WSF Headline Roundup - 5/20/08 - Housing legislation closer; Buffett says crunch 'far from over'; Oil around $127; Food prices forecast higher; German consumer confidence falls; SEC sues AOL execs; Muni Bond exemptions upheld by SCOTUS; more

• Dodd, Shelby Reach Agreement on Anti-Foreclosure Bill
• Buffett says effects of crisis ‘far from over’
• Oil fluctuates around $127/bbl on supply fears
• Government Again Raises Forecast for Food Prices
• German Investor Confidence Unexpectedly Fell in May
• SEC Sues Ex-AOL Executives Over Inflated Revenue
• Muni Bond Tax Exemptions Upheld by U.S. Supreme Court
• Northern Rock to repay 25% of BoE loan this year
• Platinum prices ‘could surge by 15%’
• Yahoo option traders bet on Microsoft deal
• Dell Names Brian Gladden as CFO, Replacing Don Carty
• Home Depot Profit Declines on U.S. Housing Slump

Dodd, Shelby Reach Agreement on Anti-Foreclosure Bill - Bloomberg

U.S. Senate Banking Committee leaders moved closer to passing housing legislation that would stem foreclosures by insuring as much as $300 billion in mortgages and create a new regulator for Fannie Mae and Freddie Mac.

Senators Christopher Dodd, the panel's chairman, and Richard Shelby, its top Republican, reached a deal to pay for the insurance program with proceeds from an affordable housing fund financed by Fannie Mae and Freddie Mac, Dodd said today in a conference call. The government-sponsored companies are the biggest sources of U.S. mortgage funding.

``The primary goal is to keep people in their homes, but also to help establish a floor and a bottom'' to the housing slump, Dodd, a Connecticut Democrat, told reporters during the call......

Buffett says effects of crisis ‘far from over’ - Financial Times

Warren Buffett, the world’s richest man and chief executive of conglomerate Berkshire Hathaway, on Monday said he thought the effects of the financial crisis were “far from over”.

Mr Buffett was speaking at a press conference in Frankfurt, where he is meeting German family-owned businesses as part of a four-country tour of Europe.

“It is rippling - there are secondary and tertiary effects. I think the Wall Street crisis is mostly over although I don’t know. The [Federal Reserve] with its Bear Stearns rescue largely stopped that. But I don’t think we are half way or even a quarter of the way through the impact in the general economy,” he said.

The “Sage of Omaha” said the effects of the crisis were beginning to be felt not just by those who had behaved the “silliest” but also now by people “who did sound things”....

Oil fluctuates around $127/bbl on supply fears - Thomson Financial via Forbes

Oil fluctuated around $127 a barrel on Tuesday, as fresh supply concerns combined with Opec's reluctance to increase output kept prices supported within touching distance of all-time record highs.

At 10:26 a.m., New York-traded West Texas Intermediate crude for June delivery -- which expires today -- was up 2 cents at $127.07 per barrel, having set an all-time high of $127.82 per barrel on Friday. Prices closed above $127 a barrel for the first time ever yesterday.

In London, Brent crude for July delivery was down 21 cents at $124.85 per barrel.....

Government Again Raises Forecast for Food Prices - Wall Street Journal

 

The government raised its one-month-old forecast of how much food prices will rise in 2008 by half a percentage point to a range of 4.5% to 5.5%.

 

The forecast released Monday by the Agriculture Department is the third consecutive month the agency has raised its food-inflation forecast by half a percentage point. With the latest increase, the food-inflation forecast is approaching levels not seen in the U.S. since 1990, when food prices climbed 5.8%. Food prices rose 4% last year.
 
  For consumers, the forecast signals that the typical household will probably pay about $350 more for the same basket of goods they bought last year. The federal government also faces higher budget costs for nutrition programs that feed millions of Americans.....

German Investor Confidence Unexpectedly Fell in May - Bloomberg

Investor confidence in Germany unexpectedly fell for a second month in May on concern faster inflation, the stronger euro and fallout from the U.S. housing slump will hurt economic growth.

The ZEW Center for European Economic Research said its index of investor and analyst expectations declined to minus 41.4 from minus 40.7 in April. Economists expected a gain to minus 37, according to the median of 41 forecasts in a Bloomberg News survey. The gauge reached a 15-year low of minus 41.6 in January. A negative reading means that pessimists outnumber optimists.

``Analysts are less certain that the European Central Bank will lower interest rates because the inflation outlook remains a concern,'' Sandra Schmidt, an economist at ZEW, said in a Bloomberg Television interview. ``They are also concerned that continuous high prices will damp consumer spending.''....

SEC Sues Ex-AOL Executives Over Inflated Revenue - Bloomberg

Eight former America Online Inc. executives, including Chief Financial Officers John Michael Kelly and Joseph Ripp, were sued by U.S. regulators for allegedly helping overstate Internet advertising revenue by more than $1 billion from 2000 to 2002.

Four of the executives agreed to pay more than $8 million to settle a U.S. Securities and Exchange Commission lawsuit filed today at federal court in Manhattan, the agency said in a statement. The regulator's claims are still pending against Kelly, 51, Ripp, 56, and two others.

In mid-2000, before AOL completed its $124 billion takeover of Time Warner, the Internet service provider began overstating revenue by paying more for goods and services in exchange for customers' ad purchases, the SEC said. The company agreed to pay $300 million in 2005 to settle a related regulatory probe.

