A federal judge handed the Obama administration an important victory in its push to steer the automobile industry back to health Sunday, approving the sale of General Motors Corp.’s (OTC: GMGMQ) most profitable assets to a new government-run company.

The move removes an important barrier to the company’s plan to exit bankruptcy.

Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York issued a ruling saying the sale was GM’s only option and that it would “prevent the death of the patient on the operating table,” according to Reuters.

The 87-page ruling rejected appeals from a group of bondholders, tort claimants and unions who had objected to the plan.

“As nobody can seriously dispute, the only alternative to an immediate sale is liquidation — a disastrous result for GM’s creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates,” Gerber said in the opinion.

When the sale is completed, it would transfer GM’s “good assets” – including the Chevrolet, Cadillac, Buick and GMC brands – to a new company majority-owned by the U.S. Treasury.  It would also pave the way for the new GM to exit bankruptcy in less than two months, one month earlier than the government’s projection.

The plan would allow the company to jettison unwanted property to the old GM, including 16 automotive plants in Delaware, Ohio, New York, Indiana, Pennsylvania, Virginia and Michigan. The Treasury will also provide the estate with $1.175 billion to unwind the remaining assets, up from original projections of $950 million after creditors complained about possibly getting stuck with liquidation costs.

The U.S. government would own 60% of the new GM in return for $50 billion in loans, the Canadian government would get 11.7% for $9 billion in loans, and workers would receive a 17.5% stake for relinquishing future health-care benefits.

Bondholders would be forced to convert about $27 billion in bonds into about 10% of stock in the new company, plus warrants with a total value of $7.4 billion. New GM’s total equity is anticipated to be worth more than $38 billion, according to Bloomberg News.

During three days of hearings, the workers and bondholders objected to the plan, saying the “new GM” is just “old GM” minus a slew of liabilities. They contend the company would market nothing new, pedaling the same cars and trucks, made by the same workers managed by the same executives.

Gerber dismissed the bondholders’ assertion that GM should restructure under a Chapter 11 reorganization plan, which would let creditors vote on details of the plan, saying the argument was unrealistic.

“In the event of liquidation, creditors now trying to increase their incremental recoveries would get nothing,” he ruled.

Gerber’s ruling also torpedoed arguments from dealers whose contracts are being terminated, groups of car-accident victims who said they would now be unable to sue GM for their injuries, and others who claimed that the U.S. government had been overbearing in its negotiations to restructure the automaker.
Gerber issued a typical four-day stay of the order approving the sale, which allows for possible appeals.

Steve Jakubowki, a lawyer for product-liability claimants said he would appeal the ruling even though GM recently revised its bankruptcy plan to take on claims from future car-accident victims.

“This issue is too important, too unsettled and too many people’s lives hang in the balance for me not to pursue this appeal through to the end,” Jakubowski told The Wall Street Journal.

Gerber ruled that the sale could be “free and clear of claims,” because his hands were tied by precedents established in the second judicial circuit during the bankruptcy filed by Chrysler LLC.  The second judicial circuit encompasses Gerber’s court.

But in the end, Gerber concluded that the government’s plan was the only one that makes sense.

“GM cannot survive with its continuing losses … and without the governmental funding that will expire in a matter of days,” Gerber wrote.

The ruling marks the second big victory for the Obama administration’s auto task force, which will be charged with supervising the liquidation of the remaining assets.  The task force had previously engineered the sale of Chrysler to a consortium headed by Italy’s Fiat S.p.A. (ADR OTC:FIATY).

Source: GM Bankruptcy Judge Approves Obama Administration’s Exit Plan ]]> http://www.contrarianprofits.com/articles/gm-bankruptcy-judge-approves-obama-administration%e2%80%99s-exit-plan/18801/feed 0 http://www.contrarianprofits.com/articles/bankrutpcy-will-let-general-motors-move-forward/17343 http://www.contrarianprofits.com/articles/bankrutpcy-will-let-general-motors-move-forward/17343#comments Mon, 01 Jun 2009 14:17:30 +0000 William Patalon III http://www.contrarianprofits.com/?p=17343 By the time investors read this today (Monday), embattled U.S. automaker General Motors Corp. (NYSE: GM) Motors Corp. could be operating under the protection of the U.S. bankruptcy code, a strategic move made in an effort to transform the once-dominant firm into a leaner and more competitive player.

