• Paulson to testify July 16 to House panel
  • Ruling Adds Teeth to State Oversight of Banks
  • AIG Discloses New Risk on Derivatives Sold to European Banks
  • Pimco’s El-Erian Says Federal Reserve Unlikely to Raise Rates
  • Supreme Court overturns ruling by Sotomayor
  • Ivy League Endowments Finally ‘Dumb’
  • The New M&A Pipeline
  • Car-Sales Rebound Seen for June
  • General Motors to seek approval to sell itself
  • GM Plans to Dump Stake in Joint Factory With Toyota
  • Porsche Spurns VW Offer as Pressure Mounts to Combine
  • US DOJ opposes blanket immunity for Continental Air
  • Amazon Drops More Affiliates to Avoid Tax
  • Abbott Told to Pay Record $1.67 Billion Award to J&J

Paulson to testify July 16 to House panel – Reuters

Former Treasury Secretary Henry Paulson will testify July 16 before a U.S. House of Representatives committee probing the government’s role in Bank of America Corp’s (BAC.N) acquisition of Merrill Lynch, lawmakers said on Monday.

The Committee on Oversight and Government Reform is investigating the role of regulators in the purchase, and whether the bank properly notified investors of its concerns about Merrill’s troubled financial state…..

Ruling Adds Teeth to State Oversight of Banks – Washington Post

For years, state governments have had little power to enforce consumer-protection and lending rules at the country’s biggest banks. No more.

Yesterday, in a decision that marked a major victory for consumer advocates, the Supreme Court held that states can challenge the practices of national banks in court…..

The case, Cuomo vs. Clearing House Association, came about when then-New York Attorney General Eliot L. Spitzer and his successor, Andrew M. Cuomo, demanded that banks in the state disclose information about their lending patterns as part of an investigation into whether minorities were being steered into bad mortgages. The banks argued that only their federal regulator, the OCC, had authority to demand that information — a position that the OCC argued as well…..

AIG Discloses New Risk on Derivatives Sold to European Banks - Bloomberg

American International Group Inc., the insurer bailed out by the U.S., said that valuation declines on credit-default swaps sold to European banks could have a “material adverse effect” on the company’s results.

The risk of losses on the derivatives may last “longer than anticipated,” the New York-based insurer said late yesterday in a regulatory filing updating the “risk factors” in its 2008 annual report. The firm had $192.6 billion in swaps allowing lenders to reduce the funds they had to hold in reserve as of March 31, AIG said.

Gerry Pasciucco, hired from Morgan Stanley in November to clean up AIG’s Financial Products operation, is under pressure to unwind contracts at t

Pimco’s El-Erian Says Federal Reserve Unlikely to Raise Rates – Bloomberg

Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said the U.S. Federal Reserve is unlikely to raise interest rates.

The Fed will keep rates low “for a long time,” El-Erian said today in a Bloomberg Radio interview from Pimco’s headquarters in Newport Beach, California…..

Supreme Court overturns ruling by Sotomayor – Financial Times

The US Supreme Court on Monday gave ammunition to conservative opponents of Sonia Sotomayor, Barack Obama’s nominee to fill the vacancy in the apex court, when it overturned a ruling by the Latina judge that had thrown out a reverse discrimination case by white firefighters.

The court divided along predictable 5-4 ideological lines, with Justice Anthony Kennedy providing the swing vote. It upheld the firefighters’ claim that they were victims of discrimination when the city of New Haven, Connecticut, discarded their exam results because no African-Americans had qualified to be promoted…..

Ivy League Endowments Finally ‘Dumb’ – Wall Street Journal

The markets finally found a way to stump the Ivy League.

The largest college endowments, long the envy of their smaller rivals for their sophisticated and profitable investment strategies, were left behind over the past year by the performance of smaller schools with far simpler approaches.

The fiscal year for most endowments ends Tuesday and nearly every one has had big declines, but smaller endowments are poised to outperform heavyweights like Harvard University and Yale University by significant margins. Endowments with less than $1 billion generally held up better by putting more money in fixed income and less in alternative investments like hedge funds….

The New M&A Pipeline – Wall Street Journal

It isn’t often a merger announcement plays down cost savings. But Enterprise Products Partners’ $5.9 billion all-paper acquisition of fellow master limited partnership Teppco Partners, including net debt, really isn’t about scrimping on paper clips. Taxed and capitalized at 10 times, expected savings equate to just 2% of the transaction value.

