Dow Reacts to Talk of Bank Nationalization

All eyes are on the Dow Jones industrial average as talk of bank nationalization and bleak economic predictions drove the measure down 6.2 percent—the worst weekly decline since the week of Oct. 10, 2008, reports the Wall Street Journal—ending Friday at "a new low for the current bear market." The Washington Post is reporting that the Dow's plunge is the worst since the financial crisis began, and analysts are saying it will get worse. Both papers say, however, that White House spokesman Robert Gibbs' afternoon remarks about the Obama administration believing strongly that a "privately held banking system is the correct way to go" helped cut losses.

Keeping with the mood, CNNMoney opens a story with: "If it's Friday, there must be a bank failing somewhere across the country." In fact, industry regulators have seized control of a bank after the market closed on Friday every Friday for the past six weeks, bringing the total number of failed banks so far this year to 14, the news site says. Compare that with 25 total in 2008. Yesterday, it was Silver Falls Bank in Oregon. Gerard Cassidy, managing director of bank-equity research at RBC Capital Markets, anticipates 1,000 institutions could fail over the next three to five years.

"Still, the current crop of bank failures hardly comes close to what happened during the savings & loan crisis two decades ago," CNNMoney says. More than 1,900 financial institutions went under during 1987-1991, peaking with the failure of 534 banks in 1989." The article also provides an interactive map showing where the closures are hitting hardest. The answer so far? California, which has seen eight banks go under since the beginning of the year.

The WSJ, in an out-of-character play, fronts with a profile of Irving Azoff, CEO of ticket vendor Tickmaster, who is gunning for a merger with concert promoter Live Nation. The move "would concentrate power in the music industry like never before" and "occasionally put [Azoff] in direct conflict across the negotiating table—with himself," the paper writes. Last week, the Justice Department's antitrust division opened an investigation amid concerns the deal could reduce competition, and this week Azoff and Live Nation CEO Michael Rapino will testify before the antitrust subcommittees of the Senate and House.

"The company he's trying to assemble would dominate three major businesses: artist management, ticket sales and the staging of live concerts," the WSJ sys. "Mr. Azoff is chief executive of Ticketmaster Entertainment Inc., the largest ticket vendor in the world, which in turn owns Front Line, the world's biggest talent-management company, representing more than 200 stars including Christina Aguilera, Willie Nelson, Miley Cyrus and Neil Diamond. Merging with Live Nation Inc. would add the world's biggest concert promoter to the mix." A picture from the '70s of a hirsute and rather diminutive Azoff surrounded by the Eagles adds to the article's intrigue.

Also on the front of the WSJ is a story about GM subsidiary Saab, which filed for bankruptcy protection yesterday and is seeking aid from the Swedish government to help the floundering company become independent once again. In a filing earlier this week with the Treasury Department, GM announced it wants to cut ties with Saab by next year.

The New York Times works the fraud circuit this morning two feature-y stories—one about R. Allen Stanford, the Texas financier who may be behind an $8 billion fraud, and one about Bernard Madoff, which is seconded by a story in Bloomberg.
On Madoff: Irving Picard, the court-appointed trustee liquidating Bernard L. Madoff Investment Securitie, said yesterday that although Madoff provided clients thousands of receipts for trades over the years, it appears he hasn't conducted a trade for 13 years. Picard also said he found no separation between the company's broker-dealer division and its investment advisory unit.

The NYT deftly sets the scene for the disclosures yesterday: "These fresh details about the case were laid out to an intent and diverse audience that filled a courthouse auditorium in Lower Manhattan. Sweaters and flannel shirts were crowded next to lawyerly suits and expensive ties. Customers detailed hardships they or family members were suffering because of the Madoff collapse, and many expressed anger at regulators who had not stopped Mr. Madoff and lawmakers who they say have failed to respond to the disastrous aftermath of his fraud."

Separetly, the story about Stanford highlights the financier's rise in Antigua, where he was knighted in 2006 and which is sometimes called "Stanford Land." "At one point or another," writes the Times, "he has owned an airline that many locals and visitors fly on. A local newspaper that covers their goings-on. A vast residential complex where many live. Two restaurants where they eat. And the national stadium where they go to watch cricket, the island’s favorite sport."