10 large US banks to repay $68B in TARP funds

A key government effort to ease the credit crisis reached a milestone Wednesday as 10 large banks said they had repaid a total of $68 billion in bailout funds.

Treasury said last week that the banks could begin repaying money they received under the $700 billion financial system bailout known as the Troubled Asset Relief Program, or TARP. The government created the program in October as its flagship effort to address the global credit crisis and teetering financial markets.

Meanwhile, officials hustled to prepare an announcement about the pricing of stock warrants Treasury holds -- a final barrier to the banks' ending their ties to the bailout program. The warrants allow Treasury to buy the banks' stock at a fixed price at some future date. The banks now want to buy back those warrants

The flurry of activity around TARP followed months of criticism from opponents of government intervention in the financial industry. It showed that some of the biggest TARP investments are winding down sooner than many had feared.

More than $70 billion has been returned to the fund. That includes Wednesday's redemptions and about $2 billion in earlier repayments from smaller banks.

But until the banks can buy back the stock warrants Treasury holds, they remain entangled in a program that has subjected them to limits on executive pay and other restrictions. The banks have chafed against TARP from early on, fearing government-imposed rules could hurt their profits and prevent them from hiring or keeping top talent.

The warrants are hard to price because their values will fluctuate along with the banks' stock prices. Treasury wanted more money to unwind the contracts than the banks were willing to pay.

Uncertainty surrounding the warrant sales raises questions about whether Treasury "is getting the best possible price for taxpayers," the Government Accountability Office charged in a report released Wednesday

The GAO also urged Treasury to create consistent rules for evaluating bank requests to buy their way out of TARP.

Wednesday marked the first repayment opportunity for the 10 large banks whose exit applications Treasury approved last week. Throughout the day, the banks announced that they had finished repaying the government money

The list included some of the largest and best-known banks in the country. They were: JPMorgan Chase & Co., Morgan Stanley, Goldman Sachs Group Inc., U.S. Bancorp, Capital One Financial Corp., American Express Co., BB&T Corp., Bank of New York Mellon Corp., Northern Trust Corp. and State Street Corp.

To begin the process of leaving TARP, the banks had to clear a series of hurdles designed to make sure they would remain viable despite the financial crisis and the recession

All but Northern Trust underwent government "stress tests" to ensure they had an extra capital buffer in case the recession worsened. The 10 also were required to raise equity from investors and raise debt without a government guarantee.

Despite their relative strength, the banks still rely on government subsidies, including guarantees on debt they already issued and discounted credit lines from the Federal Reserve

The rapid repayments are not necessarily a sign that TARP itself will be scaled back. Treasury has said the money would be returned to the $700 billion bailout fund. It could be recycled in loans to other institutions the government hopes will lend money to people and businesses, supporting an economic recovery.

But an announcement about warrant pricing is expected by Friday, according to two industry sources who would speak only anonymously because the matter was not yet public.

That clarification and Wednesday's repayments provide a clearer way forward for banks wishing to end their involvement with the government's financial stabilization plans.

That clarification and Wednesday's repayments provide a clearer way forward for banks wishing to end their involvement with the government's financial stabilization plans.

That clarification and Wednesday's repayments provide a clearer way forward for banks wishing to end their involvement with the government's financial stabilization plans.

In addition, taxpayers will receive billions in exchange for the warrants, once Treasury and the banks agree on how to price them.

NEWS AT A GLANCE

Visa readies largest U.S. IPO

Visa International said it expects to earn up to $18.76 billion in its long-awaited initial public offering, making it the largest U.S. IPO on record. The previous record was AT&T Wireless in 2000, at $10.6 billion. In a filing with the Securities and Exchange Commission, Visa said it would sell 447.2 million shares, including 406.6 million to the public, at between $37 to $42 a share. Visa will trade under the ticker symbol "V" on the New York Stock Exchange. The SEC filing also show that Visa beat rivals MasterCard and American Express last year in terms of number of transactions and dollar amount.

