Stress Tests Show Big Banks Will Need to Raise Billions More

Some of the nation's largest banks will need to raise billions of dollars in additional capital after results of the government stress tests are released late Thursday.

The tests, which will be made public at 5 pm ET, were designed to gauge whether any of the nation's 19 largest banks would need more capital to survive a deeper recession.

Much of the results already began leaking out on Wednesday. Financial stocks initially rallied after the early results didn't appear to be as bad as investors feared. But the rally lost steam on Thursday even after Fed Chairman Ben Bernanke's comments that the stress tests should restore investor confidence in the banks.

Wells Fargo, Citigroup and Bank of America all need billions more, regulators have told them.

Citigroup will need to raise about $5 billion, according to a government official briefed on the results who spoke to the AP on the condition of anonymity because he was not authorized to discuss the matter. Earlier news reports had put that dollar figure closer to $10 billion.

Regions Financial will also need to raise more money, according to people briefed on the results, as will Bank of America and Wells Fargo.

Bank of America stock rose Wednesday after reports that the Charlotte, N.C.-based company would need to collect $34 billion in additional capital. The New York Times and Wall Street Journal reported the figure.

Wells Fargo needs between $13 billion and $15 billion, according to Times and Journal reports Thursday.

GMAC, the lending arm of beleaguered automaker General Motors, is said to need $11.5 billion.

Morgan Stanley is looking at between a $1 billion and $2 billion shortfall, according to the Times.

In all, the Journal said at least seven of the banks will need a combined $65 billion. The entire group that is deemed to need more capital will require less than $100 billion combined, according to the Times.

Despite being included in the Journal's tally, State Street is not being required to raise more capital after completing its stress test, a person familiar with the matter said Thursday.

The public nature of the assessments and Thursday's planned announcement raised questions among some critics about whether the findings will reflect the banks' actual conditions.

The tests put banks through two scenarios: one that reflected expectations about the current recession and another that envisioned a recession deeper than what analysts predict.

Stress tests have long been a part of the bank regulation system. They help regulators decide how to supervise banks and aid banks in deciding how to limit their risk. But those conversations between banks and regulators normally take place behind closed doors.

In recent weeks, the government's unprecedented decision to publicly release bank-test results has fanned speculation, with analysts predicting the findings and investors staking out trading positions.

Critics are concerned that all the attention could make the tests much less effective.

They say regulators seem so intent on maintaining public confidence in the banks that the results will have to say the banks are basically healthy. Officials have said they will not let any of the 19 institutions fold.

That makes it almost impossible for them to say anything about a bank that would threaten its survival, since a flight by investors could force the government to step in with additional bailout money—something the Treasury Department hopes to avoid.

"There is a real question as to the legitimacy of these results," said Jason O'Donnell, senior analyst at Boenning & Scattergood.

The stress tests are a key part of the Obama administration's plan to stabilize the financial industry. The tests estimated how much value the banks' loans would lose as consumers and businesses faced more trouble repaying loans.

The first test scenario envisioned unemployment reaching 8.8 percent in 2010 and housing prices dropping another 14 percent this year. The second imagined unemployment rising to 10.3 percent next year and homes losing another 22 percent of their value this year.

But economic assumptions have changed since the tests were designed in February.

Unemployment already has surpassed the 8.4 percent the test's first scenario predicts for 2009, which leaves some analysts wondering whether the tests were harsh enough.

The government is asking banks to keep their capital reserve ratios above a certain level so they can continue lending even if the economic picture darkens.

The banks that need more capital will have until June 8 to come up with a plan to raise the additional resources and have the plan approved by their regulators, officials said Wednesday.

Banks will have several options for increasing their capital. Some will be able to close the gap by converting the government's debt into common stock. Others will have six months to attempt to raise money from private investors.

If they cannot do it, the government will provide money from its $700 billion financial system bailout.

Representatives for American Express, JPMorgan Chase, Bank of New York Mellon, Citigroup and Regions Financial would not comment on the tests.

The remaining stress-tested banks are: Goldman Sachs Group, MetLife, PNC Financial Services Group, U.S. Bancorp, SunTrust Banks, Capital One Financial, BB&T, Regions Financial, Fifth Third Bancorp and Keycorp.

ECB Cuts Rate, To Start Assets Purchase: Trichet

The ECB lowered its key refi rate by a quarter percentage point to 1 percent but kept the overnight deposit rate, which is acting as a floor for money markets, at 0.25 percent, narrowing the gap between its policy rates instead of cutting the lowest of these to zero.

"The Euro System ... will purchase euro denominated covered bonds," Trichet told a news conference after its monetary policy decision.

"We expect to engage in a program which would be around 60 billion euros ($79.8 billion)," he said.

"In recognition of the central role played by the banking system in financing the euro area economy we will conduct liquidity providing longer term refinancing operations with a maturity of 12 months. The operations will be conducted at fixed rate tender procedures with full allotment," Trichet added.

He said the current interest rates of the ECB were appropriate.

The euro fell briefly against the dollar after his remarks but rebounded sharply after Trichet said an exit strategy from the policy of buying assets was needed.

Covered bonds — debt instruments secured by a cover pool of mortgage loans or public-sector debt — were considered as one segment of private securities that has been particularly touched by the financial turbulence, and needed boosting, he said.

"Around 60 billion euros is only an order of magnitude, it looks like an appropriate level for what we try to do, help revive this segment," Trichet said, but added: "sterilization, an exit strategy are absolutely essential in our view."

"These decisions have been taken to promote the ongoing decline in money market term rates, to encourage banks to maintain and expand their lending to clients, to help to improve market liquidity in important segments of the private debt security market, and to ease funding conditions for banks and enterprises," he said.

"We will display in our communication of our next meeting all the technicalities that goes with this purchase of covered bonds, which is something that is highly technical."

