Finance Blog number 1

Expectations that the Bank of Japan will cut interest rates more than doubled after the government urged the central bank to do more to support the economy and the U.S. Federal Reserve reduced its benchmark to as low as zero.

Investors see a 52 percent chance that the policy board will reduce the overnight call rate from 0.3 percent at this week’s meeting, according to calculations made by JPMorgan Chase & Co. based on interest-rate swaps trading, up from 20 percent yesterday morning. The meeting ends on Dec. 19.

Governor Masaaki Shirakawa has indicated he is reluctant to lower the rate again after cutting it for the first time in seven years in October. Still, he’s coming under pressure after Finance Minister Shoichi Nakagawa called on the central bank to consider further measures to avoid a deeper recession and the Fed’s rate reduction pushed the yen close to a 13-year high.

“The combination of the very weak domestic economy, the very strong yen, and what is likely to be intense political pressure on the BOJ will, we think, force an easing move sooner rather than later,” said John Richards, head of debt markets strategy for the Asia-Pacific region at Royal Bank of Scotland Plc in Tokyo, who predicts a move in December or January. “There is little to be gained by waiting.”

The Fed yesterday said it will target a federal funds rate of between zero and 0.25 percent in an unprecedented move, causing the dollar to fall as low as 88.68 against the yen, near 88.53 reached on Dec. 12, the weakest since August 1995. The Fed’s benchmark was last lower than the Bank of Japan’s in 1993.

More Likely

“As a result, the BOJ is now more likely than not to cut the policy rate to 0.10 percent this Friday, in addition to implementing liquidity provision measures,” said Tomoko Fujii, head of economics and strategy at Bank of America Corp. in Tokyo.

JPMorgan, Mitsubishi UFJ Securities Co. and Capital Economics Ltd. also brought forward their predictions for a rate cut to as soon as this week after the Fed’s decision.

The Bank of Japan should take “appropriate” action after the yen’s surge, Chief Cabinet Secretary Takeo Kawamura said today. Finance Minister Nakagawa said yesterday that he hopes “the BOJ considers economic conditions and the liquidity problems and reaches a conclusion” on what to do.

The Bank of Japan Law guarantees the central bank’s independence from the government.

Nakagawa said today that he’s “not that concerned” about the yen’s gains since the Fed move and the government isn’t considering intervening in the currency market now.

‘Severe’ Economy

Japanese banks’ borrowing costs fell today for the first time in 28 days, halting the longest increase since July 2006, on speculation the central bank will lower rates this week payday loans with no faxing. The Tokyo three-month interbank offered rate, or Tibor, decreased to 0.921 percent from a decade high of 0.922 percent yesterday.

The central bank’s Tankan report this week showed corporate sentiment plunged the most in 34 years as the global recession weakened exports. The survey “clearly showed that economic conditions are severe” and could get even worse as companies struggle to raise funds, Shirakawa told lawmakers yesterday.

“The Bank of Japan knows that it needs to cut the rate soon, given that the economy is rapidly deteriorating,” said Teizo Taya, an adviser to Daiwa Institute of Research and a former central bank board member. “Investors think that they will have to move sooner or later even if they don’t do it this week. Government pressure is also fueling the view.”

‘Last Resort’

Prime Minister Taro Aso is increasing spending to lift his declining approval rating and spur growth, risking the expansion of the world’s largest public debt. Last week he pledged money to help unemployed people as exporters including Sony Corp. and Toyota Motor Corp. fire workers. He also unveiled a plan to buy commercial paper to improve financing for businesses.

Aso is “turning to the central bank as a last resort, as fiscal constraints and his weakening political position limit his options,” said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo.

Since the Oct. 31 rate cut, Shirakawa has said at least eight times that further reductions may impede the flow of funds in the money market by diminishing returns and making it unprofitable to trade.

He isn’t alone: European Central Bank President Jean-Claude Trichet said this week that there’s a limit to how far the ECB can cut rates and signaled it may pause in January.

Still, yesterday Shirakawa indicated that the option of pushing rates to zero percent remains open.

“I am not going to predetermine that measures should or shouldn’t be used,” he said, when asked whether policy makers would consider reintroducing a 2001-2006 policy of pumping cash into the economy while holding borrowing costs near zero. The central bank will implement policy “appropriately,” he said.

Lawmakers yesterday asked Shirakawa in parliament whether he would consider buying commercial paper. While reiterating that the bank is considering all its options and will implement policy flexibly, the governor said purchasing corporate debt may put a strain on its balance sheet.

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First Citizens BancShares is asking the federal government for permission to merge its banking subsidiaries.

First Citizens (NASDAQ:FCNCA), based in Raleigh, is the parent of both First Citizens Bank and IronStone Bank. The company says it wants IronStone to become part of First Citizens Bank.

IronStone is a federally chartered thrift with branches in Georgia, Florida, Texas, New Mexico, Arizona, California, Oregon, Washington, Colorado, Oklahoma, Missouri and Kansas. First Citizens is chartered as a commercial bank under North Carolina law and has branches in North Carolina, Maryland, Virginia, Tennessee and West Virginia.

