05 February: New York AG gets heavy with Bank of America over Merrill Lynch buyout
- Branko Brkic
- 05 Feb 2010 (South Africa)
Also today: Markets shiver on fears that euro-zone economies are threatened by Greek debt; Lexus next in the firing line as Toyota woes keep mounting; More flak for Google on digital library plans; New medical algorithm for juvenile diabetes may help parents sleep better; Obama officials inject substance into exports plan.
New York AG gets heavy with Bank of America over Merrill Lynch buyout
The fat lady hasn’t sung for Bank of America, as New York’s Attorney General Andrew Cuomo filed fraud charges against the leader and two of its former top executives, saying they lied to investors and government officials during their huge bailout in the final months of 2008. Former CEO Kenneth D. Lewis and ex-Chief Financial Officer Joseph Price are accused of misleading federal officials about the size of losses at Merrill Lynch, bought by Bank of America at the height of the crisis, and leading to a further injection of public cash. They’re also accused of concealing billions of dollars in bonuses paid to employees when debt was piling up, and have faced dozens of enquiries on Capitol Hill in this regard. The fraud charges come on the same day the bank agreed to pay $150 million to settle two earlier US Securities and Exchange Commission lawsuits that claimed Bank of America lied to shareholders. Those suits didn’t include fraud charges and cleared individual executives of any wrongdoing. The latest lawsuit also names former Treasury secretary Henry M. Paulson and Federal Reserve Chairman Ben S. Bernanke. This one’s a real can of worms, as government officials were seen to pressure Wall Street banks into saving Merrill Lynch after Lehman Brothers collapsed. Photo: Reuters.
Markets shiver on fears that euro-zone economies are threatened by Greek debt
Fears of a global double-dip recession became more palpable as stock markets around the world slid in tandem on anxiety that Greece, Portugal and other euro-zone countries have masses of debt from years of excessive spending. The Dow Jones dropped 2.61%, while European markets fell as much as 6%. In Asia, Japan’s Nikkei lost 2.9%, and Hong Kong’s Hang Seng shed 2.9% as the euro fell to $1.37, a seven-month low against the dollar. While China has resumed stellar growth and the US has seen green shoots popping up between the snowy sidewalks, the sympathetic fall in global stock markets comes on the back of worries that even big European economies such as Spain could crash. The Spanish are struggling to exit their worst recession since the Second World War, but Greece is the domino that markets are watching most closely.
Lexus next in the firing line as Toyota woes keep mounting
Toyotas’ design woes keep on mounting, after Japanese and US authorities began investigations into alleged brake problems on its Prius gas-electric hybrid. Now the sexy top-of-the-range Lexus HS 250h hybrid is under scrutiny, after Toyota admitted that the braking system in the Lexus is identical to the Prius. The cars use different software to control the way the brakes function, but Toyota says it’ll look into the Lexus too, while denying reports it will recall 270,000 Prius vehicles sold in the US and Japan. Toyota faces some 29 lawsuits filed on behalf of customers in the US and Canada. These go beyond demanding compensation for faulty floor mats and gas pedals, extending to the cars losing value and Toyota returning profits on sales. Relatives of a California woman killed in a crash in her Camry, claim the car spontaneously sped out of control. Things are starting to slide out of control for the world’s largest car maker, and the road back looks potholed.
More flak for Google on digital library plans
Google’s plan to create a giant digital library and bookstore has authors and publishers banging at its door. Now, the US Justice Department says a class-action settlement for these groups is significantly flawed, even after recent revisions by the opposing parties. The latest ruling says amendments to the settlement don’t take into account concerns that the deal will grant Google a monopoly over millions of books whose right holders are unknown or can’t be found, re-iterating there still appeared to be anti-trust issues and questions over copyright infringements.
New medical algorithm for juvenile diabetes may help parents sleep better
A new study on managing juvenile diabetes is trying to pair a pump that automatically dispenses insulin with automated glucose testing. It seems a computer algorithm can adjust insulin doses better than a standard diabetes management system. The research, published in The Lancet, could mean that millions of parents who have to wake up several times a night to dose their children can now sleep easily. Type 1, or juvenile diabetes, often develops early in life, and is distinct from Type 2 diabetes, which often stems from obesity.
Obama officials inject substance into exports plan
US President Obama’s pledge to double American exports over five years has been given some substance, with his administration promising to pursue more trade agreements, increase pressure on trading partners to open their markets, and to create an export promotion cabinet. Officials stopped short of saying when they might send Congress completed free-trade accords with Colombia, Panama and South Korea, which are now subject to review. Trade specialists believe it’s essential to prod other countries to negotiate with the US over trade issues. Trade liberalisation is a Holy Grail of US policy, but successive administrations must first deal with previously negotiated trade pacts, often worded in ways that aren’t to their political liking, otherwise potential trade partners might walk away. That’s called red-tape, and fuels much debate among Republican conservatives and liberal Democrats.
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