(Reuters) - A federal court has approved the distribution of more than $843 million to harmed investors at insurer American International Group, the U.S. Securities and Exchange Commission said on Tuesday.
The court estimates that checks will soon be mailed to more than 257,000 AIG investors that were affected by an alleged accounting fraud at the company, the SEC said.
AIG, which has been propped up by billions of dollars in taxpayer funds, was charged with accounting fraud in 2006. The SEC alleged that the insurer falsified its financial statements from at least 2000 until 2005 and reported misleading information about its financial condition.
The company, which did not admit or deny the allegations, had repaid its ill-gotten gains, as well as penalties to the government. In 2007, a federal court authorized the SEC to establish a 'fair fund' to distribute the money to harmed AIG investors.
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Tuesday, May 19, 2009
Sunday, May 17, 2009
Asian consumers go back to basics in downturn
(Reuters) - Forget about bells and whistles. Asians have gone back to basics in the economic slowdown and are opting for no-frills, lower-priced products rather than brand names and items with fancy features that rarely get used.
Manufacturers across the region, the world's largest producer of electronics and white goods, are more than happy to oblige as they scramble for orders that will keep their heads above water until the economic tide changes.
"People are hesitant to buy top-notch, expensive models, but they still want to buy decent ones with some useful functions," said Kohei Ueda, a general manager at Bic Camera, a major consumer electronics chain in Japan.
From laptops without standard accessories such as CD-roms, to rice cookers and microwave ovens with minimal functions, brands such as Samsung and LG Electronics are quickly introducing basic items that can be sold at lower price points.
It's all about surviving the slowdown which has dealt a severe blow to Asia's export-dependent economies such as South Korea which saw exports drop 25 percent in the first quarter of the year alone.
"In an economic downturn, liquidity problems outweigh the factor of profits. Therefore, it would be important to keep their factories running and pay back debt," said Choe Soon-kyoo, a professor of Yonsei University's business school in Seoul.
"They are adopting that (low-price) strategy to maintain liquidity rather than to make profits," he added.
Buoyant sales from these products are providing relief, and much needed cash flow, to companies that posted heavy profit falls or swung to quarterly losses early this year such as Samsung Electronics whose earnings plummeted to 619 billion won in the March quarter from 2.2 trillion won a year ago.
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Manufacturers across the region, the world's largest producer of electronics and white goods, are more than happy to oblige as they scramble for orders that will keep their heads above water until the economic tide changes.
"People are hesitant to buy top-notch, expensive models, but they still want to buy decent ones with some useful functions," said Kohei Ueda, a general manager at Bic Camera, a major consumer electronics chain in Japan.
From laptops without standard accessories such as CD-roms, to rice cookers and microwave ovens with minimal functions, brands such as Samsung and LG Electronics are quickly introducing basic items that can be sold at lower price points.
It's all about surviving the slowdown which has dealt a severe blow to Asia's export-dependent economies such as South Korea which saw exports drop 25 percent in the first quarter of the year alone.
"In an economic downturn, liquidity problems outweigh the factor of profits. Therefore, it would be important to keep their factories running and pay back debt," said Choe Soon-kyoo, a professor of Yonsei University's business school in Seoul.
"They are adopting that (low-price) strategy to maintain liquidity rather than to make profits," he added.
Buoyant sales from these products are providing relief, and much needed cash flow, to companies that posted heavy profit falls or swung to quarterly losses early this year such as Samsung Electronics whose earnings plummeted to 619 billion won in the March quarter from 2.2 trillion won a year ago.
Read more here
Central banks may need more power for financial stability
(Reuters) - Central banks might need more power to oversee banks if they are to play a larger role in maintaining financial stability in the post-crisis world, a Bank for International Settlements (BIS) report said on Sunday.
The report also said central banks should examine issues such as the make-up of policymaking bodies, their independence, voting habits and finances as their role evolves.
