The Fed: Bernanke gets four more years
President Obama has nominated Ben Bernanke to serve a second four-year term as Federal Reserve chairman, “despite criticism in Congress of the low-key central banker’s frantic efforts to rescue the financial system,” said Jon Hilsenrath in The Wall Street Journal. In announcing the move, the president praised Bernanke’s success in averting “a second Great Depression.” Senate confirmation is virtually certain, but Bernanke will probably face stiff congressional questioning about his decision to bail out big banks while leaving struggling homeowners to fend largely for themselves.
Which Bernanke will we see in a second term? asked Simon Johnson in The New York Times. The “arsonist” whose blithe dismissal of the housing bubble set the stage for last year’s market meltdown? Or the “firefighter” who managed to put out the blaze he had ignored for so long? Those are crucial questions, given Bernanke’s “amazing reluctance” to radically reform a “banking and securities system with profound instability hard-wired into its DNA.”
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Entertainment: Disney acquires Marvel
Mickey Mouse and the Incredible Hulk will be under the same corporate roof, now that Disney has agreed to acquire Marvel Entertainment for $4 billion in cash and stock, said Jon Friedman in Marketwatch.com. It’s Disney’s biggest acquisition since it bought Pixar for $7.4 billion in 2006. For Disney chief Bob Iger, “the move represents a pricey bet on the strength of the U.S. economy.” With media stocks out of favor, “Iger is trying hard to drum up excitement by creating content.”
Private equity: A run on Cerberus
Investors are fleeing from Cerberus Capital, the private equity firm that took Chrysler Corp. private, said Alan Rappeport in the Financial Times. In recent weeks, investors in the firm’s core funds have deluged Cerberus with withdrawal requests totaling $5.5 billion, or 71 percent of the funds’ $7.7 billion in assets. The investors cite the funds’ poor results, stemming from the bankruptcies of Chrysler and GMAC, the financing arm of General Motors. Cerberus bought 51 percent of GMAC in 2006.
Energy: Baker Hughes bulks up
Oilfield-services giant Baker Hughes this week agreed to acquire rival BJ Services for $5.5 billion, in a move that strengthens its position in natural-gas exploration, said Edward Klump and Kari Lundgren in Bloomberg.com. BJ Services is a leading provider of pressure-pumping services, in which slurry—often sand and water—“is injected into a well to stimulate production.” The deal instantly makes Baker Hughes a force in the pressure-pumping business, where it previously had only a token presence.
Banking: The FDIC faces cash crunch
The Federal Deposit Insurance Corp. is running out of cash, while the number of troubled banks has hit a 15-year high, said Scott Mayerowitz in ABCnews.com. There are currently 117 banks on the FDIC’s list of tottering banks, up from 90 in January. Meanwhile, the fund insuring U.S. bank deposits has shrunk to $10.4 billion from $52 billion in late 2007. The FDIC can replenish the fund by raising the premiums it collects from federally insured banks.