Electronic Arts bids on 'Grand Theft Auto' maker

Video-game maker Electronic Arts offered $2 billion to acquire Take-Two Interactive Software, the maker of top-selling game "Grand Theft Auto." Take-Two rejected the offer over the weekend, and Electronic Arts moved yesterday to push the takeover bid through shareholders. The $26-a-share offer is 64 percent higher than the closing price before the bid. EA's move follows Vivendi's pending purchase of rival Activision, but comes before Take-Two's release of expected blockbuster "Grand Theft Auto IV." Still "the price is more than fair," said Wedbush Morgan Securities analyst Michael Pachter. "I'm quite confused why Take-Two would reject it."

Adobe takes on PC-Internet divide

Adobe Systems is releasing its AIR software development system today, providing a way for programmers to create hybrid Internet-based applications that run on PC desktops when a computer is offline. Some companies have already developed AIR versions of their online services; eBay is offering eBay Desktop, for example, which allows auctions management offline. Adobe is facing off against Google, Microsoft, and others to blur the line between the PC desktop, smart phone, and Web browser. "This is a battle for the hearts and minds of people who are building things," said Adobe chief technology officer Kevin Lynch.

Tackle the ice, but hold the salt

Rock salt is plentiful and cheap, and cities have used it to de-ice roads since World War II. But several states and municipalities are looking to overthrow the salt regime, which is also harmful to roads, cars, and vegetation. Akron and other Ohio towns use a goo derived from sugar beets to de-ice roads, and New Jersey uses a rum derivative. And in Colorado, self-described "obsessive-compulsive" lab rat Steve Bytnar has developed a proprietary white liquid that is used in the Denver area. These goos and liquids cost more up front, but their proponents argue that they work better and save money over the long run.

BAD DAY FOR: Sweet 16, as the number of 16-year-olds with a driver's license fell to 29.8 percent in 2006, from 43.8 percent in 1998, amid higher insurance rates, more restrictive laws, and a shift to more costly private driving schools. Parents are also more willing now to chauffeur their driving-age children around.

NOTED: Gas prices have risen 16 cents over the past two weeks, to an average of $3.10 a gallon, according to the Lundberg Survey. That's about 75 cents higher than a year ago. The rising prices mirror the price of crude oil. Trilby Lundberg, the survey's publisher, dismissed as "absurd" the idea that the Organization of Petroleum Exporting States would raise output soon. "They are certainly loving these prices,"

Dow, S&P 500 drop,Nasdaq up

The Dow and the S&P 500 dropped on Friday as concerns about the outlook of bond insurers weighed on financial shares, but bargain hunting in the technology sector pulled the Nasdaq into positive territory.

Shares of JPMorgan Chase & Co (NYSE:JPM - News) dropped 1.7 percent, and led the Dow's losers, while credit card and travel services company American Express Co (NYSE:AXP - News) slid 2 percent.

The drag from financial shares was driven in part by investor unease about the outlook for bond insurers after Moody's Investors Services cut its "AAA" ratings for bond insurer XL Capital Assurance, a unit of Security Capital Assurance (NYSE:SCA - News).
Comments from a Federal Reserve official saying a recession might not be avoidable were another headwind for stocks.

The Dow Jones industrial average (DJI:^DJI - News) was down 67.06 points, or 0.55 percent, at 12,179.94. The Standard & Poor's 500 Index (^SPX - News) was down 6.00 points, or 0.45 percent, at 1,330.91. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was up 3.59 points, or 0.16 percent, at 2,296.62.

Investors fear that downgrades of bond insurers could further harm the banking sector and stunt the global economy as financial institutions take a hit from subsequent write-downs of their assets.

JPMorgan shares fell to $44.23 on the New York Stock Exchange, while shares of American Express dropped to $45.55.

Shares of MBIA Inc (NYSE:MBI - News), the world's largest bond insurer, slipped by 0.4 percent to $14.12.

