Finance & Business World

Malaysia's central bank kept its benchmark interest rate unchanged for a 16th straight meeting, as inflation at a 13-month high leaves less room for a cut in borrowing costs that would spur growth.

Bank Negara Malaysia maintained its overnight policy rate at 3.5 percent, according to a statement in Kuala Lumpur today. The decision was expected by all 14 economists in a Bloomberg News survey.

“Cutting rates will be a bad mistake at a time when inflation is clearly on the up trend,'' said Joseph Tan, a strategist at Fortis Bank in Singapore. “Malaysia is no exception to the accelerating inflation that you are seeing all across Asia right now.''

Record prices of oil, rice and other commodities have raised inflation in the region, preventing central banks from reducing borrowing costs to spur growth as a U.S. slowdown threatens Asian exports. A weakened government in Malaysia may also prevent any attempt to raise interest rates, analysts said.

“Global energy and food prices have risen sharply since the beginning of the year from their already high levels,'' Bank Negara said in today's statement. “After evaluating the evidence on the downside risks to growth and the upside risks to inflation, the bank has decided to maintain the current stance of monetary policy.''

`Hugely Unpopular'

Voters unhappy with soaring fuel and transport prices contributed to Prime Minister Abdullah Ahmad Badawi's ruling coalition losing its two-thirds parliamentary majority for the first time in 34 years in March general elections. The opposition says it can lure enough coalition lawmakers over to form a new government.

“To be raising interest rates at a time like this will be hugely unpopular,'' Tan said. “The lesser of two evils will be to keep rates steady.''

Malaysia's consumer prices rose 2.8 percent from a year earlier in March. The central bank forecasts inflation may average as much as 3 percent this year, accelerating from 2 percent in 2007 payday loans.

Governor Zeti Akhtar Aziz, who has kept the benchmark interest rate unchanged at 3.5 percent since April 2006, said last week raising interest rates is “not the answer'' to check inflation in an environment where prices are spurred by supply shortfalls.

“A major uncertainty at this stage is the extent of the moderation in global economic activity and the impact it will have in reducing global price pressures,'' the central bank said today. “The increase in food prices reflects a structural phenomenon'' requiring measures that ensure supply, promote higher food production, and enhance efficiency.

Controlled Prices

The government needs to adjust prices of controlled items in the country in a “gradual'' manner, it added. Whether inflation will remain within the forecast 2.5 percent-to-3 percent average this year is “dependent on the degree to which the increase in global prices have an impact on domestic prices and the extent to which administered prices are adjusted.''

Malaysia's key interest rate is at the highest since its introduction in April 2004, after policy makers lifted it three times from November 2005 to April 2006 to curb inflation.

Southeast Asia's third-largest economy is expected to grow 5 percent to 6 percent in 2008, easing from 6.3 percent last year as global trade slows, Bank Negara said last month.

“While the slower external demand will have some moderating impact on the Malaysian economy, growth continues to be supported by an expansion in domestic demand,'' Bank Negara said. “Despite the global financial turmoil, domestic credit conditions have remained favorable as demand for financing continues to be supported by the ample liquidity in the financial system.''

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An overwhelming majority of Wall Street analysts see Microsoft Corp (MSFT.O: Quote, Profile, Research) preparing shortly to launch a hostile bid at its current price of $31 per share in cash and stock, a Reuters poll found.

Most Wall Street analysts believe Microsoft now faces a drawn-out proxy campaign to win its unsolicited takeover of Yahoo, according to the poll.

By contrast, the general view in February when Microsoft announced its offer was that Yahoo would agree to a friendly merger if Microsoft only sweetened its bid. By mid-March a Reuters poll showed that Wall Street expected Microsoft to buy Yahoo without raising its price.

Microsoft last week repeated Chief Executive Steve Ballmer’s 3-week-old threat that his company will go hostile, or even call off its bid, if Yahoo did not agree to a deal before this weekend. Microsoft executives said they will reveal their next move this week payday loan.