GM has lost an aggregate $82 billion in the past four years even as it slashed production capacity, nameplate brands – and more than 100,000 U.S. jobs. It needs to cut another 19,000 workers by 2012 to bring its domestic employment down to 72,500 jobs.

GM on Saturday passed a major milestone ahead of a bankruptcy filing planned for today (Monday) as the deadline passed for bondholders to accept an exchange offer brokered by the…

Such a move would likely mean bondholders would get a smaller piece of a new company that would emerge in bankruptcy with most of GM’s saleable assets. The bondholders, who own $27.5 billion in GM debt, had been offered 90% of the new entity’s equity in an earlier settlement proposal. That debt is now trading for as little as 8 cents on the dollar.

“What the government is doing is stepping them down and easing the blow,” Albert Angrisani, a turnaround executive who was assistant secretary of labor under President Ronald Reagan, told Bloomberg. By doing that, “they lessen the rights of the creditors in bankruptcy,” he said.

GM has until June 1 to turn its business model around, and that involves putting out two major fires: First, convincing the bondholders to exchange the debt into GM equity, and secondly, convincing the United Automobile Workers’ to make more concessions – the latter being more difficult without bondholders making a sacrifice.

Retirees owed health benefits would probably get more equity in the new company than bondholders, who would likely get only “a sliver,” Bloomberg reported. GM has been negotiating to reduce the $20.4 billion it owes to a union-run health care fund.

The $13.4 billion in funding previously provided to GM came in the form of secured loans holding senior status to other bondholders, which may make it easier for GM to force a restructuring plan on other creditors.

The equity stake idea surfaced on the heels of a report Sunday in The New York Times that the Treasury Department has told GM its goal is a speedy “surgical” bankruptcy, despite the company’s effort to restructure outside of court.

One of the plans the Treasury is considering would involve creating a new company that would buy GM’s better assets immediately after the bankruptcy filing. Bad assets would be left in the old company and liquidated, The Times reported.

A committee of bankers and other GM advisers are working to determine how much the restructured company might be worth in a debt-for-equity swap, anonymous sources told Bloomberg.

Banks and other creditors also have $6 billion in secured claims that would not be part of the debt-for-equity calculations.

While it is widely believed President Barack Obama favors bankruptcy as the most likely way for GM to become competitive, the government may prefer a quick sale of its stake to avoid criticism of what may be seen as a government takeover of private enterprise.

Critics have already accused the administration of teetering on the brink of socialism after the government took stakes in banks and insurance companies as part of its bailout of the financial industry.

A government stake, “means you essentially have a nationalized General Motors until such time as the government sells off its equity to someone else, which won’t happen for a while,” said Gerald Meyers, a professor at the University of Michigan Ross School of Business and a former chairman of American Motors Corp. told Bloomberg.

“The problem is it’s political. On the other hand, it’s a cheap way for the good GM to keep going and probably solidify its strengths,” he said.

Meanwhile, creditors of another struggling U.S. carmaker, Chrysler LLC, plan to make a counteroffer to the U.S. Treasury this week – possibly asking for equity in a firm combining Chrysler and Fiat S.p.A. (ADR: FIATY), Reuters reported.

The lenders, which include JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS), were in talks with the government to reduce Chrysler’s debt by swapping some of it out for equity, new debt or a lesser amount in cash.

The two auto companies have been in discussions about an alliance that could see Fiat take a stake in Chrysler by the end of April.

Source: Government May “Nationalize” GM by Swapping Debt for Equity

• U.S. factory orders rose in February, reversing six months of consecutive declines, the Commerce Department said. New factory orders rose 1.8% in February after dropping a revised 3.5% in January, Reuters reported.

• The 30-year fixed-mortgage rate dropped to 4.78%, a 30-year low, as the U.S. Federal Reserve increases its purchases of mortgage-backed bonds, Bloomberg reported. “Lower rates will help increase demand for homes. We need to see stronger demand for homes to help end the housing correction,” Celia Chen, senior director at Moody’s Economy.com told Bloomberg.

• Seeking funding to develop three new hybrid vehicles, General Motors Corp. (GM) asked the U.S. Treasury for a low-interest $2.6 billion loan, Reuters reported. If received, the loans would help the company develops two spinoffs from its all-electric Chevrolet Volt.

• Copper’s December price of $1.25 a pound is “in the past,” said Chile’s Mining Minister Santiago Gonzalez. December’s price was a four-year low, a result of tapering demand from China. Now,  “China is buying large amounts of copper,” Gonzalez said to Bloomberg. “That’s part of copper’s recovery.”

