Early Briefing: Lower Bar for Fannie, Freddie

*As expected, Fannie Mae and Freddie Mac received permission to decrease the amount of capital they have to hold as a reserve against losses, a step that could help the troubled mortgage market. The two federally chartered finance companies could increase their investment in mortgages by a combined $200 billion, potentially compensating for weak demand from other investors.

Fannie Mae's capital requirement was reduced to $38.3 billion from $41.5 billion, and Freddie Mac's was reduced to $31.8 billion from $34.4 billion. See story

*An Environmental Protection Agency appeals board upheld a fine of more than $3 million against a company that owned 23 gasoline stations in the Washington area, agreeing that the company did not do enough to prevent leaks from its underground tanks.

The ruling increased the penalty assessed against the owner of the stations, Euclid of Virginia, which is based in the District. An administrative law judge had originally fined the company $3.08 million, which was the largest ever handed down by such a judge for violations of a federal environmental law.

The agency's Environmental Appeals Board increased the fine to $3.16 million, the agency said in a news release Tuesday. The case turned on allegations that Euclid did not do enough to prevent fuel leaks or spills. The EPA has said that no serious fuel leaks occurred.

Thomas DeCaro, an attorney for Euclid, said an appeal is planned.

*The liquidator of Carlyle Capital said shareholders are unlikely to receive any money because the company's "substantial" liabilities exceed its assets. Carlyle Capital, a publicly traded affiliate of District-based Carlyle Group, "is currently considered to have insufficient assets to match its liabilities," liquidators from Begbies Traynor said. "Shareholders are unlikely to receive any distribution upon final winding up of the company's affairs."

Lenders seized Carlyle Capital's assets after it failed to meet more than $400 million of margin calls on mortgage-backed collateral that had plunged in value.

In all, the fund used about $670 million of equity to amass a $22 billion portfolio of mortgage debt.

*A federal judge dismissed a lawsuit against Legg Mason in which the second-largest publicly traded U.S. fund company was accused of deceiving investors about a 2005 asset swap with Citigroup. The investors said Baltimore-based Legg Mason sold shares in a secondary stock offering without disclosing problems related to its $3.7 billion takeover of Citigroup's investment-fund unit.

U.S. District Judge Denny Chin said the investors had not alleged enough facts in their complaint for the case to proceed.

*The New York Stock Exchange gave Sunrise Senior Living another week to file its 2006 annual report, but an analyst says the retirement community operator has at least two months before it faces delisting. On Wednesday, the New York Stock Exchange extended until Monday Sunrise's deadline to file its Form 10-K. Previously, the deadline was March 17.

Sunrise Senior Living of McLean delayed the filing because it is investigating its accounting practices. Shares fell 6.8 percent yesterday, to $18.25.

*Media General chief executive Marshall Morton said directors nominated by dissident investor Harbinger Capital Partners aren't qualified and shouldn't be elected to the company's board.

"Harbinger's self-serving action has created a costly and counterproductive distraction for the company," Morton said in a letter to shareholders of the Richmond company, which owns the Richmond Times-Dispatch and the Tampa Tribune, among other newspapers and broadcast stations.

*Constellation Energy Group and the administration of Gov. Martin O'Malley (D) are in negotiations to settle lawsuits filed by both sides over $386 million in credits to electricity customers of Constellation subsidiary Baltimore Gas and Electric, state and company officials said yesterday.

By Terri Rupar  |  March 20, 2008; 5:00 AM ET  | Category:  Morning Brief
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Please email us to report offensive comments.

What about the "free market", So it just like the War Mongers, welfare for the wealthy, the hell with those in need?
Shame on Friedman, et al.

Posted by: Peacenik | March 20, 2008 4:25 PM

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