Home prices rose modestly in October, thanks to a flood of buyers seeking to take advantage of the government&S217;s offer of a tax credit, data released Tuesday showed.

The Standard &&8; Poor&S217;s/Case-Shiller home price index, a closely watched measure of the housing markets in 20 metropolitan areas, rose 0.4 percent from September on a seasonally adjusted basis. It was the fifth consecutive month that prices were up.

Underneath this apparent good news were some disquieting signs of deterioration, however.

Seasonal adjustments tend to hide any weakness in the cooler months, when fewer houses are sold. On an unadjusted basis, the index was flat in October.

&S220;We&S217;ve started to see the possibility of either a leveling off of prices for a few months or perhaps a double-dip,&S221; said Maureen Maitland, the vice president for index services at S emergency payday loan.&&8; P.

The Case-Shiller index is down 7.3 percent from October a year ago.

Prices fell or were flat in nine of the 20 cities surveyed in October, the same as in September. But the recovery is beginning to diverge sharply by metro area, Wells Fargo chief economist John Silvia noted.

In the last three months, prices in San Francisco increased at a 25 percent annual rate while Minneapolis was up 17 percent and Los Angeles rose 11 percent. Phoenix, long a laggard, rose 13 percent.

But New York, Portland and Boston were up less than 2 percent.

Home Prices Rose Slightly in October

NEW YORK – The government has handed its ATM card to beleaguered mortgage giants Fannie Mae and Freddie Mac.

The Treasury Department said Thursday it removed the $400 billion financial cap it will provide to keep the companies from failing. Already, taxpayers have shelled out $111 billion to the pair.

Treasury Department officials said the $400 billion limit would be replaced with a flexible formula to ensure the two agencies can stand behind the billions of dollars in mortgage-backed securities they sell to investors.

Fannie Mae and Freddie Mac provide vital liquidity to the mortgage industry by purchasing home loans from lenders and selling them to investors. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion, or about half of all mortgages.

Without government aid, the firms would have gone broke, leaving millions of people unable to get a mortgage.

The biggest headwind facing the housing recovery has been the rise in foreclosures as unemployment remains high. The Treasury's latest move could allow Fannie and Freddie to play a bigger role in restructuring mortgages for troubled borrowers.

The news follows the announcement Thursday that Fannie's and Freddie's chief executives could get paid as much as $6 million for 2009, despite the companies' dismal performances this year.

Fannie's CEO, Michael Williams, and Freddie CEO Charles "Ed" Haldeman Jr. each will receive $900,000 in salary, $3.1 million in deferred payments next year and another $2 million if they meet certain performance goals, according to filings with the Securities and Exchange Commission.

The pay packages were approved by the Treasury Department and the Federal Housing Finance Agency, which regulates Fannie and Freddie.

That pay is far less than what their predecessors earned. Former Fannie CEO Daniel Mudd received $10.2 million in 2008 and former Freddie CEO Richard Syron pocketed $13.1 million. Both execs were ousted when federal regulators seized the companies in September 2008. The federal government blocked exit packages for the pair worth up to $24 million.

The chief executives' pay could spark new criticism about the government's numerous bailouts, but that may be unfounded, said Mark Borges, principal with management consulting firm Compensia.

Haldeman and Williams each could command between $5 million and $10 million in a similar position in the private sector, Borges estimated, and without the notable challenges and public scrutiny they face at these companies.

"I doubt too many people would look at these jobs and say, 'Gosh, I would love to go there for my next career move,'" Borges said instant payday loans. "The government is getting top notch executives to solve problems that are not easy to solve."

The bulk of their pay is also not guaranteed, Borges said, so these executives can't pocket and run and must meet certain long-term goals or risk giving some of it back.

Freddie Mac's board sets the performance goals for the chief executive, which won't be disclosed until next year. Fannie Mae's filing outlined its corporate goals including "being a recognized leader in the housing recovery," "protecting taxpayers," and "managing risk more effectively."

Fannie Mae and Freddie Mac declined to offer further details on CEO performance goals.

Public anger over Wall Street pay boiled over earlier this year. In response, the Obama administration imposed pay curbs on banks that received government bailouts. All the major banks have since repaid their federal money, largely to escape caps on executive pay.

Former Bank of America Corp. CEO Ken Lewis, for example, agreed to forgo his salary and bonus this year under pressure from the government. Last year, he pocketed more than $9 million in total compensation. Bank of America received $45 billion in government assistance, which it has since repaid.

Freddie Mac hired Haldeman, a former mutual fund executive, in July. At the time, the company disclosed his annual salary of $900,000 but did not disclose other incentive payments. In September, the company hired a new chief financial officer, Ross Kari, and said his pay package would be worth up to $5.5 million.

Williams, formerly Fannie Mae's chief operating officer, took over as CEO in April after the first government-appointed CEO, Herbert Allison, took a job at the Treasury Department. Williams earned a base salary of $676,000 last year, plus a retention award of $260,000.

Washington-based Fannie Mae was created in 1938 in the aftermath of the Great Depression. It was privatized 30 years later to limit budget deficits during the Vietnam War. In 1970, the government formed its sibling and competitor McLean, Va.-based Freddie Mac.

