U.S. Secretary of State Condoleezza Rice, in a stern policy speech, said current Russian policies including its invasion of Georgia, have put Moscow on a path to self-imposed isolation and irrelevance. She said Moscow will not achieve its war aim of removing Georgia's pro-Western government. VOA's David Gollust reports from the State Department.
Secretary of State Condoleezza Rice delivers policy speech on US-Russia relations, in Washington, 18 Sep 2008.
Condoleezza Rice delivers policy speech on US-Russia relations in Washington, 18 Sept. 2008
Rice's address at an event hosted by the German Marshall Fund included some of her strongest comments to date about Russian intervention in Georgia and other recent behavior.
But at the same time, she stressed that U.S.-Russian tensions have not lapsed back to Cold War levels, and that the two powers have shared interests in, among other things, bringing peace to the Middle East, and preventing Iran from obtaining nuclear weapons.
Rice acknowledged that both sides in last month's Georgian crisis made mistakes and miscalculations, but she said Russian intervention - sparked by a Georgian military move into disputed South Ossetia - was a full-scale and apparently long-planned invasion.
What is more disturbing, she said, is that it fits into a pattern of behavior of a Russia increasingly authoritarian at home and aggressive abroad.
"I am referring, among other things, to Russia's intimidation of its sovereign neighbors, its use of oil and gas as a political weapon, its unilateral suspension of the CFE treaty, its threat to target peaceful nations with nuclear weapons, its arms sales to groups that threaten international security, and its persecution - and worse - of Russian journalists and dissidents, and others," she said.
Rice declared the Russian invasion has achieved, and will achieve, no enduring strategic objective - including what she said was Moscow's primary war aim of removing the pro-Western Georgian government of President Mikheil Saakashvili.
She said the goal of the United States and its allies must be to make clear to Russian leaders that their choices are putting the country on what she termed a one-way path to self imposed isolation and international irrelevance.
"Russia's international standing is worse now than at any time since 1991. And the cost of this self-inflicted isolation has been steep. Russia's civilian nuclear cooperation with the United States is not going anywhere now," she said. "Russia's leaders are imposing pain on their nation's economy. Russia's bid to join the World Trade Organization is now in jeopardy. And so too is its attempt to join the Organization for Economic Cooperation and Development."
In a note of sarcasm, Rice said the political support Russia has gotten on Georgia from Nicaragua's leftist leader Daniel Ortega and the Palestinian radical group Hamas is hardly a diplomatic triumph. And she said anachronistic Russian displays of military power, such as its recent dispatch of Soviet-era Blackjack bombers to Venezuela, will not turn back the tide of history.
But she concluded her message with conciliatory language, stressing the Bush administration's determination to pursue areas of common concern with Russia - among them fighting terrorism, denuclearizing the Korean Peninsula, and stopping Iran's rulers from obtaining the world's deadliest weapons.
A spokesman said Rice spoke by telephone before the speech with Russian Foreign Minister Sergei Lavrov - only their second such conversation since the peak of the Georgian crisis.
Rice and Lavrov will meet on the sidelines of the U.N. General Assembly next week in multilateral meetings on the Middle East peace process and the Iranian nuclear issue.
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Monday, September 22, 2008
Pakistan troops 'repel US raid'
Tensions show no sign of abating in the border area
Pakistani troops have fired warning shots at two US helicopters forcing them back into Afghanistan, local Pakistani intelligence officials say.
The helicopters flew into the tribal North Waziristan region from Afghanistan's Khost province at around midnight, the reports say.
Tensions have risen after an increase in US attacks targeting militants.
The incident comes amid mounting security fears after a militant bomb attack on the Islamabad Marriott hotel.
Pakistan's army has said it will defend the country's sovereignty and reserves the right to retaliate to any border violations.
The government has said it will take targeted action against the militants, promising raids in some "hotspots" near the border with Afghanistan.
Meanwhile in the city of Peshawar, Afghan consul Abdul Khaliq Farahi was kidnapped after six unidentified men ambushed his car, officials say. His driver died in the attack.
'Firing in the air'
Last week Pakistani troops fired into the air to prevent US ground troops crossing the border into South Waziristan.
BORDER TENSIONS
3 Sept: First reported ground assault by US troops in Pakistan - Islamabad responds furiously
15 Sept: Pakistani troops reportedly fire in air to stop US troops crossing in S Waziristan
17 Sept: Top US military chief Adm Mike Mullen visits Pakistan to calm tensions
16 Sept: Pakistan says it was not told of fresh US missile strike
22 Sept: Pakistani troops in fresh firing to deter US incursion into N Waziristan, officials say
Confusion over Marriott 'escape'
'We are all in pain and agony'
The latest confrontation between US and Pakistani forces took place in North Waziristan's sparsely populated Ghulam Khan district, west of the main town in the region, Miranshah, local officials say.
They told the BBC that troops at border posts in the mountainous region fired at two US helicopters which crossed into Pakistani territory.
The helicopters returned to Afghanistan without retaliating.
A senior security official based in Islamabad told the AFP news agency that the helicopters had been repelled by both army troops and soldiers from the paramilitary Frontier Corps (FC).
"The helicopters were heading towards our border. We were alert and when they were right on the boundary line we started aerial firing. They hovered for a few minutes and went back," the official said.
"About 30 minutes later they made another attempt. We retaliated again, firing in the air and not in their direction, from both the army position and the FC position, and they went back."
A Pakistani military spokesman, Maj Murad Khan, said he had no information "on border violation by the American helicopters".
The US military in Afghanistan also said it had no information on the incident.
The BBC's Barbara Plett in Islamabad says after increased American incursions this month, the army stressed that it reserved the right to retaliate.
Our correspondent says standard procedure would be to first fire warning shots.
'Crisis in relations'
The two countries held talks last week on anti-militant co-ordination.
