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GM boosts IPO again General Motors Co. is on track for one of the biggest initial public offerings ever, possibly the largest in the U.S. depending on how it plays out.
GM, the subject of a bailout and a stint in bankruptcy protection, said today it was boosting the size of the offering of common shares to 478 million from 365 million, not including overallotments. The estimated price range is $32 (U.S.) to $33 (U.S.), driven by very hot investor demand.
The IPO could bring in $18-billion from the common stock and $4.6-billion from the preferred share offering if the overallotment provision is exercised.
GM will price the IPO today and its shares will begin trading again tomorrow in New York and Toronto.
Both the U.S. and Canada are involved, both holding stakes in the auto maker after the historic bailout during the crisis. In the U.S., the government will sell 412 million of its 912 million shares, according to reports.
GM has rebounded smartly from the crisis, last week posting a profit of $2-billion for the third quarter. So far this year, GM's profits have topped $4-billion - that follows five years in a row of losses.
U.S. probes bank failures The U.S. agency that insures bank deposits is probing former executives, employees and directors that collapsed in the crisis, The Wall Street Journal reports today.
The Federal Deposit Insurance Corp., the U.S. equivalent of Canada Deposit Insurance Corp., has launched about 50 criminal investigations, the newspaper said.
The FDIC wants to punish alleged recklessness and fraud, as authorities did after the infamous savings and loan scandal in the 1980s and 1990s. More than 300 institutions have collapsed since the financial crisis began.
"We anticipate results from our investigations, although we cannot predict when a particular case will reach a stage at which disclosure of specifics would be appropriate," Fred W. Gibson, the agency's deputy inspector general, told the Journal.
Beijing to fight high food prices Beijing is taking steps to fight surging food prices, announcing today it will subsidize costs for poorer families and saying it could bring in price controls if warranted.
China's cabinet, while short on details, said in a statement it will move to boost commodities supplies. "When necessary, temporary intervention measures will be implemented on prices of some important daily necessities and production materials," it added in the statement, according to Reuters.
Markets fear China will next move to hike interest rates again in a bid to cool a hot economy.
"This move follows public comments from Premier Wen yesterday stating that the government will act to curb inflation," RBC Dominion Securities said in a research note.
"These measures are said to include the release of reserves and steps to curb speculative activity, with subsidies to low-income households also floated as part of the government's response to concerns about increases in the cost of living.
"The recent increase in inflation highlight the main risk associated with Beijing's delay in normalizing policy this year and suggests that greater urgency will be needed in the months ahead."
In a report yesterday Capital Economics suggested price control would not work well, and that there are better alternatives, including raising subsidies, as Beijing did today.
"Price controls may appeal to officials eager to be seen to be doing something about rising inflation, but China's experience with controls has not been encouraging," said economists Mark Williams and Qinwei Wang.
"For markets, they could play either way. Investors may conclude that such a step makes conventional monetary tightening less urgent. More likely, the need to resort to such a step would fan fears that the government was going all-out to tame inflation."
The two economists said Beijing should be wary of price controls, citing a 2008 initiative that went nowhere and were formally abandoned at the end of the year.
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