WSF Headline Roundup - 12/31/08 - Fed picks MBS managers; Muni sales dry up; Libor 1.43%!; Dollar, copper multi decade lows; $DELL mgt shakeup; Defiant Blago names a Senate Seat filler; GMAC lending; Online Xmas sales 3% drop; Viacom / Time Warner spat

• Fed Selects Four Firms to Manage MBS Purchase Plan
• SEC study: Bank failures not due to fair value rule
• Muni Bond Sales Drying Up as States Face $42 Billion Shortfall
• Three-Month Dollar Libor Slips to Lowest Since 2004, BBA Says
• Dollar Heads for Biggest Annual Drop Against Yen in Two Decades
• Copper Heads for Biggest Drop in 21 Years as World Growth Slows
• Blagojevich Names Burris to Fill Obama’s Senate Seat
• GM, GMAC ease lending rules to entice car buyers
• Bailout Trims Cerberus's GMAC Stake
• KKR arm breaches $1 NYSE stock rule
• AIG seeks easing of rules on disposals
• Lehman Brothers delay plea
• Dell Shakes Up Management as Turnaround Stalls
• October Home Prices in 20 U.S. Metro Areas Fall 18%
• Chemical Giant Mulls Bankruptcy
• Online holiday sales fall 3 percent
• Viacom May Pull Channels Off Time Warner Cable in Contract Spat

Fed Selects Four Firms to Manage MBS Purchase Plan - Bloomberg

The Federal Reserve chose BlackRock Inc., Goldman Sachs Asset Management, Pacific Investment Management Co. and Wellington Management Co. to manage a $500 billion purchase of mortgage-backed securities it plans to complete by June. 

“They picked the crème de la creme of the money managers,” said Art Frank, head of mortgage-bond research at Deutsche Bank AG in New York. “By doing $500 billion by June, no question they’re doing their best to try to hold down mortgage rates.”.....

SEC study: Bank failures not due to fair value rule - Reuters

The controversial accounting rule used to value hard-to-price assets underlying the U.S. housing crisis was not a major factor in 2008 bank failures, the U.S. Securities and Exchange Commission told Congress in a report on Tuesday.

However, the report also recommended that regulators issue more guidance to help banks determine the fair value of an asset such as mortgage-backed securities when there is little or no market trading.....

Muni Bond Sales Drying Up as States Face $42 Billion Shortfall - Bloomberg

The worst year for municipal bond investors since 1999 may further reduce demand for tax-exempt debt just as state governments face the biggest budget deficits in at least a quarter-century. 

State and local borrowers sold $385 billion of long-term bonds through yesterday, down 9 percent from 2007, according to data compiled by Thomson Reuters. Next year, sales will drop more than 6 percent to about $364 billion, the least since 2004, based on an average of estimates from London-based Barclays Plc, Merrill Lynch & Co. and Loop Capital Markets LLC. 

The combination of the worst financial crisis since World War II and the collapse of the $330 billion auction-rate debt market will leave 41 states and the District of Columbia with shortfalls just as financing sources diminish. Merrill Lynch’s Municipal Master Index, which tracks 14,000 bonds, fell 4.6 percent this year, the first decline since a 6.34 percent drop in 1999. The biggest underwriters are merging or leaving the business.....

Three-Month Dollar Libor Slips to Lowest Since 2004, BBA Says - Bloomberg

The London interbank offered rate, or Libor, that banks say they charge each other for three-month loans in dollars fell to the lowest level since June 8, 2004, according to data from the British Bankers’ Association. 

The rate declined one basis point to 143 basis points today, the BBA said....

Dollar Heads for Biggest Annual Drop Against Yen in Two Decades - Bloomberg

The dollar was set to complete its biggest annual decline against the yen in more than two decades on signs the U.S. economy is sinking deeper into recession. 

The euro was poised for its best year against the British pound since its 1999 debut on speculation the Bank of England will keep its main lending rate lower than that of the European Central Bank. The Australian and New Zealand dollars had record slides versus the U.S. currency and the yen as a global economic slump dragged down prices of commodities the nations export and curbed demand for higher-yielding assets. 

