Business

'Act soon on financial reform'

SnehaSubra — Sat, 20 Mar 2010 19:42:51 +0530

The U.S. needs major changes to its financial system so consumers are better protected, banks fortified and the economy safeguarded from sliding into another Depression, President Barack Obama said on Saturday.

In his weekly radio and Internet address, Obama told Congress to act quickly and pass "commonsense rules that will our allow markets to function fairly and freely while reining in the worst practices of the financial industry."

That, he said, is the central lesson of the current financial crisis that has cost millions of Americans their jobs and nearly caused the collapse of the entire financial system.

"And we fail to heed that lesson at our peril," Obama said.

Never before powers

The Senate Banking, Housing and Urban Affairs Committee is set to begin debating on Monday on legislation from its chairman, Sen. Christopher Dodd, D-Conn., that would give the government unprecedented powers to split up big financial firms, force the industry to pay for its most spectacular failures and create an independent consumer watchdog.

Obama made a strong pitch for that agency, a chief point of disagreement between Democrats and Republicans. The U.S. Chamber of Commerce has launched a $3 million campaign against that provision.

"I won't accept any attempts to undermine the independence of this agency," Obama said.

The House-passed version of the legislation creates a stand-alone agency with power to write and enforce regulations. Dodd's bill places an independent agency within the Federal Reserve and its regulations could be vetoed by an overarching government council headed by the treasury secretary and composed of financial regulators.

Ready rivals

Already, Obama said, industry lobbyists are gearing up to spend millions of dollars in an attempt to defeat the legislation.

"In fact, the Republican leader in the House reportedly met with a top executive of one of America's largest banks and made thwarting reform a key part of his party's pitch for campaign contributions," Obama said, a reference to a meeting between House Republican Leader John Boehner of Ohio and JPMorgan Chase & Co. chief executive Jamie Dimon.

The president said he remains a "vigorous defender" of free markets.

"But what we have seen over the past two years is that without reasonable and clear rules to check abuse and protect families, markets don't function freely," he said.

Lehman accounting tricks possibly illegal

SnehaSubra — Sat, 20 Mar 2010 19:13:40 +0530

A Lehman Brothers whistleblower warned his bosses that accounting gimmicks the bank used before its collapse may have been illegal, his lawyer said on Friday.

Matthew Lee, a former Lehman senior vice president, was fired days after questioning the accounting tricks in a letter to his superiors, attorney Erwin Shustak said. Shustak gave a copy of the letter to The Associated Press.

Lehman Brothers Holdings Inc. imploded in September 2008, becoming the biggest corporate bankruptcy in U.S. history. The collapse sent financial markets across the globe into a free-fall and prompted a massive bailout of the U.S. banking system.

An examiner appointed by the bankruptcy court said in a 2,200-page report last week that Lehman hid its debt and perilous financial condition by using an accounting gimmick called Repo 105. The report revealed Lee's warnings to the bank, though his letter makes public the first internal assessment of the legality of Lehman's bookkeeping.

Manipulation exposed

In a letter dated May 18, 2008, Lee wrote that he discovered that the bank had been underreporting its debt by about $5 billion at the end of each month. Lee, a 14-year Lehman veteran, wrote that he felt compelled to report the "discrepancies" under the firm's code of ethics, saying he believed they "possibly constitute unethical or unlawful conduct."

"I believe the manner in which the firm is reporting these assets is potentially misleading to the public and various governmental agencies," Lee wrote. "If so, I believe the firm may be in violation of the code."

Days after sending the letter, the firm told Lee he was being terminated as part of a general layoff, Shustak said. After his firing, Shustak wrote a letter to the bank saying that Lee "believes he has been the victim of retaliation for bringing what he believed, in good faith, to have been ethical and securities law violations by Lehman."

Lee, 56, later reached a severance agreement with Lehman, however, he stopped receiving payments after the firm's collapse, Shustak said. He has filed a claim with the bankruptcy court to recover the unpaid amount.

The bankruptcy examiner's report and Lee's letter could provide a framework for any future legal action against Lehman executives.

Investigation opened

Senate Banking Committee Chairman Christopher Dodd on Friday called for Attorney General Eric Holder to investigate the circumstances that led to Lehman's collapse. A Justice Department spokeswoman said the department would review the request.

The examiner, Anton Valukas, discovered that Lehman put together complex transactions that allowed the firm to sell "toxic," mostly mortgage-backed, securities at the end of a quarter — wiping them off its balance sheet when regulators and shareholders were examining it — and then quickly buy them back.

His report doesn't conclude whether executives violated securities laws. It does say that the executives' decision not to disclose the effects of its business judgments appears to be sufficient evidence to support the awarding of civil damages in a trial.