Though the Obama administration has yet to divulge its long-term plans for the two companies, they are unlikely to return to their former power and influence.

___

AP Real Estate Reporter Alan Zibel in Washington contributed to this report.

Treasury removes cap for Fannie and Freddie aid

LONDON (MarketWatch) -- British stocks tentatively built on recent gains in a holiday-shortened trading session on Thursday, with miners advancing amid higher commodity prices

The U.K. FTSE 100 index rose 0.1%, or 5.22 points, to 5,377.60.

The British stock market and selected Continental equity markets close early on Thursday for the Christmas break. Shares trading in Europe on Thursday were also in a tight range. See Europe Markets.

U.S. stock futures were pointing to mild gains on Wall Street.

The FTSE 100 index ended 0.8% higher on Wednesday, with the move bringing gains made in the first three sessions of the week to 3.4% and year-to-date gains to 21.2%.

The index is almost back at its 2009 closing high of 5,382.67, hit on Nov. 16.

Miners have performed strongly this year and were higher again on Thursday, with BHP Billiton shares up 1 low cost payday loans.4% and Anglo American shares up 1.2%.

Silver miner Fresnillo gained 2.6% and copper miner Kazakhmys advanced 1.2%.

The gains for the sector came as metal futures advanced, with gold futures up $10.10 at $1,104.20 an ounce. Light sweet crude oil futures were up 18 cents at $76.85 a barrel in electronic trading and sterling traded up 0.2% at $1.5993 against the dollar.

Still, gains for the top London index were kept in check by losses for some banks and insurance companies.

RSA Insurance Group shares were down 1.4% and shares of banking giant HSBC Holdings lost 0.7%.

London Markets: British stocks gain for fourth straight session

NEW YORK (MarketWatch) -- Benchmark stock indexes in Mexico and Brazil closed higher Wednesday, adding to the prior session's rally, after J.P. Morgan upgraded Mexico and industrial production in Brazil improved for a 10th month.

Mexico's IPC index rallied 1.1% to 32,112 and Brazil's Bovespa gained 0.3% to 68,615.

The swing in Mexico's economic growth in 2010 is predicted to be 0.5% from this year, one of the largest turnarounds in emerging markets, J.P. Morgan analysts wrote in a research note. Still, the nation's stocks are under-owned, and growth in the U.S. will be a big boost for one of its largest trading partners, Adrian Mowat and Ben Laidler said.

Among the shares J.P. Morgan now rates at overweight, Ternium's U.S. shares gained 2.5% and brewer Femsa's shares rose 1.4%.

DOW INDUSTRIALS (DJIA)

Separately, bank concern Banorte jumped 3.5% in local trading.

Among some of the most actively-traded Mexican companies, U.S. shares of fixed-line telecommunications firm Telmex advanced 2 fast cash.6%.

Retailing giant Wal-Mart de Mexico gained 3.9% on U.S. exchanges.

U.S. shares of wireless giant American Movil declined 1.7% while cement maker Cemex slid 0.5%.

In ETF action, the iShares MSCI Mexico Investable index rose 1.4%

Meanwhile, iShares MSCI Brazil Index gained 1.1%.

WSJ's personal finance reporter Shefali Anand talks to India Bureau Chief Paul Beckett about whether individual investors can still buy stocks in light of massive gains in 2009.

Industrial production in Brazil rose 2.2% in October compared to the previous month, the national statistics agency said.

Utility companies led the advance, with local shares of Centrais Eletricas Brasileiras up 8.5% and Eletrobras shares gaining 6.6%.

Petrochemicals company Braskem's U.S. shares rose 4.2%.

Steel firms were among the gainers, with U.S. shares of Gerdau up 2.5% and CSN advancing 2.4%.

Oil giant Petrobras declined 0.1%.

Elsewhere in South America, Argentina's Merval index advanced 0.5% to 2,221. In Chile, the IPSA index gained 0.6% to 3,344.

Latin American Markets: Latin America stock rise; analyst upgrades Mexico

Finance and trade ministers meeting in Singapore for the Asia Pacific Economic Cooperation forum have agreed the global economic recovery is still fragile and more coordinated efforts are needed for sustained growth. Ministers from 21 Pacific Rim economies discussed sustaining growth and connecting the region.The economic leaders issued a statement saying although most economies are now recovering from last year's financial crisis, the recovery remains fragile and growth over the next few quarters is likely to be uneven. US Treasury Sec. Timothy Geithner (L) talks to a fellow minister at a joint APEC Finance Ministers press conference in Singapore, 12 Nov 2009The United States Treasury Secretary Timothy Geithner says while inflation is low across most major economies there are very high levels of unemployment. He says more efforts are needed to ensure an early economic recovery."Right now the challenge is growth ... let us make sure we have a business confidence restored, private investment expanding again, unemployment coming down, financial sectors definitively repaired. That is our basic challenge now," he said.Geithner says it will take some time to bring down unemployment levels, which in October reached a 26-year high in the United States.The ministers agreed on the need to find new ways for sustaining economic growth, which has largely depended on the U cash til payday loan.S. market.Geithner says the United States is seeing signs of a shift to saving more and borrowing less. He says private investment and exports are growing again."But what it means is, if the world is going to grow at the rate it can in the future, the rest of the world is going to have to shift to more domestic sources of growth, investment, and spending," he said.In the statement, APEC economies with large deficits pledged to encourage private savings, while those with large surpluses pledged to strengthen domestic growth.APEC ministers, including China, also agreed to pursue "market oriented" exchange rates. China has been accused of keeping its currency, the yuan, artificially low to boost exports. But, ministers played down currency exchange concerns.Singapore's Finance Minister Tharman Shanmugaratnam said none of the ministers called for any sudden or significant change in exchange rates, but said they should remain flexible.The finance and trade ministers were meeting before an APEC summit this weekend that is to include U.S. President Obama on his first trip to Asia as president.

