The first major newspaper endorsement has been issued in the race for New York governor — even before the Republicans pick a candidate.
The New York Daily News has endorsed the Democratic nominee, Attorney General Andrew Cuomo, saying that he is far superior to either Republican contender.
"There is no point in taking further stock of the candidates vying for the Republican nomination in next month's primary," the Daily News said. "Rick Lazio and Carl Paladino have been that awful."
Most of the newspaper's editorial was devoted to the Republicans' perceived shortcomings, rather than Cuomo's attributes.
The Daily News charged that Lazio, a former congressman from Long Island, "has thrown substantive ideas to the wind in favor of demagoguery free business cards." And it accused Paladino, a Buffalo developer, of offering "proposals [that] range from ill-informed to illegal."
The editorial also referred to two controversies that dogged Paladino's campaign earlier in the year.
"Paladino is also given to insensitivities that would divide New Yorkers," it said. "He has forwarded racist and pornographic emails, including some using the N-word, and contemptibly compared [Assembly Speaker Sheldon] Silver, an Orthodox Jew, to the anti-Christ and Hitler."
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Financial services security software firm Perimeter Internetworking Corp. has hired a dozen engineers to establish a research-and-development center at 60 State Street in Boston, the Milford, Conn., company is expected to announce Tuesday.
Perimeter, which does business as Perimeter E-Security, plans to hire eight more in the next 18 to 24 months, said Chief Marketing Officer Kurt Heinemann.
“We’re making it our headquarters for many of our developers, and the core location for what we’re doing in engineering and development,” Heinemann said.
To make the move, Perimeter cut some offshore engineering resources based in India, Heinemann said. The company employs about 300, globally.
Heinemann declined to discuss revenue numbers, but said Perimeter is seeing growth in encrypted e-mail, vulnerability scanning and firewall intrusion defense — especially where regulation requires reporting and backup related to those services.
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General Motors is paying $3.5 billion in cash to buy subprime auto lender AmeriCredit, a move that will once again give the automaker its own finance arm.
It is the first major acquisition for GM since it emerged from bankruptcy a year ago with the help of a $50 billion bailout by U.S. taxpayers.
GM will pay $24.50 a share for AmeriCredit (ACF), which represents a 24% premium over Wednesday’s closing price. The Fort Worth, Texas-based finance company typically finances low-mileage, late-model used cars to customers without good credit.
Shares of AmeriCredit shot up 22% in Thursday trading following the announcement.
Treasury owns 61% of the company. While GM completed repayment of a $7 billion loan from Treasury in April, recouping most of the bailout dollars will depend on the value of the company when it once again starts selling shares to the public.
GM is expected to go public again later this year or early in 2011.
An official with Treasury said that while the department was notified of the acquisition decision, GM is not required to seek the government’s approval for any investments, and that Treasury was not involved in negotiations. Treasury did not have any comment on the deal.
GM used to have its own finance arm, GMAC, which in addition to making auto loans and providing finance to its dealers was a major subprime mortgage lender. But it sold a majority stake in GMAC in 2006, partly because GM’s junk bond rating from credit agencies made it expensive for the finance firm to raise necessary capital.
GMAC’s problems with both auto finance and subprime mortgages ended up necessitating its own $17 billion bailout from the Treasury, which now owns 56% of its common stock as well as $10.1 billion in preferred shares.
GMAC, which recently changed its name to Ally Financial, makes loans to both customers and dealers of GM as well as Chrysler Group. But its own need to improve the quality of its loan portfolio has limited its willingness to make subprime auto loans and leases to car buyers of the two companies.
Tough market
The difficulty that potential car buyers with bad credit have getting loans is one of the factors that has kept auto sales depressed. Customers who want to use leasing to lower their payments have also had difficulties arranging that form of financing, since leasing requires the finance company to assume risks about the future value of the vehicle.
Industrywide sales in the first half of this year were up about 17% from a year ago, but they are still down 32% from the first half of 2008 — a period when sales were already being hit by the start of the recession and record high gasoline prices.
Just as easy financing created a bubble in home purchases, it led to a boom in car sales. But car sales are not likely to return to the peaks of the last decade any time soon no fax payday loans.
There has been talk in the industry that the lack of a private finance arm has put GM and Chrysler at a competitive disadvantage with Ford Motor (F, Fortune 500) and Toyota Motor (TM), which both still own and operate finance arms.
