reporters

AIG to Sell Whole Stake in Reinsurer Transatlantic, Valued at $494 Million

March 5, 2010

By Hugh Son and Jamie McGee March 5 (Bloomberg) — American International Group Inc. , the insurer bailed out by the U.S., said it will sell its remaining stake in Transatlantic Holdings Inc. in a public offering after the reinsurer’s fourth-quarter profit surged. AIG holds about 9.2 million shares, or 14 percent of the reinsurer’s common stock. The stake is valued at about $494 million based on Transatlantic’s closing price yesterday of $53.76 on the New York Stock Exchange. The offering is expected to begin by March 9, New York-based AIG said today in a statement. AIG is selling assets to repay taxpayers after receiving a government bailout valued at $182.3 billion. The insurer has struck deals to divest assets for more than $47 billion, agreeing this week to sell Asian life unit, AIA Group Ltd. Transatlantic is seeking to distance itself from the parent company that sought government aid after making bad bets tied to U.S. mortgages. “We entered 2009 with a lot of uncertainty about our ownership, which challenged our efforts to grow the business,” Transatlantic Chief Executive Officer Robert F. Orlich said last month in a conference call. “We have to move beyond this uncertainty while operating in a less than optimal underwriting environment not to mention the worst global recession in decades.” AIG raised $1.1 billion in June, selling about 30 million Transatlantic shares for about $38 a piece. The reinsurer’s board in December approved the repurchase of $200 million of shares. Transatlantic’s net income in the last three months of 2009 rose to $137 million from $4 million in the year-earlier period. The reinsurer fell $2.24, or 4.2 percent, to $51.52 at 9:55 a.m. in composite trading, the biggest drop since May. New York- based Transatlantic has climbed about 94 percent in the past 12 months. AIG climbed 39 cents to $27.10 To contact the reporters on this story: Hugh Son in New York at hson1@bloomberg.net ; Jamie McGee in New York at Jmcgee8@bloomberg.net .

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U.S. Supreme Court Signals States Must Respect Gun Rights Amid Chicago Ban

March 2, 2010

By Kristin Jensen and Greg Stohr March 2 (Bloomberg) — U.S. Supreme Court justices signaled they are poised to extend constitutional protections for gun owners to state and local laws in a case that may invalidate a handgun ban in Chicago. Hearing arguments in Washington today, several justices said a 2008 ruling suggested that the right to bear arms was so fundamental it should restrict states and cities as well as the federal government. The two-year-old ruling said the Constitution’s Second Amendment protects individual rights. The case is McDonald v. City of Chicago, 08-1521. To contact the reporters on this story: Greg Stohr in Washington at gstohr@bloomberg.net ; Kristin Jensen in Washington at kjensen@bloomberg.net

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Toyota Doesn’t `Run Away’ From Problems, Akio Toyoda Tells U.S. Lawmakers

February 24, 2010

By Angela Greiling Keane and Jeff Plungis Feb. 24 (Bloomberg) — Toyota Motor Corp. ’s president told a U.S. congressional panel “we never run away from our problems,” as the committee examines the world’s largest automaker’s record recalls. Akio Toyoda ’s remarks before the U.S. House Oversight and Government Reform Committee came in his first U.S. testimony following recalls of about 8 million cars and trucks worldwide for defects that may cause sudden acceleration. To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net ; Jeff Plungis in Washington at jplungis@bloomberg.net

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JPMorgan Said to Hire Deutsche Bank’s Larkin as Industrial Group Director

February 23, 2010

By Ambereen Choudhury Feb. 23 (Bloomberg) — JPMorgan Chase & Co., the second- largest U.S. bank, hired former Deutsche Bank AG investment banker Jeremy Larkin in Australia, two people with knowledge of the plan said. Larkin, who left Deutsche Bank this month, will be a managing director in the firm’s general industrial group, one of the people said, declining to be identified as the details are private. He was a managing director and a former co-head of industrials at Deutsche Bank in Sydney, and advised companies on transactions including Qantas Airways Ltd. and Toll Holdings Ltd. New York-based JPMorgan and Frankfurt-based Deutsche Bank, which ranked third and fourth in advising on Australian takeovers last year, have been hiring bankers as the economy accelerates. The country’s gross domestic product will rise 2.7 percent in the 12 months through June 2010 and 3 percent in fiscal 2011, Sydney-based forecaster BIS Shrapnel Ltd. said on Feb 23. Spokesmen for JPMorgan and Deutsche Bank in Sydney declined to comment. To contact the reporters for this story: Ambereen Choudhury in London at achoudhury@bloomberg.net

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Fed Raises Discount Rate by Quarter-Point in Retreat From Crisis Measures

February 18, 2010

By Craig Torres Feb. 18 (Bloomberg) — The Federal Reserve Board raised the discount rate charged to banks for direct loans by a quarter point to 0.75 percent and said the move will encourage financial institutions to rely more on money markets rather than the central bank for short-term liquidity needs. “These changes are intended as a further normalization of the Federal Reserve’s lending facilities,” the central bank said today in a statement. “The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.” The dollar jumped and Treasuries extended losses as the Fed took another step in a gradual retreat from its unprecedented actions to halt the deepest financial crisis since the Great Depression. The Fed has provided hundreds of billions of dollars in backstop credit to banks, bond dealers, commercial paper borrowers and troubled financial institutions such as American International Group Inc. The U.S. currency rose to $1.3541 per euro at 4:40 p.m. from $1.3616 before the announcement, while the yield on two- year Treasuries increased to 0.93 percent from 0.87 percent. The discount rate increase is effective on Feb. 19. The Board also said that effective March 18 “the typical maximum maturity for primary credit loans will be shortened to overnight.” January Statement The Fed Board said the outlook for policy remains “about as it was at the January meeting of the Federal Open Market Committee.” The central bank also cited last month’s statement, which said economic conditions are likely to warrant “exceptionally low” levels of the federal funds rate “for an extended period.” It was the first increase in the discount rate in more than three years. To contact the reporters on this story: Craig Torres in Washington at ctorres3@bloomberg.net ;

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Pernod Profit Misses Estimates on Lower U.S. Liquor Sales, Currency Losses

February 18, 2010

By Andrew Cleary and Ladka Bauerova Feb. 18 (Bloomberg) — Pernod Ricard SA , the world’s second-largest liquor maker, said first-half earnings fell 5.4 percent after U.S. consumers bought less spirits over the holiday and currencies reduced the value of sales. So-called net profit from recurring operations fell to 648 million euros ($880 million) in the six months through December from 685 million euros a year earlier, the Paris-based company said in a statement today. That missed the 659 million-euro median estimate of five analysts surveyed by Bloomberg News. Pernod, which also makes Chivas Regal whisky and Beefeater gin, struggled to maintain sales growth last year as consumers in the U.S. and Europe bought cheaper versions of spirits and visited bars less frequently. “In addition to the relatively weak holiday period trends for U.S. spirits, in particular promotional activity stepping up, we believe that Pernod’s portfolio has been struggling,” Melissa Earlam , an analyst at UBS AG in London, said in a note before the statement. Pernod’s market share losses in the U.S. “have been quite pronounced in vodka,” Earlam wrote. Pernod rose 65 cents, or 1.2 percent, to 57.29 euros in Paris trading yesterday. The stock has climbed 30 percent in the past year, more than rival Diageo Plc’s 23 percent increase. To contact the reporters on this story: Andrew Cleary in London at acleary7@bloomberg.net ; Ladka Bauerova in Paris at lbauerova@bloomberg.net .

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AIG Loses 60 Managers After Bailout, From Archambault to Zeballos: Table

February 17, 2010

By Joel Schectman and Jamie McGee (Corrects spelling of Hartford in first paragraph.) Feb. 17 (Bloomberg) — Christopher Swift , named by Hartford Financial Services Group Inc. as chief financial officer, joins more than 60 managers leaving American International Group Inc. since its bailout. Swift was CFO of American Life Insurance Co., a unit that AIG is negotiating to sell to MetLife Inc. AIG announced this month the departure of Steven Udvar-Hazy as chief executive officer of International Lease Finance Corp. , the plane-leasing business he founded 27 years ago and sold to AIG in 1990. AIG said Dec. 30 that general counsel Anastasia Kelly was leaving after a dispute over government-imposed pay limits. The following table, listing workers who have left since New York-based AIG was rescued by the U.S. in September 2008, was compiled from company statements and news reports. Some job titles, companies and employee’s first names have been abbreviated for space, and the new employers of some workers weren’t immediately available. To contact the reporters on this story: Joel Schectman in New York jschectman@bloomberg.net ; Jamie McGee in New York at jmcgee8@bloomberg.net .