APEC Ministers say Economic Recovery Fragile

SINGAPORE (Reuters) – U.S. Treasury Secretary Timothy Geithner offered fresh reassurances to Asian nations that the Obama administration was committed to a strong dollar and to actions aimed at bolstering its value.

"It&&9;s very important to the United States that we have a strong dollar," he said at a news conference at the Asia-Pacific Economic Cooperation forum, or APEC in Singapore on Thursday. "As growth recovers, (we will) move our fiscal position back into balance."

Soaring budget deficits, which hit a record &&6;1.4 trillion in fiscal 2009 and will likely be near that in 2010, have weakened the dollar because of huge U.S. borrowing to meet the U.S.&&9;s day-to-day spending needs.

For a graphic on the dollar&&9;s downturn, click:

http://graphics.thomsonreuters.com/119/US_USD1109.gif

As he did throughout the past week, at meetings of the Group of 20 in Scotland last weekend and in Tokyo earlier this week, Geithner acknowledged the U.S. carried a special burden for protecting the currency&&9;s value because it is the global reserve currency.

"We bear a special responsibility for being a source of stability and strength in the global economy and we are going to continue to be a voice for reform and we&&9;ll be a strong partner for countries in this region," Geithner said.

The dollar has declined 16 percent against a basket of six major currencies from the highs set in March and is down more than 37 percent from a peak in 2001.

Geithner dismissed a suggestion that pouring hundreds of billions of dollars worldwide into spurring economic activity might lay the ground for a future inflationary surge and said finance ministers must stay focused on getting growth on more solid footing.

"Inflation is low and still moderating across most of the major economies," Geithner said. "The most important thing we need to be doing is try to make sure we are reinforcing this early recovery."

The U.S. Treasury chief said there were promising signs of growth returning to the global economy and credited Asia with leading the recovery but stressed it will have to find future growth in sources other than hard-pressed American consumers.

"The rest of the world is going to have to shift to more domestic sources of growth, investment and spending," Geithner said and singled out China as an example that was already starting to happen.

"China&&9;s external surplus has fallen very sharply, you&&9;re seeing spending and investment in China expand very rapidly," he said no fax payday loan. "These are early signs of not just recovery and growth but a fundamentally necessary and important shift in how the global economy grows."

TINKERING WITH THE YUAN

Geithner avoided saying whether he thought China was signaling a willingness to let its yuan currency rise in value more rapidly in a central bank monetary policy report that said Beijing should consider major currencies in guiding the yuan.

China has effectively pegged the yuan&&9;s value to the dollar since the middle of last year, to the frustration of not only the United States but other Asian nations that have seen their hopes for exports checked as the yuan tracked the dollar&&9;s losses.

"Maybe that&&9;s a question that should go to my Chinese counterpart," Geithner said when asked if he felt the People&&9;s Bank of China was ready to let the yuan appreciate, then went on to praise Beijing&&9;s robust economic growth.

"China&&9;s playing a major role in helping contribute to recovery and the broad thrust of reforms its government has laid out provide a very promising basis for helping obtain a more solid foundation for growth in the future," he said.

China&&9;s latest reference to a possible new set of benchmarks for determining the value of the yuan came shortly before U.S. President Barack Obama is scheduled to visit the country. China&&9;s move would be a departure from recent practice that has seen the currency held steady since mid-2008 around 6.83 per dollar.

But U.S. officials were wary, cautioning that a change in its exchange policies is only one of many reforms China is undertaking and should not be over-estimated.

In a statement, the 21-member APEC endorsed a movement to "market-oriented" exchange rates that was widely seen as a reference to China as well as the necessity for keeping massive global stimulus measures in place until a more stable recovery is assured.

In a later interview on CNBC television, Geithner said the Obama administration needs to borrow "substantially less than we initially anticipated" to bail out the financial system and said that will help get the country&&9;s fiscal house into order.

"That&&9;s going to allow us to devote more to debt reduction," he said without offering any estimate how much less will have to be borrowed. "That&&9;s a fundamentally good thing."

(Additional reporting by Saeed Azhar; Editing by Anshuman Daga)

Geithner stresses strong dollar's global role

FORT LAUDERDALE, Fla. (AP) &<51; A Florida yacht broker who admitted filing a false federal tax return and concealing millions of dollars in a secret account at the Swiss bank UBS was sentenced Friday to two months in prison.