"Not having an in-house finance arm hurt our ability to finance certain loans and leases, which in turn hurt our sales," said GM Chairman and CEO Ed Whitacre in a conference call Thursday.
GM estimates that about 4% of its retail U.S. sales have been subprime loans, and 7% have been leases. Industrywide, roughly 7% of new car sales are through subprime loans and 21% are lease, according to figures from sales tracker Edmunds.com.
But there are risks involved with GM getting into the business of again making its own loans to less creditworthy buyers — especially since the market for investors buying those loans is still a fraction of what it was before the late 2008 crisis in financial markets.
Bill Visnic, senior editor for Edmunds, said that while there’s clearly a potential for increased sales for GM in subprime loans and leases, it shouldn’t be assumed that there will be an immediate spike in sales, especially since approval rates for subprime loans are still only a fraction of what they used to be.
"It’s wise to proceed with a little caution. We can’t all just declare this tight credit situation is over," he said. "Auto sales are still in sputtering stage."
Chris Whalen of Institutional Risk Analytics said in a note to clients Thursday that he saw the deal as a positive for GM but a negative for Ally.
"The GM business was not viable witthout a captive finance unit," he wrote. "Unfortunately for GMAC/Ally, GM has chosen to work with another credit provider. This suggests to us that GMAC will become just another provider of consumer credit in an already overbanked market."
Ally will continue to provide most of the auto loans to GM buyers with good credit, as well as the financing for its dealers, said GM spokeswoman Reneé Rashid-Merem. She said the AmeriCredit deal is designed to give GM additional financing offers for potential customers.
GM said its purchase of AmeriCredit "establishes the core of a new GM captive financing arm that will enable GM to provide customers with a more complete range of financing options." It pointed to the need to make loans to car buyers with subprime credit scores as well as offering leasing options.
The automaker’s balance sheet was greatly improved by the bankruptcy process it went through a year ago, leaving it with $23.5 billion in cash and only $5.3 billion of long-term debt.
Results of a Field Poll that measured voter awareness and sentiment toward four of 10 propositions slated to appear on the state’s November general election ballot were released Friday.
Voters are opposing Proposition 23, the initiative to suspend AB 32, California’s greenhouse gas reduction law, and Proposition 19, the marijuana legalization initiative, and supporting Propositions 25 and 18, the Field Poll said.
Proposition 25 would require a majority vote to approve the state budget while retaining a two-thirds vote to increase taxes, while Proposition 18 is an $11.1 billion bond measure to fund water supply and protection facilities.
Voter awareness of the measures varied widely, according to the survey. More than three in four likely voters (77 percent) report some familiarity with Proposition 19, the marijuana legalization initiative. Most voters (56 percent) also had heard of Proposition 25, which would change vote requirements needed to pass the state budget.
Fewer potential voters (39 percent) had heard of Proposition 23, which would suspend AB 32, or water bond measure Proposition 18 (24 percent).
According to the Field Poll:
The poll has a sampling error rate of plus or minus 3.2 percentage points for likely voters and a higher margin for subgroups. Pollsters surveyed 1,005 people by telephone between June 22 and July 6.
Fitch Ratings agency said it will have to downgrade Blockbuster’s ratings to “restricted default” or “default” if the company fails to make a $42.4 million payment to creditors next month.
The payment was originally due July 1, but Blockbuster received an extension from bondholders who hold 70 percent of the outstanding principal on the senior secured notes, which are due in 2014. Blockbuster now has until Aug. 13 to make a payment.
Fitch said Blockbuster’s ratings are okay for now, but will become a problem if they miss another payment when the extended deadline hits.
Fitch said it will downgrade Blockbuster’s issuer default rating to ‘RD’ from ‘C’ if the company ends up defaulting again or receiving another extension on Aug cash advance in one hour. 13. In the alternative, the ratings giant said it will downgrade the company’s issuer default rating from ‘C’ to ‘D’ if the company ends up filing for bankruptcy or entering into a similar procedure on or before Aug. 13.
New York-based ratings agency Standard & Poor’s also reacted to Blockbuster’s rough Thursday. The company lowered its corporate credit rating on Blockbuster to ‘SD’ from ‘CC’, and the company’s ratings on Blockbuster’s $675 million senior secured notes were downgraded to ‘D’ from ‘CC.’