Anti-US feelings are on the rise in Pakistan
America's top military officer, Admiral Mike Mullen, flew to Islamabad to try to calm the crisis in relations but tensions remain high, our correspondent says.
As well as reported incursions, there have been a number of US missile attacks aimed at militants in Pakistan territory in recent weeks.
The Americans stepped up their strikes after criticism that Pakistani troops were unable or unwilling to eliminate Taleban sanctuaries along the border.
Waziristan is one of the main areas from which Islamist militants launch attacks into Afghanistan.
It emerged earlier this month that US President George W Bush has in recent months authorised military raids against militants inside Pakistan without prior approval from Islamabad.
Pakistan reacted with diplomatic fury when US helicopters landed troops in South Waziristan on 3 September. It was the first ground assault by US troops in Pakistan.
Pakistan's army has warned that the aggressive US policy will widen the insurgency by uniting tribesmen with the Taleban.
E-mail this to a friend Printable version
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PAKISTAN IN TURMOIL
MARRIOTT HOTEL BOMB
Pakistanis bear brunt of attack
The human and political fall-out of the attack
'Message from Hell'
Pakistan to target rebel hotspots
Rescuers comb Pakistan bomb hotel
Eyewitnesses: Pakistan blast
Six Britons hurt in hotel blast
In pictures: Islamabad aftermath
In pictures: Pakistan blast
WATCH: CCTV of Pakistan blast
POLITICAL SITUATION
'Master plan'
Pakistan's 'bleakest moment'
Displaced by war on terror
ANALYSIS AND BACKGROUND
Q&A: Pakistan after Musharraf
Decades of rivalry
Bhutto obituary
One day in Pakistan
Pakistan: Key facts
Pakistan's circular history
PROFILES
Asif Zardari Pervez Musharraf Nawaz Sharif Bilawal Bhutto Chief justice Military chief PM Gilani
HAVE YOUR SAY
How can the bombings be stopped?
RELATED INTERNET LINKS
Pakistan government
Combined Joint Task Force
The BBC is not responsible for the content of external internet sites
TOP SOUTH ASIA STORIES
Pakistan troops 'repel US raid'
Labourers abducted in Afghanistan
Marriott 'escape' report denied
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E-MAILED READ WATCHED/LISTENED
Eleven tourists seized in Egypt
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Most popular now, in detail
Pakistani troops have fired warning shots at two US helicopters forcing them back into Afghanistan, local Pakistani intelligence officials say.
The helicopters flew into the tribal North Waziristan region from Afghanistan's Khost province at around midnight, the reports say.
Tensions have risen after an increase in US attacks targeting militants.
The incident comes amid mounting security fears after a militant bomb attack on the Islamabad Marriott hotel.
Pakistan's army has said it will defend the country's sovereignty and reserves the right to retaliate to any border violations.
The government has said it will take targeted action against the militants, promising raids in some "hotspots" near the border with Afghanistan.
Meanwhile in the city of Peshawar, Afghan consul Abdul Khaliq Farahi was kidnapped after six unidentified men ambushed his car, officials say. His driver died in the attack.
'Firing in the air'
Last week Pakistani troops fired into the air to prevent US ground troops crossing the border into South Waziristan.
BORDER TENSIONS
3 Sept: First reported ground assault by US troops in Pakistan - Islamabad responds furiously
15 Sept: Pakistani troops reportedly fire in air to stop US troops crossing in S Waziristan
17 Sept: Top US military chief Adm Mike Mullen visits Pakistan to calm tensions
16 Sept: Pakistan says it was not told of fresh US missile strike
22 Sept: Pakistani troops in fresh firing to deter US incursion into N Waziristan, officials say
Confusion over Marriott 'escape'
'We are all in pain and agony'
The latest confrontation between US and Pakistani forces took place in North Waziristan's sparsely populated Ghulam Khan district, west of the main town in the region, Miranshah, local officials say.
They told the BBC that troops at border posts in the mountainous region fired at two US helicopters which crossed into Pakistani territory.
The helicopters returned to Afghanistan without retaliating.
A senior security official based in Islamabad told the AFP news agency that the helicopters had been repelled by both army troops and soldiers from the paramilitary Frontier Corps (FC).
"The helicopters were heading towards our border. We were alert and when they were right on the boundary line we started aerial firing. They hovered for a few minutes and went back," the official said.
"About 30 minutes later they made another attempt. We retaliated again, firing in the air and not in their direction, from both the army position and the FC position, and they went back."
A Pakistani military spokesman, Maj Murad Khan, said he had no information "on border violation by the American helicopters".
The US military in Afghanistan also said it had no information on the incident.
The BBC's Barbara Plett in Islamabad says after increased American incursions this month, the army stressed that it reserved the right to retaliate.
Our correspondent says standard procedure would be to first fire warning shots.
'Crisis in relations'
The two countries held talks last week on anti-militant co-ordination.
Anti-US feelings are on the rise in Pakistan
America's top military officer, Admiral Mike Mullen, flew to Islamabad to try to calm the crisis in relations but tensions remain high, our correspondent says.
As well as reported incursions, there have been a number of US missile attacks aimed at militants in Pakistan territory in recent weeks.
The Americans stepped up their strikes after criticism that Pakistani troops were unable or unwilling to eliminate Taleban sanctuaries along the border.
Waziristan is one of the main areas from which Islamist militants launch attacks into Afghanistan.
It emerged earlier this month that US President George W Bush has in recent months authorised military raids against militants inside Pakistan without prior approval from Islamabad.
Pakistan reacted with diplomatic fury when US helicopters landed troops in South Waziristan on 3 September. It was the first ground assault by US troops in Pakistan.
Pakistan's army has warned that the aggressive US policy will widen the insurgency by uniting tribesmen with the Taleban.
E-mail this to a friend Printable version
Bookmark with:
Delicious Digg reddit Facebook StumbleUpon
What are these?
