U.S. foreclosure filings rose 15 percent in January from a year earlier and exceeded 300,000 for the 11th consecutive month as modification programs failed to keep delinquent borrowers in their homes, RealtyTrac Inc. said.
A total of 315,716 properties received a notice of default, auction or bank seizure last month, or one in 409 households, the Irvine, California-based seller of default data said today in a statement. Filings fell 10 percent from December.
Bank seizures, also known as real-estate-owned or REOs, may rise to a record 3 million this year, RealtyTrac said last month. About 66,000 delinquent loans out of a targeted 4 million by 2012 were permanently modified as of Dec. 31 under the Obama administration’s Home Affordable Modification Program, according to the Treasury Department. About 787,000 mortgages are in trial programs that change loan terms, the Treasury said Jan. 19.
“It’s almost inevitable that modifications will fail,” Michelle Meyer, New York-based U.S. economist for Barclays Capital Inc., said in an interview. “Over the next several months, we should see REOs increase at an accelerated pace.”
Foreclosure filings also fell in January of last year from December, only to rise in subsequent months, RealtyTrac said.
“If history repeats itself we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works,” James J. Saccacio, RealtyTrac’s chief executive officer, said in the statement.
Negative Equity
Unemployment and negative equity, where homeowners owe more than their properties are worth, are adding to the foreclosure total, said Stan Humphries, chief economist at Zillow.com. More than a fifth of U.S. homeowners had negative equity in the fourth quarter, the Seattle-based real estate data provider said yesterday in a report.
“It’s tough to come up with a program that works for unemployment-related foreclosures where the owner can’t pay, or for rate resets where the owner is way underwater,” Rick Sharga, RealtyTrac’s executive vice president for marketing, said in an interview yesterday.
The jobless rate unexpectedly fell to 9.7 percent in January, and payrolls dropped by 20,000, the Labor Department said Feb. 5 in separate reports. About 8.4 million jobs have been lost since the recession began in December 2007, with more than 4 million cut since Obama took office in January 2009.
Home Sales
Sales of existing U payday loans.S. homes rose 14 percent in the fourth quarter from the third while the median price fell 4.1 percent from a year earlier, the Chicago-based National Association of Realtors said today. The sales gain may not last when government support for housing, including the Federal Reserve’s $1.25 trillion purchase of mortgage bonds and a first-time buyer tax credit, ends as scheduled in the spring, Humphries said.
January’s total filings were down 12 percent from the July peak, according to RealtyTrac. Bank seizures climbed 31 percent from a year earlier, default notices rose 4 percent and scheduled auctions increased 15 percent.
Nevada had the highest foreclosure rate for the 37th straight month, with one in 95 households receiving a filing in January. Total filings in the state fell 18 percent from a year earlier to 11,854.
Arizona ranked second, with filings for one in 129 households. The rate for both California and Florida was one in 187 households, RealtyTrac said.
Utah, Idaho, Michigan, Illinois, Oregon and Georgia rounded out the 10 highest foreclosure rates.
California Filings
California had the most filings with 71,817, down 6.4 percent from a year earlier. Florida followed with 47,069, up 15 percent, and Arizona was third at 21,048, up 43 percent. The three states accounted for 44 percent of the U.S. total.
Illinois was fourth with 18,120 filings, up 25 percent from January 2009. Michigan ranked fifth with 17,574, up 54 percent. Texas, Nevada, Georgia, Ohio and New Jersey completed the 10 states with the most filings, RealtyTrac said.
Filings increased 23 percent from a year earlier to 6,146 in New Jersey. They rose 34 percent to 2,218 in Connecticut, and jumped 31 percent to 4,569 in New York.
Las Vegas had the highest foreclosure rate for cities with a population of more than 200,000. One in 82 households there got a filing, a 21 percent decrease from a year earlier.
Phoenix was second among the biggest cities at one in 102 households. Six California cities ranked third through eighth: Modesto, Stockton, Riverside-San Bernardino, Merced, Vallejo- Fairfield and Bakersfield, according to RealtyTrac.