All dollar figures, except for per-share figures, are in millions.
Allied Healthcare Products Inc. Amdocs Ltd. Ameren Corp. American Railcar Industries Inc. Arch Coal Inc. Bakers Footwear Group Inc. Belden Inc. Brown Shoe Co Inc. Build-A-Bear Workshop Inc. Cass Information Systems Inc. Centene Corp. Centrue Financial Corp. Commerce Bancshares Inc. CPI Corp. Emerson Electric Co. Energizer Holdings Inc. Enterprise Financial Services Corp. Esco Technologies Inc. Express Scripts Inc. First Clover Leaf Financial Corp. Furniture Brands International Inc. Insituform Technologies Inc. Isle of Capri Casinos Inc. KV Pharmaceutical Co.* LaBarge Inc. Laclede Group Inc . LMI Aerospace Inc. MEMC Electronic Materials Inc. Monsanto Co. Olin Corp. Panera Bread Co. Patriot Coal Corp. Peabody Energy Corp. Perficient Inc. Pulaski Financial Corp. Ralcorp Holdings Inc. RehabCare Group Inc. Reinsurance Group of America Inc. Reliv International Inc. Savvis Inc. Sigma-Aldrich Corp. Solutia Inc. Spartech Corp. Stereotaxis Inc. Stifel Financial Corp. Synergetics USA Inc. Thermadyne Holdings Corp. Viasystems Group Inc. ** Young Innovations Inc. Zoltek Cos Inc.
Just over 3,000 homeowners in the Albany, N.Y., region have received a bank notice since mid-February telling them they are at risk of foreclosure, according to a report.
The data is based on notices mailed under a new law requiring lenders to give homeowners 90-day notice of a possible foreclosure.
The information was compiled by the New York State Banking Department and a group of housing assistance agencies based in Albany called the HomeSave Coalition.
HomeSave is sponsoring a free legal clinic June 9 to help homeowners avoid being scammed by companies promising to help those facing foreclosure.
The clinic will be held at 5:30 p.m. at Stuyvesant Plaza on Western Avenue. To attend or for more information, contact the HomeSave Coalition at 518-434-1730.
A total of 3,009 home owners in Albany, Columbia, Fulton, Greene, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie and Washington counties received the notices since Feb. 13.
That represents just under 1 percent of all owner-occupied homes in the 10 counties.
The highest per-capita ratio was in rural Montgomery County, where 1.27 percent of owner-occupied homes received a pre-foreclosure notice. The lowest ratio was in Saratoga County, 0.79 percent.
The per-capita figures for the Albany region are in line with data compiled by RealtyTrac, an online seller of distressed properties that reports on the number of foreclosure notices filed in county clerk’s offices nationwide.
Unlike RealtyTrac, however, the new report tracks the number of homeowners at risk of a foreclosure action, not those that have already received a foreclosure filing. The foreclosure process takes months to complete and involves several procedural steps in court.
Under the new state law, which took effect in February, lenders must sent notices to homeowners at least 90 days before starting a foreclosure action.
Lenders must also file certain information with the state Banking Department about the pre-foreclosure notices. The Banking Department, in turn, shares that with nonprofit groups that help people in danger of losing their home.
The HomeSave Coalition is responsible for outreach in the 10-county region surrounding Albany.
The top three mortgage service companies that sent the notices were Wells Fargo, HSBC and Citi Mortgage/ABN Amro Mortgage.
MidSouth Bank has raised about $5 million in a stock offering begun in March, a level that’s well beneath the $15 million maximum the Murfreesboro lender set, but in line with what its chief executive said his expectations were.
Lee Moss, chairman and CEO, said today is the last day the bank will receive payments for the public offering, which began with current shareholders then opened to the general public. He said the total will likely ring in at slightly more than $5 million, and that the bank had expected to raise between $5 million and $6 million.
“It will keep us well in excess of all the regulatory capital ratios for a well-capitalized bank,” Moss said.
Treasury prices fell for a second day on Thursday as stocks soared and the euro firmed.
What prices are doing: The benchmark 10-year note fell 2/32 to 101-4/32, pushing the yield up to 3.37%, from 3.19% on Wednesday. Bond prices and yields move in opposite directions.
The 30-year bond lost 4/32 to 102-29/32 and yielding 4.3%. The 5-year note edged lower by 1/32 to 99-21/32, yielding 2.21%, while the 2-year note fell less than 1/32 to 99-24/32, yielding 0.89%.
