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Portfolio
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Aug 21, 08 4:11 PM CDT
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As the recession puts a damper on luxury spending throughout the country, the nation’s toniest golf clubs—catering to a clientele at the heart of the credit tumult—are flourishing, Portfolio finds. Even with initiation fees approaching $1 million, Wall Street’s clubs of choice are brushing off the downturn even as courses elsewhere in the US are facing hard times.
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Financial Times (UK)
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Aug 21, 08 9:48 AM CDT
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Secret talks earlier this month to sell up to half of struggling US investment bank Lehman Brothers to South Korean or Chinese buyers fell apart after last-minutes squabbles over details, the Financial Times reports. The bank, which is expected to announce up to $4 billion in writedowns next month, was said to be asking 50% above its book value.
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Wall Street Journal
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Aug 20, 08 10:00 AM CDT
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The credit crunch that has shifted the US economy into neutral has slowed the growth of India’s tech sector, which once boasted growth rates of 40% in the overall strong economy, the Wall Street Journal reports. The slowdown comes as the sector faces increasing competition from abroad and rising labor costs at home, and a weak dollar eating into profit margins.
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Wall Street Journal
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Aug 20, 08 9:40 AM CDT
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A federal bailout for Fannie Mae and Freddie Mac looks more likely every day, both the Wall Street Journal and the New York Times report, as the mortgage giants find it increasingly difficult to borrow and their stock continues to take a pounding. Freddie was able to auction $3 billion in debt yesterday, but at unusually hefty interest rates, which in turn could be passed on to borrowers.
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Wall Street Journal
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Aug 19, 08 8:50 AM CDT
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Lehman Brothers is shopping a piece of its investment management unit, the Wall Street Journal reports, joining other large banks in shedding strong-performing businesses to offset mortgage meltdown losses. Lehman’s management business, which includes Neuberger Berman and hosts 27 mutual funds managing $22 billion in individual and institutional wealth, has been a rare bright spot for the company.
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Wall Street Journal
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Aug 19, 08 6:51 AM CDT
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Share prices of Fannie Mae and Freddie Mac took another precipitous plunge yesterday as investors fear the home mortgage giants will not be able to avoid a government bailout, the Wall Street Journal reports. An article in Barron’s stoked smoldering concerns that the companies will not be able to raise more capital by selling shares and that a Treasury bailout will render existing shares worthless.
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Los Angeles Times
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Aug 17, 08 7:59 PM CDT
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Bought an expensive house right before the subprime crash? Fret not, writes Chris Ayres in the Los Angeles Times . With 5% inflation, lower interest rates, and a mortgage tax deduction, buyers of pricey houses will be smiling in 10 years. "If you're a boom-time buyer who can still pay the mortgage, you have more than you think to feel happy about," writes Ayres.
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New York Times
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Aug 15, 08 11:59 AM CDT
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Until recently, borrowing against one's home was considered a desperate measure, but now it's commonplace. Since the 1980s, outstanding home-equity loans—once called second mortgages—have exploded a thousandfold to more than $1 trillion. The New York Times looks at how banks waged a concerted advertising campaign to transform Americans' attitude toward debt, enriching themselves while leading homeowners to financial ruin.
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Wall Street Journal
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Aug 14, 08 11:19 AM CDT
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Alan Greenspan said housing prices could continue to edge lower through 2009, but should “stabilize or touch bottom” in the first six months of the year, reports the Wall Street Journal . And, the former Fed chief says, while a government bailout of Freddie Mac and Fannie May was the right thing to do, the companies should have been nationalized.
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Wall Street Journal
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Aug 13, 08 8:05 AM CDT
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The rising costs of carrying foreclosed homes are prompting banks to sell them off for as little as half of their original value, reports the Wall Street Journal, a strategy that’s costing financial institutions big money. The losses, and the specter of their continuing to rise, pummeled bank share prices by 10% or more in trading yesterday.
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Reuters
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Aug 7, 08 2:12 PM CDT
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Citigroup has agreed to buy back $7 billion in risky debt it marketed to consumers as safe and equivalent to cash, Reuters reports. Today’s deal, struck with New York's attorney general and the SEC, also requires the bank to pay fines totaling $100 million, and reimburse customers who took a loss on auction-rate debt.
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Bloomberg
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Aug 6, 08 2:07 PM CDT
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Morgan Stanley has told thousands of its home-equity credit clients they can no longer draw on the lines, Bloomberg reports. Most had property values that had fallen, and were frozen to cut back on risk, a source said. A Morgan Stanley spokesman confirmed that “a segment of clients” had been notified of changes, but said it wasn’t out of the ordinary.
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BusinessWeek
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Aug 6, 08 11:05 AM CDT
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Though still smarting from the subprime debacle, some of the Wall Street’s biggest players are lobbying the government to be allowed to buy up and manage some of the $2.3 trillion in US corporate pension funds, BusinessWeek reports. Many businesses, eager to get the plans off their books, are backing the movement—but consumer advocates have reservations.
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Bloomberg
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Aug 6, 08 7:15 AM CDT
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Rising delinquencies and a still-skidding home market combined to make Freddie Mac’s second quarter losses three times worse than analysts predicted, reports Bloomberg . The government-backed mortgage enterprise lost $821 million, or $1.63, in the quarter, prompting it to also announce a third quarter slash in dividends from 25 cents to 5 cents a share.
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Financial Times (UK)
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Aug 4, 08 2:35 PM CDT
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Last summer, central banks injected hundreds of billions of dollars into the financial system, desperate to restore liquidity to battered markets. But by then the credit crunch was on—and after 12 months, it shows no signs of abating. The Financial Times looks at how risky US mortgages set off the worst economic crisis in 70 years.
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