MORNING BRIEFS

Jobless Claims Fall 14K to 631K; Moving Avg. Falls 10,750; Personal Income Down 0.3%Spending Down 0.2% (story to come)

Chrysler Talks Falter; Chapter 11 Imminent
Talks between the Treasury and lenders aimed at keeping Chrysler out of bankruptcy broke down, making it all but certain that the car maker will file for Chapter 11 protection.

BIS says banks made rapid retreat from foreign lending
The Bank for International Settlements issued a report stating banks have cut back on overseas lending. The pullback, which was made at the fastest rate since the BIS started records three decades ago, marks a reversal from years of globalization in the financial industry. "The drop in international credit is a symptom of the pressure among banks to shrink balance sheets and, reflecting pressure from governments and regulators, to adopt a 'home bias,' but also a clear signal of the resultant widespread drop in credit supply and credit demand across many countries," Citigroup economist Michael Saunders said. Financial Times (29 Apr.)

Private equity on sidelines as leveraged loans disappear
When Royal Bank of Scotland, now essentially owned by British taxpayers, exited the business of making leveraged loans, Europe lost one of its two most active leveraged-finance players. Many banks are shutting down their leveraged-finance operations, and "it becomes a self-fulfilling prophesy that there will be less activity," said Mark Vickers, a debt and restructuring partner at Ashurst law firm. The Wall Street Journal (30 Apr.)

*don't worry, just get the US government to fork over the money
World of credit derivatives to face significant test
The determination committee of the International Swaps and Derivatives Association said a partial default by Kazakhstan's largest bank will trigger its credit default swaps contracts. The development could prove to be an important test for the world of credit derivatives. CDS contracts were settled for Lehman Brothers and other collapsed Western companies, but there have not been similar cases in emerging markets. Financial Times (29 Apr.)

*sound familiar?
Analysts question Chinese banks' rosy situations
Three Chinese lenders have emerged to be in the top four of the world's largest banks by market value, gaining respect and appreciation around the globe. Some analysts said the situation might not be all that it appears. "We suspect some of the banks may have compromised their risk-management and risk-aversion attitude to meet targets and government expectations," said Wen Chunling, an analyst in Beijing at Fitch Ratings. "That will lead to a rebound in nonperforming loans in the next few years." Bloomberg (30 Apr.)