The company on Thursday sold $1 billion of shares to raise capital it hopes will help it avoid a rating downgrade. The sale was at a discount to MBIA's closing price.

On the Nasdaq, Apple Inc (NasdaqGS:AAPL - News) provided the biggest lift to the index, with a gain of 1.7 percent to $123.24. Tech stocks recently have taken a beating as investors worried about business spending, making some stocks attractively priced.
as attractive valuations lured investors to seek bargains.

San Francisco Federal Reserve Bank President Janet Yellen, speaking in Honolulu, indicated on Thursday a willingness to cut U.S. interest rates further, but she said she was not confident a recession can be avoided this year.

4:10 pm : On Monday, the major indices closed with significant gains, at their best levels of the session. The advance was broad-based with nine of the ten sectors posting a gain in excess of 1%. Financials showed significant strength, leading a late-day surge.

It was shaping up to be another negative day on Wall Street. Asian markets closed sharply lower on fear of a U.S. economic slowdown, and an economic reading on new home sales disappointed. The stock market managed to rebound into positive territory, though, as traders upped their bets for a rate cut and embraced several better than expected earnings reports.

On the economic front, December new home sales came in at a seasonally adjusted annual rate of 604,000 which is 4.7% less than last month's reading and is 40.7% less than last year's number. Economists expected sales to come in at 647,000.

The median sales price of a new house in December was $219,200. This equates to a 10.9% price drop year-over-year, the largest decline in nearly four decades. At the current sales rate, there is a 9.6 month supply of new homes. In 2007, there were an estimated 774,000 new homes sold, down 26.4% from 2006.

The number of new home sales is very low, and the large supply of inventory should keep pressure on prices for some time. Homebuilders (+6.4%) shrugged off the negative report. The group is up 36.5% in the last five sessions.

Stocks fell to their session lows shortly after the release, but then recovered into positive territory as traders increased their bets on the size of a fed funds rate cut on Jan. 30.
Fed funds futures currently indicate an 88% chance of a 50 basis point rate cut, with a 25 basis point cut fully priced in. Prior to today's action, futures suggested a smaller 70% chance of a 50 basis point cut.

Of the 22 companies that reported earnings this morning, 12 beat expectations, three met, and seven missed. Some of the notable companies that topped estimates include Corning (GLW 23.10, +0.73), Halliburton (HAL 33.55, +0.46), McDonald's (MCD 51.07, -3.03) and Sysco (SYY 28.33, +0.72). McDonald's traded lower though, as traders were disappointed with its flat December U.S. same-store sales. Verizon (VZ 38.11, +0.35) met expectations.

All ten sectors advanced. The financial sector (+3.3%) posted the largest gains, as it stands to benefit from a lower fed funds rate. Beaten down telecoms (+2.6%) came in second. Tech (+0.4%) underperformed on a relative basis due to lack of leadership within the sector.DJ30 +176.72 NASDAQ +23.71 NQ100 +0.9% R2K +2.0% SP400 +2.3% SP500 +23.36 NASDAQ Dec/Adv/Vol 1052/1929/1.90 bln NYSE Dec/Adv/Vol 749/2421/1.35 bln

3:30 pm : The stock market continues to give up ground. Tech (-0.5%) is leading the retreat, which sent the Nasdaq briefly into negative territory. Apple (AAPL 128.27, -1.74) is playing a large role in the tech sector's reversal, as it went from a leader to a laggard.

After the close, 29 companies will be reporting earnings including Dow component American Express (AXP 46.70, +1.26). President Bush will address the nation is his annual State of the Union address at 9:00 P.M. ET. It is being reported that the state of the economy and the proposed fiscal stimulus package will be focal points.

