Money & Politics -- Mike (fast)
NYSE -- Julie (slow)
>> hello, i’m michael mckee. welcome back to “money & politics.” even as outrage in washington rises over high gasoline prices, crude oil and gasoline prices were falling today after touching $75.35, crude for june delivery fell 2.5% to $73.33 a barrel. at an informal opec meeting today, cartel president edmund daukoru telling reporters, we’re giving them all they ask for and what they can process. gold and silver followed oil lower. crude’s drop eased inflation concerns which led energy and mining stocks down. at the end of the day, the dow jones industrials lost 11 points, the s&p 500 down three, the nasdaq off by nine. for more on today’s trading action, here’s a report from julie hyman at the new york stock exchange.
>> the dow jones industrials made a late run at a gain in today’s session, couldn’t quite finish that way, however. we had the dow falling about .1%, the s&p losing about .25% in today’s session. a a couple of things going on today. first of all, we had the commodities prices lower and rather than helping stocks overall, it put a lot of pressure on the commodity-related stocks. we had bond yields lower today but still a lot of investors expressed concerns about yields at recent levels. 10-year note yielding right around 5%. those were the twin concerns today, in addition to earnings reports from prominent companies missing what analysts had been estimating. looking at what energy shares were doing today, they accounted for more than half the drop of the s&p 500. halliburton and conocophillips leading the way downward, both with declines of almost 4%. we also had interesting individual stock movement within the energy group, stocks that weren’t quite faring as badly. weatherford international’s first-quarter profit more than doubled. its clients drilled more wells to keep up with petroleum demand. the company did beat analysts’ estimates with its earnings and the stock was up about .4%. you can see the declines in energy today really coming on the heels of strong gains over the past month. this group up 8.5%, and the decline today was only the second in the past seven sessions. another interesting story in the energy group today coming in the form of an acquisition. plains exploration and production agreeing to buy stone energy, which is a u.s. oil producer that last year slashed its reserve assessment. the price on this about $1.5 billion, an 11% premium to stone energy’s close on friday. you can see the shares only up about 4%. then there was one sub segment within energy today that fared very well, that was the coal producers―foundation, arch coal, peabody, consol, all trading at records today. foundation and consol out with earnings later this week. i’m julie hyman at the new york stock exchange.
>> bank of america says it will tighten anti-money laundering controls for the second time in six years after criticism from bank regulators. under an agreement with the federal reserve and the new york state banking department, the company will improve monitoring of accounts and reporting of suspicion transactions. the pate yacht act increased the responsibility of banks in reporting suspicion financial activity. separately, bank of new york agreed to pay a quarter of a million dollars in civil penalties to settle s.e.c. charges it did not properly track security holders. when we come back, a man who’s raised a lot of money for liberals.
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Listen Interview: Sunamerica
>> “forbes” magazine says he’s the 39th richest american with a net worth of $5.5 billion. eli broad made his money in real estate and insurance business. he sold his business, sunamerica, to a.i.g. he uses a good portion of his fortune to support democratic causes and candidates, making him one of the party’s most important donors. he’s standing by with brian sullivan at the milken conference.
>> we have a lot of things to talk about. i’ll jump right into philanthropy first. wall street has had boom times. are you seeing money flowing to the right places in your views? and what are some of the biggest crises facing this country right now?
>> we’re seeing money flowing in the right places philanthropy-wise, a lot of money going to k-12 education reform and scientific and medical research. one of the biggest crises facing us these days, k-12 education, we have to improve that if we’re going to cheap up with―keep up with china, india, korea and european nations. we have to do a better job educating our kids.
>> john chambers of cisco and craig barrett said the same thing. are you working with corporate america, with active corporations to do more in education?
>> i’ll tell you what we are doing. we are training superintendents, people from the business community, three or four-star generals and others, to take over and run large urban school districts. we’re training newly elected appointed school board members. we have 54 m.b.a.’s with several years’ experience placed in the best urban districts in mesh america―new york city, philadelphia, et cetera, to raise the quality of the management of school districts. we need a longer school year. our kids only get 50% to 75% of the academic hours children get in other countries.
>> some of those ideas sound shockingly republican for a democratic donor.
>> oh, no, no, no, no. when it comes to educating our kids, we have to beat party lines.
>> you are one of the biggest democratic donors so i will and you about that. do you feel that there is a gap in the parties right now between how we approach education?