The decision to purchase assets does not necessarily mean the interest rate has found a floor, he said.

"We have not decided today that the new level of our policy rates was the lowest level, that we could never cross whatever future circumstances would be," Trichet said.

The ECB has cut rates from 4.25 percent since last October. Trichet said the euro zone was showing tentative signs of stabilising at a very low level after a weaker than expected first quarter.

BoE increases QE program, leaves rates on hold

LONDON (Reuters) - The Bank of England said on Thursday it would increase the size of its asset purchase program by 50 billion pounds to 125 billion pounds, and left interest rates at a record low 0.5 percent for a second month.

The central bank has already bought more than 50 billion pounds of assets, mainly government bonds, to boost the recession-bound British economy. It had been on track to complete the original program of quantitative easing by early June at the latest.

The pound fell and gilt futures rallied strongly after Thursday's announcement, halving earlier losses as the decision calmed nerves that the Bank might have suspended the program at the end of this month.

"There's no surprise that Bank Rate was held at 0.5 percent; however we are a little taken aback by the decision to increase the quantitative easing target by 50 billion pounds," said economist Philip Shaw at Investec.

"We had thought it more likely the Monetary Policy Committee would sit and wait to assess the impact of the existing program rather than expand it right away."

The central bank has cut interest rates by a total of 4.5 percentage points since October as Britain's economy plunged into its first recession since the early 1990s.

The Bank said on Thursday it would take a further three months to complete the program and that its scale would be kept under review.


STIMULUS MEASURES

Stimulus measures taken to revive a recession-hit economy would work, but it was not clear how quickly the upturn would come, the Bank said in a statement. It said it expected inflation to fall below its two percent target later this year, having stood at 2.9 percent in March.

"That stimulus should in due course lead to a recovery in economic growth, bringing inflation back toward the 2 percent target. But the timing and strength of that recovery is highly uncertain," the Bank said.

Britain's economy shrank at its fastest pace since 1979 in the first three months of this year, and looks set to record its worst full-year performance since World War Two.

However, recent surveys suggest the pace of decline is slowing. Consumer confidence has picked up markedly over the past two months, equity prices have jumped by a fifth and money market strains appear to be easing.

Stress tests may bring few shotgun weddings

Thu May 7, 2009 7:49am EDT

NEW YORK (Reuters) - U.S. regulators may be tempted to force bank marriages and asset sales to fill multi-billion dollar capital holes exposed by their stress tests.

But a rapid redrawing of the banking landscape like the one last fall may not be in the cards, banking industry experts say, even though the capital shortfalls at the 19 largest U.S. banks are much larger than analysts had expected.

Citigroup analyst Keith Horowitz wrote that banks, other than his own, may need to raise $75 billion after the tests.

The results are due on Thursday, and about 10 of the 19 banks may need capital, according to media leaks.

While seeking stronger partners could be tempting to the weaker banks, their healthier brethren will likely want to repay money they got under the Treasury Department's $700 billion Troubled Asset Relief Program (TARP) before they use their capital for acquisitions.

And regulators may not have the needed leverage to force these banks to buy their needy rivals, the experts said.

Still as some banks find it hard to raise money, and with mergers often offering significant cost savings, regulators may try to forge a handful of deals, they said.

Some companies may try to sell assets to raise capital, but regulators are unlikely to give weaker banks six months to raise capital unless they have assets they can plausibly sell in that time, said Seamus McMahon, chief executive of bank consulting firm McMahon Advisory LLC.

"If what you are saying is that you are waiting for market conditions to improve and you have no plausible plans in place by June, I don't think they will hesitate to force some of these banks together," McMahon said.

The list of likely acquirers could include banks such as US Bancorp (USB.N), JPMorgan Chase & Co (JPM.N) and Morgan Stanley (MS.N), McMahon said.

Targets could include banks such as SunTrust Banks Inc (STI.N), Regions Financial Corp (RF.N), KeyCorp (KEY.N) and Fifth Third Bancorp (FITB.O), he added.

Citigroup Inc (C.N), which a source said needs $5 billion, could be an acquirer as well despite all its troubles, as takeovers could be a way for it to get much-needed deposits, McMahon said.

RELUCTANT BUYERS?

In urging any mergers, though, regulators will want to be careful that they do not create a new problem instead of solving one.

"You don't want to put two stones together and see if they float," said Jonathan Weld, a banking lawyer at Shearman & Sterling.

"You would only want to put together a strong organization and a weaker one if you thought that you could restructure it and emerge with a strong single entity."

The regulators will be dealing with a situation much changed from last fall, when the U.S. financial system was at a risk of collapse and the government bailout money was seen by many as desirable.

Now, healthy banks are eager to give back taxpayer funds and, despite a recession, the end of the financial world doesn't appear to be at hand.

"The reality is they too want to get rid of their TARP money," said Marshall Sonenshine, chairman of the boutique investment bank bearing his name, referring to healthier institutions. "So they are not going to buy anything that slows down that process."

Regulators may have also lost some of their leeway after allegations they forced Bank of America (BAC.N) to complete its acquisition of Merrill Lynch.

"Already you have BofA feeling more than a little bit burned by having been pushed so hard to take over Merrill Lynch," Sonenshine said. "You are likely to see more banks fail at the bottom of the food chain."

Regulators may not want to create another giant through a merger, but they could urge one of the stronger banks to acquire a weak and smaller rival.

"If as a result of the stress test they realize there are two categories of banks -- banks with excess capital that are in great shape and banks that are deficient, then such marriages may make a lot of sense from a regulatory standpoint," said Joseph Vitale, a bank regulatory partner at law firm Schulte Roth & Zabel.