Before the open tomorrow, 55 companies are reporting their earnings. Notable companies include 3M (MMM 76.90, +1.39), Dow Chemical (DOW 36.97, +0.66) and Countrywide Financial (CFC 5.94, -0.08).DJ30 +79.66 NASDAQ +3.15 SP500 +11.96 NASDAQ Dec/Adv/Vol 1159/1801/1.59 bln NYSE Dec/Adv/Vol 851/2306/1.12 bln

3:00 pm : Stocks retreat off their highs, but are still holding onto strong gains. The recent retreat was concentrated in the tech sector, which is now trading 0.1% lower.
Shares of Nymex Holdings (NMX 114.50, +7.34) are posting significant gains. CME Group (CME 619.81, -9.19) and Nymex confirmed rumors that they are in preliminary discussions regarding CME's potential acquisition of Nymex. The companies have agreed to a 30-day exclusive negotiating period.

In other acquisition news, shares of Alliance Data (ADS 42.10, -23.50) are sharply lower after the company indicated its acquisition by affiliates of The Blackstone Group may not happen. Blackstone had told Alliance that it does not anticipate the condition to close the merger related to obtaining approvals from the Office of the Comptroller of the Currency will be satisfied.DJ30 +82.75 NASDAQ +10.32 SP500 +12.57 NASDAQ Dec/Adv/Vol 1017/1927/1.44 bln NYSE Dec/Adv/Vol 766/2390/1.02 bln

2:25 pm : Stocks hit fresh intraday highs in recent trade. Support has been broad based, with eight of the ten sectors advancing more than 1%. Energy (+0.5%) and consumer staples (+0.9%) are the laggards. Financials (+2.1%) continue to pace this session's advance. In currency trading, the dollar is down 0.7% against the euro. Against a basket of leading world currencies, the dollar is down 0.57%. DJ30 +130.55 NASDAQ +19.93 SP500 +17.11 NASDAQ Dec/Adv/Vol 1077/1834/1.28 bln NYSE Dec/Adv/Vol 886/2237/914 mln

2:00 pm : Stocks continue to post sold gains, as the major indices trade near their session highs.
Market breadth leans bullish. Advancers outpace decliners by 5-to-2 on the NYSE, and by 5-to-3 on the Nasdaq. Volume is on the heavy side, as it has been of late.

Gold closed the session up $16.00 to $926.70 per ounce, slightly lower than its new all-time intraday high of $929.80 that was reached in earlier trade.DJ30 +95.11 NASDAQ +15.93 SP500 +12.97 NASDAQ Dec/Adv/Vol 1112/1773/1.18 bln NYSE Dec/Adv/Vol 888/2222/841 mln

1:30 pm : The S&P 500 and Dow climb to fresh session highs. The financial (+2.0%) and energy (+1.6%) sectors are lending support. Energy has extended its gains as crude oil (+0.2% to $90.91) recovers into positive territory. The Nasdaq is trailing, as tech (+0.5%) is a notable laggard.

72 of the 100 stocks in the Nasdaq 100 Index are posting a gain. Weakness in Microsoft (MSFT 32.57, -0.37), Google (GOOG 559.55, -6.85) and Yahoo! (YHOO 20.90, -1.04) are offsetting Apple's (AAPL 131.08, +1.10) advance.DJ30 +93.00 NASDAQ +14.13 SP500 +13.08 NASDAQ Dec/Adv/Vol 1168/1714/1.07 bln NYSE Dec/Adv/Vol 984/2089/747 mln

1:00 pm : The major indices regain some ground, with notable strength in financials (+1.6%).
351 stocks in the S&P 500 have advanced this session. Bank of America (BAC 40.64, +1.16), Merck (MRK 49.11, +1.32) and General Electric (GE 34.35, +0.35) are pacing the advance. The main laggards are McDonald's (MCD 50.58, -3.52), Microsoft (MSFT 32.48, -0.46) and Google (GOOG 559.36, -7.04). Two stocks in the index hit new 52-week highs, and two stocks hit 52-week lowsDJ30 +71.78 NASDAQ +7.03 SP500 +10.41 NASDAQ Dec/Adv/Vol 1277/1586/971 mln NYSE Dec/Adv/Vol 995/2054/679 mln

12:30 pm : The major indices are holding onto modest gains, but remain off their best levels. All ten sectors remain in positive territory.

