Senator Dodd on a Mission to Crush Talent

Senator Dodd forgets to take medicine

Feb. 17 (Bloomberg) — Wall Street bankers chafing at new limits on executive pay may have to accept the fact that the U.S. government is prepared to remake the nation’s financial system without them.

Bankers and their supporters, mostly executive-pay consultants, say the restrictions championed by U.S. Senator Christopher Dodd will prompt an Exodus of talent. The response from politicians after banks lost $820 billion: So be it.

“Populism has completely taken control of the process,” said Jeff Davis, director of research at Howe Barnes Hoefer & Arnett, a Chicago-based brokerage. “It’s borderline pitchforks in the street.”

Dodd, chairman of the Senate Banking Committee, added the limits to the $787 billion fiscal stimulus bill approved by Congress on Feb. 13. President Barack Obama plans to sign the stimulus bill into law in Denver today, said his spokeswoman, Jen Psaki. Dodd has brushed aside concern the provision would weaken banks by driving away talent, saying there are plenty of potential replacements.

Overseas markets worried about many issues

LONDON – Asian stock markets fell sharply Tuesday, with benchmarks in Hong Kong and South Korea down about 4 percent, as renewed financial fears sent banks across the region tumbling. European shares slid in early trade.

Every major Asian market retreated with the previous day’s news that Japan’s recession deepened amid the global economic downturn still weighing on investors. Crude oil prices fell below $37 a barrel, though the dollar strengthened against the yen and the euro.

Banks and insurers were in the spotlight amid concerns there was more pain ahead for the global financial industry.

In Europe, speculation had mounted overnight that Britain’s Lloyds Banking Group might be nationalized after the firm Friday reported larger-than-expected losses at recently acquired Halifax-Bank of Scotland. Adding to worries, Moody’s rating agency said banks with exposure in hard-hit Eastern Europe could see their ratings pressured.

From Bloomberg here are the issues

Feb. 17 (Bloomberg) — Stocks in Europe and Asia dropped and U.S. futures slumped on concern banks may face rating downgrades and further losses as the recession deepens. Gold climbed to a seven-month high, while Treasuries gained.

Swedbank AB and UniCredit SpA declined more than 4 percent and the euro fell to a 10-week low after Moody’s Investors Service said it may downgrade banks with units in eastern Europe. Woori Finance Holdings Co., which yesterday applied for state funding, sank 6.8 percent as the cost for South Korean banks to borrow dollars rose to a record. Daimler AG slid 4.1 percent after the maker of Mercedes-Benz trucks and cars posted earnings that missed analysts’ estimates.

“Market participants continue to be hit by a wave of disappointing corporate results and weakening economic data,” said Henk Potts, a London-based fund manager at Barclays Stockbrokers, which has about $45 billion under management. The fallout from the financial crisis “is filtering through to more and more economies.”

The MSCI World Index decreased 1.3 percent to 819.95 at 12:31 p.m. in London, extending its 2009 retreat to 11 percent. The gauge of 23 developed markets has dropped for six straight days as companies from Electricite de France SA to Diageo Plc posted disappointing results and U.S. Treasury Secretary Timothy Geithner failed to convince investors his bank rescue will work.

The MSCI Emerging Markets Index declined 3.5 percent, the biggest slide since November. Poland’s WIG20 Index slipped for a fifth day, losing 3.7 percent, while the Czech Republic’s PX Index tumbled 7 percent, the steepest drop since October.

Nakagawa Resigns

Europe’s Dow Jones Stoxx 600 Index declined 1.9 percent as Givaudan SA and Yara International ASA fell. Austria’s ATX Index slid 5 percent after Moody’s said the country’s banking system is the “most exposed” to the deteriorating economies in east and central Europe.

The MSCI Asia Pacific Index dropped 2.7 percent. In Japan, where Finance Minister Shoichi Nakagawa said he will resign amid accusations he was drunk at a Group of Seven press conference, the Nikkei 225 Stock Average lost 1.4 percent.

Futures on the Standard & Poor’s 500 Index decreased 2.1 percent. U.S. markets were closed yesterday for Presidents’ Day.

In an effort to raise $ @ C, buyers are only interested in the assets C would like to keep

(Reuters) – Citigroup’s quest to raise cash by selling assets is falling flat as would-be suitors have more interest in the parts of the business that Citi would like to keep, the New York Post said on Tuesday.

One potential investor is Texas billionaire Gerald J. Ford, who is interested in buying back bank assets and branches that make up the former Golden State Bancorp which Citi bought from Ford seven years ago for nearly $6 billion, the paper said, citing sources.

