Billion-Dollar Bank Setbacks
Citigroup for the first time last week put a number to the cost of its bull-market misadventures, taking a $1.5 billion after-tax charge to cover expected fines and penalties as well as exposure to investor lawsuits for its role in financing Enron and WorldCom. Citi also put aside an additional $200 million to cover potential losses on loans to Argentina and financially-strapped energy companies. The same day, Bank of America announced $1.2 billion in loan write-offs.
The dollar continued to decline last week, extending a yearlong sell-off that some analysts view as a long-overdue correction for the overvalued greenback. Selling was driven by foreigners liquidating some of their U.S. investments in advance of an expected U.S. attack on Iraq early next year. The dollar closed the week at $1.04 for each euro, its lowest level in more than three years, down nearly 15 percent for the year. At 119.94, the dollar is down 9 percent against the yen.
A Bright Moment for Sun
Sun Microsystems last week won an important victory in its long-running legal battle against Microsoft. A federal judge in Baltimore, ruling in a private antitrust suit, ordered Microsoft to include Sun's version of the Java programming language in every Windows operating system. The judge found that Microsoft, by using an older version of Java, effectively discouraged other software developers from writing programs compatible with Sun's Java. Microsoft vowed to appeal.
Crude Turmoil Continues
Gasoline prices rose an average of 4 cents last week as a general strike in Venezuela drove crude prices close to $33 a barrel, the highest level in more than two years. The four-week strike is aimed at forcing President Hugo Chavez to call elections. The government claimed enough engineers had returned to work to allow most operations at the state-owned oil company to resume next week, but opposition leaders disputed that. U.S. refiners are scrambling to find a replacement for Venezuelan crude.
Good Offices for Oversight?
In a fitting coda to this year's accounting scandals, the new accounting oversight board set up by Congress is negotiating to move into the Washington office space recently vacated by none other than Arthur Andersen. "If it works out, it is certainly a nice fit for us," said board member Charles D. Niemeier. "Obviously it's available." Andersen collapsed after being convicted of destroying evidence in the government's investigation of its most infamous audit client, the bankrupt Enron.