Judge James I. Cohn of Federal District Court in Fort Lauderdale, Fla., gave the broker, Robert Moran, credit for immediately confessing his crime and for assisting a broad federal investigation of tax evasion at UBS and other offshore banks. Judge Cohn also noted that Mr. Moran, a British-born United States citizen, had paid the $1.9 million in penalties and back taxes he owed.

But the judge said &S220;the public is weary&S221; of people trying to hide wealth from the Internal Revenue Service and rejected Mr. Moran&S217;s request for a sentence of probation only.

Mr. Moran is scheduled to report to prison Jan. 4. The United States Bureau of Prisons has not yet determined where he will serve his sentence, but Judge Cohn recommended that he be held in southern Florida.

In April, Mr. Moran became the first UBS client in the United States to plead guilty after the Swiss bank provided federal prosecutors with about 150 names of Americans suspected of tax evasion best payday advance. The bank later reached a second agreement that calls for disclosure of 4,450 additional United States taxpayers to the I.R.S.

Mr. Moran is the third former UBS client to be sentenced in the last two weeks in South Florida for filing false tax returns. One got house arrest and the other a short prison term. Seven former clients have been charged in the latest crackdown, and dozens more are under investigation.

Mr. Moran, president of Moran Yacht and Ship, which has offices in Fort Lauderdale and Moscow, will lose his yacht broker&S217;s license because of the felony conviction and faces an uncertain business future, Gary M. Bagliebter, his lawyer, said.

In remarks to the judge, Mr. Moran, 58, accepted full responsibility. He had about $3.5 million in his UBS accounts.

&S220;I&S217;m really sorry for opening this foreign bank account and not disclosing it,&S221; Mr. Moran said. &S220;I realize it was a mistake.&S221;

Yacht Broker Sentenced to 2 Months for Tax Evasion

The United States economy shed 190,000 jobs in October, and the unemployment rate reached a 26-year high of 10.2 percent, up from 9.8 percent in September, the Department of Labor said Friday in its monthly economic appraisal.

While the pace of job losses has slowed significantly since the peak of the recession last winter, the unemployment rate, which measures the number of people actively seeking work, continues to climb, and economists do not foresee relief until well into next year.

&S220;There&S217;s no doubt that the slashing and burning of jobs has abated quite a lot,&S221; said Allen L. Sinai, the founder of Decision Economics, a research firm. &S220;The economy is recovering, but it is a very soft recovery.&S221;

The biggest losses came in the construction, manufacturing and retailing sectors. Health care companies added 29,000 jobs to their payrolls, and the number of temporary workers increased by 34,000 &<51; a significant gain that could indicate employers are beginning to expand their businesses again.

The Labor Department also revised September&S217;s losses to 219,000 from 263,000.

Dean Baker, a director for the Center for Economic and Policy Research, said he did not expect declining unemployment rates until next spring. &S220;We may be looking at very high levels,&S221; Mr. Baker said, &S220;barring a policy response, for several years into the future.&S221;

The dissonance of the economic recovery, with steep job losses coming even as production intensifies and companies show better-than-expected profits, has placed policy makers in a delicate position.

On Thursday, in anticipation of the unemployment report, Congress overwhelmingly voted to extend benefits for jobless workers for up to 20 weeks. That will soothe the short-term financial pain of many families, but demands for a new wave of government relief may intensify if companies continue to cut back.

So far, the federal stimulus package has injected billions into local economies, giving states money, for instance, to finance construction projects or retain teachers. The housing and auto sectors have been propped up with government credits meant to encourage spending. But weak consumer demand and hefty labor costs are still forcing many employers to cut positions and reduce hours to survive.

The recession has forced many Americans to settle for part-time work because companies are reluctant to add full-time employees. The underemployment rate, which includes part-time workers, the jobless and those who have given up on searching, was 17 bad credit pay day loans.5 percent in October &<51; the highest level since at least 1994.

Even as unemployment remains high, there are signs that critical industries are gaining steam.

The manufacturing sector, considered the engine of the economy, was given its most optimistic bill of health in three years by a private group on Monday. Manufacturers added jobs for the first time in 15 months in October, the group said, largely by bringing in temporary workers or recalling laid-off workers. Economists say that the first sign of recovery in jobs will be when more companies begin bringing in temporary workers.

The economy expanded at a 3.5 percent annual rate in the third quarter, ending a year of back-to-back contractions. But whether that economic expansion will translate into immediate job creation is still widely debated.

&S220;You can&S217;t force businesses to use their profits to hire,&S221; Mr. Sinai said.

Consumer confidence is still low, and many economists believe an economic turnaround will not come until consumers feel at ease again. With families taking home smaller paychecks each month, that could take time.

For the 15.7 million Americans who were without work in October, Friday&S217;s data did little to change the realities of their daily lives &<51; mornings spent combing online job sites, afternoons devoted to fighting off bill collectors. Their r&>33;sum&>33;s will still go out, their interviews will go on, and, more likely than not, their phones will not ring.

Melissa Grodhaus, 42, a laid-off cemetery worker from Winona, Ohio, said she had filled out 150 applications since she lost her job nearly two years ago. She struggles to keep up with mortgage payments and utility bills, and she must also take care of her three children.

