member in its history.<br />
<br />
At the same time, the size of the financial commitment, the equivalent of $40.5 billion, which was above market expectations, could at least postpone the need for aid by reassuring investors and helping Greece refinance debt that comes due by the end of May.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0tag:blogger.com,1999:blog-2591483864364132372.post-32140555320911769012010-04-11T20:30:00.000-04:002010-04-11T20:30:42.632-04:00Interest Rates Have No Where to Go But Up<div class="separator" style="clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/_MXDkSktwuFY/S8JpovNERgI/AAAAAAAAGEc/82nbtjnU3JQ/s1600/Interest+Rates+-+Blog.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="354" src="http://3.bp.blogspot.com/_MXDkSktwuFY/S8JpovNERgI/AAAAAAAAGEc/82nbtjnU3JQ/s640/Interest+Rates+-+Blog.PNG" width="640" /></a></div><br />
The New York Times - Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates.That, economists say, is the inevitable outcome of the nation’s ballooning debt and the renewed prospect of inflation as the economy recovers from the depths of the recent <a class="meta-classifier" href="http://topics.nytimes.com/top/reference/timestopics/subjects/r/recession_and_depression/index.html?inline=nyt-classifier" title="More articles about the recession.">recession</a>.<br />
<br />
The shift is sure to come as a shock to consumers whose spending habits were shaped by a historic 30-year decline in the cost of borrowing.<br />
<br />
“Americans have assumed the roller coaster goes one way,” said <a class="meta-per" href="http://topics.nytimes.com/top/reference/timestopics/people/g/william_h_gross/index.html?inline=nyt-per" title="More articles about William H. Gross.">Bill Gross</a>, whose investment firm, Pimco, has taken part in a broad sell-off of government debt, which has pushed up interest rates. “It’s been a great thrill as rates descended, but now we face an extended climb.”<br />
<br />
The impact of higher rates is likely to be felt first in the housing market, which has only recently begun to rebound from a deep slump. The rate for a 30-year fixed rate mortgage has risen half a point since December, hitting 5.31 last week, the highest level since last summer.<br />
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Along with the sell-off in bonds, the Federal Reserve has halted its emergency $1.25 trillion program to buy mortgage debt, placing even more upward pressure on rates.<br />
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“Mortgage rates are unlikely to go lower than they are now, and if they go higher, we’re likely to see a reversal of the gains in the housing market,” said Christopher J. Mayer, a professor of finance and economics at Columbia Business School. “It’s a really big risk.”<br />
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Each increase of 1 percentage point in rates adds as much as 19 percent to the total cost of a home, according to Mr. Mayer.<br />
<br />
The Mortgage Bankers Association expects the rise to continue, with the 30-year mortgage rate going to 5.5 percent by late summer and as high as 6 percent by the end of the year.<br />
<br />
Another area in which higher rates are likely to affect consumers is credit card use.<br />
<br />
And last week, the Federal Reserve reported that the average interest rate on credit cards reached 14.26 percent in February, the highest since 2001. That is up from 12.03 percent when rates bottomed in the fourth quarter of 2008 — a jump that amounts to about $200 a year in additional interest payments for the typical American household.<br />
<br />
With losses from credit card defaults rising and with capital to back credit cards harder to come by, issuers are likely to increase rates to 16 or 17 percent by the fall, according to Dennis Moroney, a research director at the TowerGroup, a financial research company.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0tag:blogger.com,1999:blog-2591483864364132372.post-47448395511137418312010-04-11T20:24:00.000-04:002010-04-11T20:24:21.318-04:00Bernanke Says U.S. Should Tackle DebtFederal Reserve Chairman Ben Bernanke said Wednesday that huge U.S. budget deficits threaten the nation's long-term economic health and should be addressed soon. Obama administration officials have argued that the economy, while improving, is still too weak to bear all the new taxes and spending cuts that would come with an aggressive deficit-reduction campaign. In remarks to the Dallas Chamber of Commerce Wednesday, Mr. Bernanke agreed, but said merely articulating a plan for reducing the deficit in the long run would help the economy now."The economist John Maynard Keynes said that in the long run, we are all dead. If he were around today he might say that, in the long run, we are all on Social Security and Medicare," Mr. Bernanke said.<br />
Cutting the deficit ultimately will mean choosing between cutting those entitlements, raising taxes, or other spending cutsMark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0tag:blogger.com,1999:blog-2591483864364132372.post-63093817895560232962010-04-11T20:21:00.002-04:002010-04-11T20:21:58.113-04:00Greenspan on Capitol Hot SeatFormer Fed chief Alan Greenspan faced some of the toughest questioning yet about his role in the financial crisis at a hearing Wednesday marked by tense exchanges with a longtime foe. Later in the day, members of the congressionally chartered Financial Crisis Inquiry Commission also ripped <a class="companyRollover link11unvisited" href="http://online.wsj.com/public/quotes/main.html?type=djn&symbol=C">Citigroup</a> Inc. executives for their role in the subprime meltdown, where Citigroup was a major casualty. The commission is holding three days of hearings on the evolution of the subprime market. Panel members repeatedly questioned why Mr. Greenspan didn't do more to stem the flow of risky subprime loans, pop the resulting real-estate bubble or prevent use of exotic derivatives to expand the market. Commissioner Brooksley Born, a former federal regulator, said the Fed "utterly failed to prevent the financial crisis." She used the word "fail" nine times in a lengthy series of questions. <br />
"Didn't the Federal Reserve System fail to meet its responsibilities, fail to carry [out] its mandates?" she said.<br />