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Foreign Demand for U.S. Financial Assets Slowed in December on China Sales

February 16, 2010

By Vincent Del Giudice Feb. 16 (Bloomberg) — International demand for long-term U.S. stocks, bonds and financial assets grew at a slower pace in December than a month earlier, as China sold U.S. government securities, a U.S. Treasury Department report showed. Net buying of long-term equities, notes and bonds totaled $63.3 billion for the month, compared with net purchases of $126.4 billion in November, the Treasury said in Washington. Including short-term securities such as stock swaps, foreigners purchased a net $60.9 billion in December, compared with net buying of $30.7 the previous month. China has questioned the dollar’s dominance as the world’s reserve currency. In the U.S., spending to avert an economic collapse sent the federal budget deficit above $1 trillion for the first time ever in fiscal 2009, and economists said that may deter investment from abroad. “The U.S. may not be able to get its government spending under control,” said Chris Rupkey , chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, before today’s report. “But it is still seen as an island of relative safety.” China was a net seller of U.S. Treasuries for a second straight month, after sales of $34.2 billion, the report showed. Japan replaced China as the top foreign holder of U.S. government debt, after net purchases of $11.5 billion raised its total to $768.8 billion. Economists surveyed by Bloomberg News ahead of today’s survey projected long-term U.S. financial assets would show a net increase of $35.4 billion in December. Estimates ranged from $15 billion to $68.2 billion, according to the seven forecasts compiled in the survey. The Standard & Poor’s 500 Index rose 1.8 percent in December and the Dollar Index , a gauge of its strength against six other major currencies, jumped 4 percent. U.S. Treasuries lost 2.64 percent in the final month of 2009, according to an index compiled by Bank of America Corp.’s Merrill Lynch unit. The Treasury’s reporting on long-term securities captures international purchases of government notes and bonds, stocks, corporate debt and securities issued by U.S. agencies such as Fannie Mae and Freddie Mac , which buy home mortgages. Foreign purchases of Treasury notes and bonds rose to a net $69.9 billion in December compared with purchases of $117.9 billion in November. Foreign demand for U.S. agency debt from companies such as Fannie Mae and Freddie Mac registered net buying of $49 million in December after buying of $5.9 billion. Net foreign purchases of equities were $20.1 billion in December after net purchases of $9.7 billion in November. Investors sold a net $7.9 billion in U.S. corporate debt in December, the seventh straight month of net sales. To contact the reporters on this story: Vincent Del Giudice in Washington at Or vdelgiudice@bloomberg.net

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JPMorgan Is Said Near Agreement to Buy RBS’s Sempra Units for $1.7 Billion

February 15, 2010

By Andrew MacAskill and Elizabeth Hester Feb. 15 (Bloomberg) — JPMorgan Chase & Co., the second- biggest U.S. lender, is close to an agreement to buy the non- U.S. units of RBS Sempra Commodities LLP for about $1.7 billion to expand its energy and metals trading units, according to two people briefed on the talks. The purchase may be announced as early as tomorrow, said the people, who declined to be identified because the talks are private. Royal Bank of Scotland Group Plc was forced to sell its stake in Sempra by the European Union after receiving a 45.5 billion-pound ($71 billion) taxpayer-funded bailout. JPMorgan is continuing discussions with RBS and Sempra about acquiring the North American operations of the commodities and energy trader, one of the people said. Representatives for Edinburgh-based RBS, JPMorgan and Sempra declined to comment. RBS bought a controlling stake in Sempra Commodities in April 2008 to benefit from rising investor interest in gold, oil and other raw materials. RBS invested $1.7 billion of equity into the venture, and Sempra Energy $1.6 billion. Sempra Energy received about $1.2 billion in cash from the 2008 transaction. JPMorgan has been expanding its commodities operations, buying Bear Stearns Cos.’ energy business in 2008 and UBS AG’s global agriculture and Canadian commodities divisions, a purchase it completed in 2009. The bank also bought U.K.-based ClimateCare, which helps clients reduce carbon emissions and trades reduction credits, in March 2008. To contact the reporters on this story: Andrew MacAskill in London at amacaskill@bloomberg.net Elizabeth Hester in New York at ehester@bloomberg.net .

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China Milk Defaults on Shortage of Foreign Currency, Seeks Creditor Talks

February 12, 2010

By Lars Klemming and Katrina Nicholas Feb. 12 (Bloomberg) — China Milk Products Group Ltd. , a supplier of raw milk and dairy cow embryos, said it’s defaulting on some repayment obligations because it hasn’t enough money outside China to pay for early redemption of its bonds. “The company is currently exploring different options with a view to meeting its funding requirements,” according to a filing with Singapore’s stock exchange today. The notes are China Milk’s $150 million of zero coupon convertible bonds due 2012 and issued in January 2007. China Milk said Jan. 5 it had received “ valid put exercise notices ” from holders of about $146 million of the notes and was “awaiting clearance” from China for the remittance of $170.56 million so it could make the required payments. The delay was “administrative and procedural in nature.” China Milk said in today’s filing that it will try to work out an agreement with bondholders. “Any remittance of funds out of China entails a series of procedural steps and regulatory clearances in respect of which the company is currently unable to gauge the length of such a process,” the statement said. Daqing-based China Milk also said it hadn’t appointed any legal advisers at this stage. China Milk said Feb. 1 its Chief Financial Officer, Choi Ho Yan , 33, resigned to “pursue other career interests.” Trade in the company’s shares was halted on Feb. 9. The stock has fallen 30 percent this month. To contact the reporters on this story: Katrina Nicholas in Singapore on Knicholas2@bloomberg.net ; Lars Klemming in Singapore at lklemming@bloomberg.net

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SEC Said to Examine Airgas Options Trading Before Offer From Air Products

February 10, 2010

By David Scheer and Jeff Kearns Feb. 10 (Bloomberg) — U.S. regulators are examining bullish trading of Airgas Inc . stock options before Air Products & Chemicals Inc . announced a $5.1 billion offer for the distributor of industrial gases, a person familiar with the matter said. The Securities and Exchange Commission is looking at whether people illegally used confidential information about the offer to profit, the person said, declining to be identified because the inquiry isn’t public. Airgas shares surged 40 percent Feb. 5 when the bid by Allentown, Pennsylvania-based Air Products became public. Airgas’s board rejected the offer yesterday, deeming it too low. SEC spokesman John Nester and Air Products spokeswoman Betsy Klebe declined to comment. Airgas spokesman Jay Worley didn’t immediately respond to messages seeking comment. More than 4,500 Airgas call options changed hands a day before the bid, nine times the four-week average, according to data compiled by Bloomberg. Calls, conveying the right to buy stock for a given price by a certain date, usually offer higher returns to traders speculating on takeovers. The SEC polices markets to ensure investors aren’t engaging in insider trading. Airgas, based in Radnor, Pennsylvania, is the largest U.S. distributor of industrial gases. Air Products Chief Executive Officer John McGlade previously said he’s willing to take his offer to shareholders after two prior bids were rejected. Reuters reported the SEC’s inquiry earlier today. To contact the reporters on this story: David Scheer in New York at dscheer@bloomberg.net ; Jeff Kearns in New York at jkearns3@bloomberg.net

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SEC Said to Examine Airgas Options Trading Before Offer From Air Products

February 10, 2010

By David Scheer and Jeff Kearns Feb. 10 (Bloomberg) — U.S. regulators are examining bullish trading of Airgas Inc . stock options before Air Products & Chemicals Inc . announced a $5.1 billion offer for the distributor of industrial gases, a person familiar with the matter said. The Securities and Exchange Commission is looking at whether people illegally used confidential information about the offer to profit, the person said, declining to be identified because the inquiry isn’t public. Airgas shares surged 40 percent Feb. 5 when the bid by Allentown, Pennsylvania-based Air Products became public. Airgas’s board rejected the offer yesterday, deeming it too low. SEC spokesman John Nester and Air Products spokeswoman Betsy Klebe declined to comment. Airgas spokesman Jay Worley didn’t immediately respond to messages seeking comment. More than 4,500 Airgas call options changed hands a day before the bid, nine times the four-week average, according to data compiled by Bloomberg. Calls, conveying the right to buy stock for a given price by a certain date, usually offer higher returns to traders speculating on takeovers. The SEC polices markets to ensure investors aren’t engaging in insider trading. Airgas, based in Radnor, Pennsylvania, is the largest U.S. distributor of industrial gases. Air Products Chief Executive Officer John McGlade previously said he’s willing to take his offer to shareholders after two prior bids were rejected. Reuters reported the SEC’s inquiry earlier today. To contact the reporters on this story: David Scheer in New York at dscheer@bloomberg.net ; Jeff Kearns in New York at jkearns3@bloomberg.net

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MetLife Said to Weigh Using $8 Billion of Stock to Fund AIG Alico Buyout

February 9, 2010

By Emre Peker and Zachary R. Mider Feb. 9 (Bloomberg) — MetLife Inc. may use stock to fund more than half of the planned $15 billion purchase of an American International Group Inc. life insurance unit, said three people with knowledge of the matter. MetLife plans to pay AIG about $8 billion in stock and the rest in cash for American Life Insurance Co., said the people, who spoke on condition of anonymity because the talks are private. Some of the cash may come from a $5 billion bridge loan from banks, the people said. AIG and MetLife, both based in New York, may reach an agreement over the sale as soon as Feb. 11, the people said. Mark Herr , a spokesman for AIG, declined to comment. MetLife’s Christopher Breslin declined to comment. To contact the reporters on this story: Zachary R. Mider in New York at zmider1@bloomberg.net ; Emre Peker in New York at epeker2@bloomberg.net .