Advertisement
PAKISTAN IN TURMOIL
MARRIOTT HOTEL BOMB
Pakistanis bear brunt of attack
The human and political fall-out of the attack
'Message from Hell'
Pakistan to target rebel hotspots
Rescuers comb Pakistan bomb hotel
Eyewitnesses: Pakistan blast
Six Britons hurt in hotel blast
In pictures: Islamabad aftermath
In pictures: Pakistan blast
WATCH: CCTV of Pakistan blast
POLITICAL SITUATION
'Master plan'
Pakistan's 'bleakest moment'
Displaced by war on terror
ANALYSIS AND BACKGROUND
Q&A: Pakistan after Musharraf
Decades of rivalry
Bhutto obituary
One day in Pakistan
Pakistan: Key facts
Pakistan's circular history
PROFILES
Asif Zardari Pervez Musharraf Nawaz Sharif Bilawal Bhutto Chief justice Military chief PM Gilani
HAVE YOUR SAY
How can the bombings be stopped?
RELATED INTERNET LINKS
Pakistan government
Combined Joint Task Force
The BBC is not responsible for the content of external internet sites
TOP SOUTH ASIA STORIES
Pakistan troops 'repel US raid'
Labourers abducted in Afghanistan
Marriott 'escape' report denied
| News feeds
MOST POPULAR STORIES NOW
E-MAILED READ WATCHED/LISTENED
Eleven tourists seized in Egypt
The US election nightmare scenario
Sweet smells foster sweet dreams
Men with sexist views 'earn more'
Russian navy sails to Venezuela
Most popular now, in detail
FBI searches apartment of alleged Palin hacker
Federal authorities are ramping up an investigation of a 20-year-old college student for allegedly hacking into Alaska Gov. Sarah Palin's e-mail account.
Sarah Palin
(Credit: Alaska governor's office)The FBI searched the apartment of alleged hacker David Kernell on Sunday morning, and three of Kernell's roommates could testify this week about the case before a grand jury in Chattanooga, according to local news reports.
After it was discovered that the Republican vice presidential candidate's personal Yahoo e-mail account was hacked into, reports began circulating that the hack could be traced back to Kernell, a University of Tennessee student and son of Democratic Tennessee state representative Mike Kernell.
Witnesses told a local television station that the FBI served a search warrant at Kernell's Knoxville, Tenn., apartment early Sunday morning, interrupting a party, and spent more than an hour taking pictures of the apartment. Kernell's three roommates were subpoenaed to testify this week, a witness also said.
The hacker gained access to Palin's account by guessing certain personal details about the governor's life and then resetting her password to "popcorn." ZIP files with content from Palin's account were posted on the Internet.
Laura Sweeney, a Justice Department public-affairs specialist, confirmed that there was investigatory activity relating to the Palin hack in Knoxville over the weekend but said no criminal charges have been filed against anyone.
- Topics:
-
Elections
China milk scandal spreads to neighbours
China's tainted milk crisis has spilled over the mainland's borders when supplies from international food giants were found to be contaminated with the poisonous additive melamine.
Children drink milk while waiting to receive medical checks for possible kidney stones at a hospital in Hefei, Anhui province Photo: REUTERS
Hong Kong authorities said it had found traces of melamine in Nestle's Dairy Farm milk produced for catering use by a company subsidiary in the Chinese coastal city of Qingdao, the site of the Olympics sailing events.
Supermarkets in Hong Kong had already pulled Nestle's milk powder from the shelves amid media reports that the territory's government had found a sample that had been tainted.
However Nestle released a statement said: ""Following press reports in Hong Kong earlier today claiming that traces of melamine had been found in a Nestle growing up milk, Nestle is confident that none of its products in China is made from milk adulterated with melamine."
Holland's Friesland Foods, which sells Chinese-supplied milk in the Far East under the Dutch Lady label, said it was recalling products from Hong Kong and Macau after a strawberry flavoured milk shake also tested positive.
The strawberry milk drink also tested positive in Singapore.
They were the first non-Chinese brands to be directly implicated in the widening scandal, which began when the mainland's most popular make of baby formula was revealed to have been suffering contamination problems for months without alerting the central government.
The make, Sanlu, is implicated in the deaths of four babies and the poisoning of more than 6,000 others, at least 158 of whom were seriously ill with kidney failure according to the most recent figures.
Hong Kong's government said the traces melamine in Nestle's Dairy Farm milk were small and posed no threat to human health, though the milk should not be fed to babies.
Earlier, Apple Daily, a local tabloid, alleged that it had found melamine in its own tests on Nestle's powder, its Neslac Gold 1+ "growing up milk", which is also produced in mainland China.
Nestle reacted sceptically to that report, questioning Apple Daily's methodology, and pointing out that Nestle had previously passed tests conducted by both the Chinese and Hong Kong governments.
It said the Hong Kong government had passed Neslac Gold 1+ in tests conducted as recently as Thursday to Saturday.
"Nestle has a very close relationship with its milk producers in China, and advises them continuously on the quality of milk production,"a statement said. "Nestle also has the same stringent quality control system in place in its factories in China as in any other part of the world."
Earlier, it was confirmed that a three-year-old girl in the territory had become the first victim of the scandal outside the mainland. The girl, who was not named, was taken by her parents for tests at the Princess Margaret Hospital because she regularly drank Yili brand liquid milk.
Yili, one of the mainland's two largest dairy companies and an Olympics sponsor, had all its products in Hong Kong pulled from stores on Thursday after several were found to be contaminated.
The girl had a small kidney stone, though not large enough to warrant treatment or a stay in hospital.
Melamine is mixed in with milk supplies by farmers and middlemen because it artificially boosts protein readings and can disguise substandard and watered down milk.