The executives named by the report include former CEO Richard Fuld and three chief financial officers. Fuld has denied knowing what the transactions were or the accounting for them.

Securities and Exchange Commission Chairman Mary Schapiro said on Wednesday that the agency is investigating several companies' actions in the run-up to the financial crisis of 2008. She said the SEC's review of the Lehman disaster "has taken us down a path where we're looking broadly" and that Valukas's report will be helpful to the agency in its investigation. She did not name other firms.

Strike cancels thousand of BA flights

SnehaSubra — Sat, 20 Mar 2010 18:37:03 +0530

British Airways canceled more than 1,000 flights after its cabin crew launched a three-day strike on Saturday, wreaking havoc on the plans of tens of thousands of passengers just before the busy spring holiday season.

Hoping to keep as many passengers happy as possible, BA scrambled to rebook some on other services, chartered planes from rival airlines and drafted in volunteer crew. But it still had to scrap more than half of its 1,950 scheduled flights over the period.

Public apology

Chief Executive Willie Walsh issued a direct apology via YouTube for the walkout, the airline's first in almost 15 years, saying it was a "terrible day for BA."

The strike — backed by some unions in the United States, Germany and Spain — also risked harm to Britain's Labour government before a tough general election expected before June.

On Saturday morning at BA's London Heathrow hub, the cavernous Terminal 5 was nearly deserted after some passengers had flown out early to avoid the strike or simply stayed away altogether. But delays were beginning to mount.

One man trying to get home to Sweden said he was already looking at a four-hour delay.

"Our flight from Dallas arrived two hours late, and now we're waiting to go to Stockholm — that flight is two hours late as well," said Bjorn Barka, a high school principal.

Inconvenience abounds

Michael Clements, a security director for a California-based company, was able to check in for his business trip to Amsterdam but was told it would be an hour before he could check in his heavy luggage. "Not enough people," he said with a shrug.

The Eurostar train service between London and continental Europe and Virgin's rail services between London and Scotland were expected to be busy as passengers sought alternate routes.

BA also warned that the disruption would likely last several days beyond the three-day strike, because of a knock-on effect on flights that would carry through to the end of a second strike planned for March 27-30.

"We're in limbo land," said Susan Danby, a school worker from the northern English city of Hull. She is due to fly March 29 to Las Vegas with friends to celebrate their 50th birthdays. "This is our dream trip, we booked it last August and we've been planning it for years."

"We all want more money and better conditions, but people shouldn't ruin other people's holidays," Danby said.

Severe loss

As protesters were readying picket lines on Saturday outside London's Heathrow international airport, analysts estimated BA has already lost more than 25 million pounds (more than $37 million) because of canceled tickets and contingency costs.

The two planned strikes combined could cost the airline more than the 63 million pounds ($95 million) that Walsh is trying to save through the disputed changes to workers' pay and conditions.

BA's pilots are not part of the strike, after their union resolved a separate dispute over pay with the airline.

Support

U.S., German and Spanish unions have given some support for Unite's action, but stopped short of pledges for coordinated activity that would disrupt BA's ability to refuel and service the planes it is operating during the walkout.

The U.S. International Brotherhood of Teamsters, which represents 40,000 aviation industry workers, urged travelers to find alternatives and said it was keeping its options "open." The U.S. Association of Professional Flight Attendants also expressed support for BA.

"Many of us have taken decisions not to pull extra flights or routes to help BA pick up the slack," said a pilot for a Chicago-based airline, who spoke on condition of anonymity for fear it could cause him repercussions with his job. "We don't want to be seen as supporting scab labor."

BA said it would handle as many as 49,000 passengers on both Saturday and Sunday. That compares with the average 75,000 for a normal weekend day in March.

Haul-ted flights

At its Heathrow base, more than 60 percent of long-haul flights will operate, but only 30 percent of short-haul. At Gatwick, all long-haul flights and more than half short-haul flights will run as normal. London City flights, including flights to New York, are operating as normal.

Aside from hurting BA financially, the strike is also an unwelcome event for Britain's governing Labour Party before the upcoming national elections.

Prime Minister Gordon Brown irritated Unite, a major political donor, by calling the union "deplorable" and saying as late as Friday night that it should call off the strike.

Travel turmoil exacerbated

Britain faces even more possible travel chaos in the run-up to the April 2-5 Easter break, as railway signal workers voted last week to join rail maintenance workers in a strike. The Rail Maritime and Transport union has not called dates for the walkout, but refused to rule out the long Easter weekend.