Cape Coral-Fort Myers and Orlando-Kissimmee in Florida were ninth and 10th respectively, said RealtyTrac, which sells default data collected from more than 2,200 counties representing 90 percent of the U.S. population.
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Missouri may have given birth to “Mad Men” star Jon Hamm and Grammy-winning singer Sheryl Crow but the state ranks 44th on a list of the best-looking states.
In light of Miss Virginia winning the Miss America crown Saturday, The Daily Beast ranked the states based on the hometowns of the winners of the Miss America and Miss USA pageants for the past decade, more than 300 male and female fashion models and the 125 men mentioned in 10 years’ worth of People’s “Sexiest Man Alive” issues. The list also factored in health and fitness data for each state from 2006-2008, ranked by the Trust for America’s Health.
Illinois, home of supermodel Cindy Crawford, comes in at No. 11.
Washington, D.C., ranked No. 1 for its beautiful people, and North Dakota came in last.
European exports declined for a second month in November as the euro’s strength made goods from the region more expensive abroad.
Exports from the euro area dropped a seasonally adjusted 0.4 percent from October, when they decreased 0.1 percent, the European Union’s statistics office in Luxembourg said today. The trade surplus narrowed to 3.9 billion euros ($5.6 billion) in November as imports rose 0.3 percent from October, when they fell 1 percent. European inflation accelerated to 0.9 percent in December, a separate report showed.
The euro’s 10 percent advance against the dollar in the past year is threatening to undermine the region’s recovery by making exports less competitive. While European services and manufacturing industries expanded at the fastest pace in more than two years in December, the economy still faces a “bumpy road” ahead, European Central Bank President Jean-Claude Trichet said yesterday.
“The exports-driven recovery of the preceding two quarters is fading,” said Dominique Barbet, an economist at BNP Paribas SA in Paris. “Imports’ lack of dynamism suggests lackluster domestic demand.”
December inflation was the fastest since February 2009, with energy prices rising 1.8 percent from a year earlier, the statistics office said. Core inflation, excluding volatile costs such as tobacco, food and energy, accelerated to 1.1 percent in December from 1 percent in the previous month.
Greece’s Struggles
The euro fell the most in almost a month against the dollar today as Greece’s struggles to cut its budget deficit dented investor confidence in European assets. The 16-nation currency traded at $1.4366 at 3:43 p.m. in London, down 0.9 percent on the day.
The ECB yesterday left its benchmark interest rate at a record low of 1 percent and signaled that officials will wait for more signs of recovery before withdrawing emergency measures further, with Trichet citing “a great level of uncertainty” surrounding the economic outlook short term personal loans. The central bank forecasts growth of about 0.8 percent this year and around 1.2 percent in 2011.
European Aeronautic, Defence & Space & Co., the parent of Airbus SAS, on Jan. 12 reported its steepest annual revenue drop since the company went public a decade ago, partly because of a weaker dollar. Eckhard Cordes, chief executive officer of Metro AG, Germany’s biggest retailer, said on Jan. 12 that he anticipates economic conditions will remain “challenging” in 2010 after currency swings eroded fourth-quarter revenue.
Biggest Economy
Economies around the globe are emerging from the worst recession in six decades, led by China, where exports gained for the first time in 14 months in December. The Asian nation overtook Germany as the largest exporter of goods in 2009. Industrial output in the U.S., the world’s biggest economy, rose in December for a sixth month, data showed today.
Euro-area exports to the U.S., the region’s second-biggest trading partner, dropped 20 percent in the first 10 months of 2009 from a year earlier, today’s report showed. Shipments to the U.K., the largest market for euro-area goods, declined 24 percent, while exports to China rose 1 percent. The detailed country data are published with a one-month lag.
To help shore up earnings, companies have been cutting costs and paring wages. European unemployment rose to 10 percent in November. That’s the highest in more than 11 years. Koenig & Bauer AG, the world’s third-biggest printing-press maker, said last month that it plans to eliminate more jobs.