Sanlu is now thought to have been notified by customers of problems as early as February. At least one has admitted that after he complained when his daughter fell ill, the company refused to publicise test results and bought his silence with free supplies.
A number of Asian countries have banned dairy products from China, including Singapore, Malaysia and Brunei. Burma has destroyed all its imports of Chinese dairy productFor Buyers, Many Roadblocks
For Buyers, Many Roadblocks
By CHRISTINE HAUGHNEY
From left; Robert Stolarik for The New York Times, Michael Falco for The New York Times, Rob Bennett for The New York Times
Julie Chan, left, must sell her house in New Hope, Pa., to get the mortgage she wants. Juan Matiz and Sarah Mosele Matiz, center, said sellers would not accept their bids until they sold their Manhattan studio. Michael Clemente, right, had a hard time getting a mortgage because he had a short credit history.
People are eager to buy in Manhattan, but are finding they must have near-perfect credit and much more cash on hand to satisfy lenders and co-op boards.
Q & A: Ask an Expert About Getting Mortgages
.Big Deal
Main Street Pauses
By JOSH BARBANEL
On the co-op and condo-lined streets of Manhattan real estate was on everyone’s mind, as always, last week, but the nature of the conversation had changed.
.Living In | Elmont, L.I.
You Couldn’t Call It a One-Horse Town
By MARCELLE S. FISCHLER
Elmont, best known for the 430-acre Belmont Park racetrack, is diverse and has mostly owner-occupied and neatly kept Capes, ranches, raised ranches and colonials.
More Living In Columns
Slide Show
Share Your Tips for Living in Elmont, L.I.
.Streetscapes | 63 Nassau Street
Cast-Iron Builder, Iron-Clad Renown
By CHRISTOPHER GRAY
The building at 63 Nassau Street is one of the few surviving architectural works of the cast-iron pioneer James Bogardus, a building designated a Landmark last year.
By CHRISTINE HAUGHNEY
From left; Robert Stolarik for The New York Times, Michael Falco for The New York Times, Rob Bennett for The New York Times
Julie Chan, left, must sell her house in New Hope, Pa., to get the mortgage she wants. Juan Matiz and Sarah Mosele Matiz, center, said sellers would not accept their bids until they sold their Manhattan studio. Michael Clemente, right, had a hard time getting a mortgage because he had a short credit history.
People are eager to buy in Manhattan, but are finding they must have near-perfect credit and much more cash on hand to satisfy lenders and co-op boards.
Q & A: Ask an Expert About Getting Mortgages
.Big Deal
Main Street Pauses
By JOSH BARBANEL
On the co-op and condo-lined streets of Manhattan real estate was on everyone’s mind, as always, last week, but the nature of the conversation had changed.
.Living In | Elmont, L.I.
You Couldn’t Call It a One-Horse Town
By MARCELLE S. FISCHLER
Elmont, best known for the 430-acre Belmont Park racetrack, is diverse and has mostly owner-occupied and neatly kept Capes, ranches, raised ranches and colonials.
More Living In Columns
Slide Show
Share Your Tips for Living in Elmont, L.I.
.Streetscapes | 63 Nassau Street
Cast-Iron Builder, Iron-Clad Renown
By CHRISTOPHER GRAY
The building at 63 Nassau Street is one of the few surviving architectural works of the cast-iron pioneer James Bogardus, a building designated a Landmark last year.
2ND UPDATE: MUFJ To Buy Up To 20% Stake In Morgan Stanley
Dow Jones
September 22, 2008: 10:13 AM EST
(adds further details)
DOW JONES NEWSWIRES
Morgan Stanley (MS) announced that Japan's Mitsubishi UFJ Financial Group Inc. (MTU) has agreed to buy an investment in the company that would eventually reach 20%.
The deal follows the U.S. Federal Reserve's decision late Sunday to convert Morgan Stanley and the other remaining independent broker-dealer, Goldman Sachs Group Inc. (GS), into traditional bank-holding companies. "This strategic alliance with Mitsubishi UFJ can put Morgan Stanley in an even stronger position as we look to realize the opportunities we see in the rapidly changing financial marketplace," Morgan Stanley Chief Executive John Mack said in a statement.
"As one of the largest commercial banks in the world, Mitsubishi UFJ would be a valuable partner as we transition to a bank-holding company and build our bank services and deposit base," Mack added.
The move for the remaining independent brokerages to transition out of the Wall Street model marks a sharp turnaround from last week, when Goldman Sachs and Morgan Stanley repeatedly vowed that they would stick with the their model despite a growing pool of doubters following the bankruptcy protection filing last Monday of Lehman Brothers Holdings Inc. (LEHMQ) and the planned acquisition of Merrill Lynch & Co. (MER) by Bank of America Corp. (BAC).
Shares of all the firms plunged last week amid record volumes and especially volatile trading as the moves by Lehman and Merrill roiled the financial markets and led to the onset of a crisis on Wall Street. Over the course of the week, Goldman and Morgan Stanley hit lows of $85.88 and $11.70, respectively, before paring some of their losses Friday on hopes of government efforts to end the week down 16% and 27%, respectively.
Shares of Morgan Stanley jumped nearly 11% in early trading to $30.06, while Goldman slipped 0.4% to $129.33.
Investors in credit default also seem relieved about the end of independent investment-banking firms and the Morgan Stanley news, as the credit-protection costs on Morgan Stanley fell to between $390,000 and $420,000 to protect $10 million worth of bonds for five years, from $560,000 Friday. Goldman's debt- protection costs slid to between $280,000 and 350,000 from $485,000 Friday. The big gap between bid and offer points to sluggish trade, though, which could help account for such large moves amid so much uncertainty.
The Fed's decision to convert Morgan Stanley and Goldman into traditional bank-holding companies represents an extraordinary attempt to prevent the crisis on Wall Street from infecting the two premier institutions. As a bank-holding company, Goldman Sachs would become the fourth-largest such company in the U.S., behind Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C).