"The current global financial crisis could well have ... important implications for central banks, particularly with respect to their role in fostering financial stability," said the report, by the Central Bank Governance group.
"If central banks are to play a key role in dealing with systemic risk when applying a more macroprudential approach, they may also need to have closer oversight of systemically significant institutions."
But the report said there was no magic bullet for arranging central bank governance to deal with the new challenges, as their roles as well as political and economic conditions differ from each other.
"What is suitable for one country will not be for another. Hence, setting down a single set of best practices is not feasible."
Financial stability, for its part, would be difficult to codify in central bank objectives, as it is not as simple as naming a range for consumer price growth as an inflation target.
"Financial stability is ... somewhat incomplete as a guiding light for policy actions and as a basis for accountability," it said.
"Financial stability is not an absolute objective -- most economists would agree that financial variables should be flexible, and should change, and sometimes sharply. The question is by how much and in what circumstances."
Read more here
The report also said central banks should examine issues such as the make-up of policymaking bodies, their independence, voting habits and finances as their role evolves.
"The current global financial crisis could well have ... important implications for central banks, particularly with respect to their role in fostering financial stability," said the report, by the Central Bank Governance group.
"If central banks are to play a key role in dealing with systemic risk when applying a more macroprudential approach, they may also need to have closer oversight of systemically significant institutions."
But the report said there was no magic bullet for arranging central bank governance to deal with the new challenges, as their roles as well as political and economic conditions differ from each other.
"What is suitable for one country will not be for another. Hence, setting down a single set of best practices is not feasible."
Financial stability, for its part, would be difficult to codify in central bank objectives, as it is not as simple as naming a range for consumer price growth as an inflation target.
"Financial stability is ... somewhat incomplete as a guiding light for policy actions and as a basis for accountability," it said.
"Financial stability is not an absolute objective -- most economists would agree that financial variables should be flexible, and should change, and sometimes sharply. The question is by how much and in what circumstances."
Read more here
Thursday, May 14, 2009
U.S. financial reform to be unveiled despite clashes
(Reuters) - The Obama administration's plan to reshape the opaque world of derivatives trading, unveiled on Wednesday, is only a preview of sweeping financial reform proposals that may be announced as soon as next week.
The White House and Treasury, responding to the global financial crisis, have firm ideas about tightening oversight of hedge funds, streamlining bank regulation, shaking up executive pay standards and protecting consumers.
But two key components of the administration's approach -- policing "systemic risk" and winding down troubled financial firms -- are dividing senior officials and lawmakers, which will likely cause delays in getting broad reforms enacted.
Treasury Secretary Timothy Geithner, a chief architect, acknowledged on Wednesday the proposals might not sit well with everyone. "It's not going to be comfortable for everybody but it's important to do," he told a group of bankers.
The regulatory reform drive comes as economies around the globe continue to reel from a credit market paralysis triggered by a sudden plunge in the value of exotic securities created during the U.S. real estate boom. U.S. President Barack Obama has vowed to pursue changes to prevent another such crisis.
His administration's approach centers on a powerful, new "systemic risk" regulator, likely to be the U.S. Federal Reserve, backed by a council of regulators, including the Federal Deposit Insurance Corp, which will also get new powers, according to sources briefed on the plan.
That compromise has emerged after a debate between advocates of centralized financial supervision and skeptics who fear making the Fed too powerful, especially in view of its shaky record in handling troubled insurer AIG (AIG.N).
The administration looks poised to put the FDIC at the center of newly streamlined bank regulations. Other agencies' rulebooks will be rewritten to conform with an FDIC standard, preventing banks from shopping around for a lax regulator.
But other bank overseers, such as the Comptroller of the Currency and the Office of Thrift Supervision, for now, will not be slated for shutdown, the sources said.
As part of its effort, the Treasury will emphasize the need for global cooperation, wary of the risk that financial firms might flee to jurisdictions with looser regulations.
PLANS IN CONGRESS
Geithner said on May 8 that Congress would get "the broad comprehensive framework within the next couple weeks, and we hope to move forward quickly with legislation."
