the business headlines......
Warren Buffett buys into Goldman
Troubled investment bank Goldman Sachs has gained the support of legendary stock-picker Warren Buffett, reported Bloomberg.com. Buffett’s investment vehicle, Berkshire Hathaway, is buying $5 billion of perpetual preferred stock with a 10 per cent dividend, with an option to buy more in the next five years. Analysts confirmed that this was a very good deal for Buffett, who is benefiting from Goldman’s need for funds as it becomes a bank. Goldman said it plans to sell at least $2.5 billion to the public, the first such offering for eight years.
Goldman and Morgan risk losing star traders 
Lunch at the diner with Warren
People: Buffet buys stake in Goldman Sachs
Worries grow over US bail-out
Analysts are becoming increasingly concerned about the $700 billion bank bailout proposed by the US Treasury, reported Bloomberg.com. Fed Chairman Ben Bernanke yesterday told the Senate Banking Committee that the authorities still don’t know the “best design” for the plan. Bernanke and Treasury Secretary Henry Paulson are signalling that they are intent on helping the banks, even at the expense of the taxpayer, which would anger legislators. However paying “fire-sale prices” for the assets will fail to achieve the plan’s goals.
Welcome to Wall Street’s cash machine
Lehman exposes Wall Street’s moral bankruptcy
FBI investigates subprime players
It has emerged that 26 firms, including AIG, Leman Brothers, Fannie Mae and Freddie Mac, are under review by the FBI for possible accounting irregularities, said the Daily Telegraph. US reports say that the investigations are still at a “preliminary stage” and are being conducted in parallel with a US Securities and Exchange Commission enquiry into civil violations. Fannie and Freddie had to restate numbers earlier this decade and paid fines to the SEC for hiding losses using unacceptable accounting techniques.
Lehman exposes Wall Street’s moral bankruptcy
Hedge funds take legal action to recover Lehman assets
Hedge funds are beginning a round of legal action against the administrators of Lehman Brothers to recover $40 billion of frozen assets in the failed broker, said the Financial Times. RAB Capital sued in the UK this week, over £50 million held with Lehman. Administrators PwC are currently calculating all outstanding positions, leading to complaints from the hedge funds involved, like GLG Partners and Amber Capital, over their failure to return client money. This has already led to the closure of several funds with no access to assets.
Lehman exposes Wall Street’s moral bankruptcy
Bank short-sellers revealed
John Paulson, the New York hedge fund manager who correctly forecast the subprime crisis, has been revealed as the biggest short-seller of UK banks after new disclosure requirements, reported the Financial Times. Paulson has sold short four of the five biggest in the sector, with the largest position in Barclays, at £350 million, and shorts of £292 million in Royal Bank of Scotland and £260 million in Lloyds TSB. It also emerged that hedge fund company Man Group has asked the FSA to add it to the list of protected stocks since it is now being targeted itself.
Home loan approvals at record lows
The latest release from the British Bankers’ Association shows that the number of mortgages approved by the major banks fell to 21,086 in August, the lowest monthly figure since BBA records began. The number is down two thirds on last year and 12,000 lower than the average figure for the last six months. Mortgage lending in August was £2.1 billion, which is less than half the average of the last six months. The organisation put the blame on government dithering over its plans for stamp duty as well as the difficult economic environment.
...in brief..................
EDF bid agreed for British Energy and Google launches first mobile
French state-owned energy company EDF launched a £12.5 billion agreed bid for British Energy this morning at 774p per share. This seals the takeover of most of the country’s nuclear industry and has been backed by British Energy’s board and major shareholder Invesco…………
Shares in Bradford & Bingley closed at a record low yesterday, after a credit rating agency downgrade to one level above junk status. The shares slid another 12 per cent to 24p on the Fitch downgrade from BBB+ to BBB-, the lowest of ten investment-grade ratings…………
Tate & Lyle shares fell more than 11 per cent yesterday after a US ruling against the company’s claims over Chinese imitations of its sucralose product. The calorie-free sweetener, sold under the Splenda brand, accounted for 21 per cent of the group’s operating profit last year…………
Carpetright has issued a negative trading statement, saying that the floor coverings market has become even tougher. Founder and chief executive, Lord Harris of Peckham, told the Times that the current economic climate is the worst he has seen since the 1970s…………
Yahoo’s new board, which includes activist investor Carl Icahn, Viacom boss Frank Biondi and former Nextel head Frank Chapple, has approved more talks with AOL, with a view to a possible merger. Yahoo opened talks as Microsoft made an unsolicited bid for the company…………
Google is set to take on Apple and Nokia this Christmas with its first mobile phone, the G1. The handset was launched in the US yesterday and will debut in the UK in November. It is a touchscreen phone with a flip-out keypad, competing with the iPhone and Nokia’s first touchscreen model…………
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