And over this weekend, engineering works on the London Underground were forcing closures between central London and Heathrow, though the Heathrow Express train service was operating as normal.

Opposition Conservative Party leader David Cameron criticized the stranglehold that unions such as Unite have over the Labour Party.

Labour at loss

Cameron is seeking to evoke memories of the difficulties the Labour government, which receives millions of pounds (dollars) in donations from unions, had in the 1970s, culminating in the mass strikes that became known as Britain's "winter of discontent" and led to the election of Conservative leader Margaret Thatcher in 1979. Unite alone has donated 11 million pounds to the Labour Party in recent years.

"Once again, under Gordon Brown the vested interests triumph and the people lose out," Cameron said on Saturday. "This threatens the future of one of Britain's greatest companies along with thousands of jobs."

At a rally of thousands of striking workers in Bedfont, north of London, Unite spokesman Steve Turner said BA "is effectively at war with very proud, very dedicated employees."

Walsh said the disputed changes are critical to the airline's survival — BA has been particularly hard hit by the global economic recession because of its heavy running costs and reliance on increasingly unpopular premium fares.

The airline on Friday offered a compromise on a proposed pay freeze this year, offering a 3 percent rise next year and the year after and then an inflation-linked increase in 2013/14 capped at 4 percent.

Unite argues it was not properly consulted on the changes, which also include a switch to part-time work for 3,000 staff and a reduction in cabin crew sizes from 15 to 14 on long-haul flights from Heathrow.

Any passengers with canceled flights from Saturday through the end of the second planned strike on March 30 will be allowed to rebook on another BA flight within 355 days at no extra charge, but no refunds were being offered, the airline said.

Toyota eyes over 25% sales growth in India

sitansu — Sat, 20 Mar 2010 16:31:24 +0530

Japanese car maker Toyota is aiming for more than 25 per cent growth in India in the current calendar year (2010) as it targets to sell a minimum of 70,000 units.

Its joint venture with Kirloskar Group, Toyota Kirloskar Motor(TKM), have sold 55,497 units in 2009.

"This year, we are looking at a minimum of 70,000 units," TKM's Deputy Managing Director (Marketing) Sandeep Singh said.

TKM aims to sell 47,000-48,000 units of Innova, 10,000- odd Fortuner and 12,000 Corolla Altis in 2010, he said.

The company has decided to come out with diesel version of Corolla Altis, but is yet to decide on when to launch it.

At Toyota 'Q' World event in Bangalore, where the company is showcasing its compact car Toyota Etios and displaying other products, TKM Managing Director Hiroshi Nakagawa said it would hire an additional 2,000 people for its India plants.

The TKM plant in located at Bidadi on the outskirts of Bangalore and employs around 3,000 people. A Rs 3,200-crore second plant is coming up near this location for manufacturing Etios, which is expected to be rolled out from December 2010.

The Etios sedan version, targetted at small family and businessmen, would compete with the likes of Swift D'zire and Tata Indigo Manza, while the hatchback is being positioned for young people, employed and entrepreneurs, and would compete with Swift and Hyundai's i20 among others, officials said.

The company expects to sell 70,000 units of Etios, which will mark Toyota's entry into the mass volume segment in India, in the first year of sales.

Singh claimed Etios would be at least 10 per cent more fuel efficient than its "nearest competitors".

"We have ambitious plans to export (Etios)," Nakaga wa said, but did not elaborate. Company officials said TKM sees good export potential but is yet to decide on overseas markets.

Gold plummets on selling pressure

sitansu — Sat, 20 Mar 2010 16:12:42 +0530

Gold prices on Saturday nosedived by Rs 280 to Rs 16,660 per ten grams in the bullion market in New Delhi on hectic selling induced by weak global cues.

Standard gold and ornaments weakened by Rs 280 each to Rs 16,660 and Rs 16,510 per ten grams, respectively, while sovereign shed Rs 25 to trade at Rs 14,000 per eight-gram piece.

Selling pressure gathered momentum as gold prices fell the most in six weeks in New York last evening on dollar rally, which eroded the appeal of the metal as an alternative investment. Continued uncertainty about Greece's economy helped the greenback rise against the euro.

The overseas markets, which normally set the price trend for the domestic markets here, saw gold lose $19.90 to $1,107.60 an ounce in New York last night.

Traders refraining from purchases on hopes of a further correction in gold prices further dampened the sentiment, market experts said.

In line with the general trend, silver ready dropped by Rs 175 to Rs 27,000 per kg and weekly-based delivery lost Rs 375 to Rs 26,600 per kg.

Silver coins lost Rs 100 to Rs 33,300 for buying and Rs 33,400 for selling of 100 pieces.