“China and other emerging countries bring in volume but not necessarily profit,” Koenig & Bauer CEO Helge Hansen said on Dec. 4 in Wuerzburg, Germany. “They help retain jobs, but they don’t help in terms of a positive balance.”
OTTAWA–Canadians are becoming more pessimistic over the strength of the economic recovery and what it will mean for their finances and job security, a new consumer confidence survey shows.
The monthly Conference Board of Canada survey shows even as economists say they think the recession has ended, many Canadians are not so sure.
Consumer confidence normally bubbles during good times, but the November survey of 2,000 people finds that confidence dropped 5.7 points to 79, well below the readings of about 100 observed before the recession struck a year ago.
The biggest worry is over job security, not a surprising finding given that more than 400,000 workers have lost jobs in the past year, including 43,000 in October, the last month for which data is available.
The November survey found only 19.7 per cent of the respondents expected to find more jobs available over the next six months, down 3.2 points from October. As well, 25 per cent said they believe fewer jobs will be on offer, up 1.2 points.
"The outlook for future job creation remains a significant detractor to consumer confidence," the Ottawa-based think-tank said.
"This month’s results highlight just how fragile the perception of an economic recovery is at this time."
Economists are divided on the importance of consumer confidence surveys as an accurate predictor of future economic performance, with some saying the results merely serve to reflect current sentiments. But the board and some economists argue deteriorating confidence can cause individuals to hold off purchases, thereby depressing overall economic activity easy payday loans.
The latest survey does suggest that the euphoria over the end of the recession observed during the spring and summer months is giving way to a belief that true recovery, as many analysts have warned, may take years rather than months.
Gloom was spread throughout the country, with Ontario, British Columbia and Atlantic Canada registering declines in consumer confidence. B.C.’s decline was 13 points.
There were no corresponding bright spots. The other two regions – Quebec and the Prairies – registered no relevant change from the rather weak optimism of the previous month.
The survey also found more pessimism about personal finances.
Just 13.9 per cent of respondents answered positively about their current finances, down one point from October.
Asked if they thought their family’s finances would improve in the coming six months, only 27.1 per cent agreed, down 0.6 of a point.
And 25.6 per cent described their finances as worse than six months ago. Not surprisingly, their views on whether this was a good time for a major purchase fell – not a good sign for retailers during the year’s busiest shopping season.
The Canadian Press
The Toronto stock market closed slightly lower Friday, pressured by falling energy stocks as demand concerns and a rising U.S. dollar pushed crude prices down.
The S&P/TSX composite index shed 20.97 points to 11,579.33, down for a second day on another rising tide of concern about whether the market has advanced too quickly relative to the strength of the economic rebound.
"Investors seem to need a constant reassurance with where we are in the economic recovery," said Brett D'Arcy, chief investment officer at CBIZ Wealth Management Group in San Diego.
"We just haven't gotten it in the past few days."
But the market advanced 171.65 points or 1.5 per cent this week on the way to a solid gain for November after a short-lived spell of pessimism sent the TSX down about four per cent for October.
"We're going to get periods of consolidation and the markets aren't going to go straight up," said Colin Cieszynski, market analyst at CMC Markets Canada.
"To have consolidations from time to time are not unheard of and, to be honest, they're healthy for the markets. You don't want to see the markets going straight up all the time."
The Canadian dollar was down 0.56 of a cent to 93.47 cents US as Federal Finance Minister Jim Flaherty said the Conservative government doesn't plan to undertake major new spending initiatives in next year's budget. Rather, it will continue with the $61 billion in stimulus spending announced in January.
There was also disappointment surrounding the latest earnings report from computer maker Dell Inc. The company said Thursday that its net income dropped 54 per cent to US$337 million in the latest quarter amid signs the company isn't fully benefiting from the computer industry's fledgling recovery.
Dell's numbers missed Wall Street's forecasts. However, it said it is seeing improvement in some areas even as it repeated an earlier prediction that a meaningful rebound in technology spending by businesses won't come until next year. Its stock was down $1.58 or 9.96 per cent to US$14.29.