Gold continues to climb higher, hitting a fresh all time high of $929.80 per ounce. Silver has hit multi-year highs, and is currently up 1.5% to $16.73 per ounce.DJ30 +46.34 NASDAQ +7.19 SP500 +7.46 NASDAQ Dec/Adv/Vol 1245/1587/886 mln NYSE Dec/Adv/Vol 1063/1976/624 mln

12:00 pm : After some choppy action in the early-going stocks are posting modest gains at midday. Several better than expected earnings reports and increased bets on a rate cut helped offset steep declines in Asian markets and worse than expected new home sales data.

Of the 22 companies that reported earnings this morning, 12 beat expectations, three met, and seven missed. Some of the notable companies that topped estimates include Corning (GLW 23.17, +0.80), Halliburton (HAL 33.51, +0.42), McDonald's (MCD 51.14, -2.96) and Sysco (SYY 27.97, +0.36). McDonald's is trading lower though, as traders were disappointed with its flat December U.S. same-store sales. Verizon (VZ 37.21, -0.55) met expectations.

On the economic front, December new home sales came in at a seasonally adjusted annual rate of 604,000 which is 4.7% less than last month's reading and is 40.7% less than last year's number. Economists expected sales to come in at 647,000.

The median sales price of a new house in December was $219,200. This equates to a 10.9% price drop year-over-year, the largest decline in nearly four decades. At the current sales rate, there is a 9.6 month supply of new homes. In 2007, there were an estimated 774,000 new homes sold, down 26.4% from 2006.

The number of sales is very low, and the large supply of inventory should keep pressure on prices for some time. Homebuilders (+1.3%) shrugged off the negative report.

Stocks fell to their session lows shortly after the release, but then recovered into positive territory as traders increase their bets on the size of a Fed Funds rate cut on Jan. 30. Fed funds futures currently indicate an 88% chance of a 50 basis point rate cut, with a 25 basis point cut full priced in. Prior to today's action, futures suggested a smaller 70% chance of a 50 basis point cut, with a 25 basis point cut fully priced in.

Sharp declines in Asian markets on concerns of a U.S. economic slowdown weighed on U.S. stocks in pre-market trading. European markets were also lower, but pared most of their losses as U.S. stocks advanced.

All sectors are higher this session. Financials lead the way with a 1.6% advance. Consumer discretionary is underperforming on a relative basis with a 0.3% gain.DJ30 +59.10 NASDAQ +10.79 SP500 +10.01 NASDAQ Dec/Adv/Vol 1142/1656/767 mln NYSE Dec/Adv/Vol 1001/1987/521 mln

11:30 am : The major indices continue to post modest gains. U.S. Senate Democrats have added a jobless benefits extension and senior citizen rebates to the stimulus bill, according to Dow Jones.

Gold hit an all-time high of $924.80 per ounce before easing a bit. Gold is currently up 1.2% to $921.30 per ounce.DJ30 +58.29 NASDAQ +9.91 SP500 +9.81 NASDAQ Dec/Adv/Vol 1178/1578/650 mln NYSE Dec/Adv/Vol 1004/1967/433 mln

11:00 am : Stocks climb to their best levels of the session in a broad-based move. All ten sectors are in positive territory.

Financials (+1.6%) is leading the rebound with all 19 of its industry groups in the green. Industrial REITs is posting a 2.3% gain and regional banks is up 1.8%.
Even the energy sector (+1.0%) has rebounded into the green, despite a 1.4% slide in crude oil prices.DJ30 +53.36 NASDAQ +6.68 SP500 +7.61 NASDAQ Dec/Adv/Vol 1446/1271/508 mln NYSE Dec/Adv/Vol 1476/1445/322 mln

10:30 am : Stocks recover after falling to fresh session lows on the weak new home sales data. Utilities are leading the recovery effort with a gain of 1.3%. Meanwhile, telecom (-0.5%) pares most of its losses.