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UBS Raises 2009 Bonus Pool 34% to $2.7 Billion After Returning to Profit

February 9, 2010

By Elena Logutenkova Feb. 9 (Bloomberg) — UBS AG said it will pay out 34 percent more in bonuses for 2009 as the biggest Swiss bank by assets reported its first quarterly profit in more than a year. The bonus pool amounts to 2.9 billion Swiss francs ($2.7 billion), Andreas Kern , a spokesman for the Zurich-based bank, said by phone today. This compares with a 2008 payout of 2.16 billion francs in variable pay to staff, excluding U.S. brokers. Chief Executive Officer Oswald Gruebel , who isn’t getting a bonus, vowed to stick to a policy of paying market-level compensation since joining the bank almost a year ago. UBS last year boosted salaries for senior bankers at its securities unit by an average of 50 percent to increase the ratio of fixed pay. UBS slashed 2008 bonuses 78 percent after reporting a net loss of 21.3 billion francs, a record in Swiss corporate history, and receiving a 6 billion-franc lifeline from the Swiss government to help it spin off toxic assets into a central bank fund. It had paid 9.92 billion francs in 2007 bonuses. The bank has said it would make fixed salaries a higher proportion of employees’ total compensation. In line with guidelines from the Swiss regulator, UBS also introduced claw- back provisions to allow taking back parts of bonuses allocated to members of the executive board, divisional top management and certain other employees in the years after the award. The bank is booking 3 billion francs in costs for bonuses in 2009, compared with 1.7 billion francs for the previous year because of accounting changes, Kern said. UBS didn’t make provisions for a new U.K. bonus tax, it said. The U.K. announced a one-time 50 percent tax on bonuses of more than 25,000 pounds ($39,080), to be paid by the banks. To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

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`Dear John’ Ends `Avatar’ Run as Top U.S. Film With $32.4 Million Sales

February 7, 2010

By Esmé E. Deprez and Oliver Staley Feb. 7 (Bloomberg) — “Dear John,” a romantic drama based on the novel by Nicholas Sparks , was the top film in the U.S. and Canada, ending the seven-week run of “Avatar” in the No. 1 spot. “Dear John,” opened with sales of $32.4 million for Sony Corp., according to Hollywood.com Box Office . The film is Sony’s first No. 1 movie since mid-November, when “2012” debuted. It’s also the first to surpass “Avatar,” James Cameron’s 3-D sci-fi adventure, which has taken in $630 million domestically since its Dec. 18 release by News Corp.’s Twentieth Century Fox. In “Dear John,” Channing Tatum plays a soldier who falls in love while on leave with a college student, who is portrayed by Amanda Seyfried. The two write letters to one another after he is deployed overseas. “Avatar,” which beat the domestic record of $600.8 million held by another Cameron movie, “Titanic,” brought in $23.6 million in ticket sales as the No. 2 movie this weekend. “From Paris With Love” opened at No. 3 with $8.12 million in ticket sales for Lionsgate Entertainment Corp. John Travolta plays a bald-headed, pistol-wielding American special agent who is sent to the French capital along with Jonathan Rhys Meyers to thwart a terrorist attack. To contact the reporters on this story: Esmé E. Deprez in New York at edeprez@bloomberg.net ; Oliver Staley in New York at ostaley@bloomberg.net

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G-7 Discussion Paper Says Nations Must Allow Greater Currency Flexibility

February 6, 2010

By Simone Meier Feb. 6 (Bloomberg) — Major economies with inflexible exchange rates must consider allowing them to strengthen to help narrow international trade imbalances, according to a report prepared for a meeting of finance chiefs from the Group of Seven. “Countries with inflexible nominal exchange rates must permit greater flexibility in real exchange rates either through higher inflation or a nominal appreciation of their currency,” the document, drawn up by Canada’s finance ministry and obtained by Bloomberg News, said. G-7 finance ministers and central bankers are meeting in Iqaluit, Canada, today. The document doesn’t mention which countries are viewed as having inflexible currencies. China has attracted international criticism this year from foreign governments for controlling the value of its yuan since July 2008 after it strengthened 21 percent against the dollar over the previous three years. Although nations are entitled to set their own currency policies, the “freedom to choose their exchange rate arrangements carries an obligation not to manipulate exchanges so as to gain a competitive advantage,” the document said. To contact the reporters on this story: Simone Meier in Iqaluit at smeier@bloomberg.net

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U.K. Prosecutors to Charge Four Members of Parliament Over Expenses Claims

February 5, 2010

By Tom Penny and Kitty Donaldson Feb. 5 (Bloomberg) — Four U.K. lawmakers will be charged over their expenses claims after a review of police evidence, the Crown Prosecution Service said today. House of Commons members Elliot Morley , David Chaytor and Jim Devine will all be charged over their expenses in the case, Director of Public Prosecutions Keir Starmer said today at a news conference in London. In addition, Paul White, a member of the House of Lords, will also be charged. The Metropolitan Police passed files on six lawmakers from the House of Commons and the House of Lords to prosecutors after an investigation into taxpayer-funded expenses claimed by some members of parliament. A series of stories about lawmaker expenses started appearing in the Daily Telegraph newspaper on May 8 last year after it bought a computer disc containing details of the claims. The revelations, which showed lawmakers claimed for items ranging from a floating house for ducks to the cost of clearing a moat, sparked a scandal that engulfed all parties and led to a collapse in public respect for Parliament. To contact the reporters on this story: Thomas Penny in London at tpenny@bloomberg.net .

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More Than Half of U.K. Lawmakers Asked to Repay $1.8 Million in Expenses

February 4, 2010

By Thomas Penny and Robert Hutton Feb. 4 (Bloomberg) — More than half of the lawmakers in the U.K. House of Commons were asked to repay expenses, according to a report published in London today. Thomas Legg, the retired civil servant who led an investigation into the expense claims, said 392 lawmakers and former lawmakers had been asked to repay 1.12 million pounds ($1.77 million) that had been paid out to cover costs for their housing, cleaning bills and furniture. The Daily Telegraph newspaper started publishing a series of stories about the expenses on May 8 last year after it bought a computer disc containing details of lawmakers’ claims. The revelations, which showed lawmakers claimed for items ranging from a floating house for ducks to the cost of clearing a moat, sparked a scandal which engulfed all parties and led to a collapse in public respect for Parliament. Prime Minister Gordon Brown said on Oct. 12 that he would repay 12,415 pounds, mainly for claiming too much for cleaning and laundry. Conservative Party leader David Cameron repaid 947 pounds in June for work including trimming plants, replacing washers on faucets and changing light bulbs at his Oxfordshire home. To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net ; Thomas Penny in London at tpenny@bloomberg.net .

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UBS Voted Top European Equity Researcher for Ninth Year in Magazine’s Poll

February 2, 2010

By Alexis Xydias Feb. 2 (Bloomberg) — UBS AG was voted Europe’s top brokerage for equity research for a ninth straight year in a poll for Institutional Investor magazine. Nomura Holdings Inc., JPMorgan Chase & Co. and Credit Suisse Group AG tied for second. A total of 28 analyst teams at Zurich-based UBS were voted among the best researchers in the region, the publication said on its Web site today. Nomura, which jumped from eighth place, JPMorgan and Credit Suisse each had 22 favorably ranked teams. The changing positions reflect upheavals in the industry, with banks purchasing rivals and analysts switching employers as bonuses were slashed. Europe’s Dow Jones Stoxx 600 Index surged 61 percent from March 9 to Dec. 31, pushing the gauge to its biggest annual gain in a decade. Tokyo-based Nomura, which bought Lehman Brothers Holdings Inc. ’s European operations after the U.S. bank’s bankruptcy in 2008, lured the largest number of new votes after poaching analysts from brokerages including Dresdner Kleinwort, Citigroup Inc. and Bank of America Corp.’s Merrill Lynch unit. Merrill Lynch fell to fifth place from second in 2009, the magazine said. Deutsche Bank AG , Morgan Stanley and Citigroup were ranked sixth to eighth, respectively. New York-based Citigroup had won third place in 2009. The results were based on responses from more than 1,100 investors at about 500 institutions managing an estimated $5.4 trillion in European equities, Institutional Investor said. To contact the reporters on this story: Alexis Xydias in London at axydias@bloomberg.net .