“I’m betting that Ballmer is bluffing with his ‘walk away’ comments and that he’s going hostile,” said Jefferies & Co analyst Youssef Squali, who believes Microsoft will stick with its current $31-per-share offer.

Nineteen brokerages now say they expect Microsoft in coming days to move forward with a hostile bid after being frustrated in a three-month effort to entice Yahoo to reach a negotiated deal, the survey reveals.

By contrast, only three brokerages see the possibility that the two sides will end their standoff over price and begin negotiations to reach a deal at a slightly higher price than the initial offer, which had been worth $31 per share in cash and stock, or $44.6 billion.

Due to a drop in Microsoft stock, it is now worth $42.7 billion. 

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Treasury Undersecretary Robert Steel said it's premature to say that financial market turmoil stemming from tightening credit conditions is near an end.

“This is going to take a while to work through, and the improvement from here won't be in a continual line,'' Steel said in an interview on Bloomberg Television's “Political Capital with Al Hunt,'' to be aired today. While progress is being made, he added, “there will be some bumps and fallbacks.''

Steel's remarks suggest he's less optimistic than Wall Street executives such as JPMorgan Chase & Co. Chairman Jamie Dimon, who have said the credit-market freeze is more than half over. Steel said it's “a bit simplistic'' to say the turmoil is closer to the end than the beginning, as Citigroup Inc. Chief Executive Officer Vikram Pandit did this week.

To help restore liquidity in capital markets, the government should consider easing limits on how much private- equity firms can invest in banks, Steel said in the interview. The Bush administration is also open to discussions with Congress on the creation of a federal agency to monitor financial market risk, he said.

Falling house prices and rising mortgage delinquencies have slowed U.S. growth, disrupted credit markets and led to $309 billion in credit losses and asset writedowns by the world's biggest banks and securities firms since the start of last year.

Fed's Response

As head of Treasury's domestic finance division, Steel has worked to contain damage from the collapse in the market for subprime mortgages. Former Federal Reserve Chairman Alan Greenspan said on April 8 that the decline in credit is worse than at any time in 50 years.

Since the Federal Reserve arranged an emergency loan on March 14 for Bear Stearns Cos., the Standard & Poor's 500 Index has risen 4.6 percent and the dollar is up 0.8 percent against a basket of currencies of U.S. trading partners.

“The essence of it is we're making good progress, and we're pleased with how things are going,'' Steel said.

Steel, 56, said a restriction on private-equity firms' investment in banks should be reconsidered if it can help banks raise needed capital. Under current law, prior approval from the Federal Reserve is required for any acquisition of 10 percent or more in a bank.

Treasury Secretary Henry Paulson has repeatedly urged financial institutions to raise as much capital as possible to cope with the credit and housing crises.

Private-Equity's Role

“In the last few recapitalizations where balance sheets have been strengthened for financial institutions, private equity has played an important role,'' Steel said payday loan. Changes to the current asset limit is “certainly something worth considering and looking at.''

Steel said it's “worth talking about'' a proposal by Massachusetts Rep. Barney Frank, the Democratic chairman of the House Financial Services Committee, to create a federal agency to regulate risk in financial markets.

Treasury's plan to overhaul regulation of Wall Street includes a financial stability regulator, “which has really the same idea'' suggested by Frank, Steel said. Treasury is still considering how best to alter the regulatory regime, he said, stopping short of a full endorsement of Frank's plan.

“We need to have a financial regulation system in our country that is effective, efficient and competitive,'' Steel said.

Support for Fed

Steel said he supported the Fed's March rescue of Bear Stearns from possible bankruptcy. The Fed's decisions to lend to Bear Stearns and other Wall Street firms at the same discount rate offered to commercial banks “were right for this time,'' he said.