&S220;There&S217;s nothing here,&S221; she said. &S220;I can&S217;t see anything worse than it is right now.&S221;

Ms. Grodhaus has started selling old clothes on eBay, and she has told her children she cannot afford to pay the fees for school sports this year. Every two weeks, when the local church brings out food baskets, she rushes to pick up her share. Within minutes, she said, they are gone.

U.S. Unemployment Rate Hits 10.2%, Highest in 26 Years

CHICAGO (Reuters) – Federal prosecutors in the Galleon Group case have sent a subpoena to a former employee of Steven A. Cohen&&9;s SAC Capital Advisors, a sign that the scope of the problem into the largest hedge fund insider trading case in history is expanding, the Wall Street Journal reported, citing people familiar with the matter.

The subpoena seeks trading records from a former SAC hedge fund manager, Richard Grodin, who employed a cooperating witness in the insider trading case announced last week, the Journal said.

The Journal reported that the subpoena does not suggest wrongdoing. Nor does it suggest that Cohen -- one of the nation&&9;s most well known and successful hedge-fund managers -- has been implicated in the scandal.

Galleon and SAC Capital could not be immediately reached to comment.

Last week, federal investigators brought criminal charges against Galleon founder Raj Rajaratnam and five others in the largest hedge fund insider trading case in history pay day advance.

Galleon, which managed &&6;3.7 billion at the end of last week and boasted strong returns through September, has told investors it will wind down its funds.

The trading scandal has also entangled big names such as Intel Corp, consulting firm McKinsey & Co, IBM, and rating agency Moody&&9;s.

According to regulators&&9; complaints, an employee at investor relations firm Market Street Partners tipped off a Galleon informant in July 2007 that Google Inc&&9;s earnings would be below market expectations.

Galleon traded on that information, netting a profit of &&6;9 million, the biggest illegal trades identified in the complaints, which said a total of &&6;20 million had been made by trading on nonpublic information.

(Reporting by Lisa Shumaker, Editing by Sandra Maler)

Probe widens in Galleon case to SAC Capital: report

BOSTON (Reuters) – Diversified U.S. manufacturer Honeywell International Inc (HON.N) posted a 15 percent profit drop that was far less severe than analysts had forecast, sending its shares higher in light premarket trading.

The world&&9;s biggest maker of cockpit electronics on Friday reported third-quarter profit of &&6;608 million, or 80 cents per share, compared with &&6;719 million, or 97 cents per share, a year earlier.

Earnings were boosted 4 cents per share by a lower-than-expected tax rate, though the company expects that to be offset in the fourth quarter.

Revenue fell 17 percent to &&6;7.7 billion.

Analysts, on average, looked for profit of 72 cents per share on &&6;7.88 billion in revenue, according to Thomson Reuters I/B/E/S.

Its shares rose 2.3 percent to &&6;39.40 in premarket trading.

Honeywell held its full-year profit target steady at &&6;2.85 per share.

For the year, Wall Street expects profit of &&6;2.78 per share.

The Morris Township, New Jersey-based company has faced declining demand for its thermostats and other control systems as commercial construction has slowed around the world payday loans no fax. Its aviation unit has also been hit by declining air travel.

Honeywell has twice this year cut its profit forecast, first in April and again in July. As of July it expected to earn &&6;2.85 per share for the year, well below its December forecast of &&6;3.20 to &&6;3.55 per share.

Much of corporate America revised its earnings targets in the first half of 2009, as it scrambled to keep up with a downturn that was faster and more severe than many executives had anticipated.

Its competitors include United Technologies Corp (UTX.N) in aerospace and building control systems, Goodrich Corp (GR.N) in aviation and DuPont Co (DD.N) in specialty materials.

So far this year, Honeywell shares are up about 13 percent, lagging the 14 percent rise of the Standard & Poor&&9;s capital goods industry index (.GSPIC).

(Reporting by Scott Malone; Editing by Derek Caney)

Honeywell profit tops Street view, shares up

LONDON &S212; Qatar announced Tuesday that it would sell a part of its stake in the British bank Barclays after the value of its investment almost doubled.

Qatar&S217;s sovereign wealth fund said it would sell 379 million shares in the bank, exercising warrants that it agreed to buy a year ago when the bank was suffering at the height of the financial crisis.

The fund will retain a 7 percent stake in Barclays and will remain the bank&S217;s largest shareholder.

Barclays&S217; shares rose five-fold over the last eight months after the bank avoided the government&S217;s cash injection, it acquired Lehman Brothers&S217; assets in the United States and benefited from strong earnings at its securities unit.

Qatar would make a profit of about &<63;634 million, or $1 billion, on the investment based on Monday&S217;s share price as it pays 198 pence a share to exercise the warrants.

Barclays is set to get &<63;750 million as a result of the sale to strengthen its capital base, Qatar said.

Shares in Barclays were quoted at 363 pence in early afternoon trading in London Tuesday, down 5 percent.

&S220;The decision to exercise the warrants and dispose of the resultant shares forms part of Qatar Holding&S217;s portfolio management program and does not impact on our current intention to remain a long-term strategic shareholder in Barclays,&S221; Ahmad Al-Sayed, the investment group&S217;s chief executive, said in a statement fast cash.