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Argentina Central Banker Redrado Quits Amid Dispute Over Use of Reserves

January 29, 2010

By Bill Faries and Rodrigo Orihuela Jan. 29 (Bloomberg) — Argentina’s central bank President Martin Redrado resigned, saying the government has tried to destroy the bank’s independence and that he has sought to follow the law. “I have followed the constitution, the law and the central bank rules,” Redrado said at a press conference in Buenos Aires. President Cristina Fernandez de Kirchner tried to fire Redrado, 48, by decree on Jan. 7 for not backing her plan to tap $6.6 billion of reserves to pay debt due this year. A judge halted her decree the following day, saying Fernandez hadn’t notified Congress as required in the central bank charter. A bi-cameral commission, which must make a non-binding recommendation on the decree, began discussions on Jan. 26 and is due to convene again on Feb. 2. Economy Minister Amado Boudou has said the government intends to nominate former central bank President Mario Blejer , who also worked at the International Monetary Fund and the Bank of England, to replace Redrado. To contact the reporters on this story: Bill Faries in Buenos Aires at wfaries@bloomberg.net

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NYSE Technical Error Is Delaying Delivery of Price Quote Data in New York

January 28, 2010

By Whitney Kisling and Nina Mehta Jan. 28 (Bloomberg) — NYSE Euronext said a technical error at the New York Stock Exchange, the world’s largest equity market, caused delays in current prices being delivered to customers. The company said the problem affected the so-called consolidated quote system, which aggregates the best price at various trading venues for NYSE Euronext-listed companies. The CQS sells the data from the exchange to vendors including Bloomberg LP, the parent of Bloomberg News, who provide that information to customers. To contact the reporters on this story: Whitney Kisling in New York at wkisling@bloomberg.net ; Nina Mehta in New York at nmehta24@bloomberg.net .

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Apple Tablet Computer Enters Market That’s Never Taken Off: Chart of Day

January 27, 2010

By Ian King Jan. 27 (Bloomberg) — Apple Inc.’s tablet computer will need more than a snazzy design to fire up a product category that consumers have largely ignored, according to IDC. Tablet shipments are forecast to drop to less than 1 percent of the U.S. mobile-computer market next year, as the CHART OF THE DAY shows. This year, manufacturers will ship about 523,000 tablets in the U.S., IDC estimates. “There are rumors that Apple is looking at more than 2 million in shipments this year. Good luck,” said David Daoud , an analyst at the Framingham, Massachusetts-based research firm. “Unless they really have a well-articulated strategy, that’s going to be a huge challenge.” IDC may revise its predictions after it learns more about Apple’s new device, Daoud said. Apple hasn’t revealed any details about the tablet, which analysts expect to be released at a company event today. The rumors alone have prodded the top personal-computer makers — Hewlett-Packard Co. and Dell Inc. — to re-examine the category, he said. Until now, no company capable of delivering content along with a well-designed device has entered the market, Daoud said. That’s relegated tablet computers to “a drop in the bucket.” “Apple being Apple, they already have an infrastructure in place to provide content,” he said. “They are way ahead of the PC guys in that sense.” To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net

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China May Raise Yuan Value by 5% to Cool Economy, Goldman’s O’Neill Says

January 24, 2010

By Zijing Wu Jan. 23 (Bloomberg) — China will probably let its currency appreciate a one-time 5 percent and hike interest rates to cool the economy and combat surging inflation pressures, Goldman Sachs Group Inc. Chief Economist Jim O’Neill said. The Chinese government may allow the yuan to have “a bigger one-off move than people talk about, at least 5 percent, maybe more,” O’Neill said in an interview today at the London School of Economics. “They may also consider having a wide band to let it move more frequently on the daily basis to stop speculative players.” China’s economy rebounded stronger than anticipated in the fourth quarter, and the inflation rate accelerated to a 13-month high of 1.9 percent in December, igniting speculation the government will abandon the yuan peg to avoid the economy from overheating. China has kept a lid on its currency since July 2008 after it strengthened 21 percent against the dollar over the previous three years. “Part of the idea of doing these things is to surprise people so we are not going to get any hints of it happening,” said O’Neill. “We’ll just wake up on an unpredictable day and see it happen.” Besides loosening controls on the exchange rate, Beijing will also hike interest rates soon, according to O’Neill. “It will definitely happen, and it could happen any day,” he said. China’s yuan traded at 6.8269 per dollar in the spot market as of 3 p.m. in London. To contact the reporters on this story: Zijing Wu in London zwu17@bloomberg.net ;

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Saudi Arabia Will Not End Stimulus This Year, Finance Minister Assaf Says

January 24, 2010

By Maher Chmaytelli and Camilla Hall Jan. 24 (Bloomberg) — Saudi Arabian Finance Minister Ibrahim al-Assaf said the kingdom will continue to pump money to boost growth in 2010, even as the economy rebounds from last year’s stagnation. “At one point there will be a curbing of spending, but in my view 2010 is a year that needs continuous stimulus to the economy,” al-Assaf said today at the Global Competitiveness Forum, an [bn:URL= http://www.gcf.org.sa/ http://www.gcf.org.sa/ http://www.gcf.org.sa/ http://www.gcf.org.sa/] investors’ conference [] in the Saudi capital. Saudi Arabia expects growth of more than 4 percent in 2010, the finance minister said. The country’s economy expanded 0.15 percent in 2009, according to Ministry of Finance estimates. Saudi Arabia, the world’s largest oil exporter, is spending $400 billion on infrastructure over a five-year period starting from 2009 to stimulate the economy. Rising oil prices, which have rebounded to around $75 a barrel from less than $35 in February, are also likely to boost growth this year. “Stimulus packages shouldn’t be withdrawn prematurely, nor should they be extended more than required so as not to produce inflationary pressures,” al-Assaf said. To contact the reporters on this story: Maher Chmaytelli in Riyadh via the Dubai newsroom at 1029 or mchmaytelli@bloomberg.net Camilla Hall in Riyadh via the Dubai newsroom at chall24@bloomberg.net or

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U.K. Raises Terror-Threat Level to `Severe’; U.S. Level Remains Unchanged

January 22, 2010

By James Hertling and Kitty Donaldson Jan. 22 (Bloomberg) — The U.K. raised its international terrorism threat level to “severe” from “substantial,” indicating authorities consider an attack “highly likely.” “I should stress that there is no intelligence to suggest that an attack is imminent,” Home Secretary Alan Johnson said in the statement today announcing the change. The heightened alert comes two days after the government suspended direct flights between Yemen and the U.K. as British officials prepare to host conferences next week in London on Yemen and on the war in Afghanistan. The U.S. government said it doesn’t plan to follow the U.K. action with its own raised alert. The Yemeni branch of al-Qaeda said it was behind a Dec. 25 plot in which Nigerian Umar Farouk Abdulmutallab was charged with trying to blow up a Northwest Airlines flight on its approach to Detroit. Several hundred al-Qaeda members in remote tribal areas of Yemen may be preparing for attacks similar to last month’s plane plot in the U.S. and elsewhere, President Barack Obama ’s assistant for homeland security and counterterrorism, John Brennan , said on Jan. 3. The U.S. has no plans now to raise its terror threat level, an Obama administration official said after the U.K. posted the increased alert. The official asked not to be identified. The overall threat level of the U.S. is elevated, or yellow, meaning there is a “significant risk” of attack. Yellow is the third of five tiers in the threat alert. Flight Threat The country’s threat level for domestic and international flights is high, or orange, which is the second-most severe on the scale. British Prime Minister Gordon Brown on Jan. 20 announced stepped-up security following the attempted Christmas Day attack including the creation a “no-fly list” of terrorist suspects and a second list of those who will be subject to increased security screening prior to boarding flights heading to Britain. The nation’s three intelligence agencies will focus on investigating individuals “long before” they reach the country, he said. To contact the reporters on this story: James Hertling in Paris at jhertling@bloomberg.net ; Kitty Donaldson in London at kdonaldson1@bloomberg.net

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Charter Communications’ CEO Smit Resigns to Take Position at Rival Comcast

January 22, 2010

By Kelly Riddell Jan. 22 (Bloomberg) — Charter Communications Inc. , the U.S. cable operator that emerged from bankruptcy protection in November, said Chief Executive Officer Neil Smit resigned to take a position at larger rival Comcast Corp. Smit’s resignation is effective Feb. 28 and he will be temporarily replaced by Chief Operating Officer Mike Lovett while Charter searches for a CEO, according to a statement from the St. Louis-based company today. Smit will join Comcast , the largest U.S. cable operator, as president of cable communications, reporting to COO Stephen Burke . Charter, the No. 4 cable operator, won approval of its bankruptcy plan in November and plans to relist on the Nasdaq this year. It filed for Chapter 11 protection in March after being overwhelmed by more than $21 billion in debt . The company, which has reported a loss every year since going public in 1999, amassed the debt through acquisitions and the addition of services to compete with larger rivals. Smit took the helm of Charter in 2005 when the company had already racked up $19.2 billion in debt and was losing customers to competitors who offered bundled telephone, cable and Internet services. Smit helped boost Charter’s average revenue per video customer to $115.26 in the quarter ended Sept. 30 from $73.94 when he took office, driven by rising sales of bundled services. Before serving at Charter, Smit was president of Time Warner Inc.’s America Online Access Business overseeing Internet access services. Comcast, based in Philadelphia, fell 52 cents to $16 yesterday in Nasdaq Stock Market trading. The stock was little changed last year. To contact the reporters on this story: Kelly Riddell in Washington at kriddell1@bloomberg.net