The Toronto energy sector was down 0.67 per cent as oil moved lower for a second day. The December crude contract on the New York Mercantile Exchange dropped 74 cents to US$76.72 a barrel. Canadian Oil Sands Trust (TSX: COS.UN) declined 64 cents to $29.55.
The gold sector was off 0.54 per cent even as the December contract on the Nymex closed up $4.90 to a record US$1,146.80 an ounce. Kinross Gold (TSX: K) faded 32 cents to $20.39.
The base metals sector was down 0.37 per cent as the December copper contract rose 2.7 cents to US$3.108 a pound. HudBay Minerals (TSX: HBM) lost 46 cents to C$15.23.
The TSX tech sector was the biggest gainer, up 0.72 per cent with Research In Motion Ltd. (TSX: RIM) advancing 95 cents to $63.66.
The TSX Venture Exchange added 7.12 points to 1,408.06.
New York markers were also weak as demand for safe havens rose following Dell's report and as European Central Bank president Jean-Claude Trichet said the ECB plans to start reining in some of its stimulus programs. Hiking borrowing rates could help keep inflation in check but could also slow improvement in the economy.
Investors seeking safety pushed into the U.S. dollar. A strengthening dollar curtails foreign demand for commodities, which are traded in dollars. It also can depress U.S. exports, which become more expensive as the dollar rises.
The Dow Jones industrial average closed down 14.28 points to 10,318.16 but gained a slight 47.69 points for the week.
The Nasdaq composite index lost 10.78 points to 2,146.04 and the S&P 500 was off 3.52 points to 1,091.38.
American homebuilder D.R. Horton Inc. also was a letdown as it reported that its fiscal fourth-quarter loss narrowed as it took smaller writedowns on its inventory. Even as its losses shrank, revenue fell 42 per cent as the housing market remained unsteady and its shares dropped $1.88 or 15.35 per cent to US$10.37.
In other corporate news, Agrium Inc.'s (TSX: AGU) reluctant U.S. takeover target, CF Industries Holdings Inc. (NYSE: CF), made headway in a hostile bid of its own Friday, installing its nominees on the board of Terra Industries Inc. (NYSE: TRA). CF's efforts to buy out its U.S. rival for US$4.1-billion have been met with resistance from Terra's board and management since January.
Agrium, the Calgary-based fertilizer giant, has been doggedly trying to buy CF since February, making its nearly US$5-billion offer conditional on CF dropping its pursuit of Terra. Agrium shares were up 37 cents at $61.13.
Stocks recovered from early losses Tuesday, closing at 13-month highs for the second day in a row, as strength in commodity-linked shares offset weakness in the retail sector.
The Dow Jones industrial average (INDU) rose about 30 points, or 0.3%, to close at 10,437.42. The S&P 500 (SPX) gained 1 point to close above the key 1,100 level. The Nasdaq composite (COMP) advanced 0.3% to end at 2,203.78.
All three indexes are at their highest levels since October 2008.
Stocks opened lower and struggled for most of the day as the dollar regained ground against rival currencies, reflecting a decreased appetite for risky assets.
The tone improved in the last few hours of trading as oil and gold prices reversed direction. Oil closed above $79 a barrel, while gold edged up to settle at a fresh all-time high.
The rebound in commodity prices boosted shares of energy and materials companies. But gains were limited by weakness in the retail sector after Home Depot and Target offered cautious earnings outlooks.
Tuesday’s economic news was mixed. Government data showed inflation at the wholesale level remains subdued, while industrial production was weaker than expected in October.
Ryan Larson, senior equity trader at Voyager Asset Management, said the stock market continues to look to the dollar for direction.
"The main story has been the dollar trade," he said. "When the dollar is weak, investors take on more risk. If it’s strong, they take the risk off."
The dollar has wallowed near a 15-month low against rival currencies in recent weeks as investors take advantage of U.S. interest rates near zero percent to fund bets in more risky stock and commodities markets.