Democratic lawmakers and the White House want to enact reforms by the year-end, but the deadline looks less realistic as the proposal expands.
"The problem is that as you start adding more new issues, the consensus starts breaking down," said Wayne Abernathy, an executive at the American Bankers Association.
Many of the proposals involve sensitive structural changes that threaten existing bureaucracies and cross jurisdictional lines among congressional committees.
Read more here
The White House and Treasury, responding to the global financial crisis, have firm ideas about tightening oversight of hedge funds, streamlining bank regulation, shaking up executive pay standards and protecting consumers.
But two key components of the administration's approach -- policing "systemic risk" and winding down troubled financial firms -- are dividing senior officials and lawmakers, which will likely cause delays in getting broad reforms enacted.
Treasury Secretary Timothy Geithner, a chief architect, acknowledged on Wednesday the proposals might not sit well with everyone. "It's not going to be comfortable for everybody but it's important to do," he told a group of bankers.
The regulatory reform drive comes as economies around the globe continue to reel from a credit market paralysis triggered by a sudden plunge in the value of exotic securities created during the U.S. real estate boom. U.S. President Barack Obama has vowed to pursue changes to prevent another such crisis.
His administration's approach centers on a powerful, new "systemic risk" regulator, likely to be the U.S. Federal Reserve, backed by a council of regulators, including the Federal Deposit Insurance Corp, which will also get new powers, according to sources briefed on the plan.
That compromise has emerged after a debate between advocates of centralized financial supervision and skeptics who fear making the Fed too powerful, especially in view of its shaky record in handling troubled insurer AIG (AIG.N).
The administration looks poised to put the FDIC at the center of newly streamlined bank regulations. Other agencies' rulebooks will be rewritten to conform with an FDIC standard, preventing banks from shopping around for a lax regulator.
But other bank overseers, such as the Comptroller of the Currency and the Office of Thrift Supervision, for now, will not be slated for shutdown, the sources said.
As part of its effort, the Treasury will emphasize the need for global cooperation, wary of the risk that financial firms might flee to jurisdictions with looser regulations.
PLANS IN CONGRESS
Geithner said on May 8 that Congress would get "the broad comprehensive framework within the next couple weeks, and we hope to move forward quickly with legislation."
Democratic lawmakers and the White House want to enact reforms by the year-end, but the deadline looks less realistic as the proposal expands.
"The problem is that as you start adding more new issues, the consensus starts breaking down," said Wayne Abernathy, an executive at the American Bankers Association.
Many of the proposals involve sensitive structural changes that threaten existing bureaucracies and cross jurisdictional lines among congressional committees.
Read more here
GM near deal with UAW
(Reuters) - Under the direction of the U.S. Treasury, General Motors Corp is close to a deal with the United Auto Workers that would cut its hourly labor costs by more than $1 billion a year, the Wall Street Journal said, citing people familiar with the matter.
GM expects to halve its remaining cash outlays for retiree health costs to about $10 billion, and supplement that contribution with a 39 percent equity stake in the reorganized company, the people told the paper.
Read more here
GM expects to halve its remaining cash outlays for retiree health costs to about $10 billion, and supplement that contribution with a 39 percent equity stake in the reorganized company, the people told the paper.
Read more here
Wednesday, May 13, 2009
Panasonic seen posting $1.1 billion loss in 2009/10
(Reuters) - Japan's Panasonic Corp (6752.T) is likely to post a net loss of more than 100 billion yen ($1.1 billion) for the year ending in March 2010, the Yomiuri newspaper reported, as the consumer electronics maker grapples with a stronger yen and slowing demand.
That is in line with an average estimate of a 105.4 billion yen net loss in a poll of 17 analysts by Thomson Reuters.
Analysts expect the company to suffer a second straight year of losses this financial year, as the industry is mired in a global slump that is shaping up to be nastier than the last major downturn in 2001 after the IT bubble.