BofA, Citi, Wells need capital under stress tests

Thu May 7, 2009 3:59am EDT


By Karey Wutkowski and Jonathan Stempel



WASHINGTON/NEW YORK (Reuters) - Regulators are ordering some of the largest U.S. banks to find tens of billions of dollars of capital to cushion themselves in the event of a deep economic downturn.


The results of government "stress tests" of the ability of the 19 largest U.S. banks to weather a deep recession will be released on Thursday at 5 p.m. EDT and are expected to show about half the banks need more capital.


While the reported capital shortfalls so far are much larger than analysts had expected, bank shares soared as investors got more clarity over how well the industry will cope with perhaps the most severe recession since World War Two.


Among banks needing capital, Bank of America Corp shares closed up 17.1 percent, Citigroup Inc rose 16.6 percent and Wells Fargo & Co rose 15.6 percent. The Standard & Poor's Financials Index gained 8.1 percent.


"The market likes the certainty of putting numbers on the worst-case scenarios of how much capital these banks need," said Chris Armbruster, an analyst at Al Frank Asset Management in Laguna Beach, California.


Regulators have told Bank of America it needs $34 billion, while Citigroup needs $5 billion and auto and mortgage lender GMAC LLC needs $11.5 billion, according to people familiar with the matter.


Citigroup's amount reflects its previously announced plan to convert some preferred shares into common stock. The various sources were not authorized to speak because the official stress test results are not public.


Wells Fargo needs $15 billion, Morgan Stanley needs $1.5 billion and Regions Financial Corp needs some capital, the Wall Street Journal said.


Bank of New York Mellon Corp does not need capital, a person familiar with the matter said.


American Express Co, Capital One Financial Corp, Goldman Sachs Group Inc, JPMorgan Chase & Co and MetLife Inc also do not need capital, the Journal said.


All the companies declined to comment.

In an interview on PBS' "Charlie Rose Show," U.S. Treasury Secretary Timothy Geithner said none of the 19 banks are at risk of insolvency. He also said the government does not want to get involved in day-to-day management at the banks.


Geithner and the top U.S. bank regulators -- Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corp Chairman Sheila Bair and Comptroller of the Currency John Dugan -- will brief media on the tests at 4:15 p.m. EDT on Thursday on condition reporters withhold the information until the results are released.


Bair said on Wednesday the results should be "confidence instilling."



STABILITY SOUGHT

Banks may cover any capital shortfalls through a mixture of asset sales, share sales and perhaps the conversion of preferred shares into common stock.


The government is giving banks needing capital one month to develop a plan to raise it and until November 9 to finish the job. These banks must also review their managements and board of directors to ensure proper leadership.


Banks needing capital may ask the government to issue more preferred shares, or to swap government preferred shares into convertible preferred shares. They cannot repay aid from the Troubled Asset Relief Program (TARP) until they issue debt not backed by the federal government, and for more than a 5-year term.


Calling the new capital a "one-time buffer," the government pledged "to stand firmly behind the banking system during this period of financial strain to ensure it can perform its key function of providing credit to households and businesses."


If banks convert preferred shares issued under TARP, the government could become one of their biggest shareholders. The White House said it will await the stress test results before commenting on banks' potential management changes.


Citigroup analyst Keith Horowitz wrote that banks, other than his own, may need to raise $75 billion after the tests.


Analysts believe other banks that may need capital include Fifth Third Bancorp, KeyCorp, PNC Financial Services Group Inc and SunTrust Banks Inc.



PRESSURE ON BANK OF AMERICA CEO

Bank of America's stress test results are certain to increase pressure on Chief Executive Kenneth Lewis, who was ousted as chairman last week in a shareholder vote.


That ouster could also lay the groundwork for his departure from his employer of 40 years, including the last eight as CEO. The largest U.S. bank has already received $45 billion of government help.


Critics fault Lewis for not backing away in December from Bank of America's planned merger with Merrill Lynch or disclosing Merrill's failing health.


The bank might raise capital by converting some of its $30 billion of privately held preferred shares into common stock, or by selling its stakes in China Construction Bank and Brazil's Itau Unibanco.


It might also sell its Columbia asset management unit, and has said it may sell its First Republic Bank business.



WELLS FARGO, CITI, GMAC

Wells Fargo opposed taking its initial $25 billion of government aid and did not get government help in buying Wachovia Corp for $12.5 billion at the year-end.


Chairman Dick Kovacevich in March called the government tests "asinine." Billionaire investor Warren Buffett, whose Berkshire Hathaway Inc is the bank's largest shareholder, said on Sunday that Wells Fargo needs no more capital.


But analysts have said Wells Fargo may need a greater cushion against loan losses, despite it having taken a big writedown when it bought Wachovia.


Citigroup's capital need would be at the low end of the $5-$10 billion it had been expected to require.


The bank is preparing an exchange offer that could leave the government with a 36 percent equity stake.


GMAC, meanwhile, has been struggling with rising auto and mortgage losses, as well as falling vehicle sales at its former parent, General Motors Corp. It said on Tuesday a GM bankruptcy would not automatically trigger a GMAC filing.

Chrysler files for bankruptcy; inks Fiat deal

Thu Apr 30, 2009 8:12pm EDT

DETROIT/WASHINGTON (Reuters) - Chrysler LLC filed for bankruptcy on Thursday and announced an industry-changing deal with Fiat, after being pummeled by sliding auto sales and unable to reach agreement on restructuring its debt.

Despite weeks of intense negotiations, Chrysler failed to gain full support from its lenders to avoid the first-ever bankruptcy filing by a major U.S. automaker.

The move was hailed by President Barack Obama as a critical step in saving 30,000 jobs at Chrysler, majority-owned by Cerberus Capital Group, and hundreds of thousands more jobs at affiliated suppliers and dealers.

At the same time, Chrysler entered an expected alliance with Fiat SpA, in which the Italian carmaker was given an initial stake of 20 percent.