However, after pushing the major indexes up some 30% from the lows of early March, investors have become wary of placing big bets as the economic outlook remains cloudy.
"The economy is growing, but shows a loss of momentum given the recent round of economic and corporate data," said Nick Kalivas, vice president of financial research at MF Global.
Investors will digest reports on consumer prices and initial construction of new homes Wednesday morning. Later in the week, the government will report on the number of Americans filing first-time claims for unemployment benefits.
Stocks rallied Monday as investors bet on the weak dollar and Federal Reserve Chairman Ben Bernanke said interest rates will remain low amid a slow recovery.
Economy: The government reported that the Producer Price Index, the key measure of inflation for manufacturers, edged up 0 cash till payday.3% in October. Core PPI, which excludes volatile food and energy prices, fell 0.6%.
The PPI was expected to have risen 0.5% for the month, according to a consensus of economist opinion from Briefing.com. The core was expected to have edged up 0.1% in October.
Before the start of market trading, the government also reported that industrial production rose 0.1% last month versus a forecasted 0.4% increase. In September, production rose 0.7%. Capacity utilization rose by 0.2 percentage point to 70.7%, a rate slightly below economists’ expectations for 70.8%.
Companies: Home Depot (HD, Fortune 500) reported a decline in third-quarter earnings to 41 cents per share from 45 cents in the year-ago quarter. While the results were better than 36 cent per share profit that analysts had expected, the company said it expects earnings for the full year to be down 13%.
Discount retailer Target (TGT, Fortune 500) reported an 18% increase in third-quarter profit, helped by gains in the company’s credit card portfolio. But Target, which had suffered declining profits for the last eight quarters, remained cautious about the outlook for holiday spending.
TJX (TJX, Fortune 500), which owns the T.J. Maxx and Marshalls chains, reported a larger-than-expected quarterly profit on increased consumer demand for discount products. The company said it expects profit from continuing operations of 65 cents to 71 cents per share in the fourth quarter. Analysts surveyed by Thomson Reuters are forecasting a profit of 71 cents per share in the fourth-quarter.
On the higher end, Saks (SKS) reported a quarterly profit, surprising analysts who were expecting the company to report a loss. However, the results were driven mostly by cost-cutting, and the company offered a cautious outlook.
International markets: The Nikkei and the Hang Seng each closed lower by a fraction of a percent. European markets ended with losses of less than 1%.
Other markets: Treasury prices rose, with the yield on the 10-year note falling to 3.33%.
The weak dollar recovered a little Tuesday. The dollar index, which measures the U.S. currency against a basket of rivals, was up 0.7% to 75.38 from 74.92.
Oil prices rose 24 cents to settle at $79.14 barrel in New York.
The price of gold closed at an all-time high of $1,139.40 an ounce, up 20 cents from Monday’s record close of $1,139.80.
Five banks failed late Friday, bringing the 2009 tally to 120.
The biggest to fall was United Commercial Bank of San Francisco, which had 63 U.S. branches as well as operations in Hong Kong and Shanghai. The bank held deposits totaling $7.5 billion.
East West Bank of Pasadena, Calif., agreed to assume all of United Commercial’s domestic branches, as well as its international subsidiaries.
United Security Bank of Sparta, Ga., closed its doors for the last time on Friday. Moultrie, Ga.-based Ameris Bank will assume control of all United Security’s deposits.
Home Federal Savings Bank of Detroit also failed late friday. New Orleans-based Liberty Bank and Trust Co. will assume control of its deposits.
Prosperan Bank of Oakdale, Minn., failed and will be taken over by Grand Forks, N.D.-based Alerus Financial.
Gateway Bank of St. Louis, Mo., also failed. Central Bank of Kansas City will take over its deposits.
Customers of the failed banks are protected, however. The FDIC., which has insured bank deposits since the Great Depression, currently covers customer accounts up to $250,000.
Customers can access their money over the weekend by writing checks or using ATMs or debit cards. Checks will continue to be processed, and borrowers should make mortgage and loan payments as usual.
