Atlanta, GA, United States (AHN) – Oh how the tall and mighty have fallen.

Atlanta’s tallest building, Bank of America Plaza, a tower bought at the market peak, has been struggling with rising vacancy rates and a heavy debt load.

A foreclosure date has been set for the storied tower. According to a public notice, the building will go up for auction on Feb. 7.

The foreclosure auction comes three months after owner BentleyForbes Group LLC, a Los Angeles real estate firm, defaulted on its $363 million mortgage.

Since then, the company has been in negotiations to restructure its debt.

According to a statement from BentleyForbes, the company “remains committed to work with its financial partners” to stabilize the capital structure of the 55-story, 1,024-foot tower.

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New York, NY, United States (AHN) – The Federal Housing Finance Agency (FHFA) is set to sue a dozen banks over risky mortgage-backed securities they sold and that lost value during the housing collapse, according to reports from the Wall Street Journal and the New York Times. The suit alleges the banks misrepresented the securities’ quality and stability.

The suits from the FHFA, which oversees mortgage buyers Freddie Mac and Fannie Mae, are expected to be filed within days.

Reports say the securities named in the suit are those sold and backed by risky and subprime loans, but classified as safe by rating agencies.

Banks said to be targeted include Bank of America, JP Morgan Chase, Deutsche Bank and Goldman Sachs.

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Charlotte, NC, United States (AHN) – Warren Buffett’s Berkshire Hathaway will invest $5 billion in Bank of America, the bank announced on Thursday. The fresh capital is expected to boost BofA’s finances after losses suffered by the bank over subprime mortgages.

Berkshire will purchase cumulative preferred stocks that pay 6 percent dividends, which would provide Berkshire a net $300 million in dividends yearly. It will also get warrants to buy 700 million shares at $7.14 per share, which Buffett could exercise within a 10-year period.

News of Buffett’s investment in BofA drove the bank’s shares 9.4 percent, which closed up by 66 cents to $7.65 on Thursday trading.

The fresh infusion of capital comes at a time that the bank just announced job cuts and asset sales to help bring back investors’ confidence.

According to reports, Buffett made the decision to buy into BofA while in the bathtub on Wednesday morning. He has his aide immediately get the private number of Bank of America Chief Executive Officer Brian Moynihan.

Buffett said he decided to purchase BofA stocks because the bank is a strong and well-led company. He added he is impressed with the profit-generating abilities of the franchise and their aggressive measures to place challenges behind the bank.

Buffett made a similar $5 billion investment in Goldman Sachs Group at the height o the 2008 credit crisis, which Goldman repaid this year. The investment earned Buffett a 10 percent dividend.

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Charlotte, NC, United States (AHN) – Bank of America agreed on Monday to sell its Canadian credit card unit to Toronto-Dominion Bank for $7.6 billion cash.

The unit was acquired by former BofA Chief Executive Officer Kenneth Lewis and is one of over 20 bank assets or units sold by current CEO Brian Moynihan since he took over BofA in 2010.

Besides the Canadian card unit, Moynihan disclosed that the bank will also sell its U.K. and Irish card businesses, signaling its exit from credit-card lending outside the U.S. He said the sale is part of the company complying with new international capital standards and to focus on corporate lending, investment banking and retail clients in the U.S.

Prior to the announcement of the sale, Moynihan wrote down $20.3 billion the credit card and mortgage units purchased by BofA under Lewis, which spent over $130 billion to make it the largest U.S. bank by asset. The write downs were because of increased defaults and U.S. regulation limiting fees.

Besides the credit card unit, BofA is also disposing of the First Republic Bank, stakes in BlackRock and Itau Unibanco Holding in Brazil.

BofA’s Canadian MasterCard portfolio is just one of the purchases made by TD Bank within the past five months, which has reached $20 billion. Previously, TD Bank bought Chrysler Financial for $6.3 billion;

Canadian banks are buying assets from foreign lenders who are leaving and amid unloading of units by Canadian and U.S. banks to boost their capitals.

News of the credit card business sale caused shares of Bank of America to go up 57 cents or 7.9 percent to $7.76 in the New York Stock Exchange composite trading.

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Frankfurt, Germany (AHN) – The European Central Bank on Sunday decided to buy eurozone government bonds to deter a possible panic selling on Monday’s opening of stock market trading.

The decision was made through a tense evening video conference of the European Union’s 17 central bank governors, who were divided on the issue of purchasing sovereign debts after bailing out Portugal, Ireland and Greece last week.