“These were unusual times'' involving “tricky issues,'' Steel said. Support for Bear Stearns was necessary because turmoil on Wall Street impairs consumers' ability to borrow and spend. “This was not about Wall Street, this was about Main Street,'' he said.

Treasury opposes legislation that would give company shareholders the ability to cast nonbinding votes on executive pay, Steel said.

“Each company should decide that as opposed to legislation,'' Steel said. “In the end compensation is going to have to be managed from the board room.''

Steel, a former vice chairman of Goldman Sachs Group Inc., said Democrats' plans to aid homeowners who can't pay their mortgages “go a little bit too far.''

Frank's Plan

Frank on April 17 introduced legislation to have the Federal Housing Administration guarantee up to $300 billion in refinanced mortgages for owner-occupied homes.

“There's a fine balancing act between what FHA should do and how much they should be helpful and also protecting the taxpayers,'' Steel said.

He reiterated Treasury's commitment to a voluntary program to get lenders and borrowers to renegotiate loans. The priority for Congress should be to pass separate bills streamlining FHA and creating a tougher regulator for Fannie Mae and Freddie Mac, the largest sources of money for U.S. home loans.

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Nine proposed ballot issues were filed this week by individuals aligned with trial lawyers in the state in apparent retaliation for a proposed amendment that would severely limit contingency fee compensation for lawyers in civil lawsuits.

The new proposed ballot measures target doctors, real estate brokers, corporate executives and homebuilders. For example:

• One initiative would revoke the license of a doctor found to have engaged in three or more incidents of medical malpractice. Another changes the rules governing the admission of certain evidence in medical malpractice cases.
• Another caps real estate sales commissions to no more than 6 percent on the first $250,000 of a real estate sale; limits it to 3 percent on sales between $250,000 and $500,000 and to just 1 percent on sales greater than $500,000.
• Executive compensation would be limited to no more than 50 times the compensation paid to the lowest paid employee in any given tax year under the provisions of one proposal.
• Caps on damages arising from construction defects would be increased from the current $250,000 to $750,000 under another proposal. A new triple damages provision would also be created for homebuilders who fail to respond to a claim by a homebuyer.

"The initiatives filed on Wednesday aim to improve the lives of working families and consumers in Colorado," said John Sadwith, executive director of the Colorado Trial Lawyers Association, whose name is on several of the proposals. "For too long corporate interests have been put ahead of consumer interests in this state fast cash now. The initiatives filed shift the balance of fairness back to the consumer. Real people in this state deserve a break."

The proposals are apparently in response to a competing ballot measure filed earlier this year by what proponent Mark Hillman described as a coalition of business interests and grass roots activists.

Hillman's proposed ballot initiative would limit contingency fees in civil court judgments to 30 percent for the first $250,000 recovered for clients. Attorneys would be limited to 25 percent for awards of more than $250,000 but less than $500,000. They would get 10 percent for awards of more than $500,000.

One of the measures filed by Sadwith and attorney Scott Wolfe, imposes increased state taxes on federal farm subsidies.

Hillman is a Burlington wheat farmer and former state legislator who reportedly receives subsidies that would be subject to the proposed new tax.

Douglas Friednash, a Denver lawyer who has been critical of the initiative and referendum process and the ease with which such measures can make it onto the ballot, said the measures "go far beyond what the trial lawyers ought to be concerned about."

"We really have to look long and hard at how we approve initiatives and how we get constitutional amendments onto the ballot," Friednash said.

He called the measures "Draconian and disengenuous."

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The state Public Service Commission reported Wednesday that its staff helped 301,000 utility customers last year.

The PSC, based in Albany, N.Y., said its staff spoke directly to 75,000 of those customers over the phone. Others came in to one of the PSC's offices in Albany, Buffalo and New York City, or contacted the commission via mail or e-mail.

The office estimates customers received $7 million in bill credits and refunds as a result of the assistance.

