BUSINESS BRIEFS
News doesn't get better in banking
Associated Press
CHARLOTTE, N.C. — More troubling news erupted from the financial services sector yesterday as Wachovia, PNC and Bank of America warned of bigger-than-expected writedowns and hinted that fourth quarter results could be disappointing.
Wachovia Corp. doubled its estimate of loan loss provisions to about $1 billion for the fourth quarter, while the chief executive of crosstown rival Bank of America Corp. pointed to higher writedowns and said he expects current credit market turbulence to extend into 2008.
A third major bank, PNC Financial Services Group Inc., said the money it will set aside to cover bad loans for the last three months of the year will be more than twice as large as in the third quarter.
The disclosures come as a number of the nations' banks have forecast increasing credit losses in the wake of last summer's subprime mortgage crisis.
ENERGY FUTURES UP AS SUPPLY DIPS
NEW YORK — Energy futures rose sharply yesterday after the government reported unexpected declines in supplies of crude and heating oil last week and the Federal Reserve announced a plan to help banks weather the credit crisis.
Crude supplies fell 700,000 barrels during the week ended Dec. 7, according to a weekly inventory report from the Energy Department's Energy Information Administration. Analysts had expected a 100,000 barrel increase.
SALLIE MAE PROFIT FORECAST SLASHED
WASHINGTON — Student lender Sallie Mae yesterday slashed its profit forecast for the fourth quarter and all of 2008, as it hoards cash to offset bad loans and faces reduced federal subsidies.
The company also said it failed to renegotiate a buyout with an investor group that balked several months ago at its original $25 billion cash offer for Sallie, the nation's largest student lender. The investor group, led by private-equity firm J.C. Flowers & Co., "does not wish to pursue these opportunities," Sallie, formally known as SLM Corp., said in a press release.
Sallie's shares sank $3.45, or 10.8 percent, to close at $28.49 a share Wednesday. That is more than 50 percent below the original $60-per-share offer from the investor group, which also includes Bank of America Corp. and JPMorgan Chase & Co.
BIOGEN SHARES FALL AS SALE EFFORT FAILS
BOSTON — Biogen Idec Inc. said yesterday it would remain an independent company after a search for a possible buyer failed to yield any definitive offers. The company's shares plunged nearly 28 percent.
The strategic review began Oct. 12 after Carl Icahn bought up shares of the biotechnology firm. That led to speculation that the activist billionaire investor could be preparing a buyout bid, or that he might seek to increase the value of his shares by encouraging a bid by a major pharmaceutical company.
But Biogen Idec said after markets closed that its board had decided the firm "will continue on its present course as an independent company."
PESSIMISM GROWS OVER ECONOMY
WASHINGTON — Americans have turned markedly gloomier about the economy in recent months, a shift that is reshaping a presidential campaign dominated by the war in Iraq and national security concerns.
Higher prices for gasoline and home heating oil, stock market volatility and rising mortgage foreclosures all account for some of the pessimism, in the view of political pollsters. Significantly, they also cite the recent drop in real estate prices as a major worry for millions who have long viewed their homes as a source of retirement income.
Recently, the wave of mortgage foreclosures has created a campaign issue where none had existed, particularly among Democrats who are critical of President Bush's proposal for relief and are offering competing alternatives.
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