Obama says bad decisions caused US economic woes

By MIKE GLOVER

WASHINGTON (AP) — Democratic presidential candidate Barack Obama on Monday blamed "irresponsible decisions" by the Bush administration and Wall Street for the country's economic woes as government officials said the budget deficit would soar to record heights next year.

Turning to domestic problems after a week's tour of the Middle East and Europe, Obama met with more than a dozen economic advisers, appearing with them briefly before retreating for a two-hour closed meeting. The new deficit numbers were the latest sign of an economy in decline, with foreclosures rising, home prices falling, soaring energy prices and nearly a half-million job losses since January.

"It was not an accident or a normal part of the business cycle that led us to this situation," Obama said. "There were some irresponsible decisions that were made on Wall Street and in Washington."

Obama said the economy needs both short- and long-term fixes, including another round of "stimulus" measures from Congress to revive the economy and a longer-term focus on renewable energy to curb high gas prices and on universal health care to trim costs. He said he would move "rapidly and vigorously" to respond.

"We are also going to have to provide some short-term relief," Obama said. "People are hurting right now. We need to respond rapidly and vigorously to problems, and to anticipate the problems that may be on the horizon."

Obama says bad decisions caused US economic woes....

Sirius Disappointment

Carl Gutierrez

Even though Sirius Satellite Radio should soon be wed to XM Satellite Radio, the company needs some serious cash to tide it over in the meantime.

On Monday, the company announced it's conducting a $375.0 million stock offering.

"The stock sale was a way for Sirius to gain some financial flexibility at a time when it still faces losses with or without the XM Satellite Radio merger," said Frederick Moran, an analyst at Stanford Group. "Either independent or combined with XM, Sirius still faces operational losses, and some financial flexibility can certainly only help them."

The announcement came on the same day the satellite radio company said in a preliminary quarterly report that its adjusted loss narrowed, thanks to an increase in subscribers. Sirius Satellite Radio (nasdaq: SIRI - news - people ) reported that its adjusted loss from operations is expected to be $24.0 million, well off the $79.0 million loss reported in last year's corresponding period.

Sirius Disappointment....

Merrill Has $5.7 Billion of Writedowns, Sells Shares

By Bradley Keoun and Christine Harper

July 28 (Bloomberg) -- Merrill Lynch & Co. took steps to shore up its endangered credit rating by selling $8.5 billion of stock and liquidating $30.6 billion of money-losing assets at a fifth of their original value.

Temasek Holdings, the Singaporean government investment fund that bought shares in Merrill last December to become the firm's biggest investor, will buy $3.4 billion of stock in the new offering, New York-based Merrill said today in a statement. Merrill will book a $2.5 billion expense related to the transaction as well as $5.7 billion of additional writedowns on collateralized debt obligations and associated hedges.

Merrill Chief Executive Officer John Thain is pushing to rid the firm of its CDOs, which have contributed the majority of $18.7 billion of net losses reported over the past four quarters. Thain, 53, has had to raise capital to stave off credit-ratings downgrades and demonstrate to regulators that the firm can withstand losses. Standard & Poor's on June 2 cut Merrill's rating to A from A+ and assigned a ``negative'' outlook, indicating additional downgrades were possible.

Merrill Has $5.7 Billion of Writedowns, Sells Shares....

Wall Street mixed after earnings reports

By JOE BEL BRUNO

NEW YORK (AP) — Wall Street closed out an impressive week with a mixed performance Friday after disappointing high-tech earnings punctured some of investors' enthusiasm over better-than-expected bank earnings reports. But the major indexes still ended the week with big gains, the result of rising optimism about the troubled financial sector.

The market was clearly pleased when Citigroup Inc., while reporting a second-quarter loss Friday morning, beat analysts' forecasts and joined Wells Fargo & Co. and JPMorgan Chase & Co. in delivering stronger results than the market anticipated. But investors who ecstatically sent the Dow Jones industrials soaring by more than 480 points over Wednesday and Thursday were brought back down to earth by results from Google Inc., Microsoft Corp. and Advanced Micro Devices Inc.

Google's results were lower than expected, the result of the weakening economy hurting advertising revenue, while Microsoft missed forecasts by a penny. Also, AMD's chief executive stepped down after the chip maker posted a wider-than-expected loss.

Still, the market that has hungered for good news about financial companies after a year-long credit crisis got it from Citi. The banking company reported a $2.5 billion second-quarter loss due to write-downs tied to deteriorating credit markets. The results surpassed projections, and helped to mitigate some of the market's concerns following a big loss from Merrill Lynch & Co. reported late Thursday.

It was a good sign to some analysts that the market didn't sell off sharply after two straight days of hefty gains.

Wall Street mixed after earnings reports....

FBI probing IndyMac for possible fraud

WASHINGTON, July 16 (Reuters) - IndyMac is under investigation by the FBI for possible fraud involving home loans made to risky borrowers, The Associated Press reported on Wednesday, citing an unnamed law enforcement official.

