Newsflash


The American International Group has become a money pit for the United States government. The insurance giant’s new $150 billion bailout is bigger and looks easier on A.I.G. than its previous two facilities, in aggregate $123 billion, from the Federal Reserve. The package is better defined than before, but the increased potential burden on taxpayers is embarrassing for the Fed and the Treasury. It underlines the need for regulation that catches any group that’s too big to fail.

In structural terms, A.I.G.’s Bailout 2.0 looks like an improvement. It aims to solve the company’s main problem — the cash bleeding from its $400 billion credit-default swap portfolio — by unwinding the worst of the instruments completely in a kind of “bad bank” separate from A.I.G.’s insurance businesses. It’s doing something similar with a collection of dodgy mortgage-backed securities. In addition, the Treasury will invest $40 billion in preferred securities under its Troubled Asset Relief Program, and the New York Fed will replace its existing $85 billion credit facility with a new $60 billion loan with a much lower interest rate.

This should all help keep A.I.G. afloat while also bringing an end to the collateral calls that have caused a huge outflow of cash. It should also buy the insurance giant time to sell some of its assets. However, the plan amounts to burdening taxpayers with all of A.I.G.’s losses while still leaving shareholders and even management with a slice of any upside.

That seems too generous, but the Fed’s earlier strategy to protect taxpayers was always wishful thinking. A.I.G.’s size and market significance meant it had the government over a barrel. The insurer’s finance operations had grown far too big to fail, while operating in large part in the cracks between different regulators’ territories.

If the Fed and the Treasury have now done enough to stabilize the situation, that offsets some of the embarrassment of having to bail out their own initial bailout. Longer term, regulations need to capture any company that becomes too significant to the financial system. Rewriting the currently inadequate rulebook is an important task for President-elect Barack Obama. A.I.G. makes for a persuasive Exhibit A.

Santander’s U-Turn

They say Spain is different, but its biggest bank may not be so different after all. Like many of its European peers, Santander has pulled a U-turn on capital. Days after its chief executive, Alfredo Saenz, said the bank didn’t need more capital, Santander has begun raising 7.2 billion euros (about $9.2 billion) with a deeply discounted rights issue.

The about-face reflects the increasing nervousness of investors about the bank’s capitalization. Santander’s core Tier 1 capital ratio, a measure of the strength of its capital, stood at 6.3 percent at the end of September, but was expected to drop below 6 percent as the bank absorbed its recent glut of acquisitions.

Santander could have increased its capital organically by retaining profits over time. That may have been adequate by yesterday’s standards, particularly for a retail bank with minimal exposure to toxic subprime housing assets. But the goalposts have moved, and Santander woke up late to the sentiment shift. The rights issue will take the ratio up to a more comfortable 7 percent.

Turnabouts can dent confidence and make investors suspicious. Santander insists it has no skeletons rattling about in its closet. Nor is it planning any further acquisitions, it says. But shareholders are now likely to be more skeptical about taking what management says at face value.

Santander, which recently acquired Sovereign Bancorp, is issuing the shares at a steep 46 percent discount. Still, the bank looks to be a cut above its peers. It isn’t tapping the government for the capital. Its dividend looks safe through 2009. Its do-it-yourself approach is also on more shareholder-friendly terms than other recent bank transactions. Credit Suisse diluted existing shareholders and issued expensive preference shares to investors from the Middle East. Barclays did the same at an even steeper price.

What’s more, by finally relenting to the market’s demand that it raise more capital, Santander has piled the pressure on other refuseniks. Deutsche Bank, BBVA of Spain and Italian institutions are looking increasingly stubborn in holding out. Like Santander, they all claim to be different. But toughing it out in the face of investor skepticism is looking like a untenable strategy.



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Home arrow Blog arrow Police chief: Woods' wife helped after accident
Police chief: Woods' wife helped after accident PDF Print E-mail
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Friday, 27 November 2009

Tiger Woods was injured early Friday when he lost control of his SUV outside his Florida mansion, and a local police chief said Woods' wife used a golf club to smash out the back window to help get him out.

The world's No. 1 golfer was treated and released from a hospital in good condition, his spokesman said. The Florida Highway Patrol said Woods' vehicle hit a fire hydrant and a tree in his neighbor's yard after he pulled out of his driveway at 2:25 a.m.