The deal will allow Fiat to own up to 35 percent as it makes investments in U.S. operations and small-car technology for Chrysler. Over time, Fiat could eventually own 51 percent after Chrysler has repaid its loans to the U.S. Treasury.

Chrysler has struggled in recent years to compete, hurt by its near total reliance on the U.S. market, poor quality and a truck and SUV-dominated vehicle line-up with the lowest combined fuel economy of any major automaker.

Founded in 1925 by Walter P. Chrysler, three years later the company laid the cornerstone for the Chrysler Building, briefly the world's tallest building and still a landmark on the Manhattan skyline.

The Chapter 11 filing, in U.S. Bankruptcy Court in Manhattan, has implications for the entire industry -- including Chrysler's rivals and suppliers.

As part of the filing, the U.S. government will provide up to $3.5 billion in debtor-in-possession (DIP) financing and up to $4.5 billion in exit financing. Obama said he hopes the entire process will take only 30 to 60 days.

Some of Chrysler's 3,600 U.S. dealers are expected to close, and Chrysler Financial will stop providing loans for new cars and trucks. Instead, General Motors Corp's financing arm, GMAC, will provide loans to Chrysler dealers and customers.

The legal proceedings will be overseen by Judge Arthur Gonzalez, the same jurist who oversaw the Enron and WorldCom bankruptcies.

In addition to Fiat's ownership stake, U.S. officials expect Chrysler to be 55 percent owned by the United Auto Workers' healthcare trust fund while the U.S. and Canadian governments hold a combined stake of 10 percent.

Chrysler has three manufacturing plants in Canada and had to reach agreements with its unions there and the Canadian government under the restructuring. The automaker is not filing for bankruptcy in Canada, but the Canadian government, along with the province of Ontario, said they will provide $2.42 billion in financing to help the company restructure.

FIGHTING WORDS

The bankruptcy signals that Obama is prepared to play hardball with holdout lenders rather than knuckle under to their demands and will likely set the tone for similar discussions with bondholders of General Motors -- which is now on the clock to restructure its operations by the end of May.

While Obama voiced his support for Chrysler and the deal with Fiat, he was pointed in his criticism of the investors who did not agree to this deal.

"I don't stand with them. I stand with Chrysler's employees and their families and communities," the president said. "I don't stand with those who held out when everybody else is making sacrifices. That's why I'm supporting Chrysler's plans to use our bankruptcy laws to clear away its remaining obligations."

This is not the first major government action with Chrysler. In 1980, U.S. President Jimmy Carter signed a bill providing Chrysler with more than $1 billion in loan guarantees.

"Bankruptcy is what they have been headed for in the past several months," said Mirko Mikelic, portfolio manager at Fifth Third Bank. "The biggest concern now is that the different stakeholders will be able to make the tough decisions they need to make."

Chrysler Chief Executive Robert Nardelli will leave the automaker following the emergence from bankruptcy. The U.S. government will place six members on the new company's board and Fiat will appoint three.

Shares of Chrysler's U.S. rivals reacted positively to the news. GM shares ended 6.1 percent higher and Ford Motor Co ended up 9.7 percent, both on the New York Stock Exchange.

FIAT: A DONE DEAL

The bankruptcy filing did not stall the Fiat deal.

Chrysler has been seeking a rescue deal from the Italian automaker while also trying to finalize its debt agreement.

"It's a partnership that will give Chrysler a chance not only to survive, but to thrive in a global auto industry," Obama said. "Fiat has demonstrated that it can build the clean, fuel-efficient cars that are the future of the industry."

In court documents on Thursday, Chrysler detailed its lengthy search for a partner over the last year and a half, including talks with General Motors and Nissan. Those talks did not pan out and Chrysler eventually found its way to Fiat.

The government's debt-restructuring talks have been spearheaded by the Obama administration's autos task force and former investment banker Steve Rattner.

In a bid to win over three fund firms that had spurned an offer to accept $2 billion in cash in exchange for writing off all of Chrysler's $6.9 billion in secured debt, U.S. officials sweetened the terms by throwing in another $250 million, people familiar with those discussions said.

Chrysler's plight reflects a slump in demand facing a global industry whose $2.6 trillion annual revenue is equivalent to the GDP of France and which employs more than 9 million people.

Chrysler Talks Seen on the Rocks as Deadline Looms

Chrysler rushed to clinch deals with Fiat and a fractious group of lenders in a last-ditch effort to avoid bankruptcy ahead of a government-imposed April 30 restructuring deadline.

There is "reasonable optimism" that a deal between Fiat and Chrysler could be announced on Thursday, Italy's industry minister said on Thursday after talking to Fiat's top management.

"I've spoken to them and I think there is reasonable optimism that (a deal) can be closed with an announcement perhaps even by President Obama today and we hope it is this way," Claudio Scajola told Italian television.

He said once Fiat has concluded a deal with Chrysler, it would have "good cards" to play in a reorganisation of the European car sector.

He also said he expected Fiat to clarify its intentions on the future of jobs and plants in Italy after eventual deals.




According to a report in the Wall Street Journal citing people familiar with the matter, those efforts hit a major roadblock late in the day as talks between the U.S. Treasury Department and lenders collapsed.

This meant bankruptcy for Chrysler was "all but certain", the report said, citing those sources.

Earlier in the evening, U.S. President Barack Obama said concessions by Chrysler's unions and its major bank lenders had made him more hopeful than a month ago that the struggling automaker could be made viable. But he added it was still not clear if Chrysler would need to seek bankruptcy protection to cement concessions from its lenders and move ahead with a planned alliance with Italy's Fiat.

"The details have not yet been finalized so I don't want to jump the gun, but I'm feeling more optimistic than I was about the possibilities about that getting done," Obama said at a news conference.