The sale renewed speculation among some investors that Qatar&S217;s sovereign wealth fund could be raising cash for another acquisition.

Shares of the British supermarket chain J Sainsbury jumped as much as 20 percent last Thursday because some investors expected Qatar to make a takeover bid or try to increase its current shareholding of about 15 percent.

Shares in Sainsbury, which rebuffed a takeover proposal by Qatar in 2007, rose 4 percent Tuesday in London.

The Barclays chief executive John Varley said the effect of the share sale &S220;will be further to broaden the base of our share register.&S221;

&S220;Qatar Holdings is our largest shareholder and a key partner,&S221; he said.

Qatar initially bought a 6.2 percent stake in Barclays in July last year and increased the holding to about 7 percent, excluding warrants and share options, in October because the bank needed to raise capital to avoid taking government aid.

At that time, Barclays also sold shares and warrants to Abu Dhabi&S217;s royal family and Challenger Universal, another Qatari investment vehicle.

Qatar Takes Profit on Stake in Barclays

NEW YORK (Reuters) – CME Group Inc (CME.O), the world&&9;s largest derivatives exchange, is in talks to take over the Chicago Board Options Exchange in a deal that would value the largest U.S. options market at up to &&6;5 billion, according to Crain&&9;s Chicago Business.

"Acting through intermediaries, officials at the exchanges have held informal discussions over the past month about a combination," but no formal bid is on the table, Crain&&9;s cited sources in a report on Sunday.

Further talks are on hold until after Wednesday, the report said outdoor fireplace plans. A deal of that size would mean a big payday for CBOE members, with each CBOE seat valued at about &&6;4 million, about 50 percent more than they fetch today, the report said.

The &&6;5 billion price tag would value CBOE at about 20 times its expected annual earnings after it converts to a shares-based private company from a member-owned exchange, the report said.

(Reporting by Franklin Paul; editing by Gunna Dickson)

CME in informal talks to take over CBOE: report

A year after Washington rescued the banks considered too big to fail, the ones deemed too small to save are approaching a grim milestone: the 100th bank failure of 2009.

In what has become a ritual, the Federal Deposit Insurance Corporation has swooped down on a handful of troubled lenders almost every Friday, seizing 98 since January alone and putting their assets into the hands of another bank.

While the parade of failures still represents a mere fraction of America&S217;s small banks, it underscores a growing divide between them and large institutions like Goldman Sachs, JPMorgan Chase and U.S. Bancorp, which are slowly growing stronger as the economy improves.

Burdened by worsening commercial real estate loans, many small banks&S217; troubles are just beginning. Many analysts say that the now-toxic loans could sink hundreds of small lenders over the next few years and place a significant drag on the economy.

Already, the bank failures are placing enormous strain on the F.D.I.C. and its fund, which keeps depositors whole. Flush with more than $50 billion only two years ago, the fund recently fell into the red.

The prospect of more failures has led the F.D.I.C. to seek new ways to replenish the fund with higher and earlier payments by healthy banks, even after setting aside reserves for future losses.

The initial wave of failures has also unsettled some communities, even though most of the troubled institutions have been bought by other banks rather than shuttered. While deposits are safe thanks to federal insurance, the new buyers often do not have the same ties to local businesses as the former owners.

In some cases, they tighten lending and make it harder for longtime customers to obtain loans or favorable terms. In other cases, managers of the new bank make other changes, like ending offers for high-interest certificates of deposit and calling in certain lines of credit. In the longer term, some new owners are likely to close branches of the bank they have acquired in order to cut costs.

&S220;In the near term, bank failures can be painful,&S221; said Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation. But a bank that is teetering on collapse is not going to lend, she said, and &S220;that&S217;s not good for the economy.&S221;

Regulators expect closures to ripple through hundreds of small banks over the next couple of years, especially in the Midwest and Southeast, where lenders have been hard hit by the recession.

These banks loaded their balance sheets with loans to home builders and other property developers to make up for lost business in credit card and mortgage lending that bigger competitors wrested away. They eased their lending standards during the boom years and made big bets on new housing developments, strip malls and office projects. Now, many of those deals are falling apart, and the lenders are scrambling to raise capital to cushion the losses.

&S220;These banks were big enough that they could do loans that were fairly sizable,&S221; said John R. Chrin, a former investment banker who is now an executive in residence at Lehigh University. &S220;If they go bad, they are toast.&S221;

The pace of bank failures is expected to accelerate in the coming months. There were just 25 bank failures in 2008 and just 10 in the five previous years. But in September alone, regulators took over 11 banks in nine states that were saddled with soured commercial real estate loans, from Corus Bank, a $7 billion construction lender based in Chicago that financed projects across the country, to Brickwell Community Bank in Woodbury, Minn., which had just a single branch and $72.6 million in assets.

Three others were taken over this month, including Warren Bank, a small lender just outside Detroit. Regulators swept into the offices on a recent Friday night after brokering a sale to Huntington Bancshares of Ohio, a regional bank with a big presence in Michigan.

By Saturday morning, Huntington had taken control of the bank&S217;s computer systems, started reassuring depositors and placed vinyl signs with its name outside some of the Warren Bank branches free credit scores.

