Monday, May 25, 2009

Economy Watch (Bank Closures, FDIC Fees, GM Loan, Auto Appeal, Canadian Auto Deal, Commodities)

Here's a nice snapshot summary of news related to the U.S. Economy. News source is a 23 May article titled "Economy Watch" by Wisconsin State Journal. To preface the snapshot, my take is:

Commodities - Commodities should continue to show strength until President Obama signals an end to bailouts.

BANK CLOSURE : Regulators have shut down Strategic Capital Bank in Illinois, marking the 35th failure this year of a federally insured bank . The Federal Deposit Insurance Corp. was appointed receiver of the bank , based in Champaign, IL. The FDIC said Friday the bank 's deposits will be assumed by Midland States Bank, based in Effingham, IL.

FDIC FEES: Federal regulators on Friday adopted a new system of special fees paid by U.S. financial institutions that will shift more of the burden to bigger banks to help replenish the deposit insurance fund. The move by the Federal Deposit Insurance Corp. cut by about two-thirds the amount of special fees to be levied on banks and thrifts. It followed protests by small and community banks against a plan adopted in February that charged premiums based on the amount of deposits. The smaller institutions insisted they would be unfairly hit even though they didn't contribute to the financial crisis with reckless lending.

GM LOAN: General Motors Corp. said Friday that it has borrowed an additional $4 billion from the Treasury Department, meaning the automaker now has accepted $19.4 billion in loans from the U.S. government. GM started taking government money in December and said it intended to borrow $2.6 billion more by June 1 and an additional $9 billion after that. But in a regulatory filing Friday, GM said it needed $1.4 billion sooner than originally forecast.

AUTO APPEAL: Lawmakers appealed to the Obama administration on Friday to slow down the restructuring of General Motors and Chrysler, wary of shuttered car dealerships, job losses and the big unknown of a GM bankruptcy. Thirty-six members of Congress urged the White House to re-examine its work to stabilize the U.S. auto industry, prompted by sweeping plans outlined last week by Chrysler LLC and General Motors Corp. to shutter hundreds of car dealerships. They said a pending June 1 deadline for a GM bankruptcy created more uncertainty for the industry.

CANADIAN DEAL: After two weeks of round-the-clock negotiations, the Canadian Auto Workers union has agreed to another cost-cutting deal with General Motors Canada in its bid to qualify for government loans to stave off liquidation, the head of the union said Friday. Specific details of the deal were not immediately available. Union leader Ken Lewenza said the CAW was pressured into a deal after the United Auto Workers agreed Thursday to a tentative deal with the U.S. government and GM Canada's parent company, General Motors Corp.

COMMODITIES REVIEW: Gold for June delivery added $7.70 Friday to settle at $958.90 an ounce on the New York Mercantile Exchange. It was the highest close since Feb. 25. July silver jumped 25 cents to $14.6950 an ounce. July copper futures rose 4.65 cents to $2.0975 a pound. July wheat futures jumped 19 cents to $6.1250 a bushel on the Chicago Board of Trade. Corn for July delivery gained 6.25 cents to $4.3025 a bushel. July soybeans fell 9 cents to $11.66 a bushel...

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