• International Business Machines Corp. (IBM) cut its offer for Sun Microsystems Inc. (JAVA) to $9 from $10 per share, The Wall Street Journal reported. Sun has agreed to accept a lower price in return for stronger commitments from IBM that it will complete the deal even if it faces intense regulatory scrutiny, according to The Journal.

• Oil prices surged nearly 9% yesterday (Thursday), as light, sweet crude for May delivery rose $4.25 to settle at $52.64 a barrel on the New York Mercantile Exchange. Natural gas for May delivery added 8.7 cents to settle at $3.782 per 1,000 cubic feet.

Source: Global Investment News Briefs Friday, April 3, 2009

All told, the Big Three will idle about 59 factories over the next month as each of the three American carmakers struggle to wait on a rescue that the White House says is still under study. The announcement comes in the wake of a stubborn credit crisis and debate over the government bailout for the Big Three automakers.

The Chrysler announcement – because it came first – was the stunner.

“This is definitely out of the ordinary,” Edmunds.com analyst Jesse Toprak told MarketWatch. “I’ve never seen this kind of shutdown for this long.”

At Chrysler, some 46,000 employees will be affected by the shutdown, but will receive about 95% of their pay through unemployment and contributions from Chrysler.

Meanwhile, Chrysler’s new credit terms are forcing some dealers to sell cars at a loss.  At a time when many are struggling to survive, the company’s financing arm imposed large fees on aging, unsold inventory, which could cost dealers hundreds of thousands of dollars in 2009.

David Kelleher, who owns two Chrysler dealerships in metro Philadelphia, told The Wall Street Journal he has 56 vehicles more than a year old, which are subject to the fees.

“I’m taking, in some cases, a loss to get rid of cars before I face curtailment,” said  Kelleher, who is making deals to reduce his aged inventory before he gets a bill from Chrysler on Jan. 1. Kelleher said he knows of many dealers in worse shape.

Any loss of dealers could hurt the automaker’s sales and increase consumer worries about the company’s future.

The company also threatened to temporarily suspend new-inventory loans. Known in the industry as floor planning, the loans are funded by the dealers themselves to stock their  lots with new vehicles and drawn down as they pay off inventory. But since July, dealers have yanked $1.5 billion from the accounts on worries that Chrysler could go bankrupt.

Blaming its woes squarely on the credit crisis, Chrysler said that dealers have indicated “many willing buyers for Chrysler, Jeep and Dodge vehicles,” but have been unable to close the deals, due to lack of financing.

Automakers’ cash troubles are coming to a head, which is what forced General Motors, Chrysler and Ford Motor to conserve cash by halting production at many or all of their plants.

Ford said Wednesday that it would idle 10 North American plants for an additional week in January because of the slumping industry. GM said it will indefinitely delay the construction of a Michigan factory that will make its electric car, the Volt – one of the vehicles GM hopes will help turn the company profitable.

Even Toyota Motor Co. (ADR:TM), the world’s top automaker, told Reuters that it will announce a revised 2009 sales forecast at its end-of-the-year news conference Dec. 22. The company is expected to cut at least one million cars from its original forecast of 9.7 million units.

The Big Three have warned that without a loan package, millions of jobs could be lost, which would send ripple effects through the nation’s already faltering economy. U.S. auto sales sank 37% in November amid talk of a bankruptcy at GM or Chrysler if Washington fails to deliver a massive bailout package

The latest news raises new questions about the viability of any proposed bailout, with some analysts saying a rescue plan – no matter how large – won’t solve the industry’s underlying problems.

“Even though the industry has improved its products in the last few years, the government shouldn’t give the Big Three a dime until they can demonstrate compelling changes to their products, management, and productivity that will be rewarded by increased market share,” said Money Morning Investment Director Keith Fitz-Gerald.

Fitz-Gerald estimates the final cost of a rescue package would exceed $100 billion.

Meanwhile, the White House remains evasive about any plans for a bailout.

President George W. Bush said late Wednesday he was “looking at all options,” according to the transcript of a Fox News interview. “A disorganized failure, disorganized bankruptcy or disorderly bankruptcy … could cause great harm to the economy, beyond that which we’re now witnessing. And that concerns me,” Bush said.

The news came a day after the White House warned that the U.S. auto industry would have to make “concessions” to win a government bailout.