What happens to the banks. United Commercial’s failure will cost the FDIC’s Deposit Insurance Fund an estimated $1.4 billion. East West Bank paid the FDIC a premium of 1.1% for the right to assume United Commercial’s deposits, and the two organizations agreed to share losses on around $7.7 billion of the failed bank’s assets.
An average of 11 banks have failed per month this year, and the federal coffer is thinning under the massive strain. The fund now stands below $10 billion, down significantly from $45 billion a year ago bad credit payday advance.
When the FDIC factors in expected closures, the agency says the fund is in the red and will likely remain there through 2012. Bank failure costs are expected to total $100 billion over the next four years.
So far 2009 has seen more than four times the number that were closed in 2008. It’s the highest total since 1992, when 181 banks failed.
Ameris Bank will pay the FDIC a premium of 0.36% to take control of American United’s $150 million in deposits.
United Security had $157 million in assets, and the FDIC and Ameris entered into a loss-share transaction on $123 million of those assets. The agreement means Ameris will share in the losses on the assets covered.
The failure is expected to cost the Deposit Insurance Fund an estimated $58 million. The two branches of United Security will reopen Saturday as branches of Ameris.
Liberty Bank and Trust will assume Home Federal Savings Bank’s $14.9 million in assets and $12.8 million in deposits. The failure cost the FDIC fund $5.4 million. The two branches of Home Federal will reopen Saturday as branches of Liberty.
Alerus Financial will pay the FDIC a premium of 1.02% to take control of Prosperan’s $175.6 million in deposits. Prosperan had $199.5 million in assets, and the FDIC and Alerus entered into a loss-share transaction on $173.9 million of those assets.
The failure will cost the FDIC $60.1 million. The three branches of Prosperan will reopen Saturday as branches of Alerus.
Central Bank will assume Gateway Bank’s $27.7 million in assets and $27.9 million in deposits. The failure cost the FDIC fund $9.2 million. The single branch of Gateway will reopen Saturday as a branch of Central.
In the end, pay czar Kenneth Feinberg’s hardest case was AIG.
The troubled insurer lobbied hard to let three of its executives keep their bonuses.
AIG told Feinberg that three executives, who were entitled to large retention payments, were particularly critical to the company’s long-term financial success and should be able to keep their bonuses.
Feinberg said Thursday that he relented in the case of AIG even though he was able to pare down similar pay clauses at the other six companies in his purview.
Feinberg was appointed by President Obama in June to oversee executive compensation at companies getting bailout funds. On Thursday he unveiled a sweeping plan to rein in pay for top executives at the seven most heavily bailed out companies.
When it came to AIG’s request, Feinberg said he thought long and hard.
In finally agreeing to the special cases, he said that paying those employees bonuses was in the public interest, since they were needed to help AIG pay back the government.
"We listened very, very carefully to [AIG CEO Robert] Benmosche," said Feinberg on Friday at George Washington Law School in Washington. "AIG compensation practices are unique. They are on the cusp. We took into account independent, very credible opinions of others to come up with a package that we think will help AIG thrive."
In exchange for allowing them to keep their retention bonuses, Feinberg trimmed their 2009 salaries for the last two months of the year and for 2010.
"AIG had one very thorny situation," said Feinberg at a media briefing on Thursday. "In that particular case, I gave a it a lot of thought and decided that if AIG wants these contracts enforced in cash, they’re entitled to those contracts enforced in cash."
It appears from a table provided by Feinberg’s office that the three employees will receive bonuses of about $4 million, $5 million and $7 million. Feinberg did not identify the executives by name or salary.
"The fact of the matter is, I met with AIG officials; there is clearly an understanding that the contracts are valid," Feinberg told CNN on Thursday. "Since those contracts are valid, I did take dollars into account for setting compensation for 2009 and 2010."
A spokeswoman for AIG said Thursday the company was still looking into the matter.
CEO pay OK, other bonuses get dropped
In addition to those three executives, Feinberg also ruled on ten others at AIG.