>> there has been but i think that gap is closing very rapidly and i think we’re all beginning to recognize, as i say, that we have to be party-blind. we are not getting the job done in educating our kids and it’s the biggest job facing our country and i think you’ll see between now and 2008 all the candidates talking about education reform, and i don’t mean platitudes, simply better teaches and better schools. a longer school day, a longer school year, more chartered schools to give parents choice between public chartered schools and other schools. we’ll see more mayoral control of urban districts like you have in new york with mike bloomberg, chicago with rich daley, boston with tom moneato and our mayor will take over schools. and that’s all good.
>> some would say one of the crises facing america is campaign finance reform. the democrats do raise more money through the 521 plans than the republicans. if the congress cracks down on the 527’s, will that hurt the democratic party?
>> i don’t know if it will hurt the democratic party. i’m not all that engaged in being a large political fundraiser the way i used to be. right now i spend all my time on philanthropy―education reform, scientific and medical research, the arts and civic developments here in los angeles.
>> is there a reason that you may be―i don’t want say backed off support of the democratic party or make gotten less political?
>> i don’t back off supporting the democratic party but i think i can do more in the philanthropic community than i can in politics.
>> has that been hard for you to do or impacted any relationships with high-level officials?
>> it hasn’t at all. i had dinner with bill and hillary the other night. i had --
>> what did they say?
>> what did they say? we talked about a lot of things.
>> did she say, yes, i’m running in 2008?
>> she can’t say that until after she’s re-elected senator for new york but it’s very clear to most people that she’s running, together with nine other democrats. and then you have about five republicans running. so it’s going to be an interesting year.
>> how would you hedge her chances? obviously she has a lot more money than maybe some of the other prominent democrats out there.
>> clearly she’s the morning line favorite, but you have warner from virginia, bill sack of iowa, evan bayh and three or four others. you never know what happens in the iowa caucuses and then you go on to new hampshire and south carolina.
>> what do you think?
>> right now you’d have to predict that assuming she’s in the race that she’ll be the democratic nominee.
>> who would be on the ticket?
>> i don’t know.
>> who would you put if you could?
>> mark warner. mark warner’s been a great governor of virginia, a red state, done a great job. i think he appeals to an entirely different constituency than senator clinton does.
>> we go to business for a second?
>> sure.
>> you founded k.b. home.
>> i did, indeed.
>> founded sunamerica. are you worried about the housing market in california?
>> not really worried about california. nothing can keep going up at 20% to 30% a year. so i think we’re going to level out. i don’t see a bubble here. and i don’t see appreciation through the next several years, either.
>> just in california over all over the nation?
>> every market ‘s different. i think some of the places have been overblown. condo sales in florida, condo sales in las vegas and elsewhere. every market ‘s different.
>> a.i.g.’s former chairman, hank greenberg, has been selling a.i.g. stock fairly heavily the last couple of weeks, every day. the stock price is down. are you concerned about this?
>> no, he hasn’t been selling, as a percentage of what he controls.
>> but it’s still been a daily sell over the last couple of weeks.
>> i don’t know what he’s doing. i heard about 10,000 shares, which is nothing when the stock trades six million shares a day. so i don’t know what he’s been selling.
>> what is the outlook for the insurance business? you founded sunamerica and sold it to a.i.g.?
>> a.i.g. is a great company, will have a great year. the problems are behind a.i.g. it’s got good management, a good board. it will have a great year and a great future and this year is going to be a good year for the insurance industry, both life insurance and property and casualty insurance.
>> mr. broad, i appreciate your time.
>> good being with you.
>> thank you very much.
>> thank you.
>> eli broad of the broad foundation and founder of k.b. home and former chairman of sunamerica. michael mckee, back to you.
>> thank you very much. republicans may be traditionally the party of wall street but democrats won the majority of political donations from the financial industry last year. democrats got 52% of the $26 million donated by investment banks, brokerages and fund managers in 2005, according to the center for responsible politics, which says the last time democrats had a majority of the financial industry’s donations was in 1994 when the party still controlled congress. so why is this year different? well, says james tory, chairman of the center, the $1 billion tory fund, wall street wants change. it may be explained by two names, hillary clinton and joseph lieberman, both facing re-election this year and were the two most successful fundraisers on wall street last year. donors may be hedging bets, hoping to win new democratic friends in case the party wins back control of congress this year. the financial industry is a huge cash cow for the two main political parties. in 2004, it contributed more than any group except lawyers, health professionals and the real estate industry. after a series of lengthy breaks, members of congress are back in washington for a few weeks. what should wall street watch for? andrew parmentier of friedman, billings, ramsey joins me next for our washington watch
