NEWS AT A GLANCE
WaMu quits subprime business
Washington Mutual said it is exiting the subprime mortgage business, cutting 3,150 jobs, and selling $2.5 billion in convertible preferred stock to shore up its tenuous financial position. (MarketWatch) It is also slashing its dividend to 15 cents a share, from 56 cents, and writing down the value of its home-lending unit by $1.6 billion. “They’re clearly concerned the industry will stay in a negative mode for an extended period,” said Punk Ziegel analyst Richard Bove. (Bloomberg) Moody’s and Fitch both downgraded Washington Mutual debt, saying the bank’s mortgage losses will be worse than previously thought. The bank’s shares dropped 9 percent in extended trading. (AP in Yahoo! Finance)
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Citi quietly unloads SIVs
Citigroup has quietly reduced the size of its seven structured investment vehicles by $15 billion, the Financial Times reported. The deals, largely through side deals with junior investors, has reduced the SIVs to about $66 billion, from $83 billion in September. (Financial Times, free registration required) The deals, combined with several banks’ recent bailouts of their SIVs, raise questions about the relevance of a proposed “SuperSIV” fund. (Reuters) Separately, Bank of America is liquidating an “enhanced cash” fund for wealthy investors, after an investor pulled $20 billion from the $33 billion fund due to concerns over the fund’s SIV exposure. (Los Angeles Times, free registration required)
Newspaper magnate sentenced to 6 1/2 years
Former Hollinger International chairman Conrad Black was sentenced to 6 1/2 years in prison for swindling Hollinger shareholders out of $6.1 million. He also has to give back the $6.1 million and pay a $125,000 fine. Black, 63, built up a newspaper empire that at one point included the Chicago Sun-Times, London’s Daily Telegraph, and the Jerusalem Post. (The New York Times, free registration required) The sentence was less that the up to 30 years sought by prosecutors. “Conrad Black dodged a bullet today,” said former federal prosecutor Orin Snyder, although he called the sentence “fair and very reasonable.” (Reuters)
Imitation begets imitation
PornoTube, an X-rated knockoff of Google’s YouTube, was sued yesterday for hosting copyrighted material, in a case legally similar to Viacom’s suit against YouTube. Porn producer Vivid Entertainment is seeking $150,000 for each of its clips uploaded to PornoTube. The adult film industry has been better at profiting from online content than its mainstream counterpart, but that means it is losing more from piracy. The industry used to face its biggest piracy challenge from peer-to-peer networks, says Adult Video News Online publisher Farley Cahen. But “now, there’s PornoTube, XTube, RedTube—any kind of -Tube you can think of.” (Los Angeles Times, free registration required)
