(Reuters) - U.S. Internet search engine operator Google (GOOG.O) has decided against acquiring a newspaper, the Financial Times reported, citing the company's chief executive and chairman, Eric Schmidt.
Google had considered buying a news publication but is now unlikely to do so because potential targets are either too expensive or have too many liabilities, the FT quoted Schmidt as saying in an interview with the paper's online edition.
A newspaper acquisition is also unlikely because Google is "trying to avoid crossing the line between technology and content," the paper quoted Schmidt as saying.
There has been speculation that cash-rich Google could take advantage of a dip in advertising revenues to buy out struggling news organisations, with the New York Times (NYT.N) seen as a potential target.
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Wednesday, 20 May 2009
Obama to sign credit card crackdown into law
(Reuters) - President Barack Obama was expected to sign into law on Friday a package of sweeping new limits on credit card interest rates and fees that won final approval from the U.S. Congress on Wednesday .
In a major victory for the president and congressional Democrats, the House of Representatives voted 361-64 to approve the so-called "credit cardholder bill of rights".
Taking full effect in February 2010, the bill would sharply restrict credit card issuers' ability to raise interest rates on cardholders' existing balances; to charge certain fees; and to slap cardholders with unreasonable penalties.
The bill will hurt the profits of major card issuers such as Citigroup, Bank of America, JPMorgan Chase and Capital One, analysts said.
It represents the first of several reforms on banking and market rules expected from the administration as it tightens regulatory oversight in hopes of preventing another financial crisis like the one now pounding economies worldwide.
A White House official said Obama will sign the bill at a ceremony scheduled for 1500 EDT on Friday.
The bill could hit home with more consumers than any other economic initiative the Obama administration has launched so far, with some experts predicting a broad restructuring of how credit cards are priced, managed and marketed.
Read more here
In a major victory for the president and congressional Democrats, the House of Representatives voted 361-64 to approve the so-called "credit cardholder bill of rights".
Taking full effect in February 2010, the bill would sharply restrict credit card issuers' ability to raise interest rates on cardholders' existing balances; to charge certain fees; and to slap cardholders with unreasonable penalties.
The bill will hurt the profits of major card issuers such as Citigroup, Bank of America, JPMorgan Chase and Capital One, analysts said.
It represents the first of several reforms on banking and market rules expected from the administration as it tightens regulatory oversight in hopes of preventing another financial crisis like the one now pounding economies worldwide.
A White House official said Obama will sign the bill at a ceremony scheduled for 1500 EDT on Friday.
The bill could hit home with more consumers than any other economic initiative the Obama administration has launched so far, with some experts predicting a broad restructuring of how credit cards are priced, managed and marketed.
Read more here
New U.S. derivatives rules could make odd partners
(Reuters) - New U.S. rules for the trading of derivatives could drive market enemies into each other's arms, as dealers and exchanges look to strike more partnerships to yield shared profits from the revamped landscape.
The Obama administration's proposals, announced last week, favor exchange and clearinghouse operators because they require "standardized trades" to move onto exchanges, and require all over-the-counter derivatives to be cleared by regulated central counterparties.
That would effectively transfer a very lucrative business from derivatives dealers, blamed by many for the financial crisis, to exchanges and clearinghouses, which have touted their durability since markets plunged last year.
They have long waged a tug-a-war for control over where derivatives trade, with the dealers' private OTC market mostly dominant. The new regulations may force the dealers and exchanges to work more closely together.
"There were already initiatives underway to have exchanges partner with dealers, and this helps accelerate what was already underway," Matthew Lavicka, managing director of cash equities at Goldman Sachs & Co, which is among the top U.S. derivatives dealers, told Reuters on Wednesday.
Goldman and several other big banks own a 50-percent equity stake in IntercontinentalExchange's clearinghouse for credit default swaps. Dealer backing pushed ICE to the fore of clearinghouses looking to clear U.S. CDS, default-insurance products blamed for worsening the crisis.
The world's biggest exchanges, including CME Group Inc, NYSE Euronext and Nasdaq OMX, have sought partnerships with dealers and other big OTC players who would drive business to their derivative clearinghouses and exchanges.
"You can't just build it and have them come," said Larry Leibowitz, head of U.S. markets and global technology at New York Stock Exchange parent NYSE Euronext. "We've been launched in Europe for a while and people aren't really using it," he said of the company's five month-old European CDS clearer.
