Receiving Wide Coverage ...
Down Jones: Following news that the Chinese economy might be cooling off, the "Dow Jones Industrial Average fell 3.5 percent, capping its biggest two-day drop since the height of the financial crisis in 2008," the Post reported. But it wasn't just stocks markets that were showing the stress: commodities "plummeted after months of holding steady." The Journal concurred, noting a sell-off in "everything" in a flight to the safety of U.S. Treasuries, spooked by "fears of another recession and a Greek debt default." G-20 officials were busy trying to assure investors that European banks are healthy enough to endure another crisis.
Madoff Madness: U.S. Bankruptcy Judge Burton Lifland gave trustee Irving Picard 45 days to correct flaws in the cases against some Madoff relatives, which he dismissed for now, the Journal reported. Meanwhile, former SEC general counsel David M. Becker testified to Congress that he had consulted with the SEC ethics advisor about the Madoff account in his mother's estate. "I did precisely what I was supposed to do," he said. The article explained that "on Becker's advice, the SEC took the position that Madoff investors should be entitled to more than just the amount of money they deposited with Madoff; they should also be entitled to an inflation adjustment as a fairness point." SEC Chairman Mary Schapiro allowed Becker to work on the case, but chose to keep him out of the 2009 hearings to avoid the issue. Wall Street Journal, New York Times, Washington Post
Wall Street Journal
The UBS board will get its first look at a report detailing how Kweku Adoboli was able to lose $2.3 billion trading without being noticed and could decide to axe either CEO Oswald Grubel, investment bank head Carsten Kengeter, or both.
Times are tough for Goldman Sachs. The paper reports the investment bank may post its first quarterly loss, 35 cents a share, since the financial crisis. The paper says other investment banks, including Morgan Stanley and Jefferies Group are also struggling as investor uncertainty makes life difficult. The Deals & Deal Makers column tells how Goldman fought for better billing in a press release detailing United Technologies' purchase of Goodrich. But another Journal article relates that bankers beat down the doors of United Technology to get in on the deal, suggesting that a shortage of solid borrowers is the problem in the economy.
The Fed reported mortgage lending was down last year, based on weak demand and tighter credit standards. The report notes that as many as 2.3 million homeowners could not refinance their homes at lower rates because they didn't have enough equity or because standards toughened since they first took the loans.
A venture of Square Mile Capital Management, Invesco and a fund managed by Canyon Capital Realty Advisors purchased a portfolio of about $880 million commercial mortgages at a discount of up to 25% of face value, the paper said.
New York Times
Real estate lending to developers and construction firms was even more irresponsible in Spain than it was in the U.S., columnist Floyd Norris writes. That's led to increasing problems with Spain's banks.
State and federal officials will be meeting Friday with representatives from the largest banks hoping to finalize a settlement with the state attorneys general over foreclosure practices. "The issue has caused sharp divisions in recent months within a 50-state coalition of state attorneys general and has threatened to undermine the outcome of the talks."
New World Order: An analysis piece, cueing off the annual World Bank-International Monetary Fund meetings in Washington, discusses the conundrum of coming up with a new global economic model, to replace the one we've had for the last 40 years since Nixon abandoned the backing the dollar with gold. The story posits that the financial crises over the past four decades show "is no way to run a global economy" but that "it's not clear whether there is enough political will to find a new framework." The piece said "A new system could mean limits on the kind of gaps that can arise between what countries produce and what they consume" — one classic example being the relationship between U.S. and China. Even if there were a consensus around a new global economic model the piece said "the more fundamental problem is enforcement."