The Washington Post on A1 writes that a tough new European law regulating the chemical industry is affecting the way U.S. products will be made—and its sounds like that’s a good thing.
The new regulations will force companies to prove chemicals are safe before they start selling them, as opposed to how it is in the U.S., where “where regulators must prove that a chemical is harmful before it can be restricted or removed from the market.” It’s of course “adamantly” opposed by the chemical industry and President Bush, whose administration has used industry talking points in its arguments.
This is a good story with great context, including a broadening paragraph that says the move is the latest example of how tougher European regulations, which tend to focus more on protecting consumers, are forcing American companies to adapt.
We didn’t know this, but it’s so hard to ban chemicals in the U.S. that asbestos is still legal here. The Post quotes an expert showing how American-style regulation works. Remember, we’re talking about man-made chemicals here:
“If you ask people whether they think the drain cleaner they use in their homes has been tested for safety, they think, ‘Of course, the government would have never allowed a product on the market without knowing it’s safe,’ ” said Richard Denison, senior scientist at the Environmental Defense Fund. “When you tell them that’s not the case, they can’t believe it.”
Fun!
Good reporting by the Post.
If the Belgians brewed Bud…
Belgian brewer InBev made an unasked-for bid for Anheuser-Busch yesterday, offering more than $46 billion to take over the King of Beers and other brands.
The New York Times on C1 focuses on its prediction that the bid will probably set off a “bitter battle” for Anheuser-Busch, and scooping that the company is forming something called Project Aluminum, “an army of bankers, lawyers and other advisers” to help it fend off the foreigners.
The Wall Street Journal doesn’t focus much on the likelihood of a fight over the company, at least until low in its A1 piece. The Financial Times notes up high on page one the potential political fallout, reporting that the governor of Missouri came out against a sale.
The NYT mentions that, too, saying “the battle may stir a national debate filled with patriotic fervor over a company ingrained in the American consciousness.” You Euros better keep your hands off our weak beer! The Journal reports that the Belgian company will try to head off political fallout by taking the Anheuser-Busch name, putting a North American headquarters in St. Louis, and pledging not to close any American breweries.
If completed, it would be one of the biggest deals in a year that’s had a relative dearth of them after the credit-fueled frenzy of 2006 and 2007 fizzled with the bursting of that bubble. The Journal says a deal would be the third biggest ever of an American company being purchased by one from overseas, and that getting the financing arranged shows that banks will still lend to good-credit companies despite the crunch.
We think a better angle for the business press would be to focus less on the (admittedly good copy) struggles of Anheuser-Busch’s fifth generation to hang on to the company and more on the implications of further consolidation of a company that already controls about half the beer market in the U.S. (The St. Louis Post-Dispatch says the deal is likely to go through and that the combined company would sell one in every four beers globally.)
That’s too much as it is. Adding Stella Artois, Bass, and Beck’s to Anheuser’s stable of Clydesdales is just going to make it worse.
SEC gets tough with credit-raters
The Securities and Exchange Commission proposed big changes in the conflict-riddled credit-ratings industry, the Journal says on C2.
Among the proposals, the SEC would require credit-rating firms to make more information about ratings publicly available, would ban some practices and would require firms to clearly distinguish between corporate or government debt and the more complex structured products at the heart of the financial crisis.
The paper says Wall Street is concerned that the changes could trigger widespread dumping of structured debt assets and quotes a Wall Street group saying it would come “at a time when our financial markets can ill afford such an unnecessary shock.”
The new rules would prohibit firms like Moody’s and Standard & Poor’s from rating debt they helped structure and ban gifts above $25.
Bloomberg neatly sums up why the firms, which are as responsible for the financial crisis as anybody, need more regulation:
Moody’s, Standard & Poor’s and Fitch Ratings are under fire after the collapse of the subprime market exposed flaws in their AAA rankings on mortgage bonds. The three companies are paid to grade securities by underwriters who want to sell them, prompting regulators and lawmakers to question their independence.
Damn the tanking economy, I say!