What’s moving the market: Treasury prices were pressured Thursday as demand for riskier investments increased and stocks recovered losses from the previous session.
Treasurys are viewed as low-risk investments since they are backed by the U.S. government; therefore, they are particularly attractive during times of economic uncertainty.
Confidence in the euro zone was also boosted on Thursday and the euro strengthened versus the dollar after China’s government called Wednesday’s reports that it may reduce its holdings of euros "groundless."
"There’s been some significant pickup in risk appetite today," said Kim Rupert, a fixed-income analyst at Action Economics. "Some of the fears that dogged the market late yesterday have been assuaged a bit, and that has revived confidence in the market payday advance lenders."
In the last of the week’s auctions, the Treasury Department auctioned $31 billion in 7-year notes on Thursday, receiving bids totaling $89 billion.
Economy: Economic reports from the government sent mixed signals Thursday.
The Commerce Department said the economy didn’t grow as much as originally reported, with the gross domestic product rising at an annual rate of 3% in the first quarter, compared with the 3.2% rate the government had previously announced.
Meanwhile, the Department of Labor said initial jobless claims fell to 460,000 last week from 474,000 in the previous week, beating the drop to 455,000 expected by economists.
Outlook: While Treasurys may pare losses as investors prepare for a long holiday weekend, trading is likely to remain volatile, she said.
"I think we’re going to stay choppy," Rupert said. "Markets have been very vulnerable to news headlines, and I think we’ll remain susceptible to this kind of trading pattern for some time."
One of the nation’s top banking regulators has taken a swipe at what has become a signature piece of Senate Democrats’ Wall Street reform package: cracking down on complex financial products.
Federal Deposit of Insurance Corp. Chair Sheila Bair said she’s concerned that the Senate bill goes too far, in a letter sent Friday to the authors of the measure, Sens. Christopher Dodd, D-Conn., and Sen. Blanche Lincoln, D-Ark.
Bair is taking aim at a provision that blocks all banks from trading complex financial contracts called derivatives. The bill would force banks to spin off the desks that trade derivatives, known as swaps desks.
"One unintended outcome of this provision would be weakened, not strengthened, protection of the insured bank and the Deposit Insurance Fund, which I know is not the result any of us want," Bair wrote in the letter.
The provision in question is among key controversial hang-ups for lawmakers debating the Wall Street overhaul on the Senate floor this week.
Congress generally wants to get tougher on these complex financial products that are currently traded with no oversight, which were responsible for the taxpayer bailout at American International Group (AIG, Fortune 500). But lawmakers disagree about how much to regulate them.
The measure banning bank swaps goes farther than the so-called Volcker rule, named for former Federal Reserve Chairman Paul Volcker, which only blocks some banks from doing such trades for their own purposes and accounts, called "proprietary trading." The Dodd-Lincoln proposal blocks banks from all derivatives.
In the letter, Bair argued that banks have legitimate uses for derivatives, especially when it comes to locking in an interest rate in their financial dealings. She said that if Congress were to pass the legislation, such trading would continue "but in less regulated and more highly leveraged venues," according to the letter.
Many companies and Wall Street banks use derivatives, whose value is derived from another financial product, to cut the risk that they’ll lose money on a deal. Derivatives are also used to lock in the price of a commodity, the way farmers do with the corn they hope to sell after a harvest.
A House bill that passed in December would allow all banks to trade derivatives in a more transparent way. However that bill also allows some trades between some banks and certain companies, such as airlines, to continue without regulation.
But Senate Democrats are tougher on derivatives, in the aftermath of fraud charges that the Securities and Exchange Commission levied against Goldman Sachs (GS, Fortune 500) for selling a complex mortgage-related derivative to investors while failing to tell them that a hedge fund was betting against the product.
The bill says that banks can no longer make such complex financial trades and have access to emergency government-backed loans when they get in trouble.
However, Bair said in the letter that she believes that the Volcker rule goes far enough in accomplishing the same goal, ensuring that taxpayers won’t be stuck supporting unnecessarily risky bets.
"To be sure, there are certain activities, such as speculative derivatives trading, that should have no place in banks or bank holding companies," she wrote. "We believe the Volcker rule addresses that issue."
Spokesmen for Dodd and Lincoln didn’t return requests for comment on Monday.
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