The White House has set a series of aggressive targets for Chrysler in order to justify another $6 billion in investment on top of $4 billion in emergency loans the government has extended since the start of the year.

The No. 3 U.S. automaker has won cost-cutting concessions from its unions in the United States and Canada and is on the brink of closing its deal with Fiat, a person involved in those negotiations told Reuters.

That leaves the focus on ongoing debt restructuring talks spearheaded by the Obama administration's autos task force and former investment banker Steve Rattner.

In a bid to win over three fund management firms that had spurned an offer to accept $2 billion in cash in exchange for writing off all of Chrysler's $6.9 billion in secured debt, U.S. officials sweetened the terms by throwing in another $250 million, people involved in those discussions said.

The three creditors who balked at the U.S. Treasury's $2 billion offer were Oppenheimer Funds, Perella Weinberg Partners and Stairway Capital, sources said.


About 45 financial institutions hold Chrysler's secured debt. Failure to win their support on debt forgiveness would send the automaker into bankruptcy, officials have said.

An Obama administration official said the Chrysler talks could run up to the deadline of 11:59 p.m. EDT on Thursday.

Fiat and Chrysler are prepared to complete a merger deal by Thursday that would be taken into bankruptcy court as a key element of the restructuring plan if needed, a person with direct knowledge of the preparations said.

Meanwhile, Chrysler's almost 27,000 U.S. factory workers represented by the United Auto Workers union voted on Wednesday in favor of a modified contract including cost-cutting steps intended to make the automaker's wage and benefits competitive with its leanest rivals in the U.S. market.

The new UAW contract should give the union a 55 percent stake in a restructured Chrysler.

GM Bondholders Protest

Chrysler's race to restructure has played out as a kind of prelude to the slower-moving process under way for its larger rival General Motors [GM 1.81 --- UNCH ].

GM bondholders who represent about $27 billion of the automaker's debt are being asked to write off about 90 percent of what they are owed in a debt-for-equity exchange that the automaker launched this week despite investor protests.

A committee representing GM bondholders planned to present an alternative plan to the U.S. autos task force on Thursday that would give them a controlling 51 percent equity interest in a restructured company, a person familiar with the plans told Reuters.

Bondholders had been offered 10 percent under the terms of the GM debt exchange.

By contrast, the UAW, which is owed $7 billion less than bondholders, would get a 39 percent stake.

"What they've offered us is ridiculous," said Chris Crowe, 50, a Denver, Colorado-based home inspector at an event organized for small bondholders in a Detroit suburb. "I know there are only so many pieces of pie, but they're giving us crumbs."

Auto dealers affiliated with both Chrysler and GM announced they had hired a pair of high-profile law firms to represent their interests in the government-directed restructuring.

GM, which has been kept in operation with $15.4 billion of U.S. government funding, has until June 1 to push ahead with its own restructuring which includes plans to cut 40 percent of its U.S. dealers in less than two years.
Slideshow: What's Hot at the 2009 New York Auto Show

Auto dealers are independently owned and protected by state franchise laws that industry executives have said could make it very expensive and difficult for GM to shut down dealerships.

GM's national dealer council hired Orrick Herrington & Sutcliffe LLP, the firm confirmed on Wednesday, a day after dealers demanded to be compensated in exchange for closing.

Chrysler's national dealer body hired Arnold & Porter LLP, the firm said on Wednesday.

KeyBCA Lagi!

Alhamdulillahi rabbil 'alamiin...

Hari  ini akhirnya aku punya keyBCA lagi, setelah sekitar dua tahun tidak menggunakannya. :)
Tadi aku ke BCA Darmo untuk mengambilnya, sehingga aku sekarang bisa bertransaksi dengan bebas via internet lagi. :d

Asian Summary on 27032009

Stocks mixed, off their early peaks, but overall it was a more encouraging week for equities; auto and tech stocks rose, plus there was some further quarter and fiscal year-end buying noted. Nikkei off just 0.1%, Kospi off 0.5%, Taiwan +0.1%, Aussie shares +0.7%, Shanghai Composite +0.7%, HSI off 0.5%, STI down 0.9%.

FX majors fairly well behaved with some JPY-buying related to end-year repatriation; USD/JPY at 98.14 late, EUR/JPY at 133.36, EUR/USD 1.3585.

Japan Feb core CPI flat Y/Y vs 0.1% fall tipped, overall CPI down 0.1% Y/Y, down 0.3% M/M; Tokyo area March core CPI +0.4% Y/Y, as tipped, overall CPI +0.2% Y/Y, +0.3% M/M. Feb Japan retail sales down 5.8% Y/Y, sharpest fall since February 2002. Korea revised 4Q GDP showed 5.1% fall Q/Q vs 5.6% drop initially, 3.4% contraction Y/Y, same as first forecast. NZD ticked higher on data there: NZ 4Q GDP down 0.9% Q/Q vs revised 0.5% contraction in 3Q, biggest quarterly decline since September 1992, though slightly less than 1.0% contraction tipped; GDP down 1.9% Y/Y, in line with forecasts. February trade surplus NZ$489 million vs revised deficit of NZ$104 million in January, NZ$173 million gap tipped; mostly due to biggest slump in imports in 16 years. PBOC put out yet another essay which criticized the U.S. in runup to G20 meeting, focusing on what it deemed an insufficient financial regulatory system. Vietnam 2008 GDP grew 6.18%, vs 6.23% earlier estimate, with government tipping GDP +4.8%-5.6% this year, after estimating growth of 3.1% on-year in 1Q. May Nymex crude off 67 cents.(RXM)


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March 27, 2009 02:17 ET (06:17 GMT)

Asian Summary on 27032009

Stocks mixed, off their early peaks, but overall it was a more encouraging week for equities; auto and tech stocks rose, plus there was some further quarter and fiscal year-end buying noted. Nikkei off just 0.1%, Kospi off 0.5%, Taiwan +0.1%, Aussie shares +0.7%, Shanghai Composite +0.7%, HSI off 0.5%, STI down 0.9%.