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Obama to Propose New Rules on Proprietary Trading to Reduce Risk Taking

January 20, 2010

By Nicholas Johnston and Julianna Goldman Jan. 20 (Bloomberg) — President Barack Obama tomorrow will offer new proposals on limiting the size and complexity of proprietary trading systems as a way to reduce risk-taking, a senior administration official said. Obama, who is meeting tomorrow with former Federal Reserve Chairman Paul Volcker , will propose the new rules as a part of an overhaul of financial regulations to help limit the size of financial institutions, the official said on the condition of anonymity before the announcement is made. “We’ve got a financial regulatory system that is completely inadequate to control the excessive risks and irresponsible behavior of financial players all around the world,” Obama said in an interview with ABC News broadcast tonight. Obama in June proposed an overhaul of U.S. financial regulations to fix lapses in oversight and excessive risk-taking that helped push the economy into a prolonged recession. Volcker, who is chairman of the President’s Economic Recovery Board, has criticized as “reform light” efforts by the financial industry to weaken financial regulation proposals in Congress. A year ago, he issued a report from the Group of Thirty, a panel of former central bankers, finance ministers and academics, calling for separation between commercial banks and businesses that engage in speculative risk-taking such as hedge funds and proprietary trading. The House of Representatives passed a package of new rules in December while members of the U.S. Senate continue to work on legislation that has the support of Republicans and Democrats. To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net ; Julianna Goldman in Washington at jgoldman6@bloomberg.net

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Pimco Boosts Holdings of Developed Bonds Outside U.S. to Most Since 2004

January 19, 2010

By Wes Goodman Jan. 20 (Bloomberg) — Bill Gross , who runs the world’s biggest bond fund at Pacific Investment Management Co. , increased holdings of non-dollar developed-market debt last month to the most October 2004. Gross boosted the $201.7 billion Total Return Fund ’s investment in the securities to 16 percent of assets in December from 5 percent in November, according to Pimco’s Web site . The fund cut government-related bonds to 32 percent, the least since July, from 51 percent. Bill Gross, 65, co-chief investment officer at Pimco in Newport Beach, California, began 2010 with a bullish view on German bonds. They are his “favorite” because a constitutional amendment there requires a balanced budget by 2016, Gross said Jan. 6 on Bloomberg Radio. Pimco on Jan. 4 said it is cutting holdings of U.S. and U.K. debt as the two nations increase borrowing to record levels. Under what Pimco has termed the “new normal,” investors will face lower-than-average returns with heightened government regulation, lower consumption, slower growth and a shrinking global role for the U.S. economy. Gross increased cash holdings to 8 percent of the fund’s assets in December, the most since Lehman Brothers Holdings Inc. collapsed in September 2008, from 7 percent. The Total Return Fund gained 13.7 percent in the past year, beating half of its peers, according to data compiled by Bloomberg. The one-month return is 1.1 percent, also outpacing about half of its competitors. Pimco is a unit of Munich-based insurer Allianz SE. To contact the reporters on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net .

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Citadel Securities Managing Director Kaperst Departs After Seven Months

January 19, 2010

By Saijel Kishan and Shannon D. Harrington Jan. 19 (Bloomberg) — Stuart Kaperst , a managing director at Citadel Securities, the investment bank of Ken Griffin’s Citadel Investment Group LLC, left the firm. Kaperst departed last week, Devon Spurgeon , a spokeswoman for Chicago-based Citadel, said in an interview today. He was hired in June 2009 to help build out the operations of the investment banking unit, she said. Kaperst had reported to Todd Kaplan , who ran the unit that advises companies on reorganizations, mergers and acquisitions and left Citadel on Jan. 14, less than a year after joining the firm. His departure is another setback in Griffin’s effort to create an investment bank to compete with Goldman Sachs Group Inc. and Morgan Stanley, after Rohit D’Souza , the former chief executive officer of Citadel Securities, left in October. Before joining Citadel, Kaperst was global principal- investments chief at Merrill Lynch & Co., which was bought by Bank of America Corp. in 2009. He assumed that role when Kaplan left Merrill after 22 years with the firm. D’Souza also had worked at Merrill. To contact the reporters on this story: Saijel Kishan at skishan@bloomberg.net ; Shannon D. Harrington in New York at sharrington6@bloomberg.net ;

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Euro May Decline to Seven-Month Low on Fibonacci Chart: Technical Analysis

January 19, 2010

By Yoshiaki Nohara and Kazumi Miura Jan. 19 (Bloomberg) — The euro may decline to a seven- month low of $1.380, Tokai Tokyo Securities Co. said, citing trading patterns. The euro is poised to fall to its 200-day moving average of about $1.4288, said Yoh Nihei , a Tokyo-based trading group manager at Tokai. Should the 16-nation currency drop below that level, it will decline toward $1.4120, a 38.2 percent Fibonacci retracement of its advance from $1.2457 on March 4 to $1.5144 on Nov. 25, he said. If the 16-nation euro falls below $1.4120, the next support level will be $1.380, a 50 percent Fibonacci retracement, Nihei said. That would be the lowest since June 16. Support refers to an area where buy orders may be clustered. “There’s a possibility that the euro-dollar will rapidly drop” to $1.380, Nihei said. The euro traded at $1.4399 as of 8:19 a.m. in Tokyo from $1.4384 in New York yesterday. It dropped 0.2 percent last week. Fibonacci analysis is based on a theory that prices rise or fall by certain percentages after reaching a high or low. A break above resistance or below support indicates a currency may move to the next level. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net ; Kazumi Miura in Tokyo at Kmiura1@bloomberg.net

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Canada Will Expedite Haitian Immigration Requests After Quake, Kenney Says

January 16, 2010

By Doug Alexander and Alexandre Deslongchamps Jan. 16 (Bloomberg) — Canada is expediting immigration applications from Haitians with family in the country after an earthquake struck the Caribbean nation. Priority will be given to sponsorship applications from Canadian citizens, permanent residents and protected persons with close family members in Haiti, Jason Kenney , Canada’s immigration minister, said in an e-mailed statement. Haitians in Canada will also be allowed to extend their stay in the country. The Jan. 12 earthquake may have killed 50,000 people, Haiti’s Red Cross has said. The magnitude-7.0 tremor hit the capital, destroying homes, hospitals, schools and such landmarks as the presidential palace and national cathedral. Six Canadians died in the quake and 1,362 Canadians remain unaccounted for, Canadian Foreign Affairs Minister Lawrence Cannon said today in a press conference. To contact the reporters on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net ; Alexandre Deslongchamps in Ottawa at adeslongcham@bloomberg.net

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Wizards’ Gilbert Arenas Charged With Felony Gun Count in Locker Room Case

January 14, 2010

By Cary O’Reilly and Scott Soshnick Jan. 14 (Bloomberg) — Washington Wizards guard Gilbert Arenas , suspended indefinitely from professional basketball after admitting to having guns in his locker, was charged with a felony count of carrying a handgun without a license. The charge carries a maximum jail term of five years, Channing Phillips , U.S. Attorney for the District of Columbia in Washington, said in an e-mailed statement. “On or about Dec. 21, 2009, within the District of Columbia, Gilbert J. Arenas, did carry, openly and concealed on or about his person, in a place other than his dwelling place, place of business or on other land possessed by him, a pistol, without license/licenses issued pursuant to law,” Assistant U.S. Attorney Chris Kavanaugh said in a criminal information filed today in Superior Court of the District of Columbia. Arenas, 28, has said he misinterpreted a change in local gun laws when he moved four firearms to his locker at the Verizon Center in Washington from his home in Virginia to keep them away from his children. Arenas was suspended without pay on Jan. 6 by National Basketball Association Commissioner David Stern . To contact the reporters on this story: Cary O’Reilly in Washington at caryoreilly@bloomberg.net ; Scott Soshnick in New York at ssoshnick@bloomberg.net .

