Results for U.S. Economy
Lehman Execs Have No One to Blame but Themselves
The U.S. bankruptcy-court examiner investigating the collapse of Lehman Brothers Holdings Inc. issued a stinging report Friday that accused senior executives of freewheeling accounting practices that led to the largest bankruptcy in U.S. history and sparked the worst financial crisis since the Great Depression.
The 2200-page report, authored by Anton Valukas, chairman of the Chicago-based law firm Jenner & Block LLP, also excoriated Wall Street investment banks, including JPMorgan Chase & Co. (NYSE: JPM) and Citigroup Inc. (NYSE: C) for finally pushing Lehman over the edge by demanding more collateral and changing guarantee agreements, Bloomberg News reported.
But the report says ultimate responsibility for its collapse can be attributed to a wrong-headed business model that rewarded excessive risk and encouraged leverage – problems that were brought to a head by the investment banks and government agencies.
New Banking Regulations … Same Old Story
U.S. banks, drunk with greed, drove the nation’s economy to the brink of financial Armageddon.
To save U.S. banks from losing their license to dangle the nation’s economy over a cliff, the U.S. Federal Reserve and the country’s elected elite threw them a bailout party and gifted them with
the accounting- world’s version of “Transformers. ”
Unfortunately, new banking regulations aimed at solving these problems are little more than the same old song and dance that forced the bailout – and stuck U.S. taxpayers with a multi-trillion-dollar tab.
To see how reformers have failed to fix the banking system, please read on…
What’s In Store for U.S. Stocks in Light of Greece’s Tragedy?
The recent month of February was quite interesting for U.S. stocks, because while the Dow Jones Industrial Average rose 2.6%, it didn’t exactly take a direct route to those gains: There were eight separate triple-digit moves in the Dow, both up and down.
At the root of that volatility were political and economic developments that challenged the rationale for the huge rally out of the March 2009 low. Bulls were basically rethinking their beliefs that the home-price plunge had abated, employment was on the verge of a big turnaround, governments could cut taxes and boost spending without end, and that interest rates would remain at zero for years.
I had prepared subscribers for much of this turmoil. Back in early November, I highlighted signs of trouble in the market for government debt well before the troubles in Dubai and Greece came to a head. In December, we started a dialogue on what to expect as the U.S. Federal Reserve withdrew liquidity from the economy and lifted interest rates. The upshot was a series of letters detailing why you should expect the first nine months of the year to trade flattish with a lot of volatility.
The Dividend Stock Recovery: Get Ready for a High-Yield Bonanza
It’s been a tough time for income investors lately.
Ten-year Treasuries pay less than 4%. The Standard & Poor’s 500 Index yields just over 2%. Money market fund returns are microscopic, paying an average of just 0.05%. (At that rate, it will take your money one thousand years to double.)
What should you do?
Take a look not at the stock market, but inside it. The S&P 500 may yield 2.1%, but many individual stocks are yielding far more. In addition, yields are about to arch higher.
Which Stocks and Sectors Will Shine as Market Fear Subsides?
A lot of my commentary lately on the markets has been relatively short-term oriented. Today let’s take a moment to pan back and consider the weekly perspective, which is rather benign, even positive.
From this point of view, stocks are broadly recovering from their most oversold condition since March of last year — and the release of the energy stored up then persisted at near-full strength for three months.
To find out which stocks are positioned for profit, click here.
Apple Goes “Island-Hopping” in its War Against Google
Apple Inc. (NASDAQ: AAPL) on Tuesday took aim at rival Google Inc. (NASDAQ: GOOG) and its Android operating system by filing a patent-infringement complaint with the International Trade Commission (ITC) against smartphone manufacturer HTC Corp.
Taiwan-based HTC is the largest maker of phones that use Google’s Android operating system, such as the Nexus One. Apple involved the ITC in hopes of banning U.S. imports of HTC devices made with the technology in question. However, that filing was paired with a suit filed in federal court in Delaware that claimed infringement on 20 patents.
"We can sit by and watch competitors steal our patented inventions, or we can do something about it. We’ve decided to do something about it," said Apple Chief Executive Officer Steve Jobs. "We think competition is healthy, but competitors should create their own original technology, not steal ours."
Senate’s Plan for Financial Reform Promises Nothing But Political Gridlock
U.S. senators Christopher Dodd, D-CT, and Bob Corker, R-TN, have fashioned a compromise on stalled banking regulation that straddles divisions over establishing a financial consumer protection agency and addresses unwinding too-big-to-fail firms.
The deal deftly divides lawmakers on both sides of the aisle in the Senate, as well as in the House of Representatives, which passed its plan for financial reform in December.
By engineering gridlock in the nation’s capitol, lawmakers seem determined to stall any meaningful overhaul of financial-markets regulation. But rather than counting on backsliding into the status quo to grease the wheels of economic recovery, the overhang of unresolved and ineffectual legislation threatens long-term investor confidence and desperately needed public protections.
To read more about the deal’s shortcomings, please continue below…
Hot Stocks: GM’s Robert Lutz to Retire
General Motors Co.’s "Maximum Bob" has apparently reached his vanishing point.
General Motors Vice Chairman Robert A. "Bob" Lutz will retire from the embattled carmaker effective May 1, the executive confirmed yesterday (Wednesday). Lutz had been serving as a senior adviser to Edward E. "Ed" Whitacre Jr., GM’s chairman and chief executive officer.
The move comes just one day after GM announced another shake-up in the North American unit that’s supposed to be heading the company’s overhaul.
Senate’s Proposal Calls for Fed to Increase Its Role in Consumer Protection
The Senate’s journey to agreement on a financial reform bill could lead to consumer protection responsibilities remaining in the hands of the Federal Reserve.
After much back-and-forth among senators, Senate Banking Committee Chairman Christopher Dodd (D-CT) is proposing a consumer protection unit that will be housed in the Fed. Sen. Bob Corker, R-TN, offered the idea as an alternative to Dodd’s earlier proposal of creating a consumer protection division in the Treasury Department.
Dodd’s revision aims to appeal more to Republicans than earlier proposals, in hopes the Senate can move forward with U.S. financial regulation overhaul. The proposal is expected to scale back the measures approved by the House of Representatives in December 2009.
AIG Could Seek Another Bailout as it Struggles to Return to Profitability
American International Group Inc. (NYSE: AIG), the insurance giant that received billions in federal bailout money, on Friday reported an $8.9 billion fourth-quarter loss. AIG dismissed the loss as part of its rebuilding process, but it also acknowledged that it may require even more government financing.
The loss is not nearly as bad as the previous year’s $61.7 billion fourth-quarter stumble – the biggest quarterly loss in corporate history – but at $65.51 a share, it’s still much higher than analysts predicted.
Amid scrutiny, AIG in September 2008 received a $182.3 billion bailout, which gave the government an 80% stake in its business. Since then, AIG’s debt pay-off funds have generally come from the sale of its non-core assets. AIG recognizes these “fire-sales” as the best way to pay back its debts while also streamlining its business.
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