Stress-test
grades are due this week for the
nation's banking sector, and the
New
York Times, for one, is tipping
positive results. "The
administration seems prepared to argue
that, while a few banks may need
additional money, the broad financial
system is healthier than many
investors fear," the newspaper
writes. Indeed, one unnamed government
official told the
NYT,
"None of these banks are
insolvent." That's a relief. The
full details come Thursday, when the
Treasury and Fed deliver a detailed
summary of the sector that's expected
to read like a lengthy analyst report.
"In effect, the Treasury
Department and Federal Reserve
regulators will be handing over
information to investors so that they
can decide which banks they want to
invest in—and which will ultimately
need more bailout money," the
newspaper writes. Over the weekend,
Warren
Buffett
said he doesn't need to wait for the
stress-test results to make his
investment decisions. Buffett, no fan
of the stress tests, says he's already
stockpiling shares of
Wells
Fargo (WFC),
U.S.
Bancorp (USB), and
M&T
Bank Corp. (MTB) in his
portfolio, Reuters reports.
Meanwhile, the vote of confidence
in the banks will come as little
relief to businesses looking to avoid
a cash crunch. The Wall Street
Journal reports that "banks
are shortening the terms on lines of
credit ... a sign that while lending
is reviving, businesses are facing new
hurdles to obtaining credit." The WSJ
warns that, yes, the credit markets
have thawed, but "many borrowers
are facing tougher terms" like
higher fees, or revolvers, and
fluctuating interest rates.
Fiat's Sergio Marchionne is not
finished kicking the tires. After
pulling off the Chrysler coups
last week, the Fiat chief has General
Motors' (GM) Opel unit in his
sights, the WSJ reports.
Marchionne will be in Berlin today to
meet with German government officials,
a crucial piece of support if
Marchionne is to build a new auto
super-alliance around Fiat, Chrysler,
and Opel. On Sunday, Fiat's board gave
the green light to Marchionne to begin
the negotiations, the newspaper
writes. According to the Financial
Times, Marchionne plans to build
a publicly traded "European car
supergroup," one that's even
larger than the triumvirate described
in the WSJ. "Marchionne
wants Italy’s largest industrial
group to separate Fiat Auto from its
other divisions, join them with Opel /
Vauxhall, Saab, and GM’s other
European operations, and Fiat’s
stake in Chrysler to create a company
with about €80bn ($106bn) of
revenues and sales of 6m-7m vehicles a
year," the newspaper writes. If
he pulls it off, the carmaker would be
second to Toyota and roughly the same
size as Volkswagen, the newspaper
writes.
Away from the comparatively
transparent world of Italian
corporations and back to the murky
land of U.S. banking: New
York Fed Chairman Stephen Friedman is
taking flak for his ties to Goldman
Sachs (GS) during the time when
the Fed was shoring up Goldman's
finances. At that point, Friedman sat
on Goldman's board and held a chunk of
Goldman stock, "which because of
Goldman's new status as a bank holding
company was a violation of Federal
Reserve policy," writes the WSJ.
Ultimately, the New York Fed received
a waiver for Friedman on that
policy—but not before he had bought
37,300 more Goldman shares (which have
increased $1.7 million in value). The
situation demonstrates how a
"tangle of overlapping interests
can arise at a hybrid institution like
the New York Federal Reserve
Bank" as the U.S. government gets
embroiled in day-to-day banking
business.
The fate of the Boston
Globe remains undecided as we
go to press (well, as we hit the
publish button) after New
York Times Co. (NYT) execs
and Boston Newspaper Guild
representatives failed to agree on
radical concessions before a midnight
deadline. Late last night, the Times
Co. said "it would file a notice
under federal law stating its
intention of closing The Globe
within 60 days," the NYT
reports. The union rebutted what it
called "bullying" tactics by
saying it had "made a proposal
that exceeded management’s
demands." One union, the Teamsters,
agreed to some $2.5 million in
concessions, reports the Boston
Globe, and negotiations continue
with the guild. One union official
summed up the Times Co.'s blunt
negotiating position as, "Do or
die."
And, finally, got a can't-miss
flight to Mexico scheduled? Not to
worry. The world's biggest airlines
have added a series of in-flight
additions to reassure
air passengers during the current H1N1
virus outbreak. "Lufthansa
has placed a doctor on board each of
its flights to Mexico; American
Airlines has issued medical kits to
cabin crews; British Airways is
distributing face masks; and Alaska
Airways is removing pillows as fears
of a flu pandemic rattle the global
aviation industry," the NYT
writes.