The downgrading by ratings agency Standard & Poor’s of U.S. government debt over the weekend from AAA to AA+ apparently prompted the meeting.

The announcement was made amid selloffs of Italian and Spanish government bonds last week, a sign the two countries may face expensive fiscal borrowings making them the next likely candidates for bailout.

Italy happens to the world’s third largest bond market after the U.S. and Japan. In the EU, Italy and Spain are the third and fourth largest economies with annual bond issues worth $858 billion.

The world’s stock markets, particularly Wall Street, also suffered massive selloffs last week in reaction to the European debt crisis.

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The west’s leading economic thinktank warned the Bank of England on Wednesday that it would have to start raising interest rates this year to prevent inflation taking hold in the UK.

In a downbeat assessment of the prospects for the economy, the Paris-based OECD said Threadneedle Street would have to steadily increase borrowing costs over the next 18 months despite the weakness of growth.

The OECD reiterated its support for the government’s deficit-cutting strategy, but said George Osborne should remove exemptions on VAT in order to boost public spending on Britain’s infrastructure.

And it said a full-break up of Britain’s banks should remain an option even though the Independent Commission on Banking set up by the coalition has so far backed only more limited reform of the financial system.

Releasing its half-yearly Economic Outlook in Paris, the OECD predicted that the UK would continue to lag behind most other leading industrial nations as it recovered from the deep downturn of 2008-09. Growth is projected to be 1.4% in 2011, rising to 1.8% in 2012 – weaker than ministers are expecting.

The sluggishness of the economy will feed through into higher unemployment, which the OECD expects to rise from 7.9% of the workforce in 2010 to 8.1% this year and 8.3% in 2012

“Growth is projected to remain slow during 2011″, the OECD said. “Public consumption and investment are set to fall significantly while household consumption is expected to remain subdued, reflecting falling real incomes and stagnant asset prices.”

The report added, however, that the Bank of England’s monetary policy committee would have to act before too long to curb inflation. With the government’s preferred measure of annual cost of living increases currently standing at 4.5%, the OECD said the public’s belief that inflation would remain high illustrated “concerns about the Bank of England’s willingness to tolerate significant and persistent deviations” from the government’s 2% target.

“A modest increase in interest rates should be taken during 2011 to stave off increases in inflationary expectations, which are already elevated. As the recovery gathers momentum in 2012, the pace of normalisation of interest rates should be stepped up.”

The OECD said the government’s mix of tax increases and spending cuts were needed to rein in the budget deficit, slow the build of the UK’s national debt and maintain the confidence of financial markets.

“Nevertheless, consolidation measures should be implemented in a way that minimises the impact on short-term growth. Ending exemptions and increasing lower rates in the VAT system would increase efficiency and raise revenues that could be used to lessen cuts in infrastructure investment.”

The think tank also questioned whether the ICB’s proposal to ring fence the retail operations of banks within wider financial groups went far enough. “A full break-up of banks and further increases in capital requirements should also remain options”.

For the 34-nation OECD as a whole, today’s economic outlook predicted growth of 2.3% in 2011 rising to 2.8% in 2012. While noting that the recovery was becoming “self-sustained and more broad based”, the OECD pointed to significant downside risks including rising commodity prices, a sharp slowdown in China and the soveriegn debt crisis in the Euro Area.

“All this suggests that the global crisis may not yet be over”, said the OECD’s chief economist Pier Carlo Padoan. He added that policy makers needed to address four big challenges – high unemployment, sustaining growth, repairing public finances and managing global imbalances.

“The global economy is exiting recession but is not returning to business as usual”, Padoan said. “The post-crisis economy will have to deal with old and new challenges, while purusing new, green and inclusive sources of growth.” Interest rates Economics Bank of England Economic growth (GDP) Financial crisis Banking Larry Elliott guardian.co.uk © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds

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Tel Aviv, Israel (TML) – Western powers and their allies in the Middle East hope to grease the wheels of democracy and political stability as they begin to release billions of dollars in loans and other financial aid to the region’s Arab Spring economies.

The economies of countries like Egypt, Tunisia and Jordan are facing a near-perfect storm of political unrest combined with negative growth and rising prices for imported energy and food. But the emerging aid pipeline may be clogged by domestic opposition inside donor countries. Recipients may balk at the conditions placed on much of the aid.

