S&P Forecasts Brief
Recession in 3Q, 4Q
NEW YORK Standard & Poors predicted Friday that the U.S. economy would enter a short, brief recession in the wake of last weeks terrorist attacks on the World Trade Center and the Pentagon.
David M. Blitzer, Standard & Poors managing director and chief investment strategist, said he expected the gross domestic product to decline as much as 1% in the third and fourth quarters and then recover beginning early next year.
While a pause in consumer spending and business investment is likely, the efforts of all levels of governments to return to normality, and the response of people and officials in New York and Washington, strongly suggest that the economic effects will be of limited duration and scope, he said.
Standard & Poors also said the effects of the attacks on the insurance industry would be similarly mild. The industrys tab, which has already passed $4 billion, will probably exceed the $20 billion payout that followed Hurricane Andrew in 1992, the credit and bond rating company said. Still, officials said the cost would be spread over a number of individual insurers, and that the industry as a whole was strong and well capitalized.
Losses would have to exceed $50 billion before we would begin worrying about the insurance system, said Steve Dreyer, managing director for U.S. insurance industry ratings at Standard & Poors.
Capital Standards Rule Published
WASHINGTON A final rule laying out detailed new risk-based capital standards for Fannie Mae and Freddie Mac was published in the Federal Register on Thursday, officially beginning the one-year countdown until its effective date.
The long-awaited rule, which has been in preparation for years, would impose a complicated regime of risk assessment and reporting requirements on the two government-sponsored enterprises. It was first released on July 19, but was not considered official until its publication in the Federal Register.
During hearings in July, numerous lawmakers said they were concerned that the rule would be overly harsh, and they urged OFHEO director Armando Falcon to work with the two GSEs to modify it before its effective date.
Deutsche Discussing Unit Sale with ING
FRANKFURT Deutsche Bank AG confirmed Thursday that it has entered exclusive negotiations to sell its French private banking unit Deutsche Bank SA to the Dutch banker ING Group NV.
Deutsche Bank SA employs 200 people in 11 branches in France, and it has about 10,000 private banking clients.
The move is part of a reorganization of Deutsche Banks French operations, Germanys biggest bank said in a press statement late Tuesday. Deutsche said it would organize its French activities in the areas of corporate and investment banking, asset management, and private client business through Deutsche Bank AGs Paris branch and Banque Worms, which it acquired in April. Dow Jones
AON Head to Speak At Conference
WASHINGTON The American Bankers Insurance Association announced that it expects congressional leaders, bank regulators, and senior bank-insurance managers to attend its annual conference in Arlington, Va., between Oct. 15-17.
The key speaker will be Patrick Ryan, the chief executive officer of AON Corp., one of the worlds largest diversified financial services firms, the American Bankers Associations insurance arm said. Sessions on predatory lending, privacy, and technology are scheduled. Rob Blackwell