- Bush Moves to Aid Homeowners
- Barclays reassures after more borrowing
- Barclays admits borrowing hundreds of millions at Bank’s emergency rate
- H&R in Talks to Alter Terms of Unit’s Sale
- CME Group raises ante over rival’s ownership
- Bickering Exchanges
- Putnam Leaving NYSE Job
- Dell Rises in Early Trading as Results Top Estimates
- Key investor changes tack on TXU deal
Bush Moves to Aid Homeowners
- Wall Street Journal
President Bush, looking for ways to respond to the subprime-mortgage crisis, will outline a series of policy changes and recommendations today to help borrowers avoid default, senior administration officials said.
Among the moves will be an administrative change to allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to guarantee loans for delinquent borrowers. The change is intended to help borrowers who are at least 90 days behind in payments but still living in their homes avoid foreclosure; the guarantees help homeowners by allowing them to refinance at more favorable rates.
Mr. Bush also will ask Congress to suspend, for a limited period, an Internal Revenue Service provision that penalizes borrowers who refinance the terms of their mortgage to reduce the size of the loan or who lose their homes to foreclosure. And he will announce an initiative, to be led jointly by the Treasury and Housing and Urban Development departments, to identify people who are in danger of defaulting over the next two years and work with lenders, insurers and others to develop more favorable loan products for those borrowers…..
Barclays reassures after more borrowing
- Financial Times
Barclays rushed to reassure investors and depositors on Thursday night after it was forced by what it said was a technical glitch to borrow from the Bank of England’s emergency reserves for the second time in just over a week.
The UK bank issued a statement after it emerged it had borrowed £1.6bn (€2.4bn) from the central bank’s emergency facility on Wednesday evening. The facility, which carries a penalty rate of interest, has become the subject of intense scrutiny by investors as they search for signs of distress as a result of the recent turmoil in the capital markets.
Barclays was forced to use the facility after a technical breakdown in the system used to clear and settle money-market transactions left it unable to borrow in the inter-bank market to cover a short position in its accounts with the Bank of England.
But the episode is embarrassing for Barclays, which was last week drawn into a dispute with HSBC, its UK rival, after borrowing £314m from the central bank’s emergency facility…..
Barclays admits borrowing hundreds of millions at Bank’s emergency rate
- The Guardian
Barclays has been forced to borrow hundreds of millions of pounds from the Bank of England’s emergency lending facility for the second time in a fortnight, it was revealed last night.
In a hurried and emotive statement after London’s markets had closed, Barclays attempted to calm fears that it faces a cash crisis. Rumours had circulated all day that Barclays was forced to go to the Bank of England after the central bank said it had lent £1.6bn at its penal rate of 6.75%. It is thought that Barclays borrowed the entire amount.
Barclays said: "There are no liquidity issues in the UK markets. Barclays itself is flush with liquidity. In these challenging times the dramatisation of such situations is of no help to markets, their members or their customers."
The high street bank, which also has a huge investment banking division, said it needed cash only because of a "technical breakdown" in the UK clearing system, through which all the major banks settle their books at the end of the day. Its shares fell 2.5p to 597.5p, raising questions over its £45bn bid to take over the Dutch bank ABN Amro. In its statement, Barclays said: "The Bank of England sterling standby facility is there to facilitate market operations in such circumstances. Had there not been a technical breakdown, this situation would not have occurred."….
H&R in Talks to Alter
Terms of Unit’s Sale – Wall Street Journal
H&R Block Inc. posted a wider fiscal first-quarter net loss and said it is negotiating possible changes in its agreement to sell its subprime-mortgage unit.
The company said if negotiations are successful, it would stop selling new loans through the unit, have several closing requirements waived and try to get the buyer, a subsidiary of Cerberus Capital Management LP, to close before the current deadline of Dec. 31.
"If the parties are unable to reach agreement on the modifications, the existing agreement remains in effect with its original terms, though there can be no assurance it will close," H&R Block said.