"Ensuring consumer protection requires more than just monitoring utilities for missteps," said commission Chairman Garry Brown payday loans. "It requires sorting through hundreds of thousands of contacts with individual customers, analyzing the problems encountered and developing solutions one customer at a time."

Customers interested in filing a billing complaint with the commission can call (800) 342-3377 or visit www.askpsc.com.

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Michigan and Florida lost the most U.S. jobs in March, contributing to the biggest decline in American payrolls in five years.

Employment in Michigan dropped by 21,900 workers last month while Florida lost 17,400 jobs, the Labor Department reported today in Washington. Payrolls fell in 27 states plus the District of Columbia.

The economy has lost jobs in each of the first three months of the year, culminating in an 80,000 drop in March that was the biggest since 2003, Labor reported earlier this month. Growing unemployment is one reason more and more economists say the U.S. is already in a recession.

“In Florida, it really is a story about how much damage the drop in construction is doing to the economy there,'' said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. In Michigan, “the auto industry is just getting creamed right now because consumers are seeing their purchasing power squeezed. They are making their existing cars last a few months or a few years longer.''

The decline in Michigan reflected a 14,800 drop in factory payrolls. The national figures issued on April 4 showed auto manufacturers cut 24,000 jobs last month, “largely'' reflecting the effects of a strike at a supplier for Detroit-based General Motors Corp.

Florida Job Losses

In Florida, a 17,000 slump in payrolls at professional and business-service companies, a category that includes temporary- help agencies and building management, accounted for the bulk of the decline in employment paydayloan. Florida construction companies also eliminated 6,700 workers from payrolls.

The two states also led the list in the year ended in March, with Michigan losing 74,200 jobs and Florida 56,600.

Combined, the state figures showed payrolls fell by 49,000 last month after a decline of 12,000 in February.

The state and local employment data are derived independently from the national statistics, which are typically released on the first Friday of every month. The state figures, because they come from smaller surveys, are subject to larger sampling errors, according to the Labor Department.

The national jobless rate rose to 5.1 percent last month, the highest level since September 2005, the government's report earlier this month showed.

Louisiana, where the jobless rate jumped 0.8 percentage point in March to 4.5 percent, led the increase in unemployment compared with the prior month. California, Indiana and New Mexico each showed a half-percentage-point rise in jobless rates in March.

The biggest increases in unemployment over the year ended March, a 1.2 percentage-point jump, were registered by California, Florida, Nevada and Rhode Island.

Michigan had the highest jobless rate of all states at 7.2 percent, followed by Alaska at 6.7 percent and California at 6.2 percent.

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Big Wall Street investment firms should be subject to greater regulatory oversight because any severe problems they might encounter can raise dangers to the entire financial system, the Federal Reserve’s No. 2 official said Thursday.

"We must worry about excessive leverage and susceptibility to runs not only at banks but also at securities firms," Donald Kohn, vice chairman of the central bank, said in remarks to a credit forum in Charlotte, N.C.

After the crash of Bear Stearns (BSC, Fortune 500), the nation’s fifth-largest investment bank, fears grew that others might be in jeopardy given major stresses in credit and financial markets.

Scrambling to avert a market meltdown, the Fed - in the broadest use of its lending authority since the 1930s - agreed last month to temporarily let investment firms obtain emergency financing from the Fed, a privilege that previously had been granted only to commercial banks.

By doing this, the Fed became a lender of last resort to investment firms. The program, which started on March 17, has generated a debate about whether investment firms should be subject to the type of supervision applied to commercial banks. It also has spurred debate over whether the emergency lending program for investment banks should be made permanent.

"Whatever type of backstop is put in place, in my view greater regulatory attention will need to be devoted to the liquidity risk-management policies and practices of major investment banks," Kohn said fast cash advance. "In particular, these firms will need to have robust contingency plans for situations in which their access to short-term secured funding also becomes impaired."

Treasury Secretary Henry Paulson last month said investment firms should face stepped-up regulation if they use the Fed’s emergency lending facility. However, he said it was too soon to determine whether the program should be made permanent.