Even though the process went smoothly, customers still found it unnerving.

&S220;People expect companies to go out of business, not banks,&S221; said James R. Fouts, the mayor of Warren, Mich., whose working class city of 140,000 has had a front row seat to the collapses of General Motors and Chrysler. &S220;That is something that you expect to hear about in the Great Depression, and it further exacerbates the feeling that financially, the country is not yet in stable shape.&S221;

The banking system may also be facing a long recovery. About $870 billion, or roughly half of the industry&S217;s $1.8 trillion of commercial real estate loans, now sit on the balance sheets of small and medium-size banks like these, according to an analysis by Foresight Analytics, a research firm. For most of the banks, this represents the biggest and riskiest part of their loan portfolio, since they lack the trading streams and fee businesses of their larger rivals. And as a group, small banks have written off only a tiny percentage of the losses that analysts expect them to incur.

In fact, applying only the commercial real estate loss assumptions that federal regulators used during the stress tests for the big banks last spring, Foresight analysts estimated that as many as 581 small banks were at risk of collapse by 2011.

By contrast, commercial real estate losses put none of the nation&S217;s 19 biggest banks, and only about 5 of the next 100 largest lenders, in jeopardy.

Even Citigroup, the biggest and most troubled of the banks, has a relatively small portion of its loans tied to commercial real estate and may begin to recover faster than other rivals.

Gerard Cassidy, a veteran banking analyst, said the problems call to mind the wave of small bank failures in Texas and New England two decades ago during the savings and loan crisis &<51; only on a national scale.

Back then, regulators closed more than 700 lenders in those regions. Today, Mr. Cassidy projects that as many as 1,000 small banks will close over the next few years and that their losses will be more severe. &S220;It&S217;s a repeat on steroids,&S221; he said.

But Ms. Bair said the savings-and-loan crisis far surpassed the current situation. &S220;We aren&S217;t anywhere close to that today, and based on current projections, I don&S217;t think we will get near that pace,&S221; she said.

Even if hundreds of banks collapsed, they would not threaten to bring the financial system to its knees.

Together, the 8,176 smallest banks control just 15 percent of the industry&S217;s $13.3 trillion in assets. And thanks to the expansion of the government&S217;s deposit insurance program, regulators also appear to have squelched the threat of bank runs that brought down IndyMac Bank and Washington Mutual last year.

Consumer deposits are now insured up to $250,000 per account, and the F.D.I.C. offers unlimited coverage on noninterest payroll accounts used by businesses.

&S220;We&S217;ve passed the panic stage,&S221; said Frederick Cannon, the chief equity analyst at Keefe, Bruyette &&8; Woods in New York.

What is more, community bank supporters say the bulk of their institutions will emerge from the crisis stronger. &S220;The community banks are picking up market share,&S221; said Camden R. Fine, the head of the Independent Community Bankers of America.

&S220;People are angry with all the shenanigans on Wall Street,&S221; he said. &S220;They believe their money stays local when they put it in a community bank, rather than sent off to Never-Never land.&S221;

Small Banks Failure Rate Grows, Straining F.D.I.C.

A day after the Obama administration proclaimed significant progress in its effort to spare troubled homeowners from foreclosure, an oversight panel on Friday sharply criticized the program and declared it would leave millions of Americans vulnerable to losing their homes.

In a report mild in language but pointed in substance, the Congressional Oversight Panel &<51; a watchdog created last year to keep tabs on taxpayer bailout funds &<51; said the administration&S217;s program would, &S220;in the best case,&S221; prevent &S220;fewer than half of the predicted foreclosures.&S221;

The report rebuked the administration for failing to shape a program that addressed the most significant engines of the foreclosure crisis &<51; soaring joblessness and exotic mortgages with low introductory interest rates that give way to sharply higher payments over the next three years. Many of those mortgages are too large to qualify for modification under the administration&S217;s plan. People who lose their jobs often lack enough income to qualify for relief.

The administration&S217;s plan appears &S220;targeted at the housing crisis as it existed six months ago, rather than as it exists now,&S221; asserted the oversight panel in its report. &S220;The panel urges Treasury to reconsider the scope, scalability and permanence of the programs designed to minimize the economic impact of foreclosures and consider whether new programs or program enhancements could be adopted.&S221;

In a telephone briefing with reporters, the oversight panel&S217;s chairwoman, Elizabeth Warren, said the administration&S217;s housing program was so limited that it was unlikely to keep pace with the growing wave of foreclosures.

&S220;Even when Treasury&S217;s programs are running at full speed, foreclosures are estimated to outpace modifications by about two to one,&S221; Ms. Warren said. &S220;It simply isn&S217;t clear that the programs in place will do enough to tame the crisis and have a significant impact on the broader economy.&S221;

The Treasury acknowledged that its anti-foreclosure program was limited, with the effect of rising unemployment not fully checked. But the department said other relief efforts, like extended jobless benefits and continued health insurance for people who lose work, were better suited to alleviating economic distress than the housing program.

&S220;In developing this program, it was critical that we address challenges that could be solved quickly with the tools available to us to ensure the most effective use of taxpayer money,&S221; said Meg Reilly, a Treasury spokeswoman.

