Today's Business Press

Fannie Cleans House

Troubled lender Fannie Mae shook up its C-suite on Wednesday, announcing the departure of three high-level executives, the Wall Street Journal reported. The move is said to be “designed to drive the mortgage company’s efforts to conserve capital and contain a surge in costs stemming from defaults by homeowners,” according to the paper. Out go Chief Business Officer Robert Levin, Chief Financial Officer Stephen Swad, and Chief Risk Officer Enrico Dallavecchia. And what about Fannie’s embattled CEO Daniel H. Mudd? He won a vote of confidence from the board and will continue to run the company through its biggest crisis yet, Reuters reports.

Shares in Fannie Mae rose for a third straight day, triggered by hopes the firm can avoid a “disastrous” bailout, the WSJ points out. In fact, the shake-up was greeted with a ho-hum response from investors, who appear more concerned with Washington than Wall Street. “This was probably a necessary step but not one that’s going to determine the future of Fannie Mae. Clearly, the fate of Fannie and Freddie is in the hands of policy makers,” Eric Kuby, chief investment officer of the North Star Investment Management Corp. in Chicago, told Reuters.

Wall Street got an unexpected jolt of good news as durable goods orders topped expectations, rising 1.3 percent in July, the New York Times reports. The savior? A particularly strong rise in orders for transportation equipment. The better-than-expected numbers nudged all major indices higher on Wednesday and had some observers wondering: Is the economy perhaps in better shape than we thought? The Los Angeles Times even taunts: “What happened to the recession?

The LAT parses a few promising statistics from the July data. New orders for machinery and other capital goods—a “key barometer for business spending,” it says—were up 2.6 percent in July. “This suggests the credit crunch is not having a profoundly adverse impact on capital spending that most economists, myself included, assumed it would,” David Resler, an economist at Nomura Securities, told the newspaper. CNNMoney partially backs up the rosier outlook for the U.S. economy, saying the government today will release the latest GDP report, which analysts forecast will show the country grew at a “healthy” 2.7 percent during the second quarter. We’re not out of the woods yet, though. One economist quoted in the article predicts the worst quarter yet will be Q1 2009.

Oil prices rose on Wednesday and again in Asia on Thursday, as Tropical Storm Gustav intensifies over the Gulf of Mexico and heads straight for oil rigs off the coast of Louisiana. Oil traders had an eye on the Weather Channel throughout the day, CNNMoney reports. “If the storm hits land and it is very powerful when it hits land, it could disrupt some refinery operations,” Amanda Kurzendoerfer, commodities analyst at Summit Energy, told CNNMoney. The Financial Times reports “oil companies have started to evacuate non-essential workers from the area.”

Oil closed the day Wednesday above $118 a barrel, up $1.88. Reuters reports from Singapore on Thursday weren’t much better. “Oil rose for a fourth straight day to stay above $118 a barrel … on fears Tropical Storm Gustav may hit the Gulf of Mexico after it morphs into a major hurricane, paralyzing the heart of U.S. offshore production,” Reuters said. The price of natural gas rose, too, on fears of Gustav damage, the FT adds.

A single international accounting standard, one that promises to remove uncertainty for investors, will be put in place for select U.S. companies early next year, the Securities and Exchange Commission announced on Wednesday. According to the NYT, “the adoption of international accounting standards by the United States would move the world toward one set of standards, which should make it easier for investors to compare companies operating in differing regions, and make it easier for firms to raise capital in whatever market seems most attractive.” The U.S. would be joining more than 100 countries that use the international standard.

The “big shift in accounting rules” endorsed by SEC Chairman Christopher Cox is already being greeted with relief, Business Week reports, as it would finally harmonize accounting standards between the United States, Europe,and Asia. Business Week says 110 American companies would qualify next year to adopt the new practice, with a view to all large U.S. firms adopting the standard by 2014.

In a sign that plagiarism is alive and well on Wall Street, the WSJ reports on Thursday that Lehman Brothers has been circulating among its clients over the past week an embarrassing mea culpa. In a letter obtained by the newspaper, Lehman apologizes for issuing a report from March on the semiconductor industry that contained sections plagiarized from two 2007 industry reports written by Sanford C. Bernstein & Co. analyst Toni Sacconaghi. “Several pages of text and graphics” appearing toward the end of the Lehman report were the dead giveaway.