US regulator fears wave of bank failures US bank failures could rise above "historical norms" as a weakening economy puts pressure on badly underwritten loans, particularly in commercial real estate, according to a bank regulator. In an interview with the Financial Times, John Dugan, who oversees about 1,700 national banks as comptroller of the currency, said the growing problems for lenders follow a period of almost four years in which no institution regulated by his agency had failed. "We’re going to have some more bank failures that will come back more to historical norms and may go above that with time," he said. "That is a natural consequence of the economy going from historically exceptionally benign credit conditions to something that is more normal to something you would get in a downturn."
Americans hoard food as industry seeks regs Farmers and food executives appealed fruitlessly to federal officials yesterday for regulatory steps to limit speculative buying that is helping to drive food prices higher. Meanwhile, some Americans are stocking up on staples such as rice, flour and oil in anticipation of high prices and shortages spreading from overseas. Their pleas did not find a sympathetic audience at the Commodity Futures Trading Commission (CFTC), where regulators said high prices are mostly the result of soaring world demand for grains combined with high fuel prices and drought-induced shortages in many countries. The regulatory clash came amid evidence that a rash of headlines in recent weeks about food riots around the world has prompted some in the United States to stock up on staples.
Era of cheap food ends as prices surge Families have been warned that the prices of basic foods will rise steeply again because of acute shortages in commodity markets. Experts told The Times yesterday that prices of rice, wheat and vegetable oil would rise further. They also forecast that high prices and shortages — which have caused riots in developing countries such as Bangladesh and Haiti — were here to stay, and that the days of cheap produce would not return. Food-price inflation has already pushed up a typical family’s weekly shopping bill by 15 per cent in a year. The price of rice, which has almost tripled in a year, rose 2 per cent on the Chicago Board of Trade yesterday as the United Nations food agency gave warning that millions faced starvation because aid agencies were unable to meet the additional financial burden.
Ambac reports quarterly net loss of $1.66 billion Ambac Financial reported a first-quarter net loss of $1.66 billion on Wednesday as the bond insurer continued to struggle with the effects of the mortgage meltdown and broader credit crunch. The net loss was $11.69 a share, versus net income of $2.02 a year earlier, the company said. Its operating loss in the latest quarter was $6.93 a share. Bond insurers like Ambac and MBIA Inc. agree to pay interest and principal on debt in a timely manner in the event of default. The $2.4 trillion business relies on AAA ratings to win new business. But those top ratings were in jeopardy earlier this year amid concern Ambac and MBIA will have to pay big claims from guarantees they sold on complex mortgage-related securities including collateralized debt obligations (CDOs).
SEC mum on why it ended Bear Stearns probe The Securities and Exchange Commission turned down a congressional request to divulge why it cut off an investigation into whether Bear Stearns Cos. hurt investors by improperly determining the value of complex debt securities, The Wall Street Journal reported Wednesday. The SEC cited confidentiality issues in its choice to abort an enforcement case begun in 2005 into actions at Bear Stearns several months before the Wall Street firm collapsed in March and was acquired by J.P. Morgan Chase & Co. The decision could trigger further fighting between lawmakers and securities regulators over the dropped Bear Stearns case, according to the report. An SEC spokesman didn't immediately return a call seeking comment Wednesday morning.
China down to 12 days worth of coal - report CHINA only has enough coal for 12 days of consumption, three days less than a month ago, state media reported Wednesday, sounding the alarm bells over the nation's most important source of energy. In certain parts of China, such as densely populated Hebei province in the north, reserves are down to less than a week, Xinhua news agency reported, citing the China Electricity Regulatory Commission. In the period since early March, coal reserves have slumped by 12 per cent to 46.7 million tonnes, according to the commission. Reasons for the shortage were "multi-dimensional," the commission was quoted as saying, without elaborating. Demand for coal has risen rapidly since China experienced brown-outs early this decade, motivating a construction frenzy in the power industry, with large numbers of new coal-fired plants emerging across the country.
Pentagon says worried about spiking oil prices After spending 15 billion dollars on oil in 2007, the Pentagon said Tuesday it was concerned over rising prices, since for every dollar goes up in oil price, an extra 130 million has to be added to its budget. Oil price is "a significant concern for us today," Undersecretary of Defense Tina Jonas, the Pentagon's chief financial officer, told a conference organized by Jane's defense information group. "Fuel has more than tripled in price over the past four years," Jonas said, adding that "for every dollar increase in the cost of fuel, we end up increasing by 130 million dollars in terms of operational costs." The spiraling cost of oil is especially troublesome for the Pentagon since the "DoD (Department of Defense) is the largest consumer of oil in the United States," David Trachtenberg, former deputy assistant secretary of defense for international security policy, said in his presentation.
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