“The merger of our two banking subsidiaries, known for experienced associates and exceptional customer service and products, strengthens our national presence under a single identity in many of the nation’s top growth markets,” Lewis Holding, chairman of the board, says in a statement creditreport. “The combined bank will provide better growth opportunities to build our company for the future.”

The bank expects approval of the merger in the first quarter.

Overall, First Citizens BancShares has $16.7 billion in assets and 401 branches around the country.

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NorCal Community Bancorp, the parent of Bank of Alameda, saw third-quarter earnings fall 88 percent on higher loan-loss provisions.

The bank’s net income slipped to $102,000 from $885,000 in the third quarter of 2007. Earnings per diluted share were down to 3 cents from 26 cents a year earlier.

Net interest income was down 16 percent to $3.3 million from $3.9 million last year. Noninterest income rose 7 percent to $202,000, from $188,000.

NorCal (OTCBB: NCLC) increased its allowance for loan losses, or its reserves against which loans deemed uncollectible can be charged off, to $3.95 million, from $3 million a year earlier.

“It is unclear when this economic downturn will bottom out,” Troy Williams, the company’s chief credit officer, said in its earnings release absolutely free credit report. “Management believes it critical to build its reserves to manage through this period. We believe that we have exercised sound judgment in our approach to analyzing the potential risk in our current loan portfolio.”

At the quarter’s end, NorCal’s total assets stood at $ 279.2 million, up from $264.7 million a year earlier.

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Constellation Energy Group unveiled Tuesday changes in its top management, a month after the Baltimore energy giant agreed to acquired in a $4.7 billion deal.

Jonathan Thayer will become the chief financial officer, replacing John R. Collins, who stepped down from the post, Constellation said. Charles A. Berardesco, 50, will become the new general counsel for Constellation and replace Irving Yoskowitz.

Iowa-based MidAmerican Energy Holdings Co., a subsidiary of billionaire Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A., BRK.B), said Sept. 18 it would acquire Constellation (NYSE: CEG).

Thayer, 37, had served as the vice president and managing director for corporate strategy and development for Constellation. He was appointed treasurer in August.

Collins, 51, will take an advisory role on the Constellation and MidAmerican merger and will also remain as chairman of the board of directors for Constellation Energy Partners LLC, an affiliate of Constellation Energy Group that’s developing and acquiring oil and natural gas properties savings account payday advance.

Collins was appointed chief financial officer of Constellation in May 2007.

Berardesco had served as vice president, deputy general counsel, chief compliance officer and corporate secretary for Constellation. Yoskowitz, who joined Constellation as general counsel in 2005, will retire.

The proposed union between Constellation and MidAmerican could take nearly a year to close and would need the approval of federal and state regulators and shareholders.

Constellation filed its application for the merger with the Federal Energy Regulatory Commission Oct. 15 and filed its application with the Maryland Public Service Commission Oct. 17. The PSC plans to hold a pre-hearing conference on the merger filing Nov. 3.

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Nevada-based Papa Bello Enterprises is selling its development rights for the state of Tennessee to Phoenix Rising Development LLC.

Papa Bello owns and operates franchisees of Italian style eateries and has 17 stores.

The contract with Phoenix, which also owns the rights to South Carolina, includes the acquisition of a Papa Bello’s corporate store in Cleveland, Tenn cashadvance.

"This agreement represents a substantial enhancement to fulfilling our expansion plans in the southeastern region of the country,” says Phoenix Rising CEO Chase Canfield.

Terms of the deal were not disclosed.

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Health insurer Humana Inc. has agreed to pay a $750,000 fine to the state of Wisconsin as part of a regulatory settlement with the Office of the Commissioner of Insurance.

The state’s insurance commissioner alleged that Humana’s marketing of Medicare Advantage and Part D products violated Wisconsin regulations.

The commissioner also alleged that some insurance agents selling Medicare products in Wisconsin on behalf of Humana were not licensed in the state, a violation of Wisconsin statutes.

Louisville-based Humana (NYSE: HUM) denies the allegations, the insurance commissioner’s office said in a news release.

“Humana is quickly and thoroughly addressing the exam issues,” Humana’s Louisville-based corporate spokesman Jim Turner said in an e-mail. “Humana’s primary concern is always our members, and after review of our records and the cases in question, it appears that there was no significant impact to members online payday advance. Humana either has successfully addressed or is in the process of addressing issues identified in the Wisconsin OCI exam report for 2005-2007 that led to the forfeiture.”

According to the findings of the investigation, which was initiated in 2007, Humana did not comply with recommendations made by the insurance commissioner following a 2002 investigation.

“With this settlement, we protect our senior citizens by addressing issues with marketing of Medicare Advantage and Medicare Part D products,” Wisconsin insurance commissioner Sean Dilweg said in a news release. “The settlement also resolves long-standing issues with company claim adjudication, customer service and underwriting practices.”

Click here to read the full report issued by the Wisconsin Office of the Commissioner of Insurance.