Potential buyers are also interested in Mexican bank Banamex, which Citi bought for $12.5 billion eight years ago, the newspaper added.

Citigroup spokesman Jon Diat said last week Citi had no intention of selling Banamex, which it sees as a key component of Citicorp.

The assets that make up Citi’s so-called bad bank, businesses seen as non-core and at the heart of a strategy to raise much-needed capital, are garnering little interest, the paper cited investment bankers as saying.

The assets include CitiFinancial, CitiMortgage and Primerica, which has been for sale for more than a year, the newspaper said. Those businesses are not drawing buyers because they are in sectors facing the strongest headwinds, the paper said, citing sources.

Citigroup is splitting into two operating units in what is known as a “good bank/bad bank” strategy.

Citigroup could not be immediately reached for comment by Reuters.

WMT profits fall to $.096 per share, but tops estimates

NEW YORK (Reuters) – Wal-Mart Stores Inc on Tuesday posted a quarterly profit that beat Wall Street expectations, helped by strong U.S. sales at its namesake discount stores.

Profit fell to $3.79 billion, or 96 cents per share, for its fiscal fourth quarter that ended January 31, from $4.096 billion, or $1.02 share, a year ago.

The company said earnings per share excluding a 7 cent charge for the settlement of class action lawsuits was $1.03 per share. Analysts, on average, had been expecting it to earn 99 cents per share, according to Reuters Estimates.

Last month, Wal-Mart forecast earnings per share from continuing operations of 91 to 94 cents, down from an original view of $1.03 to $1.07. It said results would be hurt by a stronger U.S. dollar, a settlement for class action lawsuits and weaker-than-expected sales in certain divisions.

It also said that for the new fiscal year it expects first quarter earnings of 72 to 77 cents per share, with full-year earnings of $3.45 and $3.60.

Wal-Mart shares rose nearly 1 percent in premarket trading from its close of $46.53 on Friday.

20k Jobs might be cut

LOS ANGELES (Reuters) – California, which is on the brink of running out of cash, will notify 20,000 state workers on Tuesday their jobs may be eliminated, a spokesman for Governor Arnold Schwarzenegger said on Monday.

The announcement came a day after California lawmakers narrowly failed to pass a $40 billion budget that would have plugged the state’s deficit with a mix of tax hikes and spending cuts.

“In the absence of a budget, the governor has a responsibility to realize state savings any way he can,” said Aaron McLear, a spokesman for the Republican governor. “This is unfortunately a necessary decision.”

The layoff notices will affect about 20 percent of state workers, McLear said, adding the cuts would extend to every part of state government.

LBO’s Were Too Early

Is it still too early to buy ? Yes No Nobody has a crystal ball; so do what you got to do Current Results

During these troubled times some companies are trading at or below cash or replacement costs. This is allowing for cash rich companies to go shopping

Feb. 17 (Bloomberg) — BG Group Plc raised its hostile offer for Pure Energy Resources Ltd. to A$995 million ($646 million), topping a bid by Arrow Energy Ltd., as it seeks to add coal-seam gas reserves for an Australian export venture.

BG, the U.K.’s third-biggest gas producer, boosted its cash offer by 25 percent to A$8 a share, the company said today in a statement. That’s 11 percent higher than the cash and stock bid from Arrow, based on yesterday’s closing prices, and 7 percent more than Brisbane-based Pure’s close yesterday of A$7.48.

Arrow and BG are among companies building up gas reserves in northeastern Australia to feed planned liquefied natural gas projects that would tap a forecast shortfall in supply. Australia’s coal-seam gas industry attracted more than A$17 billion in investment last year as producers such as ConocoPhillips and Malaysia’s Petroliam Nasional Bhd. bought into ventures that may meet Asian demand for cleaner fuel.

BG’s latest bid “still looks as though it’s within the range of previous acquisitions, so it’s not overspending,” said Andrew Williams, an energy analyst at Credit Suisse Group in Melbourne. “It’s conjecture whether Arrow can come back or not with a higher offer.”

Pure Energy gained as much as 90 cents, or 12 percent, to A$8.38 on the Australian stock exchange, rising beyond BG’s increased offer. Arrow advanced as much as 6.3 percent to A$2.85.

Reading, England-based BG is being advised by Gresham Advisory Partners, while Goldman Sachs JBWere Pty is advising Pure and Wilson HTM Corporate Finance is advising Arrow.

‘Competitively Priced’

Nick Davies, managing director of Brisbane-based Arrow, said earlier today he believed Pure’s assets were “still competitively priced” at Arrow’s latest bid, worth A$7.21 a share at yesterday’s close.