Investment houses have key roles in the financial system. If one fails or is having difficulty, it could put the whole financial system in jeopardy. That’s because they have complex relationships with many players in the system, including hedge funds, commercial banks and others.

Turmoil in financial markets, which erupted last August, has threatened to plunge the United States into a deep recession. 

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Three executives convicted in the collapse of National Century Financial Enterprises Inc. will remain in custody based on the testimony of a jailhouse informant, while a fourth is heading home until sentencing, helped by friends, family and co-workers who vouched for him.

U.S. District Court Judge Algenon L. Marbley rule that Donald Ayers, Randolph Speer and Roger Faulkenberry were flight risks, while James Dierker was not. Marbley announced his decision late Wednesday in a post-conviction hearing to a Columbus courtroom packed with Dierker supporters, reporters and onlookers.

The four former National Century executives were back in front of Marbley sooner than expected because government prosecutors were convinced they were plotting to flee to the Caribbean island of Aruba to escape potential decades-long prison sentences. The four were convicted in March on charges of conspiracy, fraud and money laundering for their roles in a fraud that plunged Dublin-based National Century into bankruptcy, resulting in as much as $3 billion in missing investor funds.

Convicted with them was Rebecca Parrett, a former executive and co-founder of the company. Parrett was not in court, however, because the government doesn't know her whereabouts.

All five were out on recognizance bonds after their March 13 convictions while they awaited sentencing. Parrett failed to show up for a March 27 meeting with a court officer and hasn't been found. A warrant is out for her arrest.

A few days after her disappearance, government agents heard April 1 from an inmate at the jail that held former National Century CEO Lance Poulsen. He told them the four other executives were planning to flee to Aruba.

The inmate, Robert Cihy, testified Wednesday that he heard of the alleged plot from Poulsen, the co-founder of National Century who was jailed after being found guilty of witness tampering quick payday loan. Poulsen faces trial in August on fraud-related charges.

Cihy testified that Poulsen told him the executives planned to take a Carnival cruise to Aruba because travelers don't need passports when disembarking on a cruise line's island stops.

The four convicted executives then took the witness stand to plead their case that they had no intention of fleeing and should be released again until sentencing, which is expected later this spring.

When announcing his decision, Marbley told the defendants he found Cihy's testimony credible because of the level of detail he included.

The testimony of the 71-year-old Ayers was not credible, Marbley said, because the former executive was unclear about the details of an $800,000 check he wrote following his conviction. Part of that money was to go toward legal fees, but it was never made clear where the balance of the check went, Marbley said.

Ayers, Speer and Faulkenberry never explicitly denied having contact with Poulsen in the years since they were indicted, so Marbley said he concluded they could have conspired to flee if convicted. Dierker denied he had contact with Poulsen, which Marbley found believable.

Marbley said that more than 130 letters from Dierker's friends and family, the presence of Dierker's Victoria's Secret co-workers in the courtroom and the testimony of Victoria's Secret CEO Sharon Turney convinced him that Dierker is not a risk to flee.

Dierker will be fitted with an electronic monitoring device before he's released.

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California and the nation are not ready to deal with the social and health-care needs of the aging population, according to a report from the Institute for Medicine.

According to Susan Chapman, a professor at UC-San Francisco and one of the authors of the report, "Retooling for an Aging America: Building the Health Care Workforce," the percentage of Californians over 65 is expected to jump from 10 percent of the state population in 2000 to 17.5 percent in 2030. The baby boom generation begins to turn 65 in 2011. The report was national in scope, but Bay Area authors of the report, Chapman and the Palo Alto Medical Foundation's Dr. Paul Tang, provided some perspective on the situation here in California as well.

There is a basic need for competence among health care providers in caring for the elderly, said Chapman, who is also director of Allied Health Workforce Studies at UCSF's Center for Health Professions. Additionally, there is a shortage in specialists in geriatrics, not just among physicians but also social workers, rehab therapists, speech therapists and nurses.

