A flutter of rescue chatter Tuesday helped the bloodied financial sector put on blinders against what should have been yet another installment of depressing news.
Financial Sector Index was surging 129.42 points, or 1.8%, to 7,491.55.
Kick-starting the hopeful rally this morning was Warren Buffett, who told
that he has already offered to pump lifeblood back into struggling bond insurers
Financial Guaranty Insurance
, by reinsuring $800 million in municipal bonds for which the firms are currently responsible.
Regardless, Ambac and MBIA themselves were sliding -- by 13.2% to $9.10 and 11.5% to $12.02, respectively -- after the proposal got a
lukewarm reception. Buffett, whose
launched a bond insurance firm of its own in December, said that one of the firms has already rejected the offer while the other two haven't yet responded.
Berkshire shares were lately up fractionally at $140,100.
Shares of Ambac and MBIA have been on a downward spiral for the past few months as egregious exposures to risky securities drained cash piles at the pair and put their crucial triple-A ratings in trouble at the major credit-ratings agencies. But Ambac might already have a
bank-consortium bailout in the works following last month's
Fitch downgrade, and MBIA
offered $1 billion in stock last week in its latest capital-boosting measure.
In another attempt to cushion the financial sector's fall, the
on Tuesday conducted the fifth in a series of auctions allowing banks to borrow below the discount rate for 28 days. The Fed accepted $30 billion worth of propositions -- just over half of the total loans for which sixty-six banks applied.
Furthermore, Treasury Secretary Hank Paulson today outlined a plan designed to help subprime-mortgage borrowers in dire straits by suspending foreclosures in order to negotiate more reasonable terms on their loans. "We have a lot of work ahead of us," Paulson warned. "These efforts can only succeed if they are pursued industrywide."
Teaming with the government for "Project Lifeline" are
Bank of America
, which recently
agreed to merge, as well as
. All were recently gaining 0.9% or more.
, of Pasadena, Calif., was also blasting higher despite posting its
first annual loss in its history -- $614.8 million, or $8.28 a share. Helping that along immensely was the company's fourth-quarter shortfall, which came to $509.1 million, or $6.43 a share thanks to $863 million in pretax costs related to credit losses. Analysts polled by Thomson Financial were looking for a loss of just $1.57 a share. A year earlier, the firm booked a quarterly profit of 97 cents a share.
In a letter to shareholders, IndyMac CEO Michael Perry spelled out a turnaround plan and said he takes "full responsibility for the mistakes that we made" while emphasizing that, as he didn't sell any IndyMac stock in 2006 or over the tumultuous year of 2007, "no one has been held more accountable, financially, than I have." He's also prepared to step down should shareholders choose not to reelect him to the board, though he's "confident" that he is the "person most capable of leading IndyMac through this crisis period and rebuilding shareholder value" and says he has the support of management, the board, and regulators.
IndyMac shares were jumping $1.09, or 14.3%, to $8.69.
floated higher despite nearly halving its fourth-quarter earnings from continuing operations, year over year, to roughly $1.10 a share (1.21 Swiss francs). And insurance broker
Marsh & McLennan
, of New York, posted a 43.3% plunge in continuing-operations income to 17 cents a share in the fourth quarter. Analysts were seeking 31 cents.
Nevertheless, shares of the firms rose 2.1% to $51.94 and 2.6% to $25.95, respectively.
American International Group
added 4.2% even after Standard & Poor's cut its outlook to negative from stable on the heels of yesterday's revelation that it had
sorely underestimated the valuation decline of its credit-swaps portfolio as of Nov. 30. In a statement today, the insurance behemoth said that it continues to believe the portfolio's losses "are not indicative" of what it "may realize over time," which it surmises, in any case, "will not be material to AIG." Shares tacked on $1.86 to $46.60.
Bermuda life-insurance company
saw its fourth-quarter operating income dip by 3 cents from a year ago to 53 cents a share, but that was 2 cents ahead of expectations. And, also in that quarter, St. Louis brokerage
came in far ahead with a rising non-GAAP profit of $20.5 million, or $1.14 a share. Assured rose 7.2% while Stifel spiked 12.3%.
spent the day higher after the credit-card company reported that its managed delinquency rate for January stayed sequentially flat at 3.87% after rising nearly every month since March of last year. As for managed net charge-offs, though, Capital One's rate was up to 3.99% from December's 3.61%. Shares booked substantial gains today, but recently pared back to trade near the flat line.
On the flip side, an analyst with Credit Suisse harshly cut fixed-income revenue targets for
, according to
, though all three brokerages held onto their outperform ratings.
Goldman and Lehman were down 3.5% and 3.4% recently. Morgan stock, however, was up 0.6% in choppy action as the New York-based firm appointed company veteran Owen Thomas to become CEO of its Asia unit, effective at the end of the month.
Finally, transaction processor
gave up 6% recently after confirming it will sell a piece of itself worth some $710 million -- at most, $775 million -- to Thomas H. Lee Partners and Goldman affiliates. The Minnesota-based company also expects to get up to $700 in Goldman debt financing. MoneyGram first announced this possibility last month as it revealed that its portfolio of asset-backed securities had taken an enormous hit as of the end of November. MoneyGram had then predicted an equity sale of between $750 million and $850 million. Shares were falling 32 cents to $4.99 in recent trading.