With the move, Wall Street, as it has been known for decades - a coterie of independent brokerage firms that buy and sell securities, advise clients and are less regulated than old-fashioned banks - will cease to exist. Wall Street's two most prestigious institutions will come under the close supervision of national bank regulators, subjecting them to new capital requirements, additional oversight, and far less profitability than they have historically enjoyed.
The Fed said it would also extend additional lending to the broker-dealer arms of the two firms, as well as to that of Merrill Lynch, as they make the transition. The steps formalize a quid-pro-quo that regulators have warned about in the months after Bear Stearns's near collapse in March - that in return for access to the Fed's emergency lending facilities, the firms would need to subject themselves to more oversight.
The rapid pace of change in recent weeks highlights the severity of the financial crisis, and suggests it is deeper than many on Wall Street were willing to admit. Some investors may view the move as a negative signal, for it suggests that Goldman and Morgan Stanley, two institutions that were once considered rock solid, may have been facing greater liquidity issues than was apparent.
Goldman - and to a lesser extent, Morgan Stanley - has maneuvered through the credit crunch better than other investment banks. But its business model, which relies on short-term funding, is under attack.
-By Donna Kardos, Dow Jones Newswires; 201-938-5963; donna.kardos@dowjones.com
(Jon Hilsenrath, Damian Paletta and Aaron Lucchetti of The Wall Street Journal contributed to this report.)
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=ALzPELgYWIxw1xSbTuiWsg%3D%3D. You can use this link on the day this article is published and the following day.
September 22, 2008: 10:13 AM EST
(adds further details)
DOW JONES NEWSWIRES
Morgan Stanley (MS) announced that Japan's Mitsubishi UFJ Financial Group Inc. (MTU) has agreed to buy an investment in the company that would eventually reach 20%.
The deal follows the U.S. Federal Reserve's decision late Sunday to convert Morgan Stanley and the other remaining independent broker-dealer, Goldman Sachs Group Inc. (GS), into traditional bank-holding companies. "This strategic alliance with Mitsubishi UFJ can put Morgan Stanley in an even stronger position as we look to realize the opportunities we see in the rapidly changing financial marketplace," Morgan Stanley Chief Executive John Mack said in a statement.
"As one of the largest commercial banks in the world, Mitsubishi UFJ would be a valuable partner as we transition to a bank-holding company and build our bank services and deposit base," Mack added.
The move for the remaining independent brokerages to transition out of the Wall Street model marks a sharp turnaround from last week, when Goldman Sachs and Morgan Stanley repeatedly vowed that they would stick with the their model despite a growing pool of doubters following the bankruptcy protection filing last Monday of Lehman Brothers Holdings Inc. (LEHMQ) and the planned acquisition of Merrill Lynch & Co. (MER) by Bank of America Corp. (BAC).
Shares of all the firms plunged last week amid record volumes and especially volatile trading as the moves by Lehman and Merrill roiled the financial markets and led to the onset of a crisis on Wall Street. Over the course of the week, Goldman and Morgan Stanley hit lows of $85.88 and $11.70, respectively, before paring some of their losses Friday on hopes of government efforts to end the week down 16% and 27%, respectively.
Shares of Morgan Stanley jumped nearly 11% in early trading to $30.06, while Goldman slipped 0.4% to $129.33.
Investors in credit default also seem relieved about the end of independent investment-banking firms and the Morgan Stanley news, as the credit-protection costs on Morgan Stanley fell to between $390,000 and $420,000 to protect $10 million worth of bonds for five years, from $560,000 Friday. Goldman's debt- protection costs slid to between $280,000 and 350,000 from $485,000 Friday. The big gap between bid and offer points to sluggish trade, though, which could help account for such large moves amid so much uncertainty.
The Fed's decision to convert Morgan Stanley and Goldman into traditional bank-holding companies represents an extraordinary attempt to prevent the crisis on Wall Street from infecting the two premier institutions. As a bank-holding company, Goldman Sachs would become the fourth-largest such company in the U.S., behind Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C).
With the move, Wall Street, as it has been known for decades - a coterie of independent brokerage firms that buy and sell securities, advise clients and are less regulated than old-fashioned banks - will cease to exist. Wall Street's two most prestigious institutions will come under the close supervision of national bank regulators, subjecting them to new capital requirements, additional oversight, and far less profitability than they have historically enjoyed.
The Fed said it would also extend additional lending to the broker-dealer arms of the two firms, as well as to that of Merrill Lynch, as they make the transition. The steps formalize a quid-pro-quo that regulators have warned about in the months after Bear Stearns's near collapse in March - that in return for access to the Fed's emergency lending facilities, the firms would need to subject themselves to more oversight.
The rapid pace of change in recent weeks highlights the severity of the financial crisis, and suggests it is deeper than many on Wall Street were willing to admit. Some investors may view the move as a negative signal, for it suggests that Goldman and Morgan Stanley, two institutions that were once considered rock solid, may have been facing greater liquidity issues than was apparent.
Goldman - and to a lesser extent, Morgan Stanley - has maneuvered through the credit crunch better than other investment banks. But its business model, which relies on short-term funding, is under attack.
-By Donna Kardos, Dow Jones Newswires; 201-938-5963; donna.kardos@dowjones.com
(Jon Hilsenrath, Damian Paletta and Aaron Lucchetti of The Wall Street Journal contributed to this report.)
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=ALzPELgYWIxw1xSbTuiWsg%3D%3D. You can use this link on the day this article is published and the following day.
The Emmys 'Mad Men' and '30 Rock' win top awards
The sleek ’60s drama 'Mad Men' made Emmy history Sunday as the first cable-only TV show to win a top series award, while the sitcom '30 Rock' and its stars Tina Fey and Alec Baldwin also emerged as big winners.