Altogether, there are 7,100 geriatricians (physicians) in the United States- one per every 2,500 older Americans - and less than 1 percent of registered nurses are certified in geriatrics. In California, there is one geriatrician for ever 4,000 older adults, added Tang.

"Demand for health care services will really expand because we are getting older and living longer," Tang said. "We need to figure out, how do you keep people living healthier and keep them healthy? All the professional health care work force must deal with common ailments of the aging population and (right now) we don't get that training."

Turnover among nurse aides, who often care for the elderly, averages 71 percent annually, and up to 90 percent of home health aides leave their jobs within the first two years credit report.

"These are poorly paid jobs," Chapman said. "The national average is $8.50 for a personal or home-care aides."

Other issues, she said, are physically demanding work, a lack of benefits, and a lack of respect and appreciation for these workers, and training. In California, required training for a nurse's aide is 150 hours, she said, compared with 350 hours to train to give people manicures.

The committee of health care leaders writing the report made recommendations ranging from increasing recruitment and retention of geriatricians, increasing salaries, developing new payment mechanisms, and providing training to friends and family who care for elderly patients in their homes.

"The work force is not just the professional work force team," Tang said. "It has to involve the patient and family caregivers. What is needed is to transfer some of that responsibility for health to the person or persons who have the most vested interest. What they are the lacking is data, knowledge and tools to do that job."

Among its findings, the committee noted that Medicare hinders the care of elderly adults through its low reimbursements, focus on treating short-term health problems rather than chronic conditions and lack of coverage for time spent by health care providers collaborating with other providers.

The study was sponsored by the John A. Hartford Foundation, Atlantic Philanthropies, the Josiah Macy Jr. Foundation, the Robert Wood Johnson Foundation, the Retirement Research Foundation, the California Endowment, the Archstone Foundation, AARP, Fan Fox and the Leslie R. Samuels Foundation and Commonwealth Fund.

mhogarth@bizjournals.com | 925-598-1432

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Finance chiefs from the Group of Seven nations signaled concern on the dollar's slide and said the global economic slowdown may worsen amid an “entrenched'' credit squeeze.

“Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability,'' the G-7's finance ministers and central bankers said in a statement after talks in Washington yesterday.

The officials downgraded their outlook for the world economy from that of two months ago, blaming the U.S. housing recession, credit-market turmoil, commodity prices and inflation pressures. The dollar has lost 8 percent against the euro and 6 percent versus the yen since the G-7 last met in Tokyo in February.

“They ratcheted up the currency rhetoric a notch or so,'' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. “They're trying to buy some time for the dollar.''

The new language was the first significant change in the G- 7's view of currencies since a February 2004 meeting in Boca Raton, Florida. The U.S. currency reached a record low of $1.5913 against the euro this week.

Monitoring Markets

“We continue to monitor exchange markets closely, and cooperate as appropriate,'' the G-7 said.

Treasury Secretary Henry Paulson said the change in the G-7 statement on currencies “reflects market developments and changes in the markets.'' He also said he told the G-7 “in very strong terms our commitment to a strong dollar.''

“They're trying to discreetly throw a lifeline to the dollar,'' said Sophia Drossos, a currency strategist at Morgan Stanley in New York, who used to help manage the Federal Reserve's foreign-exchange holdings. “Had they not said anything, the dollar would have resumed its sell-off. This acknowledges there has been increased volatility.''

Policy makers laid out a 100-day plan to strengthen regulation of capital markets. They urged financial companies to “fully'' disclose in their mid-year earnings reports their investments at risk of loss. Firms should also establish “fair value estimates'' for the complex assets that investors have shunned and boost their capital as needed, the G-7 said.

`Entrenched' Turmoil

“The turmoil in global financial markets remains entrenched and more protracted than we had anticipated,'' the officials said in their statement. “Near-term global economic prospects have weakened.''