The report said it was not immediately clear how long the FBI's probe of the bank has been ongoing but the probe is focused on the company and not individuals who ran the thrift institution.

U.S. banking regulators seized mortgage lender IndyMac on Friday after withdrawals by panicked depositors led to the third largest banking failure in U.S. history.

FBI probing IndyMac for possible fraud....

Bernanke gloomy on housing, economy

By Chris Isidore

NEW YORK (CNNMoney.com) -- The housing finance crisis and spiraling energy costs will remain a drag on the U.S. economy for the rest of the year, Federal Reserve Chairman Ben Bernanke told lawmakers in a gloomy presentation about the economic outlook.

"The economy continues to face numerous difficulties, including ongoing strains in financial markets, declining house prices, a softening labor market, and rising prices of oil, food, and some other commodities," Bernanke told the Senate Banking Committee early Tuesday.

The nation's top central banker warned "many financial markets and institutions remain under considerable stress, in part because the outlook for the economy, and thus for credit quality, remains uncertain."

Bernanke gloomy on housing, economy....

G.M. Suspends Dividend and Plans More Layoffs

By NICK BUNKLEY and BILL VLASIC

DETROIT — General Motors said Tuesday that it would reduce labor costs for salaried workers by 20 percent, eliminate its quarterly dividend and further reduce truck production to ensure that it has enough cash to finance its turnaround for at least two more years.

The moves are expected to raise about $15 billion by the end of 2009, the chief executive Rick Wagoner said in an address to employees.

G.M. Suspends Dividend and Plans More Layoffs....

Report: Anheuser-Busch agrees to InBev sale

ST. LOUIS (AP) — Anheuser-Busch reportedly has agreed to be acquired by Belgian brewer InBev for about $52 billion.

The deal being reported by The Wall Street Journal would create the world's largest brewer and put the iconic American beer maker in the hands of the Belgian-based company behind Stella Artois and Beck's beers.

The newspaper cited anonymous sources who said Anheuser-Busch-InBev would be the new company's name and Anheuser would have two seats on the company board.

Anheuser-Busch Cos. Inc. did not return messages seeking comment Sunday evening.

The newspaper said the deal was for $70 a share. That's a $5 increase over the offer Anheuser-Busch rejected in June.

Report: Anheuser-Busch agrees to InBev sale....

Treasury Acts to Save Mortgage Giants

By STEPHEN LABATON

WASHINGTON — Alarmed by the sharply eroding confidence in the nation’s two largest mortgage finance companies, the Bush administration on Sunday asked Congress to approve a sweeping rescue package that would give officials the power to inject billions of federal dollars into the beleaguered companies through investments and loans.

In a separate announcement, the Federal Reserve said that it would make one of its short-term lending programs available to the two companies, Fannie Mae and Freddie Mac. The Fed said that it had made its decision “to promote the availability of home mortgage credit during a period of stress in financial markets.”

An official said the Fed’s decision to permit the companies to borrow from its so-called discount window was approved at the request of the Treasury, but that it was temporary and would probably end once Congress approved Treasury’s plan. Some officials briefed on the plan said Congress could be asked to extend the total line of credit to the institutions to $300 billion.

Treasury Acts to Save Mortgage Giants....

Abu Dhabi Fund Acquires Most of Chrysler Building

By ALEX FRANGOS

An Abu Dhabi sovereign-wealth fund has purchased a majority stake in the Chrysler Building, an iconic New York City skyscraper.

The Abu Dhabi Investment Council will take a 90% stake in the tower's ownership for $800 million, according to people familiar with the matter. Tishman Speyer Properties, a New York landlord, will retain the remaining ownership piece and will manage the property.

ADIC purchased its share mostly from a fund managed by Prudential Real Estate Investors, a unit of insurance company Prudential Financial Inc. The fund included European investors, especially Germans. ADIC also purchased a piece of the tower from Tishman Speyer, which previously owned a quarter of the building.

Abu Dhabi Fund Acquires Most of Chrysler Building....

Fannie, Freddie Tumble on Bailout Concern, UBS Cut

By Dawn Kopecki and Shannon D. Harrington

July 10 (Bloomberg) -- Fannie Mae and Freddie Mac, the two biggest providers of financing for U.S. home loans, fell to the lowest levels in 17 years in New York trading after a former Federal Reserve president said the companies may need a government rescue.

Fannie Mae tumbled as much as 24 percent and Freddie Mac slumped as much as 34 percent in New York Stock Exchange composite trading after UBS AG analysts said in a report today that Freddie Mac's decline creates ``challenges'' for the company's plan to raise $5.5 billion.

Chances are increasing that the U.S. will bail out Fannie Mae and Freddie Mac because they don't have enough capital to weather the worst housing slump since the Great Depression, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules. The fair value of Fannie Mae assets fell 66 percent to $12.2 billion, data provided by the Washington- based company show, and may be negative next quarter, Poole said.

Fannie, Freddie Tumble on Bailout Concern, UBS Cut....