NY Times reports the co says that its potential losses related to Bernard L. Madoff, the man accused of engineering an immense global Ponzi scheme, are "pretty close to zero." But what some angry European investors want to know is when the bank cut its exposure to Mr. Madoff — and why.
As early as 2006, the bank had started offering investors a way to leverage their bets on the future performance of two hedge funds that invested with Mr. Madoff. To protect itself from the resulting risk, the bank put $250 million of its own money into those funds.
But the bank suddenly began pulling its millions out of those funds in early autumn, months before Mr. Madoff was arrested, according to accounts from Europe and New York that were subsequently confirmed by the bank. The bank did not notify investors of its move, and several of them are furious that it protected itself but left them holding notes that the bank itself now says are probably worthless.
A spokeswoman, Kristin Lemkau, said the bank withdrew from the Madoff-linked funds last fall after "a wide-ranging review of our hedge fund exposure." Ms. Lemkau acknowledged, however, that the bank also "became concerned about the lack of transparency to some questions we posed as part of our review." Investors were not alerted to the move because, under sales agreements, the issues did not meet the threshold necessary to permit the bank to restructure the notes, she said.
Under those circumstances, she added, "we did not have the right to disclose our concerns."
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WSJ reports the U.S. Senate approved a bill that would delay until June the date when television stations must broadcast in an all-digital format. Without congressional action, all TV stations by law must stop broadcasting their programs in analog format Feb. 17.
After President Obama voiced support for a delay to the transition, congressional Democrats quickly moved to bring legislation forward. The delay means that people who rely on over-the-air TV will have until June 12 to either buy a digital television or converter box, or subscribe to a cable or satellite TV service.
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Times of London reports a package of more than 1 bln pounds in bonuses for staff at UBS, the Swiss bank, is expected next month and threatens to reignite the debate over the ethics of exceptional rewards for bankers during the present worldwide banking crisis. UBS is to pay out around SFr2 billion (1.3 bln pounds) in bonuses next month, despite heading for a SFr8 billion fourth-quarter loss, the biggest quarterly deficit ever sustained by a Swiss company. The bonus payments were agreed last week by Finma, the new Swiss financial regulator, whose consent UBS is obliged to seek after it was bailed out by the Swiss Government last autumn. A spokesman for Finma would not be drawn on the precise amount of the bonus payment, which will be disclosed in UBS's fourth-quarter results on February 10. However, he said: "It's correct that we have given the green light to the 2008 bonus. The decision was taken this week".
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In its 8-K, the co discloses that it is in the process of preparing its financial statements for the fourth quarter of 2008 and the year ended December 31, 2008. Based on preliminary unaudited information concerning its results for these periods, management currently estimates that the Federal Housing Finance Agency, in its capacity as conservator of Freddie Mac (Conservator), will submit a request to the Treasury to draw an additional amount of approximately $30 billion to $35 billion under the $100 billion Senior Preferred Stock Purchase Agreement between Freddie Mac and Treasury. The actual amount of the draw may differ materially from this estimate as Freddie Mac goes through its internal and external process for preparing and finalizing its financial statements.
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WSJ reports dismal earnings reports are likely from the U.S. chemical industry this week, with the marketplace braced for significantly worse results than it expected even just a few weeks ago. Investors and analysts will be sifting through fourth-quarter results in search of signs of how much longer the downturn is likely to last. As provider of the basic chemicals and plastics used to make most industrial and consumer goods, the chemical industry has been sliding into a deep trough as the economic slump hampers demand. At the same time, falling prices for the industry's products have contributed to declining sales as customers delay purchases in the hope prices will slip further, analysts say. Figuring out how much each of these two factors is weighing on companies' earnings could help clarify the industry's outlook, analysts say. If a big part of the problem is delayed purchasing, then that could indicate a potential rebound in sales when inventories become thin and clients start to restock.
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