U.S. stocks fall on auto bailout, Madoff scandal

2008-12-16 06:26:06  

·Wall Street fell Monday as investors continued to be concerned about auto industry rescue. ·Investors were worried that any collapse of the automakers would result in thousands of job losses. ·Also, the victim list of legendary investment manager Bernard Madoff on Monday continued to grow.

    NEW YORK, Dec. 15 (Xinhua) --

Wall Street fell moderately on Monday as investors continued to be concerned about the U.S. auto industry rescue and more firms turned out to be victims of the largest Ponzi Scheme in history.

    The market sentiment was somewhat lifted in the earlier trading after U.S. President George W. Bush said on Monday morning that his administration is "now in the process of working with the stakeholders on a way forward" to rescue the country's crippled auto industry.

    A 14-billion-dollar loan package to the three leading U.S. automakers -- General Motors Corp., Chrysler LLC and Ford Motor Co.-- was rejected by the U.S. Senate last week, delivering a blow to the market as investors were worried that any collapse of the three would result in thousands of job losses, another hit to the already battered economy.

    Wall Street became more concerned on Monday as the victim list of the legendary investment manager Bernard Madoff continued to grow. Banks and financial institutions including HSBC, BNP Paribas, Royal Bank of Scotland Group PLC and hedge fund Man Group PLC are revealed to have exposure to Madoff's fund. Madoff was arrested on last Thursday for a giant Ponzi Scheme that could amount to 50 billion dollars.

    Investors are also cautious as they await Fed's Tuesday decision on interest rates. Most expect the Fed to cut interest rate again, ranging between half point to three quarter point.

    Monday's economic data highlighted a decline in the November industrial production. The U.S. Federal Reserve reported that industrial activity dropped by 0.6 percent in November, slightly lower than a drop of 0.8 percent expected by analysts. The capacity utilization rate for total industry fell to 75.4 percent in November, 5.6 percentage points below its average level from 1972 to 2007.

    Conditions for New York manufacturers deteriorated significantly in December, with the general business conditions index falling to a negative 25.8 in the month from a negative 25.4in November, the New York Federal Reserve reported on Monday. A negative reading indicates a contraction in the sector.

    The Dow Jones industrial average fell 65.15 to 8,564.53. Broader stock indicators were also lower. The Standard & Poor's 500 index dipped 11.16 to 868.57, and the Nasdaq composite index slipped 32.38 to 1,508.34.

French banks suffer from Madoff fraud

2008-12-15 23:49:29  

    PARIS, Dec. 15 (Xinhua) --

French banks are suffering indirect but significant losses of nearly 1 billion euros (1.33 billion U.S. dollars) in potential as a result of the 50 billion dollar securities fraud allegedly perpetrated by Bernard L. Madoff Investment Securities LLC.

    French investment bank Natixis, a subsidiary of the Caisse d' Epargne and Banque Populaire, estimated on Monday it could lose up to 450 million euros (605 million dollars).

    A statement by Natixis said the bank had made no direct investments in hedge funds managed by Madoff, but several of its clients had entrusted Madoff with securities. Natixis shares fell 6 percent on Monday.

    France's largest bank BNP Paribas on Sunday announced a 350 million euros (466.9 million dollars) potential loss as a result of the Madoff scandal.

    According to a statement released Sunday, BNP has no investment of its own in Madoff's investment funds, but it "does have risk to these funds through its trading business and collateralized lending to funds of hedge funds."

    BNP shares fell 9 percent Monday morning on the Paris Bourse.

    The 70-year-old Bernard Madoff, the former Wall Street CEO of the Nasdaq Stock Exchange, was arrested last Thursday on charges of defrauding investors of 50 billion dollars.

Editor: Yan