Windermere police chief Daniel Saylor told The Associated Press that officers found the 33-year-old PGA star laying in the street with his wife, Elin, hovering over him.

She told officers she was in the house when she heard the accident and "came out and broke the back window with a golf club," he said. "She supposedly got him out and laid him on the ground. He was in and out of consciousness when my guys got there."

He said Woods had lacerations to his upper and lower lips, and blood in his mouth; officers treated Woods for 10 minutes until an ambulance arrived.

The Florida Highway Patrol said Woods was alone in his 2009 Cadillac when he pulled out of his driveway from his mansion at Isleworth, a gated waterfront community just outside Orlando.

The patrol reported Woods' injuries as serious, although Woods spokesman Glenn Greenspan issued a statement that Woods was treated and released.

The patrol said alcohol was not involved, although the accident remains under investigation and charges could be filed.

Left unanswered was where Woods was going at that hour. Greenspan and agent Mark Steinberg said there would be no comment beyond the short statement of the accident posted on Woods' Web site.

Saylor said his responding officers did not hear anything about an alleged argument between Woods and his wife.

Woods, coming off a two-week trip to China and Australia earlier this month, is host of the Chevron World Challenge in Thousand Oaks, Calif., which starts Thursday. He is scheduled to have his press conference Tuesday afternoon at Sherwood Country Club. Steinberg said he did not know if Woods planned to play next week.

The Florida Highway Patrol said tapes of the 911 call won't be released until they can be reviewed, probably Monday at the earliest.

The accident report was not released until nearly 12 hours after Woods was injured. Patrol spokesman Kim Montes said the accident did not meet the criteria of a serious crash, and the FHP only put out a press release because of inquiries from local media.

Montes said the patrol reports injuries as serious if they require more than minor medical attention.

Air bags in the SUV did not deploy.

Investigators still have not had a chance to speak to Woods, but when they do, "we will ask him everything," Montes said. "We just haven't had a chance to do so because he was being medically treated."

Montes said charges could be filed if there was a clear traffic violation, although troopers still do not know what caused Woods' SUV to hit the hydrant and the tree.

Woods rarely faces such private scrutiny, even as perhaps the most famous active athlete in the world.

He usually made news only because of what he can do with a golf club. Few other athletes have managed to keep their private lives so guarded, or have a circle of friends so airtight when it comes to life off the course.

FILE - In this Nov. 14, 2009 file photo, Tiger Woods, from the United States, lines up a putt during the third round of the Australian Masters golf tournament at the Kingston Heath Golf Club in Melbourne, Australia. Authorities say Woods has been seriously injured in a car wreck in Florida. The Florida Highway Patrol says the PGA star hit a fire hydrant and a tree as he pulled out of his driveway early Friday, Nov. 27, 2009, in his 2009 Cadillac sport utility vehicle. Woods was taken to Health Central Hospital. His condition was not immediately known, though the news release said his injuries were serious. (AP Photo/Andrew Brownbill, File)

 

His wife was awarded a $183,250 settlement and an apology from an Irish magazine that published a fake nude photo of her, and Woods received a $1.6 million settlement in a lawsuit against the builder of his yacht — named Privacy — for using his name and photos of the boat as promotional material.

Woods is approaching $100 million in career earnings on the PGA Tour, and Forbes magazine reported that combined with endorsements, appearance fees and golf course design, he has become the first athlete to top $1 billion.

Woods' $2.4 million home is part of an exclusive subdivision near Orlando, a community set on an Arnold Palmer-designed golf course and a chain of small lakes. The neighborhood, which is fortified with high brick walls and has its own security force, is home to CEOs and other sports stars such as the NBA's Shaquille O'Neal.

Woods, who has won 82 times around the world and 14 majors, attended the Stanford-Cal football game last Saturday, where he tossed the coin at the start of the game and was inducted into Stanford's sports Hall of Fame at halftime.

He won six times this year after missing eight months recovering from reconstructive surgery on his left knee. Even though he failed to win a major, Woods said he considered this a successful year because he did not know how his knee would respond.

Doug Ferguson reported from Jacksonville, Fla. Associated Press writers Tamara Lush and Lisa Orkin Emmanuel in Miami contributed to this report.



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