| Bank of England rejects rate cut option
Bank of England Governor Mervyn King told Britain's Treasury Select Committee Wednesday he would not use aggressive interest rate cuts to rescue banks.
"Two principals would underlie any central bank role," King told the committee. "First, the risk of losses on their lending should remain with the banks' shareholders. Second, a long-term solution must focus on the overhang of assets and not subsidies issues of new assets," he said.
Mortgage finance providers "underestimated the risks, and hence the true costs of the securitization process," King said.
The Bank of England has moved to pump cash into the economy, but not by reducing lending rates, which have remained at 5.25 percent since December, The Times of London reported.
Last week, the bank initiated a series of injections of nearly $10 billion into the economy that will continue until the next meeting of the banks monetary committee.
Sempra, bank get OK for venture
Sempra Energy and the Royal Bank of Scotland said yesterday they had received the final regulatory approval needed to form a long-expected energy commodities and marketing joint venture. With the OK from the U.S. Federal Reserve Bank in hand, the joint venture transaction is expected to close Tuesday. The deal, which was announced in July, had been expected to close by the end of 2007. Sempra also reiterated its earnings guidance for 2008 and set a target of 11 percent average annual earnings growth through 2012. The San Diego company forecast 2009 earnings of $4.35 to $4.60 a share, and 2012 earnings of $5.50 to $5.80 a share. Its shares rose $1.98, or 3.9 percent, to close yesterday at $53. Vertex drug trial data promising Preliminary data from a midstage clinical trial of a therapy for cystic fibrosis being developed in San Diego by Vertex Pharmaceuticals showed promising results, the Cystic Fibrosis Foundation said.
Kroszner says Fed to 'consider' narrowing new mortgage lending rules UPDATE
WASHINGTON (Thomson Financial) - Federal Reserve Board Governor Randall Kroszner said today the Fed is closely examining comments it has received on its pending regulation designed to tighten mortgage lending standards, and will "consider" whether to relax key sections of its December draft rules before making them final. One key aspect of the proposed rules is that mortgage loans with an annual percentage rate above a certain threshold will be subject to new restrictions. These restrictions include rules requiring lenders to verify income of borrowers, limit prepayment penalties, set up escrow accounts for taxes and insurance, and avoid a pattern or practice of lending money without considering the ability of the borrower to repay the loan. In a speech to the National Association of Hispanic Real Estate Professionals in Washington this morning, Kroszner said the Fed sees these rules applying to all subprime mortgages, and part of the "near prime" mortgage market, also known as the "alt-A" market.
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