The Associated Press, on the other hand, says the “severe slump in housing showed no signs of abating.”
Did SEC pull back on Bear?
The Journal scoops on C1 that the Securities and Exchange Commission is refusing to cooperate with a congressional inquiry into why it dropped a Bear Stearns investigation into collateralized-debt obligations way back in 2005.
The SEC was considering bringing two cases against Bear for improperly valuing CDOs and now says it can’t discuss investigations with Congress. But the WSJ says the agency has shared much more sensitive date with legislators in the past.
Keep your eye on this one.
And we note that in the first day of the post-Brauchli era, three of the four stories on C1 don’t jump to the inside pages (two stories on Marketplace are limited to the front page).
FT reheats small-bank story
The Financial Times leads with a U.S. banking regulator saying he’s concerned about a “wave” of bank failures.
John Dugan, the Comptroller of the Currency, says small banks in particular are worrisome because of their commercial real-estate lending frenzy of the last few years, but there’s not much here that hasn’t been reported elsewhere. This is interesting, however:
More than a third of smaller community banks have made commercial property loans that exceed 300 per cent of their capital, the OCC says. By comparison, in 1987, when hundreds of banks failed amid a commercial property collapse, such banks had commercial property loans equal to 175 per cent of their capital.
Gimme a sign, any sign
The FT also reports on page one that American financial institutions have raised $28 billion in capital in the last several days by issuing debt and preferred stock, something the paper says shows that investors are less worried about the sector’s health than they have been in recent months. It says regulators are pleased that they are shoring up their capital reserves to guard against future losses.
Steven Pearlstein, in his Washington Post column, has a good take on why it’s extremely premature to say we’ve hit the bottom.
More cuts at Ford?
The WSJ takes an in-depth look at what it says is a surprise turnaround at Ford, but reports that the carmaker is considering another round of job cuts, selling Volvo and shutting down Mercury.
The Journal says CEO Alan Mulally has helped the company improve earnings (though they’re still negative) every quarter since he took the reins two years ago and that quality improvements have made Fords almost as good as Toyotas, slashing its warranty costs by a billion dollars. It notes that he has streamlined operations by selling off three car lines and that if Ford gets rid of Volvo and Mercury it will have just two remaining—Ford and Lincoln—and that he’s helped shifted its sales mix from 70 percent trucks in 2004 to just 43 percent in March.
The NYT says on page one that Europe is moving toward using more coal to fuel its energy needs. Italy, for instance, will increase its coal usage in five years to 33 percent of the total from 14 percent today.
And Italy is not alone in its return to coal. Driven by rising demand, record high oil and natural gas prices, concerns over energy security and an aversion to nuclear energy, European countries are expected to put into operation about 50 coal-fired plants over the next five years, plants that will be in use for the next five decades.
In the United States, fewer new coal plants are likely to begin operations, in part because it is becoming harder to get regulatory permits and in part because nuclear power remains an alternative. Of 151 proposals in early 2007, more than 60 had been dropped by the year’s end, many blocked by state governments. Dozens of other are stuck in court.
Miscellaneous bad economic news
The Times says on C1 and the WSJ on B4 that health insurer UnitedHealth slashed its profit forecasts and blamed much of it on the slowing economy. Its CEO says fewer companies are offering health care to employees and fewer employees are taking it.