Separately, the Sankei newspaper said Panasonic was likely to forecast an operating profit for this financial year but project a net loss due to costs to pull out of unprofitable operations.
Panasonic spokesman Akira Kadota said the reported figure was not something the company had announced.
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That is in line with an average estimate of a 105.4 billion yen net loss in a poll of 17 analysts by Thomson Reuters.
Analysts expect the company to suffer a second straight year of losses this financial year, as the industry is mired in a global slump that is shaping up to be nastier than the last major downturn in 2001 after the IT bubble.
Separately, the Sankei newspaper said Panasonic was likely to forecast an operating profit for this financial year but project a net loss due to costs to pull out of unprofitable operations.
Panasonic spokesman Akira Kadota said the reported figure was not something the company had announced.
Read more here
Most U.S. homeowners think a bottom has been reached: Zillow
(Reuters) - Most American homeowners believe their home's value has declined over the past year, but a majority also think a bottom has been reached, real estate website Zillow.com said on Thursday.
A majority, or 60 percent, believe their home lost value during the past 12 months, according to the Zillow Q1 Homeowner Confidence Survey.
In reality, 80 percent of homes across the country lost value during the past 12 months, according to Zillow's first-quarter Real Estate Market Reports.
Additionally, 18 percent believe their home gained value in the past 12 months, and 22 percent believe its value remained the same, according to the survey.
That resulted in a Zillow Home Value Misperception Index of five -- the lowest it has been since Zillow introduced the index in the second quarter of 2008 and down from 10 in the fourth quarter of 2008. A Misperception Index of zero would mean homeowners perceptions' were in line with actual values.
"The perception of American homeowners is finally catching up to reality, which is that 80 percent of all homes in the country lost value during this past year," Dr. Stan Humphries, Zillow's vice president of data and analytics, said in a statement accompanying the survey.
"While homeowners are now more realistic when looking backward, they are still pretty starry-eyed when looking forward, with three out of four homeowners believing that their own homes' prices will increase or be flat over the next six months. Unfortunately, there are few markets we expect to perform this well," he said.
Most homeowners -- 74 percent -- believe their home will not decline in value in the coming six months, effectively calling a bottom to their own home's housing slide, Zillow said.
Specifically, one in four homeowners, or 27 percent, think their home's value will increase in the next six months, while nearly half, or 47 percent, believe its value will remain the same. Homeowners were similarly optimistic when it came to predicting home values in their local markets, the survey showed.
Read more here
A majority, or 60 percent, believe their home lost value during the past 12 months, according to the Zillow Q1 Homeowner Confidence Survey.
In reality, 80 percent of homes across the country lost value during the past 12 months, according to Zillow's first-quarter Real Estate Market Reports.
Additionally, 18 percent believe their home gained value in the past 12 months, and 22 percent believe its value remained the same, according to the survey.
That resulted in a Zillow Home Value Misperception Index of five -- the lowest it has been since Zillow introduced the index in the second quarter of 2008 and down from 10 in the fourth quarter of 2008. A Misperception Index of zero would mean homeowners perceptions' were in line with actual values.
"The perception of American homeowners is finally catching up to reality, which is that 80 percent of all homes in the country lost value during this past year," Dr. Stan Humphries, Zillow's vice president of data and analytics, said in a statement accompanying the survey.
"While homeowners are now more realistic when looking backward, they are still pretty starry-eyed when looking forward, with three out of four homeowners believing that their own homes' prices will increase or be flat over the next six months. Unfortunately, there are few markets we expect to perform this well," he said.
Most homeowners -- 74 percent -- believe their home will not decline in value in the coming six months, effectively calling a bottom to their own home's housing slide, Zillow said.
Specifically, one in four homeowners, or 27 percent, think their home's value will increase in the next six months, while nearly half, or 47 percent, believe its value will remain the same. Homeowners were similarly optimistic when it came to predicting home values in their local markets, the survey showed.
Read more here
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