Aid could ease the way for Egypt and Tunisia to evolve into Western-friendly democracies as well as give a boost to beleaguered friends like Jordan’s King Abdullah. Without it, deteriorating economic conditions risk strengthening the hand of already powerful Islamic movements and undermining public confidence in the free markets and private business that economists say are needed to ensure long-term prosperity.

“These countries, particularly Egypt, face a financial hole and their economies have come to a standstill. The way out is to spend money which their governments don’t have,” said Paul Rivlin, author of Arab Economies in the Twenty-First Century. But the recipients will have to show they are taking the right political and economic measures. “The U.S wants to draw them back into a Western orientation. But the political systems in these countries may draw them elsewhere.”

Egypt, as the biggest of the Middle East’s troubled economies and the country most likely to set the direction of the region political, is the focus of the aid.

The International Monetary Fund (IMF) kicked off the effort May 12, saying it would respond to Egypt’s request for as much as $12 billion. That amount has since has been lowered to $4 billion. But in the meantime, U.S. President Barack Obama last week offered to forgive some $1 billion in Egyptian debt and. Egypt is reportedly close to an agreement with the World Bank to receive loans worth $2.2 billion.

But the biggest largesse of them all may come from Saudi Arabia, which on Saturday pledged $4 billion in the form of soft loans, deposits and grants, the Egyptian Middle East News Agency (MENA) reported, citing Field Marshal Mohamed Hussein Tantawi, the head of Egypt’s ruling military council, as saying.

Egypt won’t be the only beneficiary of international aid.

On Saturday, the European Bank for Reconstruction and Development (EBRD), which was formed to smooth eastern Europe’s transition to free market democracies, is working on a program that may eventually lead to investment of as much as 2.5 billion euros ($3.5 billion) a year in the Middle East. The EBRD said it is considering a request by Egypt to become a country of operations. Morocco, another EBRD shareholder, has also expressed an interest in qualifying, it said.

On Monday, the Group of Eight (G-8) – a forum for many of the world’s biggest economies – will discuss how they can contribute to modernizing the economies of the Middle East, without pledging dollar amounts for assistance. A special session will be devoted to Tunisia and Egypt.

Tunisia plans to attract $5 billion a year in foreign aid, loans and private investments over the next five years during meetings at the G-8 summit, Finance Minister Jelloul Ayed said in an interview with The Wall Street Journal Friday. Tunisia would apply for a $500 million standby loan, possibly from the World Bank.

Obama told a visiting King Abdullah that he would provide Jordan with several hundred millions of dollars in aid, channeled through the Overseas Private Investment Corp. (OPIC). Obama said the funds would “leverage ultimately about $1 billion for economic development in Jordan.”

Rivlin said Washington will lead the aid drive and should America judge that the Arab Spring economies aren’t meeting its conditions it “will be difficult” for Europe and international institutions to provide it either.

The Arab Spring economies are in bad shape by almost every measure. The five countries hit hardest by turmoil will show a combined drop in economic output of about 2.3% this year, according to figures based on a forecast by the Institute for International Finance (IIF) released in early May.

Egyptian Finance Minister Samir Radwan estimates his country’s budget deficit will top 10% of gross domestic product in the coming fiscal year, up from a previous forecast of 7.9% and has to borrow to cover the gap. Its official foreign currency reserves have fallen to $28 billion, but some economists think the drop is bigger than being report.

Uri Dadush and Marwan Muasher, from the Carnegie Endowment for International Peace, expressed concern that it will be difficult to convince the leaders of Egypt and other recipient countries to undertake the economic reforms needed to rekindle economic growth and enable them to eventually get off aid.

So far, the transitional governments of the region, as well as veteran leaders trying to retain power, have increased subsidies for consumer goods and promised to create jobs, all at a cost to badly strained budgets and economic efficiency. But Dadush and Muasher add that the bigger problem may be convincing Arab public opinion that free markets are beneficial.

“Change in the Middle East is about refusing an autocratic political system and calling for democracy – without a clear vision for what economic system should be put in place,” they wrote in the National Interest on April 13. “There is a significant possibility that the governments that ultimately emerge out of this crisis will renounce previous economic reforms as misguided.”

Indeed, many analysts think Egypt won’t agree to the economic reforms the IMF typically demands in exchange for its aid, such as subsidy cuts, for fear that they will spark another round of mass protests like the kind that brought down President Husni Mubarak in February.

“For understandable political reasons, the Egyptian government says that it is unthinkable to cut subsidies for food or energy. But can the IMF simply extend a loan without any conditionality? I doubt it,” Gideon Rachman wrote in the Financial Times last week.