The administration&S217;s decision to limit the cost of its one program aimed at helping homeowners could become more contentious as the foreclosure crisis grinds on. Populist anger has flashed over the rescues of major institutions including Citigroup and the American International Group &<51; the most prominent components of a $700 billion taxpayer-financed bailout &<51; while homeowners struggle.

&S220;These Treasury people are all from Wall Street, and they&S217;re not doing anything but protecting Wall Street,&S221; said Melissa A. Huelsman, a Seattle lawyer who represents homeowners fighting foreclosure. &S220;They don&S217;t care in the least about protecting homeowners.&S221;

When the Obama administration began its $75 billion Making Home Affordable program in March, it said the plan would spare as many as four million households from foreclosure. On Thursday, Treasury announced that 500,000 homeowners had since had their payments lowered on a trial basis, celebrating this as a milestone.

But the report from the oversight panel directly challenged the administration&S217;s characterizations.

Most prominently, the panel had grave uncertainty about whether large numbers of the trial loan modifications &<51; which typically run for three months &<51; would successfully be converted to permanent terms easy fast payday loans.

As of the beginning of September, only 1.26 percent of trial modifications that had made it through the three-month trial period had become permanent, the report found. Of course, very few of those trial loans had reached their three-month expiration because the program only recently began processing large numbers of applications. As of Sept. 1, the Obama plan had produced 1,711 permanent loan modifications.

Some homeowners complain they have received trial modifications only to have them canceled for what seem dubious reasons &<51; checks sent but supposedly never received, documents once in the file but suddenly missing.

&S220;We&S217;re on the phone arguing with mortgage companies every day,&S221; said Dan Harris, chief executive of Home Retention Group, a company that negotiates with mortgage companies for loan modifications on behalf of homeowners, adding that trial modifications for four of his clients had been canceled over the last month. &S220;It&S217;s incredible.&S221;

Major mortgage companies say they have significantly increased staffing to better manage the flow of paperwork, while notifying customers of the need to send in fresh documents to make their trial modifications permanent. But the companies offer no assurances that a large number of trial modifications will indeed become permanent.

&S220;The process is too new,&S221; said Dan Frahm, a spokesman for Bank of America. &S220;We don&S217;t know the number.&S221; He estimated that 15 percent to half of all trial modifications would fail to become permanent.

The Treasury expressed hopes that a newly streamlined process that allowed borrowers to submit documents to mortgage companies more easily would help make large numbers of trial modifications permanent.

&S220;We are intent on working with servicers to ensure that eligible borrowers receive permanent modifications,&S221; said the department spokesperson, Ms. Reilly.

The oversight panel&S217;s report expressed chagrin that the vast majority of loan modifications did not lower loan balances, leaving many homeowners still &S220;under water,&S221; or owing more than their homes were worth.

This tends to lower all property values, the report noted, because underwater borrowers have less incentive to care for their homes, and greater reason to stop making payments and default.

An Obama administration official who spoke on condition of anonymity, citing a lack of authorization to speak publicly, said the Treasury would have preferred that the program focused more on writing down principal balances but ultimately opted against it because &S220;that would make it significantly more expensive to the taxpayer.&S221;

In Wauwatosa, Wis., Theresa Lutz, 47, has been seeking to lower the payments on her home for several months. She is a graphic designer whose working hours were cut last summer. In September, her employer cut her salary by 6 percent. That has made it difficult for her to pay her monthly mortgage of $1,307.

As Ms. Lutz described it, her mortgage company, Wells Fargo, initially agreed to lower her payments. But then, last week, the bank informed her that she would have to come up with a fresh $3,000 to compensate the investor who owned her loan.

A Wells Fargo spokesman, Kevin Waetke, said that information had been conveyed &S220;in error&S221; and &S220;the customer has been notified that payment does not need to be made.&S221;

As Ms. Lutz struggled to clarify her agreement with Wells Fargo, she expressed dismay at news of the oversight panel&S217;s report, and its finding that not enough help seemed to be on the way.

&S220;It looks to me like Wall Street is too invested in our government,&S221; she said. &S220;Big business is winning out over the average person.&S221;

Panel Says Obama Plan Won’t Slow Foreclosures

(Reuters) – The administrator for Lehman Brothers Holdings Inc (LEHMQ.PK) plans to seek permission to remove the claims against the bank from British courts and give out assets directly to creditors, the Wall Street Journal said, citing a joint administrator for the collapsed investment bank.

According to the paper, Steven Pearson, a partner at PricewaterhouseCoopers and joint administrator for Lehman&&9;s operations in London, said he hoped to gain the support of "90 percent" of creditors, which would reduce the risk of non-participating creditors filing claims later against those who do participate no faxing payday loan.

Under the proposal, expected to be announced later on Monday, creditors who agree in writing will be bound to the plan, the paper said, adding that such a move would allow the administrator to set a time-frame for the release of the assets.

PricewaterhouseCoopers did not immediately respond to an email sent by Reuters.

(Reporting by Biswarup Gooptu in Bangalore, editing by Will Waterman)

Lehman administrator looks to dole out assets: report