FX majors fairly well behaved with some JPY-buying related to end-year repatriation; USD/JPY at 98.14 late, EUR/JPY at 133.36, EUR/USD 1.3585.

Japan Feb core CPI flat Y/Y vs 0.1% fall tipped, overall CPI down 0.1% Y/Y, down 0.3% M/M; Tokyo area March core CPI +0.4% Y/Y, as tipped, overall CPI +0.2% Y/Y, +0.3% M/M. Feb Japan retail sales down 5.8% Y/Y, sharpest fall since February 2002. Korea revised 4Q GDP showed 5.1% fall Q/Q vs 5.6% drop initially, 3.4% contraction Y/Y, same as first forecast. NZD ticked higher on data there: NZ 4Q GDP down 0.9% Q/Q vs revised 0.5% contraction in 3Q, biggest quarterly decline since September 1992, though slightly less than 1.0% contraction tipped; GDP down 1.9% Y/Y, in line with forecasts. February trade surplus NZ$489 million vs revised deficit of NZ$104 million in January, NZ$173 million gap tipped; mostly due to biggest slump in imports in 16 years. PBOC put out yet another essay which criticized the U.S. in runup to G20 meeting, focusing on what it deemed an insufficient financial regulatory system. Vietnam 2008 GDP grew 6.18%, vs 6.23% earlier estimate, with government tipping GDP +4.8%-5.6% this year, after estimating growth of 3.1% on-year in 1Q. May Nymex crude off 67 cents.(RXM)


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March 27, 2009 02:17 ET (06:17 GMT)

Germany's Merkel Says NATO Must Succeed In Afghanistan

BERLIN (AFP)--German Chancellor Angela Merkel said Thursday that the North
Atlantic Treaty Organization must succeed in Afghanistan to ensure that the
country does not become a base again for "terrorists" to attack the alliance's
members.

"Afghanistan is NATO's biggest test at present," Merkel said in a speech to
parliament ahead of the alliance's 60th anniversary summit in Strasbourg,
France and the German towns of Baden-Baden and Kehl on April 3-4.

"For me our aim remains clear, against which our success will be measured,
that Afghanistan no longer poses a terrorist threat to our security, in other
words in NATO member countries. That is our aim," Merkel said.

"We should remember that Afghanistan ... was the base for the attacks of
September 11, 2001. This was possible because there was no functioning state,
and that was the reason for our engagement in Afghanistan, because it
threatened our security, the members of NATO."

Germany has about 3,500 troops in Afghanistan, one of 41 nations forming the
60,000-strong NATO-led International Security Assistance Force. The German
parliament voted last year to increase this to 4,500. The U.S. also has a
further 10,000 soldiers there not under NATO command.

Next week's summit is expected to see Barack Obama in his first visit to
Europe since becoming U.S. President in January press allies in the alliance,
Germany included, to do more in Afghanistan.

Germany's troops are based in the relatively peaceful north of Afghanistan -
14 of its soldiers have been killed there in attacks - but Merkel reiterated
that her country is pulling its weight in terms of police support and civilian
reconstruction work.

"We can be satisfied with our performance," she said.

She also welcomed Obama's moves to develop a joined-up strategy for both
Afghanistan and Pakistan, but stressed that there can be no talks with those
"not interested in reconstruction."

WORLD FOREX: Dlr Rises, Euro Mixed As Risk Appetite Improves

The dollar is mostly higher in Europe Thursday as risk
appetite improves a little and concerns about U.S. Treasury policy towards the
currency subside.

The rise in risk appetite was illustrated in a rally by the euro against the
yen, with equity markets showing some further strength.

Market sentiment was helped by data Wednesday showing that both U.S. durable
goods orders and new home orders had risen sharply, instead of continuing
their recent decline as the market had expected.

The fresh hope of economic recovery this injected into markets helped to lift
the Dow Jones Industrial Average 1.5% and then the Nikkei Index in Japan 1.9%.

However, there was some sign this sentiment was faltering, with most European
bourses starting their trading slightly in the red Thursday.

Underlying these moves is the continued debate on just what U.S. Treasury
Secretary Tim Geithner hoped to achieve by saying Wednesday he was "quite open"
to Chinese suggestions of a move towards Special Drawing Right-linked currency
reserves.

The U.S. official quickly back-tracked, stating the dollar will remain the
global reserve currency for some time to come, and helped the dollar to recover
sharp losses it made on the original statement.

See chart at

http://www.dowjoneswebservices.com/chart/view/1777

However, analysts said the episode illustrated just how fragile dollar
sentiment remains to any suggestion foreign countries are in any way
considering reducing their dollar-denominated reserves.

An SDR-linked currency is likely to hold a much higher percentage of euros,
yen and sterling, rather than dollars.

The euro, meanwhile, was having a mixed day, helped by higher risk appetite
but hurt by news that German consumer confidence declined for the first time
since September 2008.

Although sterling had been doing well at the start, the release of data
showing a 1.9% drop in U.K. retail sales last month pushed it lower.

By 1020 GMT, the dollar had pushed ahead to Y98.16 from Y97.30 late Wednesday
in New York, according to EBS.

The euro was down at $1.3567 from $1.3587, but rose to Y133.24 from Y132.19.

The pound was up at $1.4567 from $1.4531, but it had been as high as $1.4633.

The dollar rose to CHF1.1263 from CHF1.1203, while the euro rose to CHF1.5285
from CHF1.5222. For the second day in a row, the euro has been pushed down
close to CHF1.5200 to see if this will trigger intervention by the Swiss
National Bank.

The Swiss central bank launched a surprise intervention exercise March 12
when the euro fell as far as CHF1.4800.