OTC MARKET DOMINANT -- FOR NOW
Broker-dealers earn money from trading or facilitating the trade of derivatives, instruments that derive their value from other assets. Because the $194 trillion U.S. OTC market eclipses the $7 trillion exchange-traded market, exchanges have salivated at the prospect of grabbing a bigger slice.
But they have had little success because derivatives are tailored specifically for those who trade them, and exchanges typically trade standardized products for wider consumption.
The Obama administration's plans, meant to avoid a repeat of the financial meltdown that sparked a global recession, could change the equation.
"A lot of what was signaled there was that the administration was trying to get the regulators, the sellside, the buyside and the exchanges all to work together," said Rick Redding, CME Group's managing director of products and services.
"I think directionally, it was telling the market participants they need to work in a more collaborative way to come up with solutions," he said on Wednesday in an interview on the sidelines of a conference hosted by Fox-Pitt Kelton here.
An OTC derivatives trade is a private agreement between two parties. Regulators want to install a clearinghouse between those trades to act as a central counterparty that would guarantee the obligations if any participant defaults.
Read more here
The Obama administration's proposals, announced last week, favor exchange and clearinghouse operators because they require "standardized trades" to move onto exchanges, and require all over-the-counter derivatives to be cleared by regulated central counterparties.
That would effectively transfer a very lucrative business from derivatives dealers, blamed by many for the financial crisis, to exchanges and clearinghouses, which have touted their durability since markets plunged last year.
They have long waged a tug-a-war for control over where derivatives trade, with the dealers' private OTC market mostly dominant. The new regulations may force the dealers and exchanges to work more closely together.
"There were already initiatives underway to have exchanges partner with dealers, and this helps accelerate what was already underway," Matthew Lavicka, managing director of cash equities at Goldman Sachs & Co, which is among the top U.S. derivatives dealers, told Reuters on Wednesday.
Goldman and several other big banks own a 50-percent equity stake in IntercontinentalExchange's clearinghouse for credit default swaps. Dealer backing pushed ICE to the fore of clearinghouses looking to clear U.S. CDS, default-insurance products blamed for worsening the crisis.
The world's biggest exchanges, including CME Group Inc, NYSE Euronext and Nasdaq OMX, have sought partnerships with dealers and other big OTC players who would drive business to their derivative clearinghouses and exchanges.
"You can't just build it and have them come," said Larry Leibowitz, head of U.S. markets and global technology at New York Stock Exchange parent NYSE Euronext. "We've been launched in Europe for a while and people aren't really using it," he said of the company's five month-old European CDS clearer.
OTC MARKET DOMINANT -- FOR NOW
Broker-dealers earn money from trading or facilitating the trade of derivatives, instruments that derive their value from other assets. Because the $194 trillion U.S. OTC market eclipses the $7 trillion exchange-traded market, exchanges have salivated at the prospect of grabbing a bigger slice.
But they have had little success because derivatives are tailored specifically for those who trade them, and exchanges typically trade standardized products for wider consumption.
The Obama administration's plans, meant to avoid a repeat of the financial meltdown that sparked a global recession, could change the equation.
"A lot of what was signaled there was that the administration was trying to get the regulators, the sellside, the buyside and the exchanges all to work together," said Rick Redding, CME Group's managing director of products and services.
"I think directionally, it was telling the market participants they need to work in a more collaborative way to come up with solutions," he said on Wednesday in an interview on the sidelines of a conference hosted by Fox-Pitt Kelton here.
An OTC derivatives trade is a private agreement between two parties. Regulators want to install a clearinghouse between those trades to act as a central counterparty that would guarantee the obligations if any participant defaults.
Read more here
Lehman Brothers questioned over securities sales
(Reuters) - Regulators have questioned former Lehman Brothers Holdings (LEHMQ.PK) executives over their marketing of auction-rate securities, the Wall Street Journal reported, citing people with knowledge of the matter.
Prosecutors from the U.S. attorney's office in Brooklyn and Securities and Exchange Commission lawyers have interviewed several former Lehman employees about the securities, to try to determine whether these people defrauded customers, the newspaper said.
