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French bank downgrade is latest blow to Europe - (money.cnn.com) Underscoring the uncertainty about Europe's financial system, two major French banks -- Societe Generale and Credit Agricole -- were downgraded Wednesday due to their exposure to the debt of Greece and other weak eurozone nations. The move by Moody's Investors Service wasn't a complete shock to the markets, since the ratings firm had placed SocGen, Credit Agricole and BNP Paribas on review on June 15. BNP remains under review. European markets, beaten down in recent months by concern about the impact of the debt crisis in Greece and several other nations, rebounded on the news. London's FTSE 100 (UKX), the DAX (DAX) in Frankfurt and the CAC 40 (CAC40) in Paris all rose by at least 1%. Moody's downgraded Societe Generale's long-term ratings by one notch to Aa3, with a negative outlook. The rating agency said that its downgrade reflects "the potentially persistent fragility in the bank financing markets." The rating agency said that SocGen could "absorb potential losses it is likely to incur over time on its Greek government bonds," even if the bond creditworthiness of two other nations, Ireland and Portugal, were to "deteriorate further."
Europe's banks are staring into the abyss - (www.telegraph.co.uk) Where now for European banks? Sir Howard Davies, former chairman of Britain's Financial Services Authority, said on BBC Radio's Today programme on Tuesday morning that he thought the French government was only days away from having to recapitalise the country's banking system for a second time. It's hard to disagree. The panic seems to have been temporarily stemmed by a statement from BNP Paribas to the effect that it wasn't having the problems widely reported of finding dollar funding. There was also an emphatic denial of discussions over state intervention. But no-one is kidding themselves. Italy had to pay the highest spread since joining the euro to sell its bonds on Tuesday. There are growing fears over whether Europe's largest borrower can stay the course. The eurozone sovereign debt crisis is meanwhile exacting a devastating toll on the European banking system as a whole, the UK included. With their high exposure to eurozone debt, the problem is particularly acute for the French banking goliaths, BNP Paribas and Societe Generale.
More than 22% of mortgages still underwater - (www.housingwire.com) Nearly 11 million properties, roughly 22.5% of all U.S. homes, were worth less than the underlying mortgage in the second quarter, according to CoreLogic. The percentage of properties in negative equity declined slightly from 22.7% the previous quarter and down from 24% one year ago. Another 2.4 million borrowers held less than 5% equity in their home, what analysts call near-negative equity. CoreLogic also showed nearly three-quarters of all underwater borrowers are paying above-market interest on their home loans. "High negative equity is holding back refinancing and sales activity and is a major impediment to the housing market recovery," said Mark Fleming, CoreLogic chief economist.
5 Central Banks Move to Supply Cash to Europe - (www.nytimes.com) Worried that Europe’s debt impasse posed a growing threat to the global financial system, the world’s major central banks moved Thursday to assure that European banks would not run short of cash as troubled nations like Greece and Italy sought to stabilize their economies. The central banks, in a coordinated action intended to restore market confidence, agreed to pump United States dollars into the European banking system in the first such show of force in more than a year. Some banks have found it hard to borrow dollars as American lenders grew nervous about their financial condition. Thursday’s action, coming almost exactly three years after the collapse of the investment bank Lehman Brothers, lifted global stock markets, sharply increasing the value of shares in banks heavily exposed to debt from Greece and the other struggling members of the euro zone. The euro, which had been falling in recent days, rebounded.
Goldman Sachs Shuts Global Alpha Fund - (www.bloomberg.com) Goldman Sachs Group Inc. (GS), the fifth-biggest U.S. bank by assets, will shut its Global Alpha fund after clients pulled money from the quantitative trading pool that was once the firm’s largest hedge fund. Global Alpha will stop charging fees at the end of this month and aims to finish liquidating most assets by mid-October, according to a letter that Goldman Sachs Asset Management sent to clients Sept. 14. The fund, which managed $11 billion of assets in 2007, had less than $1.7 billion at the end of June, according to a person familiar with the matter who spoke on condition of anonymity because the numbers aren’t public. Goldman Sachs, led by Chairman and Chief Executive Officer Lloyd C. Blankfein, 56, has been shrinking Global Alpha since 2007 when it lost 40 percent because of bad bets on currencies, equities and bonds worldwide. The fund’s co-managers Mark Carhart and Raymond Iwanowski quit in March 2009, and Katinka Domotorffy took charge of the quantitative investment strategies unit, which uses computers to pick securities and oversees $56 billion.
Mortgage-Default Filings Jump 33% in U.S. - (www.bloomberg.com)
Unemployment filings at more than 2-month high - (money.cnn.com)
German Leader Faces Key Choices on Rescuing Euro - (www.nytimes.com)
Wholesaler Prices in U.S. Little Changed- (www.bloomberg.com)
Greece, Europe struggle to contain debt crisis - (finance.yahoo.com)
European Interest Rates Rise in Spite of Central Bank Buying - (www.bloomberg.com)
Russia Sees Stalling Economy, With $60 a Barrel Oil Price - (www.bloomberg.com)
Federal Reserve boosts flow of dollars to European Central Bank - (www.washingtonpost.com)
UBS Trader Gets No Miracle as Loss Leads to Arrest - (www.bloomberg.com)
Analysis: BP oil spill report may prompt $30 billion pay-out - (www.reuters.com)
German Taxpayers Want Equity in Bank Bailouts: Karl Heinz Daeke - (www.bloomberg.com)
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