“And the other point is that, I’m not interested in … really putting good money after bad,” Bush said.

Big Three to Shutter 59 Plants – Chrysler Forces Dealers to Sell at a Loss

It’s also expected to outline cost cutting measures that could include laying off employees, suspending plant operations, delaying the opening of new plants, and cutting the budget for research and development.

According to several Japanese media outlets, Toyota plans to eliminate bonuses for its executives and is expected to post a second-half loss.

One analyst believes the company’s dividend also could be on the chopping block.

“We anticipate that even Toyota could see its post-dividend cash flow turn negative should it keep its dividends at 140 yen,” Morgan Stanley (MS) analyst Noriaki Hirakata wrote in a report. “Thus, in this perfect storm, we expect the firm to cut its dividend to 100 yen per share for this business year.”

That’s a gigantic step backwards from last year, when Toyota took the crown from General Motors Corp. (GM) as world’s largest automaker by selling 9.37 million cars worldwide.

But like all automakers – and nearly every major industry – Toyota has been crippled by a worldwide dearth in demand, brought on by a whirlwind of job losses, devalued property, lack of credit and falling stock markets.

From January to October this year, Toyota sold 7.74 million vehicles. And during its fiscal first half – six months ended September 30 – net revenues fell 6.3% compared to the same period last year.

Year-to-date, Toyota’s New York-listed ADR shares have fallen about 38%, still much better than GM and Ford Motor Co.’s (F) respective stock declines of 83% and 53%. But recently, Toyota’s ADR shares have been moving forward in hopes that the U.S. government will bailout Detroit’s Big Three – GM, Ford and Chrysler LLC – because that would shore up the auto industry’s underpinnings: Dealerships and parts and supply manufacturers.

The United States is also the largest market for most foreign automakers. Allowing one or all of the Big Three to go under would add millions to the running unemployment numbers and deepen the recession, making the U.S. market less likely to buy their cars.

Source: Toyota to Slash 2009 Sales Outlook, Cut Costs

“Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry,” Treasury spokeswoman Brookly McLaughlin said in a statement.

No specific announcement of a bailout was made, as there is still time before General Motors Corp. (GM) and Chrysler LLC – the companies in most at risk of foreclosure – run out of cash. However, the White House made it clear that the government is ready to backstop the companies by using a portion of the funds allocated to its Troubled Asset Relief Program (TARP).

“The current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry,” said White House press secretary Dana Perino.

The government has used roughly $335 billion into banks and insurance companies over the past two months, leaving about $15 billion of the initial $350 billion authorized by Congress for the TARP fund available for use. Treasury officials have been reluctant to make those funds available to the auto industry, however, as the money is still needed to backstop existing programs.

If the Treasury wants to tap the second half of the $700 billion bailout passed in October, the administration will first have secure Congressional approval.

A separate measure to grant the auto companies $14 billion in loans was approved by the House of Representatives last Wednesday, but failed to gain Senate approval.

“It’s over with,” said Senate Majority Leader Harry Reid, D-NV, after the Senate vote. “This is going to be a very, very bad Christmas for a lot of people.”

Democrats blamed Senate Republicans for the bill’s failure, and Senate Republicans, in turned blamed union labor.

“We’re hoping that the Democrats will continue to negotiate but I think we have reached a point that labor has got to give, if they want a bill they can get done,” said Senator Richard Shelby, R-AL.

Of course, the bill’s demise left President George W. Bush at a crucial impasse and with virtually no option but to open the Treasury coffers.

“The consequences of the Senate Republicans’ failure to act could be devastating to our economy, detrimental to workers, and destructive to the American automobile industry unless the President immediately directs Secretary Paulson to explore other short-term financial assistance options,” said House Speaker Nancy Pelosi. Action by President Bush is the “only viable option,” she added.

Detroit’s Big Three employ more than 200,000 people and support millions more U.S. workers indirectly through suppliers and dealerships. Their collapse could ultimately cost the economy more than 2 million jobs total. And that doesn’t count the estimated 1 million Americans – including many retired autoworkers – who rely on the U.S. auto companies for pension and healthcare benefits.

Ford Motor Co. (F), which has more cash at its disposal than both GM and Chrysler, has said it would not seek government funds, but still urged Congress to help its competitors because their systems of supply and distribution are so intertwined.