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SEC Seeks to File New Complaint Against BofA in Merrill Lynch Bonus Case

January 11, 2010

By David Glovin and Bob Van Voris Jan. 11 (Bloomberg) — The U.S. Securities and Exchange Commission said Bank of America Corp. failed to disclose “extraordinary losses” by Merrill Lynch & Co. in the weeks before investors voted on the takeover of Merrill Lynch in 2008. The SEC, in a letter dated Dec. 31 and released publicly today, asked a Manhattan federal judge’s permission to file a new complaint in its lawsuit that already claims Bank of America misled shareholders over bonuses paid by Merrill Lynch. Based on information discovered since it sued in August, the SEC claims that by the time of the Dec. 5, 2008, vote, Bank of America was aware of $4.5 billion in losses at Merrill in October and billions more in November. The lender violated securities law by failing to disclose the losses by updating a proxy statement to shareholders before the vote, according to the SEC. “These losses alone constituted more than one-third of the merger value as of December 5, and approximately 60 percent of Merrill’s entire losses in the preceding three quarters of the year,” SEC lawyers said in the letter. “Nevertheless, despite its representation that it would update shareholders, BOA kept them in the dark as they were asked to vote on the proposed merger.” ‘Inexcusably Waited’ Bank of America , in a Jan. 7 letter that was released today, asked the court to reject the revised complaint filed with the regulator’s letter. The SEC “inexcusably waited” to bring the claims until only a few months before the trial, and the allegations have no legal basis, the company’s lawyers wrote in the letter to the judge. The Charlotte, North Carolina-based bank said in the letter that it “would be severely prejudiced if the amendment were allowed at this late date.” The trial is scheduled to begin March 1. The case is Securities and Exchange Commission v. Bank of America Corp., 09-cv-06829, U.S. District Court, Southern District of New York (Manhattan). To contact the reporters on this story: David Glovin in New York at dglovin@bloomberg.net ; Bob Van Voris in New York at rvanvoris@bloomberg.net .

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Thain Says Fee for Being `Too Big to Fail’ May Be Part of Reform Solution

January 11, 2010

By Erik Schatzker and Deirdre Bolton Jan. 11 (Bloomberg) — John Thain , the former chief executive officer of Merrill Lynch & Co., said a “fee” may be necessary to solve the problem of banks becoming so great a risk to the financial system that they need government aid. “‘Too big to fail’ is one of the biggest issues that we haven’t really figured out what to do with yet,” Thain said today in an interview on Bloomberg Television. While a fee for systemic risk may be part of the solution, a new tax is “not necessarily the right way” to resolve the issue, he said. U.S. lawmakers developing legislation in response to the financial crisis may revive sections of the 1933 Glass-Steagall Act that separated commercial and investment banking. Senators John McCain of Arizona and Maria Cantwell of Washington last month proposed preventing deposit-taking banks from underwriting securities, engaging in proprietary trading, selling insurance or owning retail brokerages. “There’s no question in my mind that at least the top five financial institutions today are in fact too big to fail,” Thain, 54, said. “You could actually charge them and the bigger they are, the more complicated they are, the more you charge them.” H. Rodgin Cohen , chairman of Sullivan & Cromwell LLP, said in a roundtable discussion with Thain that reform should take into account that large banks benefit from their size. “I do not believe there should be ‘too big to fail,’” Cohen, 65, said. “I absolutely think there are benefits from being big, but there should certainly not be a concept that big is bad.” Thain, who was dismissed from Bank of America Corp. last year after the company bought Merrill Lynch, is looking at a “broad range” of job opportunities, he said. Thain is “not necessarily” looking to come back to Wall Street in a senior position, he said. To contact the reporters on this story: Erik Schatzker in New York at eschatzker@bloomberg.net ; Deirdre Bolton in New York at dbolton@bloomberg.net ;

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Heineken Will Buy Femsa’s Beer Unit in Transaction Valued at $7.7 Billion

January 11, 2010

By Celeste Perri Jan. 11 (Bloomberg) — Heineken NV agreed to buy the beer division of Fomento Economico Mexicano SAB in an all-share transaction valued at 5.3 billion euros ($7.7 billion). Femsa will own a 20 percent economic interest in Heineken Group as a result of the purchase, the Amsterdam-based company said in a statement posted on its Web site today. Heineken expects to achieve so-called synergies of 150 million euros a year by 2013, it said in the statement. The purchase will boost the Dutch brewer’s earnings per share after two years, the company said. “I am confident that this transaction will generate considerable future value for stakeholders in both groups,” Heineken Chief Executive Officer Jean-Francois van Boxmeer said in the statement. To contact the reporters on this story: Celeste Perri in Amsterdam at cperri@bloomberg.net .

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Hank Greenberg Tells WSJ Goldman Sachs Is Responsible for AIG’s Collapse

January 9, 2010

By Sylvia Wier and Vivek Shankar Jan. 8 (Bloomberg) — Hank Greenberg , former chief executive officer at American International Group Inc. , said Goldman Sachs Group Inc. is responsible for the collapse of the insurer during the economic crisis, the Wall Street Journal reported. “It certainly wouldn’t be difficult to come to that conclusion,” Greenberg is quoted as telling the newspaper. Greenberg blamed new standards for credit-default swaps — pushed by Goldman or Deutsche Bank AG, he said — and subprime, housing-backed derivatives sold and then shorted by Goldman as contributing to AIG’s collapse, the newspaper reported. “Mr. Greenberg appears to base his views on news reports rather than facts,” Lucas van Praag , a Goldman spokesman, said in an e-mail to Bloomberg News. “It is interesting that he doesn’t mention the devastating conclusions about AIG reached by the company’s own auditors.” To contact the reporters responsible for this story: Sylvia Wier at swier@bloomberg.net ; Vivek Shankar at vshankar3@bloomberg.net

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Hank Greenberg Tells WSJ Goldman Sachs May Be to Blame for AIG’s Collapse

January 8, 2010

By Sylvia Wier and Vivek Shankar Jan. 8 (Bloomberg) — Hank Greenberg , former chief executive officer at American International Group Inc. , said Goldman Sachs Group Inc. is responsible for the collapse of the insurer during the economic crisis, the Wall Street Journal reported. “It certainly wouldn’t be difficult to come to that conclusion,” Greenberg is quoted as telling the newspaper. Greenberg blamed new standards for credit-default swaps — pushed by Goldman or Deutsche Bank AG, he said — and subprime, housing-backed derivatives sold and then shorted by Goldman as contributing to AIG’s collapse, the newspaper reported. “Mr. Greenberg appears to base his views on news reports rather than facts,” Lucas van Praag , a Goldman spokesman, said in an e-mail to Bloomberg News. “It is interesting that he doesn’t mention the devastating conclusions about AIG reached by the company’s own auditors.” To contact the reporters responsible for this story: Sylvia Wier at swier@bloomberg.net ; Vivek Shankar at vshankar3@bloomberg.net

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CFTC’s Gensler Says U.S. Should `Explicitly’ Regulate Derivatives Dealers

January 6, 2010

By Asjylyn Loder and Matt Leising Jan. 6 (Bloomberg) — The U.S. should “explicitly” regulate derivatives dealers, said Gary Gensler , who has pushed Congress to impose new rules on the $300 trillion over-the- counter derivatives market. Gensler, chairman of the Commodity Futures Trading Commission, has pushed Congress to give the commission greater authority to regulate over-the-counter contracts, a move that may give it more control of commodity speculation that takes place outside of regulated exchanges. “Leading up the financial crisis, it was assumed that the banks that deal in derivatives were already regulated, and thus did not need to be explicitly regulated for their derivatives transactions,” he said in a speech to the Council on Foreign Relations in New York. This was a “flawed assumption,” he said. He outlined a three-prong approach: regulate derivatives dealers, bring transparency to the OTC market, and move standard derivatives to regulated clearinghouses. He cited estimates that half of all commodity and energy derivatives transactions could be standardized. Clearinghouses, which are capitalized by their members, increase stability in over-the-counter derivatives markets because they lessen the effect of a default by sharing that risk among the membership and use daily margining procedures to keep accounts current. They also allow regulators to see market positions and prices. Congressional Action Congress has proposed new rules on derivatives as part of an overhaul of the financial system after the worst recession since the Great Depression led federal government to spend, lend or commit as much as $12.8 trillion to shore up the U.S. economy. Gensler is seeking additional authority from Congress to curb speculation in off-exchange commodity contracts so that traders can’t use OTC transactions to sidestep limits meant to keep one trader from gaining too much control of the market. House legislation passed in December requires that standardized contracts be processed by clearinghouses and executed on regulated exchanges or swap execution systems. Clearinghouses impose capital and margin requirements for trading. Commodity-based businesses such as manufacturers, airlines and energy producers that use derivatives would be exempt from the clearinghouse requirement if they can show they are using the contracts to hedge operational risk. The transactions would have to be reported to regulators. To contact the reporters on this story: Asjylyn Loder in New York aloder@bloomberg.net ; Matthew Leising in New York at mleising@bloomberg.net .

