Credit expenses take toll on Fannie Mae earnings Mortgage-finance giant Fannie Mae reported a much wider-than-expected first-quarter loss of $2.2 billion, as credit-related expenses took a bite out of its bottom line, and said it's planning to raise $6 billion in new capital. On a per-share basis, Fannie Mae lost $2.57 in the first quarter, much more than the 81-cents-a-share loss expected by Wall Street analysts surveyed by FactSet. In the same period a year ago, Fannie Mae earned 85 cents a share. The company said fair value losses and credit-related expenses due to adverse market conditions hit its first-quarter earnings. The planned new capital, Fannie Mae said, will enable the company to "maintain a strong, conservative balance sheet, enhance long-term shareholder value and provide stability to the secondary mortgage market."
UBS to cut 5,500 jobs, sell assets to BlackRock fund Troubled Swiss banking group UBS said Tuesday that it plans to cut 5,500 jobs and sell a $15 billion chunk of its risky mortgage assets to BlackRock Inc. as it reported a first-quarter loss broadly in line with an earlier warning. The group posted a loss of 11.54 billion Swiss francs ($10.99 billion), compared to a profit of 3.03 billion francs a year earlier, driven by write-downs of $19 billion. The bank had disclosed the write-downs at the start of April and said it would report a loss of around 12 billion francs. UBS said it's planning to cut 2,600 jobs in its investment banking unit by the end of the year and around 5,500 -- or 7% of its workforce -- across the group by the middle of 2009.
Merrill cooperating in auction-rate probe Merrill Lynch & Co. said on Tuesday that government agencies have asked the brokerage firm for information about the failure of the auction-rate securities market earlier this year and is cooperating with the investigations. Auction-rate debt carries yields similar to long-term debt but acts like short-term investments because investors can sell at weekly or monthly auctions, when rates reset. The $330 billion market was used a lot by municipalities to borrow money, but it collapsed earlier this year, sending yields on some auction-rate securities soaring. Several regulators have launched investigations into why the market failed.
Bernanke gives green light to Frank foreclosure bill Federal Reserve Chairman Ben Bernanke gave the green light Monday to congressional efforts to prevent foreclosures of homeowners caught in the recent sharp nationwide decline in home prices. "Finding ways to avoid preventable foreclosures is a legitimate and important concern of public policy," Bernanke said in a speech at the Columbia School of Business in New York. Legislation to aid strapped homeowners is making its way through the House of Representatives. The bill has been pushed by House Financial Services Committee Chairman Barney Frank, D-Mass. It would allow the Federal Housing Administration to back as much as $300 billion in refinanced loans for homeowners facing foreclosure.
Las Vegas used to be a recession-proof oasis. Not anymore. On the third weekend of every April, Emily Ann Frankston and her family—spread out over five states—meet up in Las Vegas for their annual family vacation. This year was different. The only ones to show up were Frankston, her husband and her brother-in-law, and they stayed just two nights instead of the traditional three. "My two sisters back east said airfares were too high, my mother-in-law lost her job in January, and some of the others said they were busy, but we think they didn't want to spend the money," says Frankston, 37, who drove in from the Phoenix area. "We've done this for the past nine years. Even after 9/11 we all came. But this year's it's just us. This recession is really hurting everyone."
Crude hits new high of $121.49 on weak dollar Crude-oil futures gained for a third day Tuesday, rising more than $1.5 to a new record of $121.49 a barrel, as weakness in the U.S. dollar boosted dollar-denominated oil prices. Crude oil for June delivery rallied $1.52 to the new record in early morning trading. It was last seen up $1.23, or 1%, to $121.20 a barrel on the New York Mercantile Exchange. Crude's new record followed the previous session's record closing of $119.97 a barrel. On the currency markets Tuesday, the U.S. dollar traded lower against most of its major rivals. The dollar index fell 0.4% to 72.93. A weak dollar makes oil more attractive as an investment alternative.
Goldman's Murti Says Oil `Likely' to Reach $150-$200 Crude oil may rise to between $150 and $200 a barrel within two years as growth in supply fails to keep pace with increased demand from developing nations, Goldman Sachs Group Inc. analysts led by Arjun N. Murti said in a report. New York-based Murti first wrote of a ``super spike'' in March 2005, when he said oil prices could range between $50 and $105 a barrel through 2009. The price of crude traded in New York averaged $56.71 in 2005, $66.23 in 2006 and $72.36 in 2007. Oil rose to an intraday record $120.93 today on speculation demand will rise during the peak U.S. summer driving season. ``The possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty,'' the Goldman analysts wrote in the report dated May 5.
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