With regard to the new home sales data, the December seasonally adjusted annual rate of 604,000 is 4.7% less than last month's reading and is 40.7% less than last year's number. The median sales price of a new house in December was $219,200. This equates to a 10.9% price drop year-over-year, the largest decline in nearly four decades. At the current sales rate, there is a 9.6 month supply of new homes. In 2007, there were an estimated 774,000 new homes sold, down 26.4% from 2006.

The number of sales is very low, and the large supply of inventory should keep pressure on prices for some time. Homebuilders are down 2.7% this session.DJ30 +6.91 NASDAQ -2.28 SP500 +2.60 NASDAQ Dec/Adv/Vol 1632/1008/342 mln NYSE Dec/Adv/Vol 1763/1100/205 mln

10:05 am : Just hitting the wires, the U.S. Dept. of Commerce said December new home sales fell to a seasonally adjusted annual rate of 604K. Economists were expecting sales to hold at 647K. November's reading was revised downward to 634K. Stocks had climbed back to the unchanged mark, but fell back into the red after the disappointing data.

Three of the ten sectors are trending higher. Utilities is leading the way with a 0.6% advance. Telecom is the main laggard with a 1.7% drop, as it continues its poor showing this year.DJ30 -74.87 NASDAQ -13.77 SP500 -6.56 NASDAQ Dec/Adv/Vol 1624/790/120 mln

09:40 am : The stock market dips into the red after opening on a slightly higher note. Foreign markets saw another day of steep declined on fears of U.S. economic slowdown. Japan's Nikkei fell 4.0% and Hong Kong's Hang Seng fell 4.3%. Goldman Sachs said in a report dated Jan. 25 that Japan is either already in a recession or is very likely to do so in the first quarter, according to SCMP.com.

Earnings news leaned bullish. McDonald's (MCD), Corning (GLW), Sysco (SYY) and Halliburton (HAL) topped earnings expectations. Verizon (VZ) came in-line with expectations. McDonald's is trading lower though, as investors were disappointed with its flat December U.S. same-store sales.DJ30 -53.57 NASDAQ -16.76 SP500 -4.97

09:13 am : S&P futures vs fair value: -1.3. Nasdaq futures vs fair value: -2.0.

08:59 am : S&P futures vs fair value: -2.2. Nasdaq futures vs fair value: -3.0. Stock futures shed a few points and suggest a slightly lower open. The Dec. new home sales report is set for release at 10:00 ET. Economists are expected a reading of 645K.

08:30 am : S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: -4.5. S&P 500 futures are now pointing to a flat open as investors respond positively to this morning's earnings reports. McDonald’s (MCD) announced its dividends declared will now be paid on a quarterly basis. Nasdaq futures are pointing to a slightly lower open.

08:00 am : S&P futures vs fair value: -5.0. Nasdaq futures vs fair value: -10.0. Futures indicate a lower start for stock market after foreign markets fell sharply on concerns of U.S. economic slowdown. Japan closed down 4.0% and Hong Kong ended its session 4.4% lower. Earnings reports have lifted futures off their worst levels. Verizon (VZ) reported earnings in-line with expectations. Corning (GLW) topped earnings expectations by one cent and issued first quarter earnings guidance above the consensus estimate. McDonald’s (MCD) beat expectations by $0.02.

06:18 am : S&P futures vs fair value: -8.1. Nasdaq futures vs fair value: -19.3.

06:18 am : FTSE...5761.40...-107.60...-1.8%. DAX...6709.27...-107.47...-1.6%.

06:18 am : Nikkei...13087.91...-541.25...-4.0%. Hang Seng...24053.61...-1068.76...-4.3%.