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Commercial Real Estate Poses a Risk to U.S. Economic Recovery, Ryding Says

January 4, 2010

By Vincent Del Giudice and Ken Prewitt Jan. 4 (Bloomberg) — The commercial real estate market poses a threat to the U.S. recovery, said John Ryding , chief economist at RDQ Economics in New York. “We have yet to see the full extent of those problems,” Ryding said today in an interview on Bloomberg Radio. The housing market, which plunged the economy into recession, also remains fragile, Ryding said. “Maybe housing credit has gotten ahead of itself,” he said. “I don’t think we’re out of the woods yet on the write- off situation.” Regarding the labor market, “our feeling is we will see a small positive number” in the government’s report on non-farm payrolls in December, Ryding said. He didn’t provide an estimate. Payrolls probably fell by 4,000 workers last month, the smallest drop since the recession began two years ago, according to the median of 66 economists surveyed by Bloomberg News ahead of a Jan. 8 Labor Department report. The unemployment rate may have climbed to 10.1 percent from 10 percent. Ryding also said the Federal Reserve’s “easy policy stance is going to boost inflation expectations.” The Fed has held its benchmark rate near zero since December 2008, and there is “no inclination to raise rates at all this year,” he said. In the bond market, the yield on the Treasury’s 10-year note will rise to 4.5 percent or 5 percent by the end of the year “partially as markets come to worry about inflation down the road,” Ryding said. Ten-year note yields were little changed at 3.83 percent at 11:39 a.m. in New York. They reached 3.90 percent earlier today, near the highest level since June. There is “no credible exit strategy” for record government budget deficits, Ryding said. (In the U.S., hear Bloomberg Radio on satellite radio: Sirius Channel 130 and XM Channel 129. In New York City, tune to WBBR 1130 on the AM dial.) To contact the reporters on this story: Vincent Del Giudice in Washington vdelgiudice@bloomberg.net ; Ken Prewitt in New York kprewitt@bloomberg.net

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Developer of Golf’s `Nicklaus Trail’ in Spain Is in Talks With Creditors

December 29, 2009

By Sharon Smyth and Alex Duff Dec. 29 (Bloomberg) — Polaris World, a privately held Spanish real estate company that develops golf courses designed by Jack Nicklaus , is in talks with lenders to avoid filing for protection from creditors. The developer, whose courses designed by 18-time golf Major winner are dubbed the “Nicklaus Trail”, notified a court in Murcia about the talks with lenders, an official for the Murcia Superior Court said today in a phone interview. The company has three months to reach an agreement or it will have to file for protection from creditors, said the official, who declined to be identified. In May 2009 the company’s lenders, including Banco Popular SA and Spanish savings bank Caja Murcia, agreed to cancel 970 million euros ($1.4 billion) of debt in return for real estate assets, according to a company filing. Polaris World still has about 900 million euros of debt, El Mundo newspaper reported. Phone messages left with Nicklaus Design in North Palm Beach, Florida, were not immediately answered. Spokesmen for Banco Popular SA and Caja Murcia declined to comment. Calls made to Polaris World went unanswered. To contact the reporters on this story: Sharon Smyth in Madrid at ssmyth2@bloomberg.net or Alex Duff in Madrid at aduff4@bloomberg.net

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Tokyo Stock Exchange’s Saito Forecasts Rebound in Initial Public Offerings

December 28, 2009

By Mike Firn and Finbarr Flynn Dec. 29 (Bloomberg) — New listings on the Tokyo Stock Exchange may rise 10-fold to as many as 100 in 2010 as an increasing number of technology companies seek capital, according to Atsushi Saito , president of the bourse. “We can expect between 50 and 100,” said Saito in a Bloomberg TV interview at the exchange’s offices in Tokyo yesterday. “We will see more emerging new companies with very unique technology, so they will naturally look for capital.” Saito’s forecast follows a slump this year when funds raised by Japanese companies through initial public offerings dropped to a 30th of the peak set nine years ago amid declining share prices and a weak economy. There were 10 initial public offerings on the Tokyo Stock Exchange in 2009, according to data from T&C Financial Research Inc., while 19 companies listed on exchanges across Japan during the year. After shrinking for four consecutive quarters, Japan’s economy emerged from recession in the three-month period ended June 30, overcoming the financial crisis earlier than the U.S. and Europe. To contact the reporters on this story: Mike Firn in Tokyo at mfirn@bloomberg.net Finbarr Flynn in Tokyo at fflynn3@bloomberg.net

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Marc Faber Says Dollar May Rise Another 5%-10% Versus Euro in `Near Term’

December 28, 2009

By Deirdre Bolton and Ye Xie Dec. 28 (Bloomberg) — The dollar may appreciate 5 to 10 percent against the euro in the “near term,” according to Marc Faber , publisher of the “ Gloom Boom & Doom ” newsletter. U.S. equities and the dollar may keep rallying together, reversing a relationship that existed from March to November, Faber said in an interview on Bloomberg Television. “Sentiment on the U.S. dollar was really extremely negative over the last three months,” Hong Kong-based Faber said. “The other currencies are not much better. The dollar will appreciate against the euro by another 5 to 10 percent, and later on we’ll have to see, but that would be a near-term target.” The dollar has gained 4.2 percent to $1.4405 per euro this month, and was poised to end a five-month losing streak, on signs the U.S. economic recovery is gaining momentum. Investors need to be “very careful” holding U.S. Treasuries and cash, and U.S. stocks will rally as Federal Reserve Chairman Ben S. Bernanke and his colleagues may have to print more money to help the government finance its debts, said Faber. The Standard & Poor’s 500 Index “could go up 200 percent if it prints enough,” Faber said. “The worst investment, in the long run, will be U.S. Treasuries, and cash which has no return at present. This is the one reason that I am moderately positive about equities is that this money goes into leverage plays.” To contact the reporters on this story: Deirdre Bolton in New York at dbolton@bloomberg.net ; Ye Xie in New York at yxie6@bloomberg.net

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Iraq Oil Sites Are Under Country’s Control After Iran Clash, Official Says

December 25, 2009

By Zahraa Alkhalisi and Kadhim Ajrash Dec. 25 (Bloomberg) — None of Iraq’s oil fields are under Iranian control, an Iraqi official said, one week after Iranian forces occupied a well in a disputed border area. “There are no other wells under Iranian control,” Ali Maarej, director of Iraq’s state-run Missan Oil Co. said today on a press visit of the al-Fakah site where last week’s standoff took place. Clashes between the nations over disputed oilfields have occurred previously as the countries debate the location of their border. Iranian forces are more than 50 meters (164 feet) from the disputed site, Maarej said. They remain on Iraqi territory, he said. “The al-Fakah fields are Iraqi fields but that is being disputed by the Iranian side as they consider them shared oil fields,” Maarej said. Iran and Iraq are now in talks over al- Fakah, he said. Iran and Iraq have the world’s second- and third-largest oil reserves. To contact the reporters on this story: Zahraa Alkhalisi in Dubai at zalkhalisi@bloomberg.net ; Kadhim Ajrash in Baghdad through the Dubai newsroom or mchmaytelli@bloomberg.net

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Senate Health Legislation Gets Backing From American Medical Association

December 22, 2009

By Nicole Gaouette and Kristin Jensen Dec. 22 (Bloomberg) — The U.S. Senate cleared the second of three procedural hurdles for landmark health-care legislation, keeping it on a path toward passage this week. Democrats united along with the two independents who caucus with them on a 60-39 vote. The last procedural vote is planned for tomorrow, with a final vote on passage due at the latest on Dec. 24. The 10-year, $871 billion measure is designed to cover 31 million uninsured Americans and curb rising medical expenditures . After passage, it would need to be combined with a bill that the U.S. House passed on Nov. 7. “This is a real debate over whether or not health care is going to be a right or privilege in America,” said Senator Richard Durbin of Illinois, a member of the Democratic leadership. “If you believe it’s a privilege for the rich, then you’ll vote against this. If you believe it’s a right, then I hope you’ll vote with us.” Durbin spoke on the Senate floor before the vote. To contact the reporters on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net ; Kristin Jensen in Washington at kjensen@bloomberg.net

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Iranian Troops Leave Disputed Iraqi Oil Field After Armed Confrontation