Foto: REUTERS
The cast from 'Mad Men' pose backstage at the 60th annual Primetime Emmy Awards in Los Angeles.
"We’re all so very grateful to have jobs in this turkey-burger economy,“ Fey said after accepting the best comedy series trophy for her satire about a late-night TV show.
"This is the greatest job I’ve ever had in my life,“ Baldwin said of his role an a network executive.
He paid tribute to Fey, the NBC show’s star and creator, as "the Elaine May of her generation.“
"I thank my parents for somehow raising me to have confidence that is disproportionate with my looks and abilities. Well done. That is what all parents should do,“ said Fey, who also won for best actress and writing in a comedy series.
Emmy voters rewarded quality, not ratings: Many of the winners draw relatively small audiences. AMC’s "Mad Men,“ which looks at America through the prism of Madison Avenue, is lucky to get 2 million viewers.
Glenn Close of FX’s "Damages“ and Bryan Cranston of AMC’s "Breaking Bad“ captured drama acting trophies.
Weiterführende Links
Close, honored for her portrayal of a ruthless attorney, complimented her fellow nominees, including Holly Hunter and Sally Field.
"We’re proving that complicated, powerful, mature women are sexy in high entertainment and can carry a show,“ she said. "I call us the sisterhood of the TV drama divas.“
Cranston won the trophy for his role of a desperate man who turns to making drugs.
Dianne Wiest of "In Treatment“ and Zeljko Ivanek of "Damages“ won supporting acting honors for the drama series. Jean Smart of ABC’s "Samantha Who?“ was honored as best supporting actress in a comedy series, with Jeremy Piven her actor counterpart for "Entourage.“
Piven took aim at the five reality hosts who helped open the ceremony in what could charitably called a rambling way, saying, "What if I just kept talking for 12 minutes – what would happen? That was the opening.“
The crowd at the 60th annual Primetime Emmy Awards laughed heartily, not a good sign for the hosts, who included Ryan Seacreast of "American Idol.“
Don Rickles was honored for best individual performance in a variety or music program for "Mr. Warmth: The Don Rickles Project.“
"It’s a mistake,“ Rickles said. "I’ve been in the business 55 years and the biggest award I got was an ashtray from the Friar’s in New York.“
Best reality-competition program went to "Amazing Race,“ the show’s sixth award.
Jeff Probst of "Survivor,“ one of the ceremony’s masters of ceremonies, claimed the first award for best reality series host. "We feel honored to be part of this family. Thank you for letting reality in,“ he said.
As the evening progressed, politics went from having a cameo to a co-starring role.
"I really look forward to the next administration, whoever it is,“ Jon Stewart said as he accepted the best variety, music or comedy series award for "The Daily Show.“ "I have nothing to follow that. I just really look forward to the next administration.“
Later, Stewart and Stephen Colbert, whose "The Colbert Report“ won a writing trophy, teamed to present an award – and exchange banter in which they used a package of prunes as a metaphor for the upcoming presidential election.
"America needs prunes. It may not be a young, sexy plum. Granted, it’s shriveled and at times hard to swallow. But this dried-up old prune has the experience we need,“ Colbert said.
Tommy Smothers received a commemorative writing achievement for his work on the cutting-edge and controversial "The Smothers Brothers Comedy Hour“ from the late ’60s – and turned serious.
"It’s hard for me to stay silent when I keep hearing that peace is only attainable through war. And there’s nothing more scary than watching ignorance in action,“ he said, dedicating his award to "all people who feel compelled to speak out, and are not afraid to speak to power, and won’t shut up and refuse to be silenced.“
Martin Sheen, who played a president on "The West Wing,“ lauded television for giving America a front-row seat to real presidential campaigns. Then he urged viewers to vote for "the candidate of your choice, at least once.“
The award for best TV movie went to "Recount,“ about the contested 2000 Bush-Gore contest.
HBO’s "John Adams,“ about the founding father, was named best miniseries and won other awards including acting trophies for Paul Giamatti, Laura Linney and Tom Wilkinson.
HBO was the most-honored network, with 26 awards earned Sunday and at a creative arts ceremony held earlier this month. ABC was second with 12 awards, followed by CBS, NBC and PBS with 10 each; AMC with eight, Showtime with five and Fox with four.
Throughout the evening, the ceremony kept its landmark 60th birthday in the spotlight with salutes to television’s past.
Pop star Josh Groban offered a marathon medley of TV theme songs, ranging from "The Simpsons“ to "Mister Rogers’ Neighborhood“ to "South Park“ to "Gilligan’s Island.“ At one point, Ed McMahon kicked in a "Heeeere’s Johnny!“ to salute Johnny Carson’s "Tonight“ show.
A tribute to memorable TV dialogue of the past was delivered by the stars of today in an opening clip package.
"One of these days, Alice, pow, right in the kisser!“ Helen Mirren said, quoting Jackie Gleason’s line from "The Honeymooners.“
As the show opened at the Nokia Theatre, Howie Mandel and his fellow hosts riffed about a lack of material for the ceremony.
They then turned to slapstick: "Boston Legal“ star William Shatner came on stage to help Tom Bergeron rip off co-host Heidi Klum’s modest suit to reveal hot pants and more skin.
These Emmy Awards are not a popularity contest
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These Emmy Awards are not a popularity contest
By Scott Collins, Los Angeles Times Staff Writer
September 22, 2008
When the 1960s period piece "Mad Men" won the Emmy for outstanding drama series at Sunday's 60th annual Emmy Awards, it made history in at least two ways. It became the first basic-cable program to take top series honors. But it also added a more dubious mark: Compared with previous Emmy series winners, "Mad Men" is by far the least-watched, with an average of fewer than 1 million viewers tuning in during its first season last year. That's a fraction of the audience of even NBC's ever-ratings-challenged "30 Rock," which again took the comedy prize this year.