Back at home, both American and European leaders will have to make a case for sending billions of dollars overseas at a time when they are experiencing severe economic difficulties of their own. Europe is trying to put out debt fires in Greece, Portugal and Ireland.

In the U.S., President Barack Obama is battling Congress over increasing the country’s debt ceiling. He faces opposition from a Republic-controlled House of Representatives to helping countries whose allegiance to America is more in doubt as long-time pro-Western despots are replaced by governments whose views are yet to be fully articulated.

The U.S. budget is weighed down by $14 trillion in debt as the White House and Congress fight over raising the national debt ceiling.

“Considering our own national debt, we cannot afford to forgive up to $1 billion of Egypt’s debt,” Elena Ros-Lehtinen, the chairwoman of the House Foreign Affairs Committee, said last Thursday. “The U.S. should only provide assistance to Egypt after we know that Egypt’s new government will not include the Muslim Brotherhood and will be democratic, pro-American and committed to abiding by peace agreements with Israel.”

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Mbabane, Swaziland (IRIN) – Swaziland’s deepening financial crisis has already eroded public services, but those services may shut down entirely if the government fails to find money to pay its wage bill.

Finance minister Majozi Sithole told a state-run radio station on 9 May that the government would struggle to pay public service salaries at the end of the month, and that no money would be available for June or beyond unless the World Bank and the African Development Bank grant the loans the government has requested.

Civil servants and nurses’ unions have already threatened to stop working if salaries are not paid on time.

“A security threat with regional implications comes when government cannot pay the army, police and the correctional services,” said Manqoba Ginindza, who works at a local investment institution. “The slow deterioration of services we have seen all year will become an abrupt end to all services.”

The average Swazi wage earner supports 10 individuals, so 100,000 people – one-tenth of the population – would be directly affected if the country’s 10,000 civil servants were not paid.

If the largest group of wage earners stopped spending or investing, retailers could be left with unsold goods, and banks saddled with delinquent loans. Analysts said the knock-on effects to the economy could be far-reaching.

In January 2011 the International Monetary Fund (IMF) made a number of recommendations aimed at staving off economic disaster in Swaziland . Chief among them was that the bloated public sector workforce be cut to a size more suited to a small country’s needs.

The government announced that it would cut 7,000 public service jobs during 2011, but so far has cut none. Swaziland’s unemployment rate stands at 40 percent and more jobs have been lost since the beginning of the year as businesses that relied on government contracts have closed down.

Feeling the pinch

Swazis started feeling the pinch of the financial crisis in March, when the government suspended pensions for the elderly in order to pay school fees for orphans and vulnerable children (OVC).

Although the pensions have been reinstated, the Ministry of Education is still faced with a shortfall, which has delayed the payment of fees for the children’s second term of school.

Nurses at the country’s largest medical facility, the Mbabane Government Hospital, have announced that starting on 16 May they will hold daily pickets to protest the shortage of drugs and basic medical supplies like bandages.

The relatives of patients with wounds that need dressing have been forced to buy bandages at pharmacies, and nurses complain that they have exhausted the ways of stretching scarce resources.

Local media recently reported that the government did not have the money to maintain its large fleet of vehicles, which includes ambulances and tractors, and that many vehicles are likely to be taken out of service when they need new tires and other spare parts.

Low hopes for recovery

Putting an end to the financial crisis and turning around the economy would take the kind of fundamental growth that Swaziland has not seen since the mid-1990s. Foreign direct investors have tended to shun the country in favor of its neighbors – the economically rebounding Mozambique and the regional powerhouse, South Africa.

When the African Growth and Opportunity Act (AGOA), a US preferential trade act, was launched a decade ago, it was hailed as a means of expanding Swaziland’s economy by boosting the industrial sector.

Cyril Kunene, Principal Secretary in the Ministry of Commerce, Industry and Trade, recently told a press briefing that it had been a disappointment because the businesses that took advantage of AGOA were mainly Asian garment makers seeking entrance into the US market via Swaziland.

Their taxes were deferred as an inducement for investing in the country but the jobs their factories provided were unskilled and low-paying.

Swaziland’s non-governmental sector is attempting to fill many of the gaps created by poor public service delivery, but the expectation that they will provide more is growing just as donor support for many such organizations is shrinking .

“When the money runs out government services will stop,” the CEO of an Mbabane-based NGO, who declined to be named, told IRIN. “This means NGOs will be required to do even more to meet the health and social welfare needs of Swazis.”

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– Provided by Integrated Regional Information Networks.

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