One of them was chief executive Robert Benmosche, who joined AIG in August. The pay czar had already approved the CEO’s pay package on Oct. 2. The new CEO will receive $10.5 million in annual compensation, including $3 million in cash, $4 million in stock options and $3.5 million in annual performance bonuses.
For executives at AIG’s Financial Products division, the unit that was responsible for the insurer’s near-collapse, Feinberg ruled that they should only receive their base salaries and no other compensation "of any kind."
AIG had proposed bonuses for those employees, but Feinberg shot them down.
"The performance of AIG Financial Products has contributed significantly to the deterioration in AIG’s financial health," Feinberg wrote in his letter to AIG explaining his pay decisions. "Accordingly, the Special Master has determined that AIG’s proposed compensation structures for these employees are inconsistent with the public interest."
CEO tells employees pay czar’s reach ‘quite limited’
The news comes a day after Benmosche sought to assure his staff that the pay czar’s reach will be limited, according to a memo that the CEO sent employees late Wednesday.
In the memo, Benmosche said that Feinberg does not have the jurisdiction to adjust the compensation of the vast majority of AIG employees.
Benmosche said early reports on Feinberg’s ruling on AIG’s compensation were inaccurate but did not say which contracts in particular he was referring to.
"It is important for all of you to know that the Special Master’s jurisdiction is quite limited," said Benmosche in the memo. "He specifically has advised us that he is not requiring any retroactive salary adjustments."
Separately, AIG has asked Feinberg to make a recommendation on how to proceed with the remaining $198 million in controversial bonuses to employees of its Financial Products division. There was a great deal of public uproar after AIG paid employees of that division $168 million in bonuses in March, and AIG indicated it wanted the government’s seal of approval for the next payment.
Those bonuses were contracted in late 2008, with half to be paid in 2009 and half in 2010. Even though those bonuses fall outside his jurisdiction, Feinberg has the ability to issue recommendations on bonuses that were contracted before February 2009.
According to a recent report from Neil Barofsky, the special inspector general of the $700 billion bailout program, Feinberg has recommended to AIG that the full $198 million not be paid out in full.
Feinberg has not yet made a specific recommendation to AIG about how much the insurer should reduce the payments, according to Barofsky.
–CNNMoney’s Jennifer Liberto contributed to this report.
China’s economic growth picked up last quarter as expected as a combination of breakneck investment and buoyant bank lending more than made up for a slump in exports.
But the 8.9% growth rate fell short of some of the more optimistic predictions in the market, and the government promptly said it would stick to the ultra-loose policies it has been following for the past year.
Andy Rothman, a macro strategist for brokerage CLSA in Shanghai, described the figure as strong but not strong enough to trigger a policy tightening, which he said was unlikely until the second half of 2010 at the earliest.
"China has begun, however, to implement its ‘exit strategy’, which is a gradual reduction in the level of stimulus (credit and infrastructure spending) in response to rising private investment and consumption," Rothman said in a note to clients.
Last quarter’s year-on-year growth exactly matched the forecast of a Reuters poll and was up from 7.9% in the April-June period and just 6.1% in the first three months of 2009 in the depths of the global downturn.
Goldman Sachs said quarter-on-quarter growth had in fact slowed to around 10.2% from the second quarter’s annualized pace of 16.5%.
But with GDP expanding 7.7% in the first nine months, the government said it would now easily reach its target of 8% average growth for the year as a whole, widely regarded as the minimum needed to keep a lid on unemployment.
"We can say with certainty that achieving 8% GDP growth this year is completely assured. Without doubt," said Li Xiaochao, the spokesman of the National Bureau of Statistics, which released the figures.
Li, though, quickly reaffirmed the policy status quo.
"We have stressed a proactive fiscal policy and appropriately relaxed monetary stance to keep consistency and stability in economic policy — according to my understanding, that means no change in policy," he said, restating the thrust of a cabinet statement issued on Wednesday.