Oprah Winfrey said at the outset of the award telecast, "Nothing connects us quite like television."
The sentiment may be hard to argue with, but it's out of step with the times. Anyone who bothers to look at the ratings can see that prime-time TV is no longer the great connector it once was. It may be the only remaining medium that can still unite 30 million people for, say, a broadcast phenomenon such as "American Idol." But disproportionate amounts of attention online, in print and among TV academy voters are now devoted to niche programs such as "Top Chef," "Damages" and "Mad Men
template_bas
These Emmy Awards are not a popularity contest
By Scott Collins, Los Angeles Times Staff Writer
September 22, 2008
When the 1960s period piece "Mad Men" won the Emmy for outstanding drama series at Sunday's 60th annual Emmy Awards, it made history in at least two ways. It became the first basic-cable program to take top series honors. But it also added a more dubious mark: Compared with previous Emmy series winners, "Mad Men" is by far the least-watched, with an average of fewer than 1 million viewers tuning in during its first season last year. That's a fraction of the audience of even NBC's ever-ratings-challenged "30 Rock," which again took the comedy prize this year.
Oprah Winfrey said at the outset of the award telecast, "Nothing connects us quite like television."
The sentiment may be hard to argue with, but it's out of step with the times. Anyone who bothers to look at the ratings can see that prime-time TV is no longer the great connector it once was. It may be the only remaining medium that can still unite 30 million people for, say, a broadcast phenomenon such as "American Idol." But disproportionate amounts of attention online, in print and among TV academy voters are now devoted to niche programs such as "Top Chef," "Damages" and "Mad Men
Goldman, Morgan Stanley Bring Down Curtain on Wall Street Era
By Christine Harper and Craig Torres
Sept. 22 (Bloomberg) -- The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.
The Federal Reserve's approval of their bid to become banks ends the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.
``The decision marks the end of Wall Street as we have known it,'' said William Isaac, a former chairman of the Federal Deposit Insurance Corp. ``It's too bad.''
Goldman, whose alumni include Henry Paulson, the Treasury Secretary presiding over a $700 billion bank bailout, and Morgan Stanley, a product of the 1933 Glass-Steagall Act that cleaved investment and commercial banks, insisted they didn't need to change course, even as their shares plunged and their borrowing costs soared last week.
By then, it was too late. As financial markets gyrated -- the Dow Jones Industrial Average whipsawed 1,000 points in the week's last two days -- and clients defected, executives at the two firms concluded they had no choice. The Federal Reserve Board met at 9 p.m. yesterday and considered applications delivered that day, said Michelle Smith, a spokeswoman for the central bank. The decision was unanimous, she said.
`Blood in Water'
``There's blood in the water in the industry and the sharks are circling,'' Peter Kovalski, who helps oversee about $10 billion at Alpine Woods Capital Investors LLC, said at the end of last week. ``It all comes down to perception and the current trust within the community.''
Wall Street hasn't had such a shakeup since the 1980s, when firms including Morgan Stanley and Bear Stearns Cos. went public and London's financial markets were altered forever with the so-called Big Bang reforms implemented in 1986. Bear Stearns disappeared in March, when it was bought by JPMorgan Chase & Co.
The announcement paves the way for the two New York-based firms, both of which will now be regulated by the Fed, to build their deposit base, potentially through acquisitions. That will allow them to rely more heavily on deposits from retail customers instead of using borrowed money -- the leverage that led to the undoing of Bear Stearns and Lehman.
Morgan Stanley has taken $15.7 billion of writedowns and losses on mortgage-related securities and other types of loans since the credit crunch started last year. Goldman's tally stands at about $4.9 billion. While both companies have remained profitable and avoided money-losing quarters suffered by Lehman and Merrill Lynch, their revenue from sales and trading and investment banking have been declining this year.
Depositors Rule
``Deposit-banking is king right now,'' said David Hendler, an analyst at CreditSights Inc. in New York. ``It's the only meaningful critical-mass way to make money.''
Morgan Stanley may feel it has more time to contemplate alternatives to the deal that it began to shape last week with Wachovia Corp., said Tony Plath, a finance professor at the University of North Carolina at Charlotte.
``This means Morgan Stanley is reassessing its plan for a merger with Wachovia,'' Plath said. ``Morgan Stanley is going to try to go it alone, and I expect it will try to buy a bank with a market-to-book ratio that is next to nothing. It means they are walking away from Wachovia.''
Morgan Stanley, the second-biggest securities firm until this week, had $36 billion of deposits and three million retail accounts at the end of August. The company plans to convert its Utah-based industrial bank into a national bank.
`Certainty'
``This new bank holding structure will ensure that Morgan Stanley is in the strongest possible position,'' Chairman and Chief Executive Officer John Mack, 63, said in a statement last night. ``It also offers the marketplace certainty about the strength of our financial position and our access to funding.''
Goldman, the largest and most profitable of the U.S. securities firms, will become the fourth-largest bank holding company. The firm already has more than $20 billion in customer deposits in two subsidiaries and is creating a new one, GS Bank USA, that will have more than $150 billion of assets, making it one of the 10 largest banks in the U.S., the firm said in a statement last night. The firm will increase its deposit base ``through acquisitions and organically,'' Goldman said in a statement last night.
``Goldman Sachs, under Federal Reserve supervision, will be regarded as an even more secure institution with an exceptionally clean balance sheet and a greater diversity of funding sources,'' Lloyd Blankfein, 54, Goldman's chairman and CEO, said in the statement.
Citigroup, JPMorgan
The Washington-based Fed is the primary regulator of bank- holding companies, which are firms that own or control banks. Citigroup Inc., Bank of America Corp. and JPMorgan are bank- holding companies regulated by the Fed.
Securities firms, by contrast, had been regulated by the Securities and Exchange Commission. The SEC's future becomes dimmer with the change in Goldman and Morgan Stanley's structures.
