Wednesday February 25, 2009, 6:38 pm EST
Big banks face 'stress tests' from regulators
WASHINGTON (AP) -- The Obama administration hopes to restore
confidence in the nation's ailing financial sector by subjecting 19 of the
largest banks to "stress tests" that will gauge whether each
institution has adequate capital to survive a severe downturn.
Banks that need new funds will be given six months to obtain it
from the private sector or, failing that, from the federal government's $700
billion bank rescue program, the Treasury Department said Wednesday.
Treasury officials said the new support
will be provided through the government's purchase of preferred shares of the
bank stock that are convertible into common shares at a 10 percent discount to
their price before Feb. 9.
The option to convert the preferred shares into common shares is
a change in the rescue program designed to give the government greater
flexibility in managing its assistance.
Home sales sink unexpectedly, lowest since 1997
WASHINGTON (AP) -- Sales of existing homes sank unexpectedly last
month to the lowest level in nearly 12 years as potential buyers worried about
their jobs and awaited details of President Barack Obama's plans to stabilize
the housing market.
Sales of existing homes fell 5.3 percent to an annual rate of
4.49 million last month, from 4.74 million in December, the National
Association of Realtors said Wednesday. It was the weakest showing since July
1997. And some analysts don't see sales bottoming out until later this year as
prices sink further. Economists had expected sales to rise to an annual pace of
4.79 million homes.
The median sales price in January plunged to $170,300, from
$199,800 a year earlier and $175,700 in December. It was the lowest price since
March 2003 and the second-largest drop on record.
Stocks end down as week's back-and-forth
continues
The major indexes closed down about 1 percent Wednesday but
recovered from much steeper losses early in the day, continuing the volatile
trading that has buffeted the market this week.
Stocks initially fell on growing pessimism about the banking
industry and a home sales report that came in weaker than the market expected.
But as the day wore on, some of the uncertainty about the troubled banking
system lifted when the Treasury Department said it's beginning to "stress
test" the banks. The test will use two economic scenarios to measure
banks' health, and the process is expected to be done by the end of April.
The government also gave the market some reassurance by
confirming that it will buy preferred shares from banks that can be converted
into common shares. And investors found solace when Federal Reserve Chairman
Ben Bernanke rejected for the second straight day the notion that banks could
be nationalized.
2 arrests in NY securities fraud case
Paul Greenwood, 61, of North Salem, N.Y., and Stephen Walsh, 64,
of Sands Point, N.Y., appeared in U.S. District Court in Manhattan on charges
of conspiracy, securities fraud and wire fraud.
Bail was set at $7 million each, and
they were ordered to post $1 million in cash or property that was not derived
from the alleged fraud. Richard D. Weinberg, a lawyer for Walsh, and Robert J. Jossen, a lawyer for Greenwood, declined to comment.
Bernanke again spurns talk of bank nationalization
WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke on
Wednesday again spurned speculation that the government may nationalize
Citigroup or other big banks.
When asked about Citigroup during a House Financial Services
Committee hearing, Bernanke said nationalization "is when the government
seizes the bank and zeros out the shareholders and begins to manage and run the
bank. And, we don't plan anything like that."
But Bernanke told lawmakers it is possible the government could
end up with a much bigger ownership stake in Citigroup Inc. or other banks.
Saks reports 4th-qtr loss, TJX lower profit
NEW YORK -- Luxury retailer Saks Inc. reported a loss and issued
a downbeat sales forecast for the year as it struggles to hold onto its
affluent shoppers, while off-price retailer TJX Cos. reported flat sales -- but
better profit than expected.
With a spending slump expected to persist through the year, both
companies are preserving cash by embracing cost-cutting, including slashing
inventory and cutting capital spending.
Saks assured investors that it had sufficient liquidity to pull
through 2009 and dispelled any rumors of bankruptcy. That sent shares soaring
as much as 11 percent.
Shares in TJX, which sells discounted name-brand clothing and
household goods, rose as much as 8 percent as investors were encouraged by its
plan to cut $150 million in costs -- and by reports that the discounter is
already benefiting from the liquidation of Linens 'N Things.
Nacchio
conviction reinstated; appeal expected
DENVER (AP) -- A federal appeals court reinstated the insider
trading conviction of former Qwest CEO Joe Nacchio in
a split decision Wednesday and lifted the stay that had spared him from
starting a six-year prison term.
Nacchio's
attorney strongly suggested she would appeal.
There was no immediate word on when and where Nacchio
would have to surrender.
A three-judge panel of the 10th U.S. Circuit Court of Appeals
last year had overturned the conviction, ruling that the trial judge improperly
barred testimony from a defense witness.
Apple director says no change in Jobs' plans
CUPERTINO, Calif. (AP) -- Apple Inc. co-founder and CEO Steve
Jobs still expects to return from his medical leave at the end of June,
according to an Apple director who responded to an investor at the company's
annual shareholder meeting Wednesday.
The investor -- who was the only one to press for details on
Jobs' health -- had asked when the board knew Jobs planned to step away from
his daily duties. Apple director Arthur Levinson responded that since Jobs
announced Jan. 14 that he needed to go on leave, "nothing has
changed."
Jobs, who turned 54 on Tuesday, was not
at the meeting.
A survivor of pancreatic cancer who looked very thin last year,
Jobs said Jan. 5 that he had a treatable hormone imbalance and would continue
to run Apple. But the following week he went on leave to treat medical issues
that he said were "more complex" than he had believed. Apple's chief
operating officer, Tim Cook, took over daily duties.
Nortel Networks to cut 3,200 more jobs
TORONTO (AP) -- Telecom equipment company Nortel Networks Corp.
plans to cut its work force by 3,200 jobs worldwide, or more than 10 percent of
its global work force, in an effort to restructure its operations while under
court protection.
The Canada-based telecom equipment maker said Wednesday the new
round of job cuts will be made over the next several months. The reduction is
on top of 1,800 job cuts already announced.
Nortel filed for creditor protection Jan. 14 in
Agrium makes $3.6B offer for CF Industries
NEW YORK (AP) -- Agricultural products company Agrium on
Wednesday offered $3.6 billion in cash and stock to buy CF Industries Holdings
Inc. to expand its fertilizer business.
The offer comes about a month after CF Industries offered $2.1
billion to buy Terra Industries Inc.
CF Industries made an all-stock offer for Terra Industries of
By The Associated Press
The Dow Jones industrial average ended down 80.05, or 1.1
percent, at 7,270.89 after rising 236 points on Tuesday and falling 251 on
Monday. The average tumbled by as many as 194 points in early trading Wednesday
and later was up 54 before retreating again.
Broader stock indicators also recovered from earlier lows but
finished down. The Standard & Poor's 500 index fell 8.24, or 1.1 percent,
to 764.90, and the Nasdaq
composite index fell 16.40, or 1.1 percent, to 1,425.43.
Light, sweet crude for April delivery gained $2.54 to settle at
$42.50 on the
In other Nymex trading, gasoline
futures gained 8.3 cents to settle at $1.1667 a gallon. Heating oil rose 2.95
cents to settle at $1.2377 a gallon, while natural gas for March delivery slid
18 cents to settle at $4.056 per 1,000 cubic feet.
Brent prices rose $1.79 to settle at
$44.29 a barrel on the ICE Futures exchange in