Wednesday, May 20, 2009

Quick Notes & Articles for the Day - May 20

Geithner - Financial Markets Healing - Treasury Secretary Timothy Geithner said Wednesday that the U.S. financial system is beginning to heal. "Leverage has declined, the most vulnerable parts of the non-bank financial system no longer pose the same risk, and banks are funding themselves more conservatively," Geithner said in testimony prepared for the Senate Banking Committee. Many market metrics, including corporate bond spreads, are at their lowest level in months, he said. Geithner said the administration has $124 billion on hand to provide to banks if needed. The department's long-awaited public-private plan to help get toxic assets off bank balance sheets will start in the next six weeks.

Crude Oil Rises on Data - Crude-oil futures rose Wednesday after government data showed U.S. crude inventories fell more than expected last week. Crude inventories decreased by 2.1 million barrels in the week ended May 15, the EIA reported. Analysts surveyed by Platts had expected a gain of 1.5 million barrels. Meanwhile, gasoline inventories fell by 4.3 million barrels and distillate stockpiles rose by 600,000 barrels. After the data, crude for rose $1.38, or 2.3%, to $61.48 a barrel.

Geithner - Cannot Force Counterparties to Accept Losses - The government cannot force AIG's counterparties to share losses on complex securities written by AIG, Treasury Secretary Timothy Geithner said Wednesday. It would be "incredibly difficult for us to negotiate effectively to reduce the value of those claims," Geithner told the Senate Banking Committee. "We have no option now to selectively diminish the value of those claims without taking risk that you would have default and its consequences" for AIG, Geithner said. The financial system still cannot withstand the failure of AIG, he said. Geithner's answer did not mollify Democrats or Republicans on the panel, who are outraged over reports that major financial institutions, including Goldman Sachs, did not take any losses on their AIG derivative contracts.

Bank of America Completes Share Offering - Bank of America shares rose Wednesday as the market responded positively to the conclusion of an almost $13.5 billion stock offering. The company said Tuesday that that since May 8, it has issued 1.25 billion shares at an average price of $10.77 which has netted it gross proceeds of roughly $13.47 billion. Additionally, including the sale of CCB last week, the bank says it is half-way towards its target of $34 billion in raised capital. It must complete the capital raising by November 9 - still more than 5 months away (and two earnings reports).


Safer Credit Cards - The New York Times - Why will Congress load up a bill that should do just one thing to help the U.S. consumer? "Unfortunately, the powerful pro-gun forces in the Senate managed to contaminate the bill with an amendment to allow licensed owners to carry loaded firearms into national parks."

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