“The dollar is likely to weaken further into 2009,” said Norifumi Yoshida, vice president of the trading section in Singapore at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest bank by assets. “The U.S. recession will probably be prolonged as the data aren’t signaling any recovery at all.”....

Copper Heads for Biggest Drop in 21 Years as World Growth Slows - Bloomberg

Copper headed for its biggest annual drop in more than two decades in London trading. The metal pared its decline today on optimism governments will succeed in reviving economic growth next year. 

Copper dropped 56 percent this year, the worst performance since at last 1987. The metal, which typically tracks industrial production, ranks 16th out of the 19 commodities included in the Reuters/Jefferies CRB Index. Nickel, oil and gasoline did worse. 

The Federal Reserve cut its benchmark interest rate this month to a range of zero to 0.25 percent for the first time and shifted its focus to debt purchases to revive the economy. Growth in the U.S., the biggest copper consumer after China, will be a negative 1 percent next year, compared with a 1.2 percent gain this year, a Bloomberg survey of economists showed.....

Blagojevich Names Burris to Fill Obama’s Senate Seat - Bloomberg

Illinois Governor Rod Blagojevich named former state Attorney General Roland Burris to fill President-elect Barack Obama’s vacant U.S. Senate seat. The Illinois secretary of state and Senate Democratic leaders vowed to block the appointment. 

Blagojevich, who is facing possible impeachment by the Illinois Legislature for allegedly trying to sell Obama’s seat, announced his selection of the fellow Democrat today at a news conference in Chicago. The governor said he’s required to make the appointment to give Illinois residents two U.S. senators. 

“He has a long and distinguished career serving the people of Illinois,” Blagojevich, 52, said. “Don’t allow the allegations against me to taint this good and honest man.”....

“This is not about Mr. Burris; it is about the integrity of a governor accused of attempting to sell this United States Senate seat,” the top Democrats said in a statement issued by the office of Democratic leader Harry Reid of Nevada. “Under these circumstances, anyone appointed by Governor Blagojevich cannot be an effective representative of the people of Illinois and, as we have said, will not be seated by the Democratic Caucus.”....

GM, GMAC ease lending rules to entice car buyers - Reuters

General Motors Corp and its GMAC funding affiliate launched programs on Tuesday to lure U.S. car and truck buyers back into showrooms, as the nation's largest automaker tries to revive its sagging fortunes.

GMAC modified its credit criteria so that it could lend to a wider range of potential customers, two-and-a-half months after significantly curbing lending.

Meanwhile, GM is offering zero-percent financing on several vehicles, and rates no higher than 5.9 percent on more than three dozen 2008 and 2009 models. The offer expires on January 5. Many eligible vehicles also carry cash discounts of $500 to $4,250......

Bailout Trims Cerberus's GMAC Stake - Wall Street Journal

The government bailouts of GMAC LLC and Chrysler LLC represent a dramatic, and perhaps ironic, turn of events for Cerberus Capital Management.

The private-equity firm's boss, Stephen Feinberg, had pitched his firm's investments in the struggling companies partly as a patriotic duty. Now it is the U.S. government coming to Cerberus's aid, and Cerberus will essentially lose control of GMAC in the process.

Cerberus and dozens of co-investors paid $7.4 billion in 2006 for a 51% stake in GMAC. The stake became one of the New York firm's biggest headaches, and Cerberus could have suffered a huge loss and damage to its reputation had the Treasury Department not committed $6 billion to stabilize GMAC. The Treasury's $5 billion preferred stake will pay an 8% dividend, putting the government in line ahead of Cerberus's common-equity holdings....

KKR arm breaches $1 NYSE stock rule - Financial Times

KKR Financial, the New York Stock Exchange-listed debt arm of legendary private equity firm KKR, was told Tuesday that it had fallen below the required standard that shares in a listed company have a minimum average closing price of $1 over 30 consecutive trading days. 

The firm now has six months to bring its average share price back above $1.

KKR Financial “plans to notify the NYSE that it will seek to cure the listing requirement deficiency”, the company said.....