December 20, 2009

By Kadhim Ajrash and Zahraa Alkhalisi Dec. 21 (Bloomberg) — Iranian troops withdrew from a disputed Iraqi oil well in the East Maysan field after an armed confrontation at the deposit, Iraqi government officials said. The Iranian forces left the al-Fakah well late Dec. 19, Iraq’s deputy minister of oil Abdul Kareem al-Luaibi told reporters in Baghdad yesterday. Iranian control of the well was “a violation of the Iraqi border,” al-Luaibi said. “The issue at the al-Fakah well was resolved diplomatically.” The Iranian flag was been taken down from the well, though Iranian soldiers remained in Iraqi territory, Ali Al-Dabbagh , an Iraqi government spokesman, said in comments on Iraqi television and to reporters in Cairo yesterday. Iranian tanks entered the area on Dec. 17, triggering the dispute with its neighbor that drove up oil prices. Iran has said the well is on its territory. Clashes between the two countries over disputed oil fields near the border have occurred previously, caused by “the lack of a formally demarcated border between the two countries,” Stratfor , an Austin, Texas-based intelligence-consulting group, said in an e-mailed statement Dec. 18. The foreign ministers of the two countries have discussed the “misunderstanding” that led to the al-Fakah standoff, Iran’s state-run Islamic Republic News Agency reported yesterday. Manouchehr Mottaki and Iraq’s Hoshyar Zebari agreed in a phone conversation Dec. 19 to hold a technical committee meeting on border issues, IRNA said, citing the foreign ministry. Iraq this year signed contracts with several foreign companies to develop its oil fields. The Maysan oil fields, also known as Missan, were among the development contracts offered to foreign oil companies in June, though no bids were received. Missan is composed of the Buzurgan, Abu Ghirab and Fauqi fields. Production began at Buzurgan and Abu Ghirab in 1976 before halting in 1980 during Iran-Iraq war. It restarted in 1998. The disputed well has not been in production since the war. To contact the reporters on this story: Zahraa Alkhalisi in Dubai at zalkhalisi@bloomberg.net ; Kadhim Ajrash in Baghdad through the Dubai newsroom or mchmaytelli@bloomberg.net ; Anthony DiPaola in Mumbai at adipaola@bloomberg.net .

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CMA CGM Warns of Bankruptcy Unless Bondholders Back Plan to Increase Debt

December 18, 2009

By Laurence Frost and John Glover Dec. 18 (Bloomberg) — CMA CGM SA, the world’s third- biggest container shipping company, told bondholders it faces bankruptcy unless they approve a plan to raise more debt. CMA CGM is asking holders of $570 million of senior bonds to change the terms of the notes to allow prospective lenders to have first claim on the company’s assets in the event of a default, said Paris-based spokeswoman Anne-France Malrieu . Otherwise CMA CGM may be “forced to commence bankruptcy proceedings” and the investors may lose their money, the company said in a Dec. 16 notice to bondholders. Marseille-based CMA CGM is seeking changes to the terms of its bonds in dollars and euros due 2012 and 2013 as part of an effort to restructure $5.6 billion of debt and raise new money, according to the notice, which Malrieu confirmed is authentic. The company is in breach of conditions on most of its debt after suffering from a slump in world trade amid the deepest financial crisis since the 1930s. CMA CGM needs a majority of the bondholders to agree to the proposed changes in the terms of the notes by Dec. 22, according to the notice. Otherwise it said it “may be forced to file for bankruptcy proceedings in the near term, in which case there would be no assurance that CMA CGM would be able to repay” the senior notes. A new credit line and plans to refinance $4.5 billion in outstanding ship orders depend on CMA CGM getting the approval of its bondholders to change the debt terms, according to the notice. The so-called consent solicitation statement concerns the company’s 293.3 million euros ($420 million) of outstanding 5.5 percent bonds due May 2012 and its remaining $149.8 million of 7.25 percent notes maturing in February 2013, according to data compiled by Bloomberg. To contact the reporters on this story: Laurence Frost in Paris at lfrost4@bloomberg.net ; John Glover in London at johnglover@bloomberg.net

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Bank of America Names Brian Moynihan as Chief Executive, Replacing Lewis

December 16, 2009

By David Mildenberg Dec. 16 (Bloomberg) — Bank of America Corp., the biggest U.S. lender, promoted Brian Moynihan to chief executive officer, a person familiar with the matter said. Moynihan, the 50-year-old head of the consumer banking unit, will be in charge of repairing the company after the tumultuous takeover of Merrill Lynch & Co. pushed Kenneth D. Lewis into early retirement. Lewis, 62, said Sept. 30 he’d step down by the end of this year. Bank of America’s new boss must stanch defaults on consumer loans tied to the recession, which led to two losses in the past four quarters. He must also integrate Merrill Lynch and smooth relations with regulators after they clashed with Lewis over the purchase. The bank paid back $45 billion to the U.S. Troubled Asset Relief Program on Dec. 9. Moynihan takes charge of the biggest U.S. lender by assets and deposits, the No. 1 home lender and the largest issuer of debit cards. He’ll also oversee underwriting, trading and retail brokerage operations of New York-based Merrill Lynch. The bank counts 53 million consumer and small-business customers in 150 countries at 6,000 offices, and the company’s stock is a component of the Dow Jones Industrial Average . To contact the reporters on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net .

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Boyd Renews Bid for Station Casinos Under $2.45 Billion Non-Binding Offer

December 16, 2009

By Steven Church Dec. 16 (Bloomberg) — Boyd Gaming Corp. renewed its proposal to buy bankrupt competitor Station Casinos Inc. in a deal worth $2.45 billion in cash and debt, according to a regulatory filing. The offer is non-binding and subject to a more detailed review of Station’s finances, Boyd said in its letter to Station’s directors. Boyd included the letter in a U.S. Securities and Exchange Commission filing today. “Boyd Gaming is in the best position to execute a smooth transition of ownership and operate the Station properties efficiently from day one,” Chief Executive Officer Keith E. Smith said in the letter. Station spokeswoman Lori Nelson said in an e-mail that she couldn’t immediately comment. Since filing for bankruptcy in July, Station has battled unsecured creditors and a group of dissident lenders over issues including four casino leases. Boyd has complained in court papers that it hasn’t been given an opportunity to review Station’s financial records. The company listed assets of $5.7 billion and debt of $6.5 billion when it filed for court protection under Chapter 11 of the U.S. bankruptcy code. Chapter 11 is typically used by companies that expect to reorganize and exit bankruptcy. Station’s debt was the result of a leveraged buyout in November 2007 by Feritta Colony Partners LLC. Station Casinos has 13 properties in Las Vegas plus five joint ventures, and operates casinos for American Indian tribes. Boyd said it was willing to buy the company’s operating and property units. It excluded what it called Station’s “Landco” assets, which are collateral for a $250 million term loan. No other details about the assets were given in Boyd’s letter. The offer includes more assets than Boyd’s original sought to buy in February. Boyd originally offered $950 million for part of Station. The case is In Re Station Casinos Inc., 09-52477, U.S. Bankruptcy Court, District of Nevada (Reno). To contact the reporters on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net .

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Lazard, TPG Employees Leaked Merger Tips to Insider Traders, SEC Suit Says

December 16, 2009

By David Scheer and Karen Gullo Dec. 16 (Bloomberg) — Two former employees at Lazard Freres & Co. and buyout firm TPG leaked confidential information about pending corporate acquisitions as part of a “serial insider-trading scheme” that generated almost $500,000, the U.S. Securities and Exchange Commission said in a lawsuit. Adnan Zaman, 30, who worked in Lazard’s San Francisco and New York offices, and Vinayak Gowrish , 31, who worked in TPG’s San Francisco and Minneapolis offices, are among four defendants in the suit filed today by the SEC at federal court in San Francisco. Zaman agreed to settle without admitting or denying wrongdoing, according to documents filed at the courthouse. To contact the reporters on this story: David Scheer in New York at dscheer@bloomberg.net ; Karen Gullo in San Francisco at kgullo@bloomberg.net .

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GM Plans to Repay U.S., Canadian Loans by End of June, CEO Whitacre Says

December 15, 2009

By Katie Merx and Bill Koenig Dec. 15 (Bloomberg) — General Motors Co., the automaker that restructured in a 40-day bankruptcy, plans to repay government loans by the end of June, Chief Executive Officer Ed Whitacre said. The automaker owes the U.S. $6.7 billion out of $50 billion in assistance from the U.S., Canada and Ontario governments. The loans had a scheduled maturity date of July 2015. The automaker, 61 percent owned by the U.S., doesn’t have a timetable for public trading of its shares, he told reporters at a roundtable in Detroit today. “We plan to repay the government by the end of June,” Whitacre said. He clarified later that he meant the company would repay the Troubled Asset Relief Program and Canada. Whitacre is pushing GM managers for quick changes after the company exited bankruptcy with government aid following $88 billion in losses since 2004. Since the board ousted CEO Fritz Henderson and placed Whitacre, 68, in the role on Dec. 1, he has shuffled the Detroit-based company’s top ranks to include more younger executives and women. Henderson, 51, had been on the job eight months, and directors concluded he hadn’t done enough to fix GM’s finances and culture, people familiar with the matter have said. He became CEO in March as the former General Motors Corp. slid into bankruptcy on June 1 and emerged July 10 as General Motors Co. The U.S. Treasury selected Whitacre, a former AT&T Inc. chairman and CEO, to lead the new GM board. While he serves as interim chief, the automaker is using Spencer Stuart, the largest closely held executive-search firm, to find a replacement. To contact the reporters on this story: Katie Merx in Detroit at kmerx@bloomberg.net ; Bill Koenig in Southfield, Michigan, at wkoenig@bloomberg.net

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