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Prosecutors from the U.S. attorney's office in Brooklyn and Securities and Exchange Commission lawyers have interviewed several former Lehman employees about the securities, to try to determine whether these people defrauded customers, the newspaper said.
Read more here
Fed mulled increasing debt purchases in April
(Reuters) - The Federal Reserve said on Wednesday it saw modest improvements in the U.S. economy last month, but it still saw big risks and left open the possibility of increasing its purchases of mortgage-related and government debt to keep credit flowing and spur recovery.
Despite a pickup in household and business confidence that Fed officials saw helping to steady spending when they met in late April, they viewed the evidence as too tentative to erase risks facing the recession-mired economy.
The policy-makers cut their forecasts for economic growth over the next three years and debated whether they should further ramp up planned purchases of mortgage agency and government securities, minutes of their April 28-29 meeting said.
The Fed in recent months has turned to asset purchases as a means to keep credit flowing since running out of scope to further lower benchmark interest rates after bringing them down to close to zero percent last year.
"Some members noted that a further increase in the total amount of purchases might well be warranted at some point to spur a more rapid pace of recovery," the minutes of the Federal Open Market Committee's meeting said.
"All members concurred with waiting to see how the economy and financial conditions respond to the policy actions already in train before deciding whether to adjust the size or timing of asset purchases," they added.
In fresh quarterly forecasts, the Fed projected the U.S. economy would contract by between 1.3 percent and 2.0 percent this year, with the unemployment rate rising to between 9.2 percent and 9.6 percent.
In January, the Fed had forecast a milder contraction of between 0.5 percent and 1.3 percent, with the jobless rate rising to between 8.5 percent and 8.8 percent.
U.S. stocks fell on the gloomier economic forecast, while debt prices rallied on the prospect the Fed could boost its securities purchases.
"The tone of the minutes is a little more optimistic, and the forecasts are a little more pessimistic," said Christopher Low, chief economist for FTN Financial in New York.
The minutes showed the Fed staff last month had offered a sunnier forecast than the policy-makers, with the staff revising up their outlook for economic activity. They anticipated that growth would expand at a rate well above its potential in 2011 and that the unemployment rate would decline significantly.
"Key factors expected to drive the acceleration in economic activity were the boost to spending from fiscal stimulus, the bottoming out of the housing market, a turn in the inventory cycle from liquidation to modest accumulation, and ongoing gradual recovery of financial markets," the minutes said.
Read more here
Despite a pickup in household and business confidence that Fed officials saw helping to steady spending when they met in late April, they viewed the evidence as too tentative to erase risks facing the recession-mired economy.
The policy-makers cut their forecasts for economic growth over the next three years and debated whether they should further ramp up planned purchases of mortgage agency and government securities, minutes of their April 28-29 meeting said.
The Fed in recent months has turned to asset purchases as a means to keep credit flowing since running out of scope to further lower benchmark interest rates after bringing them down to close to zero percent last year.
"Some members noted that a further increase in the total amount of purchases might well be warranted at some point to spur a more rapid pace of recovery," the minutes of the Federal Open Market Committee's meeting said.
"All members concurred with waiting to see how the economy and financial conditions respond to the policy actions already in train before deciding whether to adjust the size or timing of asset purchases," they added.
In fresh quarterly forecasts, the Fed projected the U.S. economy would contract by between 1.3 percent and 2.0 percent this year, with the unemployment rate rising to between 9.2 percent and 9.6 percent.
In January, the Fed had forecast a milder contraction of between 0.5 percent and 1.3 percent, with the jobless rate rising to between 8.5 percent and 8.8 percent.
U.S. stocks fell on the gloomier economic forecast, while debt prices rallied on the prospect the Fed could boost its securities purchases.
"The tone of the minutes is a little more optimistic, and the forecasts are a little more pessimistic," said Christopher Low, chief economist for FTN Financial in New York.
The minutes showed the Fed staff last month had offered a sunnier forecast than the policy-makers, with the staff revising up their outlook for economic activity. They anticipated that growth would expand at a rate well above its potential in 2011 and that the unemployment rate would decline significantly.
"Key factors expected to drive the acceleration in economic activity were the boost to spending from fiscal stimulus, the bottoming out of the housing market, a turn in the inventory cycle from liquidation to modest accumulation, and ongoing gradual recovery of financial markets," the minutes said.
Read more here
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