A breakdown of growth so far this year showed just how effective Beijing’s 4 trillion yuan ($585 billion) pump-priming package has been in galvanizing investment and putting the once-fanciful 8% growth goal target easily in reach.
Capital spending contributed 7.3 percentage points to headline growth of 7.7% in the first three quarters, while consumption accounted for 4.0 percentage points. Net exports, meanwhile, subtracted 3.6 percentage points.
Domestic demand
With the United States and Europe emerging from recession with huge debt burdens that will weigh on consumption, global policymakers are looking to China to pull more weight by expanding domestic demand.
Thursday’s data showed China doing just that.
Fixed-asset investment in urban areas, which has been the main driver of China’s double-digit growth of recent years, rose by a third in the first nine months.
Whereas investment in the first half of the year was overwhelmingly government-led, capital spending by mostly private real estate developers is now surging in response to the ready availability of credit and growing confidence in the economy.
That confidence is being buoyed by rising incomes. Urban Chinese had 10.5% more disposable income in the first nine months, after adjusting for inflation, than a year earlier.
Retail sales rose 15.5% in the 12 months to September, accelerating from August’s reading of 15.4% and exactly in line with market forecasts.
Industrial production growth quickened to 13.9% in the 12 months to September from 12.3% in August, beating the median market forecast of 13.3%. Daily steel output in September matched August’s record, while iron ore production scaled a new high.
"Good figures. Economic growth has picked up very swiftly. said Wang Hu, an analyst at Guotai Junan Securities in Shanghai.
Stronger next year?
Most economists expect even stronger growth in 2010 given this year’s relatively low base of comparison, the likelihood of a partial recovery in net exports and the fiscal stimulus already in the pipeline.
The median forecast of a Reuters poll published on Oct. 18 was for 9% growth in 2010, but several banks have since taken an even rosier view.
In the currency market, non-deliverable forwards (NDF) over the past week had priced in a faster pace of yuan appreciation, partly in anticipation of a sparkling set of data.
But the yuan lost a little ground in the NDF market after the figures and the Shanghai stock market was also underwhelmed. The main index ended the morning down 0.05 percent.
Although the economy has perked up, China is still mired — technically — in deflation. The consumer price index fell 0.8% in September from a year earlier, while producer prices were down 7%. Both figures were exactly as expected.
Both gauges have shown prices rising steadily month on month since July, but Li, the NBS spokesman, said inflation was not a problem for now.
Bruce Wasserstein, chief executive of asset management firm Lazard, died Wednesday. He was 61 years old.
He was hospitalized with an irregular heartbeat on Monday, according to reports, but the cause of death was not immediately known.
The Lazard board of directors named vice chairman Steven J. Golub interim chief executive officer effective immediately.
The board said Wasserstein "has put into place a long term-strategy as well as a broad and deep leadership team, in whom we have confident and who will sustain his vision."
Wasserstein headed Lazard (LAZ) since 2002, taking the firm public in May 2005. The investment banker was known for his ruthless, high-stakes dealmaking. He initiated many hostile takeovers and redefined how mergers and acquisitions could be accomplished.
Wasserstein’s most high-profile deal was Kohlberg Kravis Roberts’ 1988 leveraged buyout of RJR Nabisco, on which he advised. The takeover was the subject of the book "Barbarians at the Gate."
During his career, Wasserstein famously advised activist investor Carl Icahn in his attempted takeover of CNNMoney.com parent company Time Warner (TWX, Fortune 500) in 2006.
"Wasserstein taught a generation how to do deals, and was a big brother of sorts to so many investors nationwide," said Michael Williams, dean of Touro College’s Graduate School of Business in New York. "He established the model for mergers and acquisitions. He was just remarkable."
Prior to his tenure at Lazard, Wasserstein was the co-head of investment banking at The First Boston Corp., and he served as an attorney at Cravath, Swaine & Moore. Wasserstein graduated from Harvard Business School and earned a law degree from Harvard Law School.
Wasserstein also was chairman of Wasserstein & Co., a private merchant bank, and he owned a group of media publications, including New York Magazine and TheDeal Magazine.
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