The G-7 pledged to implement further monetary and fiscal policies “as appropriate'' without giving details.

The officials met after the International Monetary Fund this week estimated a 25 percent chance of a global recession this year. A collapse in the market for U.S. subprime mortgages has pushed the U.S. toward its first contraction in seven years and prompted banks to shun lending after $245 billion of asset writedowns and credit losses since the start of 2007.

While the dollar's drop has helped support the U.S. economy by boosting exports, its acceleration triggered criticism from officials abroad worried that their own shipments may be hurt.

“We don't like the recent moves,'' Luxembourg Finance Minister Jean-Claude Juncker, who heads a group of counterparts from the euro area, told reporters in Washington. Canadian Finance Minister Jim Flaherty said the dollar's drop “has been borne primarily by the Canadian dollar and also by the euro and the yen.''

Skepticism

The G-7 may fail to reverse the dollar's slump because there's no sign it's willing to intervene and the U.S get a free credit report. economy is weaker than its counterparts, said Samarjit Shankar, director of global strategy for the foreign exchange group at Bank of New York Mellon in Boston.

The Fed has tried to avert recession by cutting its benchmark interest rate 3 percentage points since August, yet the European Central Bank has left its unchanged at a six-year high of 4 percent amid inflation at a 16-year high.

“Growth differentials are still stacked up against the dollar and since there's no sign whatsoever that the group is about to intervene, that clears the way for further dollar weakness,'' said Shankar, who predicted the dollar will reach $1.60 per euro.

China's Yuan

The G-7 again urged China to allow “accelerated appreciation'' in its currency, while acknowledging its recent rise through 7 per dollar for the first time since a fixed exchange rate ended in 2005.

The group pledged “rapid implementation'' of recommendations from the Basel-based Financial Stability Forum published yesterday. The FSF report aims at increasing transparency and cooperation among international bank supervisors.

In the next 100 days, the G-7 demanded that regulators revise liquidity risk management rules, improve accounting standards for off-balance-sheet units and enhance guidance on how assets are fairly valued.

With the credit squeeze now in its ninth month, the G-7 highlighted “downside risks'' to growth in a “challenging and uncertain environment.''

Since the G-7 met in February, Bear Stearns Cos. was rescued by JPMorgan Chase & Co. with the help of the Fed, U.S. employers cut jobs for a third month and the price of oil and other commodities reached record highs.

`Very Tough'

“March was a very, very tough month,'' Lehman Brothers Holdings Inc. Chief Financial Officer Erin Callan said in a Bloomberg Television interview yesterday. General Electric Co. Chief Executive Officer Jeff Immelt said “the last two weeks in March were a different world in financial services.''

Other than promising to ensure “orderly'' financial markets, the central bankers and finance ministers stopped short of introducing new measures to boost liquidity, even as the cost of borrowing euros and dollars for three months holds at the highest since December. The group said previous efforts by some central banks to bolster liquidity were “helping.''

French Finance Minister Christine Lagarde said she hoped the warning from the Group of Seven nations against “sharp fluctuations'' in currencies will strengthen the dollar.

“I hope this concerted wording on currencies will help,'' she said in a Bloomberg Television interview in Washington yesterday when asked how worried she was by the dollar's slide.

Bankers' Dinner

President Nicolas Sarkozy's government recently stepped up complaints that the euro's appreciation against the dollar is pushing France-based companies, including planemaker European Aeronautic, Defence & Space Co., to cut jobs at home and relocate some activities abroad.

Composed of the U.S., Japan, Germany, France, Italy, the U.K. and Canada, the G-7 oversees two-thirds of the world economy. Its officials dined last night with 10 executives from financial companies, including Deutsche Bank AG Chief Executive Officer Josef Ackermann, Lehman Brothers CEO Richard Fuld and Credit Suisse Group chief Brady Dougan.

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