The Los Angeles Times writes that the super-mega-ultra rich are sloughing off the economic woes and going ahead with eye-popping mansions in L.A. Actually, mansions doesn’t quite cut it. We’ll call them “palace-like complexes” as the paper does in its sub-headline. The lede:
In Beverly Hills, a 32,000-square-foot beaux-arts mansion that will be sheathed in Portuguese limestone and adorned with gold-plated doorknobs fashioned in France is rising on Sunset Boulevard.
A few miles away in Bel-Air, businessman Eri Kroh has requested permits to lop off the top of a hill, fill in a canyon and then, after moving some 68,000 cubic yards of dirt, replace the chaparral-covered lot with a 30,000-plus square-foot single family home with Pacific Ocean views.
The LAT reports there are at least twenty “homes” under construction that are bigger than 20,000 square feet. That would add a third to current supply of such estates. One builder says “People are spending much more time at home… They want to be comfortable.”
L.A. is considering putting zoning limits on huge houses, though, so our lords and ladies better get grandfathered in if they want to truly live well before the dirty masses rise up.
Here’s the Quote of the Day:
“Does anybody need 40,000 square feet?” asks real estate agent Stephen Shapiro of the Westside Estate Agency. “No, [but] these are our current-day aristocrats and feudal leaders . . . and this is what they want.”
D’oh! Citi to shutter hedge fund founded by CEO
The Journal says on A1 that Citigroup will close its struggling Old Lane hedge fund, an embarrassing move since it was co-founded by the company’s current CEO Vikram Pandit and Citi bought it for $800 million less than a year ago.
The bank considered bailing out the fund, but is so strapped for cash it thought better of it.
Old Lane’s demise is the latest embarrassment for banks that operate hedge funds or have bought stakes in them. Bear Stearns Cos., Goldman Sachs Group Inc. and UBS AG also have stumbled badly in hedge funds during the credit crunch, piling up billions of dollars in losses for themselves or their clients. The problems suggest that hedge funds, typically known for their independence and entrepreneurial spirit, may have trouble thriving within huge financial institutions.
It seems like most anything has trouble thriving within Citigroup.
On C1, the Journal says the whole hedge-fund industry is preparing for a “wave” of withdrawals at the end of June, but glaringly neglects to tell us why. It does say it could add to the “tumult” in the financial sector of the stock market, which we assumes means “send shares down further.”
Dirty CEO living large in Namibia
The Journal on A1 follows up on ex-Comverse Technology CEO Jacob “Kobi” Alexander, who fled with his family to Namibia after the feds used the Journal’s massive stock-backdating scoops to accuse him of fraud two years ago.
It seems Kobi’s having a good old time in Namibia, which has no extradition treaty with the U.S., and where we assume his money goes a long way toward keeping it that way. He’s handing out scholarships like candy, helping soup kitchens and synagogues, and who knows what else. He flew in 200 people from New York and Israel for his son’s four-day bar mitzvah bash.
Mr. Alexander has promised to invest millions more in the country. “If you’re Namibia, even if you want to follow the rules and return him, what’s the rush?” asked one U.S. official familiar with the case.
It’s an interesting read and a good follow-up.
Up, up, and away!
The NYT reports on C1 that “commodity prices went wild” yesterday, with the price of corn, soybeans, and wheat soaring as the Midwest is being hit by weeks of hard rains.
It’s more bad news for inflation. The FT and WSJ say the Agriculture Department on Tuesday cut its forecasts for production over the next year. The NYT:
“You know those complaints you’ve been hearing about high food prices? They’ve just begun,” said Jason Ward, an analyst with Northstar Commodity in Minneapolis.
Meanwhile, oil jumped $5 a barrel.
The Journal says on A3 that the floods threaten to swamp the Midwest’s economy.
Mortgage scam snares Obama’s veep screener
The Journal’s scoop Saturday that Countrywide CEO Angelo Mozilo had personally gotten good mortgages for his cronies has taken a casualty in the Obama campaign. Its vice-presidential candidate screener James A. Johnson quit after it emerged he’d gotten a loan for a Montana project that “overrode (Countrywide’s) internal limits on loan size, amount of allowable debt and number of loans to a single borrower.”
The loan program was called “Friends of Angelo.” The Journal hypes its story-getting prowess with a tear-out from Saturday’s scoop.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.