Source: White House Opens TARP to Auto Industry after Congress Fails to Approve Loans

Oil fell towards $45 a barrel on Friday, after the collapse of a $14 billion rescue for U.S. automakers caused heavy losses across global financial markets and Goldman Sachs predicted oil could fall to $30 a barrel.

U.S. crude oil for January delivery was down $2.95 at $45.03 a barrel by 1119 GMT.

Prices rallied more than $4 on Thursday to a session high of $49.12 a barrel before dropping back in late trading.

Oil sank to $40.50 last Friday, its lowest in 4 years.

London Brent crude was down $2.98 at $44.41.

The plight of the big U.S. auto firms, including General Motors Corp and Chrysler, illustrates the severity of the global economic downturn that has hit demand for oil.

“The collapse in world oil demand in the fourth quarter of 2008 as the global credit crunch intensified, now threatens to push oil prices below $40 a barrel in the near term,” Goldman Sachs said in a research note.

“The impact of the global economic recession has swung the oil market from pricing demand destruction in 2008 to pricing supply destruction in 2009.”

The U.S. investment bank, which earlier this year had predicted $200 per barrel oil, virtually halved its 2009 price forecast for U.S. crude to $45 and said the price could fall to $30 in the short term.

Goldman analyst Arjun Murti, who predicted a super-spike in oil to $100 in 2005, said prices would hit a trough in the first quarter.

The bank said a cut of an extra 2 million barrels per day was needed from OPEC, which meets next on Dec. 17 in Algeria.

French bank BNP Paribas cut its 2009 price forecast to $53 a barrel from $75 previously.

Crude has shed two-thirds of its value over the last five months, down about $100 from a record of $147.27 in July.

It rebounded more 10 percent on Thursday in anticipation of a big supply cut from the Organization of the Petroleum Exporting Countries.

OPEC’s President Chakib Khelil has called for more “severe” supply cuts at next week’s meeting.

Russia’s President Dmitry Medvedev has also weighed in, saying the country was ready to work with OPEC on possible oil output cuts.

Japan’s Nippon Oil said it expected OPEC to agree to cut 1.5-2.0 million bpd next week.

“Chances for a 2.5 mln bpd cut are possible, but that would put increased criticism on OPEC amidst the economic slowdown, so I think the likely cuts are up to 2 mln bpd,” Kazuyoshi Takayama, Nippon Oil’s general manager, told reporters on Friday.

Jane Merriman, Jennifer Tan, Osamu Tsukimori
LONDON, Dec 12 (Reuters)

The bill clearly falls short of the $34 billion the Big Three were asking for, but should be enough to keep the automakers running through January, when the new Congress and Obama administration take the wheel.

As previously reported in Money Morning, there will be limits on executive pay, prohibitions for golden parachutes and requirements that the automakers get rid of their corporate aircraft and not pay dividends while loans are outstanding. The bill also provides a “car czar,” or presidential appointee, to oversee keep tabs on the companies’ restructuring efforts.

Of course, the bill is still awaiting congressional approval and there is cause to believe it may stall in the Senate.

Sen. Richard Shelby, R-AL, was a member of the panel that twice grilled Big Three CEOs and one of the bailout’s most vocal critics. Yesterday (Wednesday), Shelby threatened to filibuster the deal if it reaches the Senate.

It’s interesting to note that Shelby’s home state of Alabama, has built three foreign car assembly plants – Honda Motor Corp. (ADR:HMC), Mercedes-Benz and Hyundai – as well as a Toyota Motor Corp. (ADR:TM) engine plant, in the past 20 years.

Shelby’s efforts induced the formation of Boycott Alabama Now, a group that says it wants America to give Shelby a taste of what he’s doing to America. Such a boycott “will include any travel into the state well as boycotting the purchase of anything produced in any way within the state,” according to the group’s Web site.

Senate Minority Leader Mitch McConnell expressed reservations about the bill’s legislation and doubts it’ll garner enough Senate votes to pass. The state he represents, Kentucky, has a 7,000 employee Toyota plant, The Boston Globe reported.

Then there’s Tennessee, the only state with U.S., Asian, and European auto assembly plants. And in an interview with BusinessWeek, Tennessee’s Sen. Bob Corker seems to understand his colleague Shelby’s positions on the bailout more so than his own.

“It has not been an issue of local politics. For me there is no issue of local politics. I try and dig into these issues and present thoughtful responses to the situation. In defense of Senator Shelby, I knew where he was going to be on this issue before this ever arose,” Corker said. “He was against the Chrysler loans back in 1979. He was always going to be against this, as he was against the Wall Street bailout legislation. In his case, it’s not the politics of the auto industry. That’s just who he is.”