In Eastern Europe, the Hungarian forint was staging a technical bounce, with
the euro falling to HUF301.89 from HUF302.41.

The euro was also down at PLN4.5541 from PLN4.5819, but up a little at
CZK27.515 from CZK27.413.

-By Nicholas Hastings, Dow Jones Newswires; 44 20 7842 9493;
nick.hastings@dowjones.com TALK BACK: We invite readers to send us comments
on this or other financial news topics. Please email us at
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right not to publish reader comments.

PBOC Zhou Urges Govts To Give Fin Mins Authority To Act Fast

People's Bank of China Gov. Zhou Xiaochuan Thursday
suggested world governments give their finance ministries and central banks
authority to take bold steps to deal with severe crises so that they have the
means to handle such crises when they strike.

He said delays had taken place in the latest crisis.

"To stabilize markets under severe stress, finance ministries and central
banks need to act fast and apply extraordinary measures," Zhou wrote in an
essay published on the central bank's Web site.

"Untimely or delayed response falls behind the curve and would make the
outcome less than desired even if the response is correct and strong," he said.

"Going forward, national governments and legislatures may consider giving
pre-authorized mandates to ministries of finance and central banks to use
extraordinary means to contain systemic risk under well-defined stress
scenarios, in order to allow them to act boldly and expeditiously without
having to go through a lengthy or even painful approval process," he said.

The essay elaborates on comments Zhou made in November, at the meeting of
Group of 20 central bankers and finance ministers in Sao Paulo, Brazil.

In contrast, he said, China has responded "decisively" and quickly to the
crisis, loosening monetary policy and introducing the CNY4 trillion stimulus
plan in November.

"Facts speak volumes and demonstrate that compared with other major
economies, the Chinese government has taken prompt, decisive and effective
policy measures, demonstrating its superior system advantage when it comes to
making vital policy decisions."

The essay, titled "Changing Pro-Cyclicality for Financial and Economic
Stability," also discusses features of the world's financial system that
magnify swings in the market.

Among the examples, the three main ratings agencies tend to give "highly
correlated" ratings, he said.

"Economic upswings produce euphoria and downturns generate pessimism," he
said, adding the rapid downgrades of ratings in the latest financial crisis
drove massive write-downs at financial institutions and "exacerbated downward
spirals."

-By China Bureau; Dow Jones Newswires; 8610 6588 5848;
djnews.beijing@dowjones.com

Iran Confirms Attendance At Afghanistan Meeting - Reuters

Iran has confirmed it will participate in Tuesday's U.N.
conference in The Hague on the future of Afghanistan, but has yet to decide who
to send, Foreign Ministry spokesman Hassan Qashqavi said Thursday, as reported
by Reuters.

"Iran will participate. The level of participation is not clear," said
Qashqavi.

U.S. Secretary of State Hillary Clinton said earlier this month Tehran would
be invited to the conference to discuss Afghanistan.

Full story:
http://www.reuters.com/article/topNews/idUSTRE52P1U520090326?feedType=RSS&feedNa
me=topNews

-London bureau, Dow Jones Newswires; +44 (0)20 78 42 9330;
generaldesklondon@dowjones.com

Man Grp FY 2009 FY Pretax Pft -43%; Launches New Ops

LONDON (Dow Jones)--Man Group PLC (EMG.LN) Thursday reported a 43% decline in
full-year pretax profit for 2009 and said it was combining its three
funds-of-funds products into a single business to improve transparency and risk
management.

ASIA OUTLOOK 19 Maret 2009

EUR still on the rise after Fed's decision
to broaden quantitative easing, with EUR/USD going over 1.35 for its highest
level since Jan. 9; now at 1.3522 vs 1.3480 late in NY, having gone briefly as
far as 1.3533. USD/JPY meanwhile falls below 96 for its lowest mark since Feb.
24; now at 95.90 vs 96.21 in NY.

EUR/JPY at 129.72, vs 129.70 in NY. Stocks
have positive cue from Wall Street, which gained on Fed news; NZ shares +0.5%.
Watch for rise too in government bonds as Treasurys rallied; 10-year yield had
its biggest fall in two decades. Data include Japan All Industry Index 2350
GMT, RBA Bulletin 0030 GMT; Aussie dwelling unit commencements 0030 GMT, plus
international merchandise imports, with HK trade 0830 GMT. Weekly India WPI
0630 GMT. BOJ monthly report due.

Europe has Italy trade, UK public sector
finances and U.S. has weekly jobless claims, Philly Fed index.(RXM)

Market Summary 19 Maret 2009

U.S. dollar tumbled sharply after Fed surprised markets by escalating quantitative-easing program, signaling more
aggressive approach to keeping longer-term yields low, stabilizing credit
markets. EUR/USD reached 1.3499, highest level since Jan. 9, marking one of its
biggest intraday gains; in early NZ trade euro tapped 1.3533, and dollar fell
below 96 against yen for 1st time since Feb. 24.

Dollar selloff was triggered
after Fed said it would expand its purchases of mortgage-backed securities by
additional $750 billion plus spend as much as $300 billion to purchase U.S.
Treasurys; "the U.S. dollar took a significant hit right across the board,"
said Dustin Reid, director at RBS Greenwich Capital Markets; says mechanics of
Fed program increases money supply, erodes the value of the dollar; confidence
boost to markets also increasing risk-appetite, reducing safe-haven flows to
dollar.

