Bank of America looks at repaying some rescue money
Bank of America suggested repaying $20 billion in state aid it received in January as encouragement to take over Merrill Lynch. Meanwhile, the U.S. government is reportedly putting pressure on Bank of America to pay $500 million or more to postpone a deal in which its losses on some assets would be shared by the government. The bank has been the subject of increased scrutiny by lawmakers and regulators as an "exceptional" aid recipient. The Wall Street Journal (01 Sep.)
*guess our banks won't be as profitable as us taxpayers would have hoped (since we have lent them all that cheap money so they can make money to lend to us) since they won't be able to peddle their wares all around the globe. We shall see, talk is always cheap.
Japan's incoming government to junk U.S.-style market practices
The Democratic Party of Japan, soon to govern the country after an electoral landslide, is preparing to roll back what it called American-style capitalism "void of morals or moderation." Party leader Yukio Hatoyama, who is expected to become prime minister, lashed out at U.S. economic policies in a commentary published in a Japanese magazine. "The recent economic crisis resulted from a way of thinking based on the idea that American-style free-market economics represents a universal and ideal economic order," he wrote. The New York Times (31 Aug.)
*I don't want to say I told you so but....
Fears of derivatives defaults send Chinese shares plummeting
Reports that the Chinese government might permit some state-owned companies to default on an array of derivatives contracts, to save them from huge losses, sent share prices plunging Monday on the Shanghai exchange. Analysts said investors' nervousness about Chinese stocks might reflect worries that the nation's recovery is unsustainable. "China is saving itself, not the world, even though it is aiding some economies at the margin," said Patrick Bennett, a strategist at Societe Generale. "Any risk appetite and investment in positions which have been based in the notion of China as the world's savior have been, and remain, ripe to be unwound." The Times (London) (01 Sep.)
NSE chief concerned about proliferation of dark pools
Ravi Narain, managing director and CEO of the National Stock Exchange of India, said the global trend toward dark pools disturbs him because of their lack of "regulatory responsibility" and "opacity." Dark pools have become increasingly popular in Europe and the U.S., and regulatory authorities are looking into whether supervision of the trading platforms is needed. Financial Times (tiered subscription model) (01 Sep.)