daily briefing

daily briefing

October 11, 2008

Oil price slide accelerates

NEW YORK: The stunning collapse in oil markets accelerated yesterday, with a barrel plunging below $78 as investors grow more pessimistic about a mushrooming global economic crisis. A barrel of crude hasn't been this low in 13 months - a rare silver lining for consumers amid a rapidly imploding financial landscape. Light sweet crude for November delivery fell $8.89 to settle at $77.70 a barrel on the New York Mercantile Exchange. It was the lowest settlement price for a front-month crude contract since Sept. 10, 2007. Crude has now lost 47 percent of its value since hitting a record $147.27 July 11.

Associated Press

Legg subsidiary sells entire stake in Freddie

Baltimore's Legg Mason Capital Management, the namesake money manager's subsidiary run by Bill Miller, has sold its entire stake in mortgage giant Freddie Mac, which was taken over by the government last month, according to documents filed yesterday with the Securities and Exchange Commission. Miller had taken a gamble on Freddie this summer, adding 30 million shares. As of July 31, LMCM had been Freddie's largest shareholder with a 12.4 percent stake in the mortgage company, but its value plummeted after the government bailout of Freddie and Fannie Mae, the nation's other mortgage giant. LMCM and its affiliate also cut their stake in online retailer Amazon.com to a 5.7 percent stake as of Sept. 30, from 8.5 percent in June, according to regulatory filings.

Hanah Cho

Severn Bancorp has 75 percent profit drop

Annapolis-based Severn Bancorp Inc., the parent company of its namesake bank, said yesterday that its third-quarter profit fell 75 percent to $600,000, or 6 cents per share. That's compared with $2.4 million or 24 cents per share, in the third quarter last year. President and Chief Executive Alan J. Hyatt said the bank saw its nonperforming loans increase from the previous quarter and expects that "our results will continue to be challenged for the foreseeable future." Hyatt said the bank continues to be well capitalized. The bank has $960 million in assets. Shares rose 48 cents, or almost 9 percent, to close at $6.09 yesterday. The earnings announcement was made after financial markets closed yesterday.

Amtrak sets revenue, passenger record

WASHINGTON: Amtrak carried a record 28.7 million people last year, with each of its routes seeing gains, the national passenger railroad said yesterday. The company has posted six years of ridership and revenue growth, recently benefiting from high gas and airline prices. The number of trips over the past year increased 11 percent over the 25.8 million taken in fiscal year 2007. Total ticket revenue for the year that ended Sept. 30 reached $1.7 billion - also a record for the 37-year-old government-owned corporation and a 14 percent increase over the $1.5 billion taken in the previous year.

Associated Press

FTC approves Wachovia purchase

NEW YORK: Federal antitrust regulators cleared yesterday Wells Fargo's $11.7 billion acquisition of Wachovia Corp., capping a weeklong battle for the Charlotte, N.C.-based bank. The Federal Trade Commission's approval comes a day after Citigroup Inc. walked away from efforts to buy Wachovia. Citigroup broke off talks with Wells Fargo and federal regulators late Thursday after the suitors failed to agree on how to split up the bank. San Francisco-based Wells Fargo & Co. said Thursday that it would proceed with the purchase and complete the deal by the end of the fourth quarter. The acquisition needs the approval of Wachovia shareholders. While Citigroup plans to seek $60 billion in damages for breach of contract, it decided not to challenge the Wells Fargo-Wachovia deal in court.

Associated Press

Two banks closed by regulators

Two more banks were closed by regulators yesterday, bringing the total of failed banks to 15 this year. Main Street Bank, of Northville, Mich., Meridian Bank, of Eldred, Ill., closed as tightening credit and a deepening housing slump accelerates government action to shore up confidence in financial institutions. Main Street had $98 million in assets and $86 million in deposits as of Oct. 7, while Meridian had $39.1 million in assets and $36.9 million in deposits as of Sept. 25.

Bloomberg News

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