Banks prepare for uneven drops

The seven top Wall Street banks, since last July, have written down $107.2 billion of the $254 billion in profits they had racked up since 2004. (The New York Times) Lehman Brothers reported a $2.8 billion loss this morning (MarketWatch), and two of the other banks—Goldman Sachs and Morgan Stanley—are expected to report large drops in quarterly profit this week. (Reuters) Goldman and Morgan Stanley should do better than the others because of their greater exposure to booming commodities like oil. Commodities won't bring in "the same scale of profits as what was being generated in the glory days doing structured credit," said Brian Barish at Cambiar Investors, "but that doesn't mean it's not big." (Bloomberg)

FCC head backs Sirius-XM merger

Federal Communications Commission Chairman Kevin Martin said he will support Sirius Satellite Radio's $5 billion buyout of rival XM Satellite Radio, after the two companies made some concessions. The Justice Department cleared the merger in March; the FCC will have to reverse the original 1997 licenses to Sirius and XM, which include a clause saying they can never join forces. (The Washington Post, free registration) "This is an unusual situation," Martin said. It now goes to an FCC vote. The concessions include a three-year price freeze, the opening of 24 channels to public-interest broadcasts, and a pledge to open up the satellite radio receivers to competition and allow them to work with both services. (AP in

AIG replaces CEO after huge losses

American International Group, the world's largest insurer, dismissed CEO Martin Sullivan and replaced him with AIG chairman Robert Willumstad, a former president of Citigroup. The change, effective immediately, comes after a more than 40 percent fall in AIG share price since December and back-to-back quarterly losses of $5.3 billion and $7.8 billion. (The New York Times) Sullivan, 52, had worked at AIG since he was 17. He is the latest of several high-profile casualties in the financial services sector, as companies face shareholder pressure. "Boards of directors are becoming less tolerant, in general," said Scott Fullman at WJB Capital Group. (AP in Yahoo! Finance)

Economy down, Spam up

Energy prices are rising, the economy is stagnating, and two-thirds of poll respondents say they're spending $100 more a week on groceries than a year earlier. This is changing shopping habits, maybe permanently, but how? It turns out people are foregoing fresh vegetables, fruits, and meats for the canned and frozen varieties; sales of Spam are up 10 percent. Thermometer and cold medicines are rising as people avoid doctor visits. Gas-sipping Vespa sales were up 105 percent in May. And people in all income brackets are cutting back on what they deem luxuries. "People won't stop using toilet paper, but they will stop using other products," said Thom Blischok at IRI Consulting and Innovating. (MarketWatch)