Late Wednesday, EUR/USD was 1.3480 vs 1.3009, last at 1.3522 in
Wellington. USD/JPY 96.21 vs 98.54, last 95.85; EUR/JPY 129.70 vs 128.17,
GBP/USD 1.4288 vs 1.4041, USD/CHF 1.1432 vs 1.1828. Stocks rose as Fed decision
boosted financial institution shares such as AIG, Bank of America; Citigroup
rose 23%, to triple value since early March low; BofA +22% to highest level
since January. Dow +1.2%, Nasdaq +2%. Treasurys surged on Fed move with 10-year
yield posting steepest one-day drop in more than 2 decades; bonds rallied
across board. "It takes your breath away," said Chris Ahrens, interest rate
strategist at UBS Securities LLC. 10-year yields fell 47.9 bps to 2.52%,
30-year fell 25 bps to 3.55%.

Nymex April crude down $1.02 at $48.14/bbl as
prices backed down from recent highs near $50 after data revealed U.S. crude
stockpiles at their fullest since 2007. Comex April gold fell $27.70 to
$889.10/oz, mostly on chart-based long liquidation after some of the recent
safe-haven demand waned. (SML)

AIG's Liddy: AIG Likely Won't Ask For More Federal Money

American International Group Inc. (AIG) chairman and
CEO Edward Liddy said that he didn't expect that the company would request more
federal funds and that the company hoped it wouldn't exhaust $173 billion
pledged to it by the government.

Liddy is testifying before the U.S. House Financial Services Capital Markets
Subcommittee Wednesday. Liddy indicated that $30 billion steered to AIG earlier
this month by the federal government may not be used.

"I do not anticipate asking the federal government for more money," Liddy
said. "I would like very very much if we did not have to draw on the $30
billion."

Asked directly about how long it will take for the company to wind down its
financial products division - the source of much of its problems - Liddy said
it could take as long as four years. He said the company should be able to show
"tremendous progress" on winding down various books of business by the first
quarter of 2010, but that getting the whole division unwound could take longer.

Liddy also said that he didn't expect businesses currently under the AIG
umbrella to continue using the AIG name in the future.

"I think the AIG name is so wounded and disgraced, we'll probably have to
change it," he said.

Fed Has Gone "All In" - RBC

Fed has gone "all in," says RBC Capital Markets senior
FX strategist David Watt; "while the FOMC left rates unchanged at de minimis
levels, they decided there was no time like the present to announce plans to
buy U.S. Treasurys, $300 billion over the next six months to be exact, focused
primarily on the two-to-ten-year part of the curve. That amounts to $50 billion
a month, but the values are not as important as the symbolism, and those values
are likely just the opening gambit." Adds "the Fed is not going to sit on its
hands; it is going to remain proactive. U.S. equities fell in love with Ben
Bernanke all over again, while the dollar was taken to the woodshed and beaten
like a dog. And after a short rest, beaten like a dog again. Market sentiment
on the Fed's maneuver was crystal clear."(RXM)

FED WATCH: Democratic, Or Just Dazed And Confused?

The Federal Reserve's dramatic decision Wednesday to
commit an additional $1 trillion-plus to steadying the economy and financial
markets gave equity and fixed-income markets a much-needed jolt.

But the one-day fix may come at the expense of the Fed's reputation for
clarity and predictability.

It might be something investors and the public just have to live with under
the Ben Bernanke era, where an apparently more democratic and consensus-driven
approach means meeting outcomes aren't always going to be foregone conclusions.

Whatever the rationale, the Fed's $300 billion Treasury purchase shocker
caught Fed watchers off guard.

The announcement came less than two weeks after the Fed's main ambassador to
Wall Street, New York Fed President William Dudley, appeared to close the door
to the idea. "At this point in time the Fed has judged buying long-term
Treasurys is not the most efficient means of easing financial market
conditions," Dudley said.

Of course, that's a bit of a noncommittal committal. With the benefit of
hindsight, Dudley seemed to be referring to what the Fed's thinking was to that
point, and it wasn't a promise of future action (or inaction). But at the time,
it appeared to be a clear signal that buying Treasurys wasn't on the immediate
horizon.

Another head-scratcher from Wednesday's statement was Richmond Fed President
Jeffrey Lacker's shift from the "nay" to "yea" camp. He had dissented at the
January FOMC meeting because he wanted the Fed to increase the monetary base
via Treasury purchases and not targeted credit programs.

The Fed took a baby step toward Lacker with the Treasury purchase plan. But
it took a giant leap away by supersizing the agency debt and agency-backed
mortgage backed securities purchase plans by a combined $850 billion to $1.45
trillion. Those programs, and others like the $1 trillion Term Asset-Backed
Securities Loan Facility, are precisely the kind of market-specific facilities
that Lacker had opposed.

One interpretation may simply be that the outcome of a meeting can't, or
shouldn't, be predetermined. The Fed now meets for two-day stretches, giving
lengthy time for discussion, and even perhaps for minds to be changed.

"What we're seeing is if there's a more democratic monetary policy,
individual participants talk about it...and small shifts in the median voter is
enough to move a program," said Vincent Reinhart, an American Enterprise
Institute economist who headed the Fed's monetary affairs division under former
Chairman Alan Greenspan and in the early months of Bernanke's term.

And there may be a good economic rationale for being so aggressive now.
Although gross domestic product likely fell again in the first quarter after
plunging 6.2%, at an annual rate, in the fourth quarter, there are some signs
of stability.

Consumer spending was fairly solid in the first two months of the year, and
housing starts appear to have stabilized, albeit at very low levels. If the
economy has indeed hit bottom, then the Fed's actions might add some wind to
the sails. At least there's less of a risk they'll be overwhelmed by a
deepening recession.

It's harder to have a charitable view about how the Fed is arriving at these
mind-boggling figures. It's unclear why the Fed decided that $750 billion, and
not $100 billion or $400 billion, was the right amount to increase the MBS
facility, or why they doubled the separate agency debt program instead of, say,
quadrupling it.

"The sizes do puzzle me," said Reinhart, as do the changes that occurred in
the intermeeting period to prompt the actions. "Why are circumstances so much
different this time?"