Lending freeze, Global melt

NEWS AT A GLANCE

IndyMac stops lending, halves workforce

Mortgage firm IndyMac Bancorp, the largest provider of risky “alt-A” loans, said it is ceasing almost all new lending and cutting 3,800 jobs—more than half its workforce. The cuts come after federal regulators said IndyMac is no longer “well capitalized” amid unsuccessful efforts to raise capital. (Los Angeles Times) IndyMac was the No. 2 independent mortgage broker last year, after Countrywide Financial, but its stock has dropped 90 percent this year. With no one lending it money, it isn’t clear “that IndyMac is going to be able to get out of this,” said RBC Capital Markets analyst Jason Arnold. “There’s too much risk involved and not enough value in their franchise.” (Bloomberg)

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Global index hits 21-month low

The MSCI main world index hit its lowest level since October 2006, as financial stocks pushed markets lower in Asia and Europe. The MSCI index is now down 20 percent from its peak last November, putting it in bear market territory. (Reuters) Asian markets erased gains from yesterday, with Hong Kong’s Hang Seng closing down 3.2 percent and Japan’s Nikkei 225 down 2.5 percent. (MarketWatch) The slide in banking stocks was prompted by Lehman Brother’s warning yesterday that U.S. mortgage giants Fannie Mae and Freddie Mac would need to raise $46 billion and $29 billion, respectively, under new accounting rules. “Investors are nervous,” said analyst Chicuong Dang at Richelieu Finance. (Bloomberg)

Siemens cuts 16,750 jobs

German engineering firm and industrial conglomerate Siemens AG said it is cutting 16,750 jobs worldwide, or about 4.2 percent of its workforce, because of the global economic slowdown. Siemens shares are down 35 percent this year, compared to a 27.4 percent drop at competitor General Electric and a 28.8 percent slide at Dutch rival Philips. (Reuters) Siemens earned $12,710 per employee in 2007, compared with $67,914 for each worker at GE. (Bloomberg) “We have to become more efficient,” said CEO Peter Loescher. About 12,000 of the jobs will be administrative. Siemens said the job cuts should save $1.8 billion by 2010. (AP in Yahoo! Finance)

The bourbon boom

High corn prices have taken their toll elsewhere, but not on bourbon. Fed by surging global demand, the weak dollar, and increasing popularity among young Americans, the bourbon trade is booming. The major distilleries, most of them in Kentucky, are in the middle of multimillion-dollar expansions. The liquor’s growth, higher in higher-end bourbons, is outstripping Scotch but lagging behind vodka and rum. Still, it wasn’t always this rosy in bourbon country. “Most of the time that I’ve been in the business—up until about the last 10 years—everybody was trying to consign the bourbon category to that great liquor store in the sky,” said Max Shapira of Heaven Hill Distilleries in Bardstown, Ky. (AP in Los Angeles Times)