Congress Primed to Act On Risky Home Loans (WSJ)
The problem with the Gretchen Morgensons of the world, well, actually just Gretchen Morgenson herself is that a number of people who sit around and read her actually have influence. So when she sees something as a scandal, they do too, and then they seek to do something about it. And so the subprime fiasco may soon reach new depths as Congress is looking to act. Sen. Christopher Dodd of Connecticut, who is running for President, said he hoped Congress would do something to protect all the families facing foreclosure due to predatory lending. Now this is downright scary. What's Sen. Dodd (who again, is running for President of the United States, although he has virtually no shot of winning) planning to do here? If he meddles too much, and doesn't allow the system to run its course, it's not hard to see some ill-conceived policy make things exponentially worse. If the mortgage holders aren't getting paid, and they can't kick out the family to resell the house, then you've got a pretty bad situation brewing.
Wal-Mart Is Said to Have Big Banking Plans (NYT)
Yesterday, we made the joke that Cadbury Schweppes, as part of its reorganization may be interested in adding more exposure to the subprime market. Actually, it might be Wal-Mart that wants to do that. Wal-Mart's banking ambitions have been known for a long time, but political opposition has made it a non starter. The company had always argued that it wasn't really looking to open a real bank, but just a bank that would allow it to save some money by doing its own banking services. But obviously they wanted to open a real bank, and why not? Apparently, a Congressman from Ohio is set to release an email message ha has obtained from the company indicating that it wants to offer a real, full-on retail bank, complete with mortgages. We can only guess that many of them would be of the subprime variety, no?
Rival Bidder Jumps Into Chicago Exchange Deal (Dealbook)
The IntercontinentalExchange has thrown a monkeywrench into CBOT's plan to merge with the Chicaco Merc. Just a few weeks before shareholders were set to vote on a merger of the two Chicago-based exchanges, the IE indicated it wants to play the role of homewrecker This is pretty par for the course in this industry, as things rarely seem to get settled quickly or quietly.
Cadbury Schweppes to split business (AFX)
Well that didn't take long at all. Just a couple days after activist investor Nelson Peltz acquired a 3% stake in the company, the food and beverage giant just goes and announced a plan to split its food and beverage units. Naturally, the only question is which private equity firms are going to bid for what assets. So far both Blackstone and Lion Capital are said to be interested in the beverage part (that's our favorite part, too), and you can be sure there will be more. And don't even get us started on the chocolate eggs part.
Asia rebounds, but tone remains wary (MarketWatch)
The American markets performed admirably on Wednesday, coming back from some early losses to end in positive territory. That, in turn, inspired the Asian markets to reverse course and end its latest slide. Still, as they say, traders remain cautious, and are concerned that the snap back was just that, a technical snap back not indicative of anything positive. One heavy gainer was Mitsubishi Heavy Industries which rallied 9% on news that it would supply two nuclear reactors to... TXU! So they're not using coal, but did you expect them to start using solar and wind power? Ha!
Chiquita to pay $25 million for dealings with militants (LA Times)
If you eat Chiquita bananas you're a supporter of terrorists. Sorry, that's just how it is. Well, ok, you're a supporter of a supporter of terrorists, which is pretty much just as bad. The banana company will shell out $25 million after admitting that it paid left-wing and right-wing Colombian paramilitary groups not to go after Chiquita assets or employees in the country. Honestly, we're not entirely convinced this should be illegal, after all, they gave money to both sides.
Halliburton plans to add 13,000 jobs (Houston Chronicle)
Halliburton is giving its critics slightly less reason to hate it after it told employees that it plans to add another 13,000 jobs in the next couple years, and that there will be no layoffs in Houston. The job gains come amidst a boom in the sector, as the company also hired 13,000 in 2006.
Gaming Shares Rise as FT Says Frank Wants Ban Repeal (Bloomberg)
Shares of online gambling firms rose after Rep. Barney Frank indicated that he would introduce a bill that would repeal or seriously roll back the anti- online gambling bill that was passed during the last congress. Frank was an early, outspoken critic of the bill, and between him and Al D'Amato, there's finally a little bit of heft on the pro-freedom side. That being said, we'd be willing to lay you some long odds on the bill's passage. For one thing, it's not clear that many Democrats -- who once were the party that cared slightly more about civil liberties -- are interested in repealing the ban. Furthermore, it's probably DOA once it hits Bush's desk, although he's always been hesitant to break out the veto pen. Ultimately, our gut says it's not gonna happen. When was the last time you heard a bad law get repealed?