AIG seeks easing of rules on disposals - Financial Times

AIG, the insurer bailed out by the US government, is prepared to ask the Federal Reserve to relax rules on its $60bn-plus disposals programme to allow bidders to use a greater proportion of shares to pay for its assets.

People close to the situation said AIG was looking at instalment payments and other flexible options in an effort to make it easier for potential buyers to bid for assets and increase its chances of surviving as an independent company. The moves, being considered by AIG’s management, are aimed at boosting competition for the disposals and countering the perception that the company will be forced to sell units at bargain prices to repay the government aid.....

Aberdeen buys part of Credit Suisse business - The Times of London

Aberdeen Asset Management is expected to unveil the acquisition of Credit Suisse's UK asset management division for £200-£250 million this morning in a deal that will make theScottish group into Britain's largest independent fund manager. 

Credit Suisse will become Aberdeen's largest shareholder as part of the all-share deal. It is understood that it will take a stake of between 20 and 25 per cent in Aberdeen, and create a fund manager with around £170 billion worth of assets under management. Credit Suisse put the business up for sale earlier this year. Job cuts at the division are likely if Aberdeen takes over.....

Lehman Brothers delay plea - The Times of London

Lehman Brothers’ liquidators have asked for an extra six months to form a plan to pay back creditors because of the complexity of the defunct Wall Street bank’s affairs. In a filing to a bankruptcy court in New York, lawyers for the bank’s new holding company asked for the deadline for the Chapter 11 plan to be put back to July 13.....

Dell Shakes Up Management as Turnaround Stalls - Wall Street Journal

Dell Inc. is preparing management changes that are expected to shake up an executive team that Chief Executive Michael Dell brought in as part of his turnaround plan for the big computer maker.

As part of the moves, which are expected to be announced soon, Michael Cannon, president of global operations, and Mark Jarvis, Dell's chief marketing officer, will leave their roles, said people briefed on the matter. They expect Mr. Jarvis to leave Dell, while Mr. Cannon will likely stay on in a different capacity.

Other changes are expected to focus on cutting costs and gaining tighter control over the company's global operations, these people said.....

October Home Prices in 20 U.S. Metro Areas Fall 18% - Bloomberg

Home prices in 20 major U.S. cities declined at the fastest rate on record, depressed by mounting foreclosures and slumping sales. 

The S&P/Case-Shiller index declined 18 percent in the 12 months to October, more than forecast, after dropping 17.4 percent in the year through September. The gauge has fallen every month since January 2007. Year-over-year records began in 2001. 

The financial market meltdown that’s reverberated around the globe has prompted banks to curb lending, signaling the housing slump will persist for a fourth year in 2009. Falling property values have eroded household wealth, causing consumers to pare spending and deepening what is projected to be the longest recession in the postwar period.....

Chemical Giant Mulls Bankruptcy - Wall Street Journal

LyondellBasell Industries, the world's third-largest independent chemical company, told lenders on Monday it is considering filing for bankruptcy protection amid plunging sales and a cash crunch, people familiar with the matter said.

LyondellBasell, which is based in the Netherlands and has large U.S. operations, has hired bankruptcy counsel and told lenders it is trying to line up as much as $2 billion in bankruptcy financing, these people say. A Chapter 11 filing may be imminent, they say.....

Online holiday sales fall 3 percent - Reuters

Online sales for the holiday period up to December 23 fell 3 percent from the same period last year, marking the first decline in online spending since comScore Inc started tracking online sales in 2001.

Online spending reached $25.5 billion between November 1 and December 23, the company said, noting this was below its expectations for flat sales on the same period a year ago.

Apple Inc and Amazon.com were among the top traffic gainers in an overall bleak period, comScore said.....

Viacom May Pull Channels Off Time Warner Cable in Contract Spat - Bloomberg

Viacom Inc. threatened to pull shows such as “Dora the Explorer” and “The Daily Show” from Time Warner Cable Inc. systems on Jan. 1 if the companies don’t reach a new programming agreement. 

Viacom, controlled by Sumner Redstone, is seeking an increase in affiliate fees of less than 25 cents a month for each subscriber for all 19 of its MTV Networks cable channels, including Nickelodeon and Comedy Central, the New York-based company said yesterday in an e-mailed statement....