``Each of the former executives played a significant role in the scheme to inflate AOL's reported online advertising,'' said Scott Friestad, the SEC attorney overseeing its case.....

Muni Bond Tax Exemptions Upheld by U.S. Supreme Court - Bloomberg

The U.S. Supreme Court ruled that dozens of states can continue to offer special tax breaks on municipal bonds issued within their borders, preventing disruptions in a $2.6 trillion market.

The high court, voting 7-2 in a Kentucky case, said the Constitution lets states exempt interest earned on in-state bonds while taxing the income from bonds issued elsewhere. The decision preserves tax rules in 42 states, including New York and California.

A ruling against Kentucky might have transformed the industry. States would have faced billions of dollars in refund claims and been forced to either eliminate the tax breaks or extend them to out-of-state bonds. Such a ruling also would have undermined the appeal of the hundreds of single-state bond funds, which held $155 billion as of 2006.

Barring in-state tax exemptions would ``radically'' change the way municipal projects are financed and ``upset the market in bonds and the settled expectations of their issuers,'' Justice David Souter wrote for the court.....

Northern Rock to repay 25% of BoE loan this year - Reuters

UK government-owned bank Northern Rock plans to repay almost 7 billion pounds ($13.7 billion) to the Bank of England this year and should fully repay its loan in the next three years even if there is a recession, it said.

Northern Rock, which was taken into state ownership in February after a funding crisis brought it close to collapse, said on Tuesday it had stress-tested its model against a housing slump and economic recession comparable to the early 1990s.

"Even under that recession scenario, the loan was repaid with only a short delay," said Ann Godbehere, chief financial officer. "The delay would only be about a six month delay in that scenario," she said.

Ron Sandler, executive chairman, told politicians at a Treasury Select Committee hearing that Northern Rock would return to profit and go back into the private sector as a leaner bank with a balance sheet shrunk to about 50 billion pounds.....

Platinum prices ‘could surge by 15%’ - Financial Times

Platinum prices could surge a further 15 per cent to a record $2,500 an ounce within the next six months as disruptions to production in South Africa lead to a “substantial” supply deficit this year, one of the biggest users of the metal has forecast.

The price of platinum, a key ingredient in cars’ tailpipe catalysts, has already surged 50 per cent since January after power shortages in South Africa, the world’s largest producer, forced miners to cut their operations.

Metals and chemicals group Johnson Matthey has forecast more rises given tight market conditions. Jeremy Coombes, general manager at Johnson Matthey, said that in his 20 years in the platinum sector he had never known it to be so stressed.

Johnson Matthey said global platinum output fell 4.1 per cent to 6.55m in 2007, creating a deficit that is likely to widen this year as demand continues to outpace supplies.....

Yahoo option traders bet on Microsoft deal - Reuters

Option investors bet heavily on Monday that Yahoo might strike a deal of some sort with Microsoft Corp, spurred on in part by pressure from activist shareholder Carl Icahn.

Microsoft has proposed an alternative deal for Yahoo, a complex transaction that would include just buying Yahoo's search business, rather than a full buyout, a person familiar with the discussions said on Monday.

As part of the deal, Microsoft would also buy a minority stake in what remains of the company after Yahoo sells its Asian assets, the source said.

Representatives of software giant Microsoft and Yahoo, the No. 2 U.S. search engine after Google, declined to comment.....

Dell Names Brian Gladden as CFO, Replacing Don Carty - Bloomberg

Dell Inc., the world's second-biggest maker of personal computers, said Brian Gladden will become its third chief financial officer in 18 months, replacing Don Carty, who had stepped in amid an accounting probe.

Gladden, 43, is the former chief executive officer of Sabic Innovative Plastics Holding BV, formerly GE Plastics, Round Rock, Texas-based Dell said today in a statement. He previously worked at General Electric Co. for almost 20 years, Dell said. He will start at Dell June 13.

Carty, 61, replaced then-CFO James Schneider in December 2006 to help founder Michael Dell clean house amid a U.S. Securities and Exchange Commission investigation. Carty, a former CEO of AMR Corp., will remain on Dell's board, where he has served since 1992.

``It was expected that Carty would come in to help Dell temporarily through the issues they were having, and he's done that,'' analyst Jayson Noland of Robert W. Baird & Co. in Milwaukee said in a telephone interview.....

Home Depot Profit Declines on U.S. Housing Slump - Bloomberg

Home Depot Inc., the largest home- improvement retailer, reported first-quarter profit that fell less than some analysts estimated after job cuts and store closings countered a decline in sales.

Home Depot rose 1.1 percent in trading in Frankfurt.

Net income decreased 66 percent to $356 million, or 21 cents a share, from $1.05 billion, or 53 cents, a year earlier, on costs to close stores, Home Depot said today in a statement. Profit excluding some expenses was 41 cents a share, beating analysts' estimates by 4 cents.

Chief Executive Officer Frank Blake cut headquarters and human-resources jobs and closed stores after the deepest housing slump in at least 25 years weakened home-improvement sales. To win back market share from Lowe's Cos., Home Depot hired plumbers and electricians to advise customers and added new lighting and displays at more than half its 2,258 locations.....