Early Briefing: Ripples From The Credit Crunch

*On a day that Maryland Gov. Martin O'Malley delivered a State of the State address in which he addressed budget issues and measure to stop foreclosure, local companies announced financial results that showed the effects of the credit crunch in the fourth quarter.
Sallie Mae of Reston lost $1.64 billion in the fourth quarter, compared with a profit in the year-earlier period, and attributed it to bad loans and loose lending practices.

And Capital One reported that its fourth-quarter profit fell 42 percent, hurt by shutting its mortgage-lending unit in August. The company says it's pulling back on loan growth.

*Karibu, one of the nation's largest black-owned bookstore chains, is going out of business. Its Pentagon City store closed after Christmas and its other five locations, four in Prince George's, will be closed by the middle of next month. See story

*Human Genome Sciences' stock price plunged more than 40 percent, to $5.62, after it said it would abandon higher-dose tests of its hepatitis C drug because an independent monitoring group expressed concerns about lung-related side effects. The company said it expected to market the lower-dose drug anyway. See story.

*Carlyle Group co-founder David Rubenstein says private-equity firms may turn to sovereign wealth funds and large pension plans to help pay for deals as financing for leveraged buyouts dries up. State-managed funds in countries including Kuwait, Abu Dhabi and South Korea have ballooned to $3.2 trillion in assets, swollen by record oil prices and rising currency reserves. An Abu Dhabi state fund bought a $1.35 billion stake last year in Carlyle, based in the District.

*Goldman Sachs Group will invest $125 million in Allied Capital as part of a broad initiative between the investment bank and the District-based business development company. Allied Capital has agreed to sell private-equity and debt investments to a new fund it manages that Goldman Sachs owns substantially all of the interests in, for a total transaction value of $170 million.

*A judge ordered Fannie Mae's regulator, the Office of Federal Housing Enterprise Oversight, to give former chief executive Franklin D. Raines more than 170,000 internal documents related to its probe of the company's earnings overstatements.

*Maryland Development, a Rockville land developer and home builder, has sought bankruptcy protection. The company listed debt and assets of as much as $50 million each.

By Terri Rupar  |  January 24, 2008; 5:00 AM ET  | Category:  Morning Brief
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