The Kansas City, Mo., tax-services company’s latest quarter included $192.8 million, or 59 cents a share, in losses from discontinued operations related to the ailing mortgage business, Option One Mortgage Corp. The prior-year loss from discontinued operations was five cents a share…..
CME Group raises ante over rival’s ownership
- Financial Times
The CME Group on Thursday intensified the battle over the future ownership of the rival Chicago Board Options Exchange by lifting a cap on its legal expenses and buying disputed purchase rights.
The CBOE is one of the few remaining mutually-owned exchanges, but its plans for an initial public offering that could value the group at more than $3bn have been effectively blocked by the simmering dispute with the CME.
The CME argues that some members of the Chicago Board of Trade, which it purchased in July, are entitled to a payout from any sale or IPO of the options exchange through their control of so-called exercise rights in the CBOE.
The CBOE argues that the exercise rights were voided by the merger of the two Chicago futures exchanges. The matter is currently before a court in Delaware….
Bickering Exchanges
- Wall Street Journal
Historically, the country’s oldest futures and options exchanges have been close cousins. Located in Chicago, they even have a footbridge across Van Buren Street linking their two buildings.
The relationship is souring, however. And now the pair is ensnared in a legal battle that boils down to this: Do the members of CME Group Inc.’s Chicago Board of Trade own part of the Chicago Board Options Exchange?
The options exchange says no, and in recent months moved to levy new fees on traders using its floor from the Board of Trade, a move that takes effect for September. About 600 traders have lost their access to trade on the options exchange completely.
The spat is symbolic of the changes sweeping the once clubby world of stock and derivatives exchanges, which for most of their histories were basically membership clubs. The Chicago options exchange, a 34-year-old cooperative, was founded in the Chicago Board of Trade’s smoking lounge…..
Putnam
Leaving NYSE Job – New York Post
The controversial tenure of NYSE Euronext Vice Chairman Jerry Putnam came to a close yesterday after he announced he was stepping down and becoming an adviser to the exchange based in Chicago.
NYSE insiders told The Post that while Putnam had a senior role in the early days after his Internet trading firm Archipelago merged with the exchange, he had less of one after NYSE acquired Euronext in April. Sources noted Putnam had little experience managing large, global organizations like the one NYSE Euronext has evolved into.
However, Putnam won’t be leaving a pauper, as he appears to have been preparing for his departure since last year’s Archipelago-NYSE merger…..
Dell Rises in Early Trading as Results Top Estimates
- Bloomberg
Dell Inc., the second-largest maker of personal computers, climbed in early trading after profit and sales topped analysts’ estimates on efforts to woo retail customers and a drop in component costs.
Dell rose 60 cents, or 2.1 percent, to $29.06 after closing at $28.46 in Nasdaq Stock Market trading yesterday. Dell said second-quarter net income was $733 million, or 32 cents a share, on sales of $14.8 billion. That beat the average estimates of $14.6 billion in sales and profit of 31 cents in a Bloomberg survey.
Chief Executive Officer Michael Dell, who took back the reins after losing the PC market lead to Hewlett-Packard Co., fueled sales growth by adding retail partners including Wal-Mart Stores Inc. in the quarter. Lower prices for parts such as memory chips also helped make machines more profitable…..
Key investor changes tack on TXU deal
- Financial Times
The $45bn buy-out of TXU, the Texas-based energy group, came a step closer to winning shareholder approval on Thursday after Franklin Resources, a large investor, reversed its stance and said it would support the deal.
In late July, Franklin said it would vote its 5 per cent stake in TXU against the takeover by private equity groups KKR and TPG on the grounds that the offer of $69.25 per share in cash was too low.
The move had puzzled many on Wall Street, since the credit market woes had already kicked in and many investors, who had begun to wonder whether a number of large leveraged buy-outs, including TXU, would be completed, preferred to seize the deal on the table.
But in a filing with the Securities and Exchange Commission on Thursday, Franklin said: “Due to changing market conditions in the intervening period of time, the Investment Management Subsidiaries have changed their opinion and now intend to vote ‘yes’ on the KKR buyout offer”…..