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Continental Airlines Inc. said Friday it is charging some coach customers $15 for a first checked bag, matching a similar fee imposed by most other major U.S. carriers.

A company spokeswoman said the fee would help offset high fuel costs, which have caused Continental and other carriers to lose money this year.

The fee took effect immediately on tickets for travel in the United States and Puerto Rico, the U.S. Virgin Islands and Canada for travel starting on Oct. 7 or later.

Bags that exceed weight and size restrictions could be subject to additional fees, the airline said.

Houston-based Continental (CAL, Fortune 500) said the fee wouldn’t apply to elite members of its frequent-flier program, those in first- or business-class seats, customers traveling on full-fare economy tickets, or military personnel and their families traveling on official orders.

Most U.S. airlines charge customers who check more than one piece of luggage.

Among major carriers, AMR Corp.’s (AMR, Fortune 500) American Airlines, the nation’s largest carrier, was the first to impose a fee for the first checked bag, beginning in June. AMR Chairman and Chief Executive Gerard Arpey conceded his airline took "a little bit of flack" for the fee.

Continental’s decision leaves Atlanta-based Delta Air Lines Inc. (DAL, Fortune 500) as the only holdout among the six so-called legacy carriers, and Southwest Airlines Co. (LUV, Fortune 500) also doesn’t charge for the first bag.

Continental Chairman and CEO Lawrence Kellner said this summer his airline was watching how the fee worked at other airlines — whether it caused delays in boarding — and whether customers would rather pay a fare increase than face a bunch of fees.

"My general view is if those people need a product, how do we put that in an all-inclusive fare?" he said at the time.

But in the nearly three months since American’s fee took effect and other carriers began matching it, it hasn’t seemed to sway customers.

"We thought we would see more of a market shift by not having the fee," Continental spokeswoman Julie King said Friday cash advance. "So we feel it’s the right competitive move" to charge for a first checked bag.

King said the fee would help offset fuel costs that remain high despite the recent decline in oil prices.

Continental declined to say what percentage of its customers would likely be charged the fee. American, which also waives the fee for many loyal customers, estimated it covered about one-fourth of its summer travelers.

Continental also didn’t give an estimate of how much it hopes to raise from the charge. The company has lost $84 million in the first half of the year after two straight profitable years, and it’s cutting 3,000 jobs and reducing U.S. flights this fall.

Shares of Continental rose 21 cents to $18.15 in morning trading. 

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More than half of the offices in the Oregon State Capitol will reopen on Wednesday as cleanup from last weekend’s fire continues.

An environmental assessment concluded that the building is safe and that many offices can reopen Wednesday morning. Officials hope to re-open the entire building on a limited basis by the end of the week.

“Smoke and water damage from the fire was extensive,” said Senate President Peter Courtney, in a statement. “The biggest concern at present is air quality and some areas will have to remain closed pending a thorough cleaning of portions of the Capitol’s ventilation system.”

State employees in offices that will remain closed are being asked to work from home.

The offices that will reopen on Wednesday include the state treasurer’s office, the House offices for the speaker and majority staffers, Senate offices for both Democrats and Republicans, the chief clerk’s office, the Senate secretary and the facility’s state police office.

Other areas opening on Wednesday include facilities services, legislative supply, the pressroom and the legislative media, counsel and fiscal offices.

The information services office in the building’s basement will be open, as will the Indian services office and the governor’s staff offices in Room 160.

Offices remaining closed include those housing staff for the secretary of state, legislative administration, financial services, employee services, committee services and capitol offices for other legislative assembly members free credit report .com. The Legislative Revenue Office, Information Services Development Office, visitor services, gift shop and hearing rooms will also remain closed.

Gov. Ted Kulongoski’s staff will occupy temporary offices two blocks from the Capitol building. The fire started early Saturday morning outside Kulongoski’s ceremonial office. Some parts of the capital received extensive smoke and water damage.

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GrandLuxe Rail Journeys of Evergreen has ceased operations.

The company, formerly known as American Orient Express, began offering luxury rail service late last year.

Tom Raider, chairman and owner of GrandLuxe, shut down Friday after the train returned from Tacoma, Wash., the day before. The travel website Leisuregrouptravel.com quoted a letter to clients from Rader in which he wrote, "We are financially unable to continue operations."

GrandLuxe offered 10 different four- to 12-day trips aboard a 21-car train cash advance.

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Miami supply company Tiles and Stones has filed for Chapter 11 bankruptcy protection.

The company declared more than 200 creditors, many of them local companies, including Travertino Trading Co with $417,244, and EPC of Miami at $943,895.

The top 20 creditors are owed more than $6.6 million, according to court filings.

It also listed stone suppliers from Italy, Spain, Turkey and Canada, such as Marmoles Novelda of Spain at $1.57 million.

Company president Joso Tomas is listed as the president; the bankruptcy was filed by attorney Robert Charbonneau, of Ehrenstein Charbonneau Calderin in Miami faxless payday advance.

Also filing Chapter 11’s on Monday were Tile and Stones Showroom, and Tile and Stones of Stuart.