Get the top business stories throughout the day on your BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Stories Report on Business is following today:
Wall Street probe widens
An investigation into the actions of several Wall Street banks in the runup to the financial crisis is widening. Reports from the United States this morning say U.S. authorities and the Securities and Exchange Commission are together probing the marketing and selling of collateralized debt obligations, or CDOs.
The Wall Street Journal reports that the Manhattan U.S. Attorney’s office and the regulator are looking into whether Wall Street firms properly represented what they were selling. The probe, the newspaper notes, marks a key point in the aftermath of the crisis as regulators step up their look at the actions of major banks.
Goldman Sachs Group Inc. already faces civil charges by the SEC, while reports yesterday said Morgan Stanley is also being probed. The Journal said today JPMorgan Chase & Co, Citigroup Inc., Deutsche Bank AG and UBS AG have also been handed SEC subpoenas. Goldman has denied any wrongdoing, Morgan has said it is unaware of any investigation, and, The Journal says, officials of Goldman, Citigroup, Deutsche Bank and UBS would not comment.
The New York Times also reports this morning that New York Attorney-General Andrew Cuomo’s office is probing whether eight major banks gave “misleading information” to the credit rating agencies, which have been criticized for their role in the crisis.
Related: SEC widens probe of Wall Street
Another rig sinks
Another rig has sunk, this one a natural gas exploration rig off Venezuela. President Hugo Chavez, however, said this morning the 95 workers on board the Aban Pearl are all safe and the incident poses no danger to the environment.
In the Gulf of Mexico, BP PLC’s troubles and costs continue to mount. BP BP-N said today it has now spent $450-million (U.S.) in its efforts to contain the slick caused by the sinking of the Deepwater Horizon, which killed 11 people.
And Bloomberg News reported this morning that the borrowing costs of energy companies are surging, rising at the fastest clip in 17 months, as the estimates for cleaning up the spill also rise, now at $12.5-billion. The news agency said the extra yield on BP bonds over government debt has almost tripled to 1.15 percentage points.
Europe’s age of austerity
It looks like Portugal and Spain finally got the memo. Spain yesterday unveiled plans to cut jobs and wages in its public sector, while Portugal’s finance minister today announced new cuts as well. Europe’s weaker economies, whose bonds have been hammered for weeks, are planning aggressive cuts to fix their deep budget holes. Markets initially rallied after the EU and IMF unveiled a $1-trillion support package for debt-burdened economies, but that faded somewhat as investors worried that it won’t be enough and, indeed, may prompt governments to lag in their actions because the bailout offers implicit support.
Today, though, some overseas stock markets rose on the announcements from Portugal and Spain, sensing something of a turning point.
Related: British face big spending cuts as coalition shows unity on austerity
Related: Greek unemployment hits 12.1 per cent
The euro: Right back where it started from
Europe’s common currency, however, is not faring as well, falling today to where it stood before the weekend bailout. And a flight to safety continued as gold GC-FT again pushed higher.
“Stock markets and commodities have been sending mixed messages over the past 24 hours,” said CMC Markets analyst Michael Hewson. “We have seen some recovery in equities on the back of attempts by Spain to implement further drastic austerity measures in response to Monday’s EU bailout, and the formation of a new coalition government in the U.K. Despite these rises in equity markets, which would seem to suggest some return in risk appetite, investors remain concerned.”