Instead, this is about dealing with the credit crunch. Master limited partnerships enjoy the tax advantages of a partnership, passing through most of their earnings to unit holders. The cash demands of these high payouts, as well as capital expenditure, make access to liquid capital markets a necessity, particularly to fund growth…..

Car-Sales Rebound Seen for June – Wall Street Journal

The beleaguered auto industry could see signs of strengthening demand when auto makers report U.S. sales for June on Wednesday, according to auto makers and analysts.

Buoyed by fewer jobless claims and improved consumer confidence, annualized U.S. sales could hit 10 million this month for the first time in 2009, Ford Motor Co. analyst George Pipas said on Monday. The deep discounts that General Motors Corp. and Chrysler Group LLC have offered to boost sales are also likely to bolster June sales…..

General Motors to seek approval to sell itself – Reuters

General Motors Corp is heading to bankruptcy court on Tuesday to seek approval to sell its assets to a “New GM” in a plan to reinvigorate the automaker under U.S. government ownership.

GM is seeking approval for the sale from U.S. bankruptcy Judge Robert Gerber just 30 days after filing for Chapter 11. Under the deal, brokered by the Obama administration’s autos task force, the company would sell its assets under Section 363 of the bankruptcy code to a “New GM” and continue to operate its best assets, like Chevrolet and Cadillac, while gaining access to billions in funding from the U.S. Treasury…..

GM Plans to Dump Stake in Joint Factory With Toyota – Bloomberg

General Motors Corp. will pull out of auto-assembly venture with Toyota Motor Corp. after the world’s two largest carmakers failed to agree on which vehicles to build at the plant.

The automakers have reviewed plans for the New United Motor Manufacturing Inc. factory since GM Chief Executive Officer Fritz Henderson said in April that the Detroit-based automaker would eliminate the Pontiac Vibe, its only model assembled there. GM said yesterday it will shed its stake in the factory, known as Nummi…..

Porsche Spurns VW Offer as Pressure Mounts to Combine – Bloomberg

Porsche SE rejected an offer from Volkswagen AG to buy the luxury sports-car maker’s operations, defying calls from Germany’s state of Lower Saxony to unite the companies and pay down debt.

The offer received by Chairman Wolfgang Porsche was “not feasible” because a sale of all or part of the carmaking unit would trigger the immediate repayment of a 10.75 billion- euro ($15 billion) credit line, Frank Gaube, a spokesman for Porsche, said today in a telephone interview. Porsche didn’t say how much VW offered…..

US DOJ opposes blanket immunity for Continental Air – Reuters

The U.S. Justice Department opposes blanket antitrust immunity for Continental Airlines Inc (CAL.N) to join UAL Corp’s (UAUA.O) United Airlines and other carriers in the Star alliance, documents show.

But the companies expressed confidence on Monday the application would be approved, with industry experts saying the bid would now certainly be reworked with conditions to address the concerns of antitrust enforcers……

Amazon Drops More Affiliates to Avoid Tax – Wall Street Journal

Amazon.com Inc. ended its business relationships with marketing affiliates in Rhode Island so the online retailer could avoid collecting sales tax in the state.

Rhode Island’s state legislature recently passed a bill that would force companies to collect sales taxes if they have online-marketing affiliates—businesses that get a sales commission by featuring links to outside e-commerce sites on their own Web sites—in the state.

The Rhode Island termination follows a similar move by Amazon last Friday to end its relationships with affiliates in North Carolina as the state approached passing a similar law. Cash-strapped states across the country have looked at similar legislation to boost revenue. Such a law went into effect in New York last year…..

Abbott Told to Pay Record $1.67 Billion Award to J&J – Bloomberg

Abbott Laboratories should pay $1.67 billion to Johnson & Johnson’s Centocor unit for using its invention to produce the Humira arthritis drug, a federal jury said in the largest patent verdict in U.S. history.

The jury sided with J&J, the world’s biggest health-care company, after five hours of deliberations today, finding Abbott’s actions were willful and J&J is owed $1.17 billion in lost profits and $504 million in royalties. Abbott pledged to appeal the verdict…..

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