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....