Americas

BofA considers right stock swap at wrong time

4 Nov 2011

Exchanging up to $6 bln of common shares and debt for prefs could save the bank some $300 mln a year and lift regulatory capital a bit. Yet the move could be a tactical error for CEO Brian Moynihan. The resulting dilution risks alienating investors at a vulnerable time for BofA.

AIG just can’t resist financial tinkering

4 Nov 2011

The U.S. insurer’s latest idea is to buy back $1 bln of stock. On that scale, it won’t do much damage. But AIG has plenty of external risks and internal business challenges to handle, plus a huge overhang of government-owned shares. The buyback looks like a gimmicky distraction.

Chesapeake’s Utica sales signal shale’s next phase

4 Nov 2011

Fetching a whopping $15,000 an acre for unproven reserves in the Ohio formation takes shale optimism to a new level. Yet environmental and political resistance to fracking remains strong. Low gas prices don’t offer much reassurance either. This new frontier is still plenty risky.

Europe slowdown threatens a still-weak world

4 Nov 2011

However the euro zone’s systemic crisis plays out, the mix of austerity and uncertainty is already pushing Europe into recession. With the U.S. recovery still tentative and emerging markets looking a bit less robust, the threat of global slowdown looms.

Less, not more, better for New England utilities

3 Nov 2011

Too many customers of Northeast Utilities lost power for too long after recent storms. As with banks, risk management and regulation failures are to blame. Towns that run their own utilities offer an alternative; meanwhile, Northeast’s planned $4.7 bln deal needs to be torpedoed.

P&G deal partner probe proves shorts aren’t nuts

3 Nov 2011

Skeptical investors piled into Diamond Foods, agreed buyer of the consumer giant’s Pringles brand, doggedly questioning the firm’s accounting. Further scrutiny uncovered more oddities and led Diamond to investigate. The sound response underscores the value of salty market views.

Kodak’s long-running woes are coming to a head

3 Nov 2011

The once high-flying photo company’s sales continue to slide. Kodak now says it needs to raise cash or sell more intellectual property inside a year if it’s to keep going. But offloading the firm’s crown jewels hasn’t worked in the past. And it may be harder than it appears.

U.S. deficit drama needs to play well overseas

3 Nov 2011

Foreign central banks, among America’s most reliable lenders, have been cutting their exposure to Uncle Sam’s debt since August. As Washington readies “Deficit Debacle: The Sequel” for primetime this month, legislators should keep foreign audiences in mind.

Jefferies’ differences with MF Global are notable

3 Nov 2011

Both Wall Street brokers took advantage of larger rivals’ regulatory pain - and bragged about it. But Jefferies has stressed client, rather than prop, trading. Its finances are clearer too. These are important distinctions getting lost in the panic after MF’s failure.

Jon Corzine becomes poster child of the times

2 Nov 2011

The boss of bankrupt MF Global embodies all that Occupy Wall Street opposes - the elite 1 pct, failed high finance and compromised politics. Meanwhile, Corzine’s liberal agenda helped catalyze the Tea Party. His downfall could yet turn him into the fall guy of the crisis.

Uncle Sam has a $1 trln repatriation concern

2 Nov 2011

That’s a rough estimate of how much U.S. companies have overseas invested in Treasuries. Lawmakers want the cash brought home at lower tax rates to foster employment, growth and government revenue. But dumping that debt on the market would inevitably have consequences of its own.

Brazil won’t solve all of TNK-BP’s problems

2 Nov 2011

The Anglo-Russian venture’s $1 billion deal to explore for oil in the Amazon is its most significant international foray. TNK-BP needs to diversify away from Russia, where its mature fields are declining. But such expansion is only a partial solution to its strategic dilemma.

Did accounting help sink MF Global?

2 Nov 2011

Much has been made of Jon Corzine’s attempt to remake the firm in the image of Goldman Sachs with risky bets on European debt. But Bethany McLean says beneath the riches-to-rags headlines are some curious choices about how MF Global paid for the purchases and disclosed them.

BofA card climbdown may push fees back in shadows

1 Nov 2011

Like rivals, the bank is scrapping plans to charge customers using debit cards. That may seem a win for consumers. But banks will find other, less transparent ways to make up for $8 bln in lost fees. The upshot of Durbin’s bill: consumers get fleeced by both banks and retailers.

MF Global exposes regulators as slow learners

1 Nov 2011

Lehman’s collapse was a stark warning of the need to handle cross-border bankruptcies better. Yet three years on, Jon Corzine’s failed brokerage shows little has changed. It’s even accused of mishandling customer accounts, a basic error. Watchdogs need yet more remedial lessons.

U.S. plea deal flaws are warning for UK

1 Nov 2011

Britain’s law enforcers may let companies avoid criminal charges if they agree to mend their ways. This would empower prosecutors. But in the U.S., where deals get little court scrutiny, it has tempted them to overreach. The Brits might do well to keep judges closely involved.

Valero’s next rainy day may not be so far away

1 Nov 2011

The biggest independent U.S. oil refiner reported a quadrupling of profit and has been buying back stock. After lean years, investors deserve a return. But the cheap U.S. crude that has been helping margins won’t last forever. Valero could do more to brace for harder times ahead.

Nabors’ $100 mln payout to CEO offers warning

31 Oct 2011

To hand Eugene Isenberg that much just to give up one of two titles seems absurd. But the board was stuck with a 1987 contract and did reduce his golden parachute. Even so, Nabors has underperformed for a decade. It shows the danger of companies binding themselves too far ahead.

Occupy themes won’t easily dazzle like Tea Party’s

31 Oct 2011

The movement that started in lower Manhattan has rightly put attention onto America’s wealthy. And though the Tea Party started out just as ragtag, it’s hard to see Occupy Wall Street catching on the same way politically. Deficits are an easier pitch than inequality. 

Rock’n’roll becomes form of economic stimulus

31 Oct 2011

That, at least, is the message from the Moogfest, which took place in Asheville, North Carolina, this past weekend. Aside from giving synthesizer geeks an outlet, Rob Cox found the three-day festival making good use of Asheville’s facilities and boosting local businesses.