``You can't kiss goodbye to the last two important investment banks without noting that the house is empty,'' said David Becker, a former SEC general counsel who is now a partner at Cleary Gottlieb Steen & Hamilton in Washington. ``It's a downward spiral where the less significant the population you regulate, the less your available resources.''
Less Risky
The change is also likely to lead to less risk-taking by the companies and possibly lower pay for their employees. Both Goldman and Morgan Stanley held more than $20 of assets for every $1 of shareholder equity, making them dependent on market funding to operate.
Goldman, in particular, has been remarkable for the high bonuses it pays to its employees. Goldman's CEO and two co- presidents were each paid more than $67 million last year.
``They're going to have to protect their deposit bases by law, and the days of high leverage are gone,'' said Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, who wrote ``Wall Street: A History.'' ``The days of the big bonuses are gone.''
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.
Sept. 22 (Bloomberg) -- The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.
The Federal Reserve's approval of their bid to become banks ends the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.
``The decision marks the end of Wall Street as we have known it,'' said William Isaac, a former chairman of the Federal Deposit Insurance Corp. ``It's too bad.''
Goldman, whose alumni include Henry Paulson, the Treasury Secretary presiding over a $700 billion bank bailout, and Morgan Stanley, a product of the 1933 Glass-Steagall Act that cleaved investment and commercial banks, insisted they didn't need to change course, even as their shares plunged and their borrowing costs soared last week.
By then, it was too late. As financial markets gyrated -- the Dow Jones Industrial Average whipsawed 1,000 points in the week's last two days -- and clients defected, executives at the two firms concluded they had no choice. The Federal Reserve Board met at 9 p.m. yesterday and considered applications delivered that day, said Michelle Smith, a spokeswoman for the central bank. The decision was unanimous, she said.
`Blood in Water'
``There's blood in the water in the industry and the sharks are circling,'' Peter Kovalski, who helps oversee about $10 billion at Alpine Woods Capital Investors LLC, said at the end of last week. ``It all comes down to perception and the current trust within the community.''
Wall Street hasn't had such a shakeup since the 1980s, when firms including Morgan Stanley and Bear Stearns Cos. went public and London's financial markets were altered forever with the so-called Big Bang reforms implemented in 1986. Bear Stearns disappeared in March, when it was bought by JPMorgan Chase & Co.
The announcement paves the way for the two New York-based firms, both of which will now be regulated by the Fed, to build their deposit base, potentially through acquisitions. That will allow them to rely more heavily on deposits from retail customers instead of using borrowed money -- the leverage that led to the undoing of Bear Stearns and Lehman.
Morgan Stanley has taken $15.7 billion of writedowns and losses on mortgage-related securities and other types of loans since the credit crunch started last year. Goldman's tally stands at about $4.9 billion. While both companies have remained profitable and avoided money-losing quarters suffered by Lehman and Merrill Lynch, their revenue from sales and trading and investment banking have been declining this year.
Depositors Rule
``Deposit-banking is king right now,'' said David Hendler, an analyst at CreditSights Inc. in New York. ``It's the only meaningful critical-mass way to make money.''
Morgan Stanley may feel it has more time to contemplate alternatives to the deal that it began to shape last week with Wachovia Corp., said Tony Plath, a finance professor at the University of North Carolina at Charlotte.
``This means Morgan Stanley is reassessing its plan for a merger with Wachovia,'' Plath said. ``Morgan Stanley is going to try to go it alone, and I expect it will try to buy a bank with a market-to-book ratio that is next to nothing. It means they are walking away from Wachovia.''
Morgan Stanley, the second-biggest securities firm until this week, had $36 billion of deposits and three million retail accounts at the end of August. The company plans to convert its Utah-based industrial bank into a national bank.
`Certainty'
``This new bank holding structure will ensure that Morgan Stanley is in the strongest possible position,'' Chairman and Chief Executive Officer John Mack, 63, said in a statement last night. ``It also offers the marketplace certainty about the strength of our financial position and our access to funding.''
Goldman, the largest and most profitable of the U.S. securities firms, will become the fourth-largest bank holding company. The firm already has more than $20 billion in customer deposits in two subsidiaries and is creating a new one, GS Bank USA, that will have more than $150 billion of assets, making it one of the 10 largest banks in the U.S., the firm said in a statement last night. The firm will increase its deposit base ``through acquisitions and organically,'' Goldman said in a statement last night.
``Goldman Sachs, under Federal Reserve supervision, will be regarded as an even more secure institution with an exceptionally clean balance sheet and a greater diversity of funding sources,'' Lloyd Blankfein, 54, Goldman's chairman and CEO, said in the statement.
Citigroup, JPMorgan
The Washington-based Fed is the primary regulator of bank- holding companies, which are firms that own or control banks. Citigroup Inc., Bank of America Corp. and JPMorgan are bank- holding companies regulated by the Fed.
Securities firms, by contrast, had been regulated by the Securities and Exchange Commission. The SEC's future becomes dimmer with the change in Goldman and Morgan Stanley's structures.
``You can't kiss goodbye to the last two important investment banks without noting that the house is empty,'' said David Becker, a former SEC general counsel who is now a partner at Cleary Gottlieb Steen & Hamilton in Washington. ``It's a downward spiral where the less significant the population you regulate, the less your available resources.''
Less Risky
The change is also likely to lead to less risk-taking by the companies and possibly lower pay for their employees. Both Goldman and Morgan Stanley held more than $20 of assets for every $1 of shareholder equity, making them dependent on market funding to operate.
Goldman, in particular, has been remarkable for the high bonuses it pays to its employees. Goldman's CEO and two co- presidents were each paid more than $67 million last year.
``They're going to have to protect their deposit bases by law, and the days of high leverage are gone,'' said Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, who wrote ``Wall Street: A History.'' ``The days of the big bonuses are gone.''
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.
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