Commission Chairman Phil Angelides added his own criticisms of the Fed's approach to subprime regulation. "My view is…you could have, you should have, and you didn't," he told Mr. Greenspan.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0tag:blogger.com,1999:blog-2591483864364132372.post-85876696328015588752010-04-11T20:17:00.003-04:002010-04-11T20:19:42.053-04:00New Ways to Read the EconomySAN FRANCISCO—When the city's top economist needs a rough prediction of sales tax revenues, he watches the number of subway passengers emerging from the Powell Street Station on Saturdays.<br />
<a href="http://www.blogger.com/post-edit.g?blogID=2591483864364132372&postID=8587669632801558875" name="U20687001271SUB"></a>Ted Egan, chief economist in the San Francisco Controller's Office, said he could wait six months for California to release the detailed sales-tax data he needs for city revenue projections. But it's quicker to look at passenger tallies from the station closest to the Union Square shopping district, which generates roughly 10% of the city's sales-tax revenue. The Bay Area Rapid Transit District releases the data within three days, he said: "Why should I have to wait?" Mr. Egan is among a growing number of economists and urban planners who scour for economic clues in unconventional urban data—oddball measures of how people are moving, spending and working.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0tag:blogger.com,1999:blog-2591483864364132372.post-14006003179520630942010-04-11T20:16:00.000-04:002010-04-11T20:16:10.868-04:00Consumer Lending Sagged in FebruaryMore consumers are keeping up with payments on their credit cards and other loans. But that is coming at a cost: They are cutting back sharply on borrowing as they pare back debt. While that is good for the long-term financial health of households, the development could slow spending and the overall economic recovery. <br />
Consumer borrowing declined at a 5.6% annual rate in February to $2.45 trillion, the Federal Reserve said Wednesday. Consumer borrowing, which includes most loans outside of real estate, had increased 2.1% in January, reflecting how borrowers typically slow payments after running up card balances over the December holidays. Revolving credit, largely credit-card borrowing, declined at a 13.1% annual pace in February. Nonrevolving credit—including loans for cars, boats and education—fell at a 1.6% annual rate that month. Analysts attributed part of the February decline to winter storms that kept consumers at home.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0tag:blogger.com,1999:blog-2591483864364132372.post-43603626114250949072010-04-11T20:13:00.000-04:002010-04-11T20:13:27.382-04:00Criminals Prey on The UnemployedOut of work for six months, Mary Long spent hours each day surfing the Web. She found a job listing this fall for a logistics manager that paid $65,000 a year and fired off her resume.But the company, Advanta Transportation Network LLC, appears to be part of an increasingly common scam that has snared Ms. Long and many others, according to cybercrime experts. As U.S. job seekers grow more desperate, criminals are using the Internet to con participants into so-called mule operations.These operations generally follow a formula, say security experts: Cybercriminals post an ad on a job board. Successful job applicants are "hired" or asked to complete a trial project. Scam operators wire stolen money to the applicant's credit card and applicants are asked to purchase such goods as expensive electronics. The applicant ships the goods, often to Eastern Europe, where scam operators sell them. Applicants end up with neither a job nor a paycheckMark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0tag:blogger.com,1999:blog-2591483864364132372.post-26238094019293345732010-04-11T20:11:00.000-04:002010-04-11T20:11:19.330-04:00U.S. Airways-United Airlines Talks IntensifyMerger talks that came to light last week between <a class="companyRollover link11unvisited" href="http://online.wsj.com/public/quotes/main.html?type=djn&symbol=UAUA">UAL</a> Corp.'s United Airlines and <a class="companyRollover link11unvisited" href="http://online.wsj.com/public/quotes/main.html?type=djn&symbol=LCC">US Airways Group</a> Inc. have become "very serious," said one person close to the matter. But they remain sensitive and it is just as likely the discussions will fall apart as result in a done deal, this person noted. Any transaction would be an all-stock merger, with United being the surviving entity, this person said. The share premium to be paid to US Airways shareholders hasn't been settled. Another person familiar with the talks said the two sides haven't yet agreed who would run the combination. A deal would create the No. 2 U.S. airline by traffic after <a class="companyRollover link11unvisited" href="http://online.wsj.com/public/quotes/main.html?type=djn&symbol=DAL">Delta Air Lines</a> Inc. If it comes to fruition, it would be announced within two or three weeks. A third person close to the situation suggested that <a class="topicLink" href="http://topics.wsj.com/person/t/glenn-f-tilton/217">Glenn Tilton</a>, UAL's chief executive officer, recently restarted the talks, not his counterpart at US Airways, Doug Parker.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0tag:blogger.com,1999:blog-2591483864364132372.post-1490603267589587932010-04-11T20:09:00.002-04:002010-04-11T20:09:59.051-04:00Light At The End of The Bailout TunnelAs momentum grows at companies that looked like zombies just a few months ago to repay taxpayers for lifelines they got during the financial crisis, the projected cost of the bailout is shrinking to just a fraction of previous estimates. Treasury Department officials say the tab is likely to reach $89 billion, which includes the Troubled Asset Relief Program, capital injections into Fannie Mae and Freddie Mac, loan guarantees by the Federal Housing Administration and Federal Reserve moves such as buying mortgage-backed securities and propping up the commercial-paper market. Treasury officials are increasingly optimistic that even <a class="companyRollover link11unvisited" href="http://online.wsj.com/public/quotes/main.html?type=djn&symbol=AIG">American International Group</a> Inc. could be on its own within a year, with officials discussing ways to extricate the government from its 80% stake in the insurer, according to people familiar with the situation. AIG is on track to repay its loan to the Fed through asset sales that will raise $51 billion.Mark W. Tatgehttp://www.blogger.com/profile/13494539257756180433noreply@blogger.com0