But Corker nailed the source of problem.

“Regardless of what happens this week, the legislation, if passed, is not going to move people to buy cars,” Corker said.

Auto Woes Extend Beyond the Big Three

Falling demand is something all carmakers can agree on, especially in Germany, Europe’s largest economy and the home of Europe’s largest carmaker, Volkswagen.

While all focus has been on Detroit’s Big Three, few have noticed that Volkswagen – like Detroit’s Big Three – is trying to bite off its own piece of a broad government bailout. In October, Germany’s parliament passed a $642 billion (500 billion euro) bank-rescue plan to stabilize the country’s banks. And Volkswagen has quietly sought government help for its financial services and banking units.

Premium carmaker BMW said it wasn’t sure if it would ask for similar help, Reuters reported.

That’s why it’s not accurate to assume bailout opponents share the same opinions on the bailout as foreign automakers. As Money Morning previously reported, it’s more than just Big Three employees on the line.

While the Big Three employ more than 200,000 people directly, they support millions more indirectly through suppliers and dealerships. The collapse of the Big Three could ultimately cost the economy more than 2 million jobs total. And that doesn’t count the estimated 1 million Americans – including many retired autoworkers – who rely on the U.S. auto companies for pension and healthcare benefits.

According to Germany’s VDA industry group, parts purchased by manufacturers account for 75% of the value of an average car, Bloomberg reported.

Here in the United States, as many as 60% of Honda’s U.S. parts suppliers are also major parts sources for the Big Three.

If a manufacturer’s major customer goes under, it too may scale back operations and therefore be unable to meet the manufacturing and shipping demands of another customer.

“You can’t underestimate what would happen when a large player collapses,” BMW Chief Executive Officer Norbert Reithofer e-mailed to Bloomberg. “That would impact the supplier structure and therefore the entire industry.”

The United States is also the largest market for most foreign automakers. Allowing one or all of the Big Three to go under would add millions to the running unemployment numbers and deepen the recession, making the U.S. market less likely to buy their cars.

Source: Auto Bailout Awaits Congressional Approval with Millions of Jobs at Stake

• Detroit-based finance company GMAC has filed to become a bank, a shot at getting a slice of the $700 billion Troubled Asset Relief Program bailout. Private equity firm Cerberus Capital Management LP owns 51% of GMAC. General Motors Corp. (GM) owns the other 49%, Reuters reported.

• Initial jobless claims climbed to 542,000 in the week ended Nov. 15, close to a 26-year high. “The economic contraction appears to be worsening,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, told Bloomberg. “The stock markets are plunging, people are retrenching and manufacturing activity is virtually falling off a cliff. The increase in layoffs can only worsen the economic downturn.”

• Ricardo Salinas Pliego, a Mexican media and retail mogul, indicated that he may seek a controlling stake in Circuit City Stores Inc. (CCTYQ), Reuters reported. Pliego already has a 28.1% stake in the company, which filed for Chapter 11 bankruptcy protect last week.

• After seven months of negotiations, Banco do Brasil SA, Brazil’s largest government-owned bank, is buying majority control of Banco Nossa Caixa SA for $2.25 billion, “Nossa Caixa has got plenty of liquidity, a decent branch network and judicial deposits of Sao Paulo state which is useful. It’s a good fit and it’s a good asset,” Pedro Fonseca, an analyst at London’s Keefe, Bruyette & Woods Ltd., told Bloomberg.

• Light, sweet crude for December delivery fell nearly 8%, or $4.07, to $49.50 a barrel in afternoon trading on the New York Mercantile Exchange, before settling at $49.65 a barrel.

• JPMorgan Chase & Co. (JPM) the largest U.S. bank, plans to fire about 10% of its investment banking staff, or about 3,000 employees, as the global economy slides into recession, Bloomberg News reported. JPMorgan also plans to freeze base salaries next year for most employees who earn more than $60,000 to $70,000, annually.

• The Dow Jones Industrial Average yesterday (Thursday) shed 445 points, or 5.6%, to close at 7,552.29 – its lowest level since March 12, 2003. Meanwhile, the Standard & Poor’s 500 index lost 54 points, or 6.7%, to close the day at 752.44 – its lowest level since 1997.

Source: Global Investing Roundups Friday, November 21st, 2008