Finance & Business World

ST. LOUIS — The Budweiser Clydesdales might be headed back to the Super Bowl after all.

Just two days after trumpeting a lineup of nine Super Bowl ads that did not include the popular horses, Anheuser-Busch said Thursday it has reconsidered. The brewer plans to release a Clydesdales ad and two other Budweiser ads on its Facebook page today to gauge public reaction.

The original Clydesdales spot — which fell short in focus group testing — has been reworked and might make it to the big game, according to A-B’s top marketing executive.

"This was a surprise opportunity that wasn’t in our hands until yesterday," Keith Levy, A-B marketing vice president, said Thursday evening.

Levy downplayed the notion that the change of heart was motivated by widespread criticism of A-B’s original decision to bench the Clydesdales, which have appeared in Budweiser ads for at least the last eight consecutive Super Bowls.

"We simply did not have a spot in our hands that did well" in testing, Levy said, although he noted A-B did "have some contact" from upset consumers that could have spurred A-B to revisit the ad.

Levy also said this was not part of an intentional publicity plan. Super Bowl advertising expert John Antil believed him.

"I think this is more about them just saving face," said Antil, a University of Delaware marketing professor. "I don’t think this is some kind of test."

Sidelining the Clydesdales drew plenty of criticism. Readers called and complained to the Post-Dispatch and on message boards. Twitter was burning. "Say it ain’t so! They’re the reason I watch!" wrote one woman. "What are they thinking?" lamented another. And: "Boo Hiss! Everybody loves the Clydesdales!"

The Clydesdales debuted in Budweiser TV ads in 1956 and have appeared in 15 Super Bowl ads. A-B bought five minutes of the pricey, precious ad time — an estimated $2.5 million for a 30-second spot— for the Feb. 7 football game, the year’s biggest advertising spectacle that is expected to be watched by at least 100 million people.

Levy said three ads would be released sometime before noon today at facebook.com/budweiser, the brand’s page on the social networking site. If the brewer selects the Clydesdales spot for the Super Bowl, it could result in a total reworking of A-B’s ad lineup because the new horse spot is 60 seconds long and would be replacing a 30-second spot.

The ad, created by Chicago ad agency DDB, opens with two baby horses — one is a Clydesdale — separated by a fence and running through a field. The ad follows the horses as they grow up together. It is a story about friendship and lifelong bonds, Levy said.

Kind of like those between some consumers and the Clydesdales.

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President Obama will propose a new tax on financial institutions Thursday to ensure that taxpayers who bailed out banks get paid back, according to a senior administration official.

The White House wants to raise as much as $120 billion through a new tax on banks to cover losses in the federal bailout program.

The law that created the $700 billion Troubled Asset Relief Program empowered the president to ask Congress to recoup money if bailouts were not paid back in full.

TARP dictates that the Office of Management and Budget consider such action five years after TARP went into effect in October 2008 to prevent the federal bailout from adding to the deficit.

When the TARP bill was hastily debated, the provision was key to winning enough support from wary lawmakers to push the bill through Congress.

This new proposal to tax banks has been under discussion since August, a senior administration official said Tuesday.

The federal bailout program has always been a controversial topic, but news of executive bonuses now being awarded for banks’ stellar performance in 2009 is throwing new fuel on populist anger.

Congress would still have to approve any proposed new tax.

Robert Gibbs, the White House press secretary, would not discuss on Monday how a possible bank fee would fit into Obama’s fiscal year 2011. But Gibbs said it is the president’s "goal" to ensure the "money that taxpayers put up will be paid back in full."

While most of the big banks have started paying back their TARP investments, the government still has a lot of money on the line and is likely to for years to come.

Last month, the Treasury estimated that the net cost of TARP to taxpayers would be $41.4 billion.

For example, Treasury Secretary Tim Geithner said last month that the bailouts of the automakers and insurer American International Group (AIG, Fortune 500) would not be paid back in full short term personal loans.

"There is a significant likelihood that we will not be repaid for the full value of our investments in AIG, GM and Chrysler," Geithner told an oversight panel.

Yet, the financial industry tax under discussion could impact the entire financial industry, a prospect the banking industry opposes.

Although few details are available about the proposed fee, the administration official suggested banks would be required to pay, even if the losses were incurred by GM and Chrysler.

"Imposing new taxes on top of the increased regulatory costs will weaken the industry, just when the industry is helping lead the economic recovery," said Scott Talbott, chief lobbyist for the Financial Services Roundtable, a bank lobbying group.

And it’s still unclear what, if anything, can be done to prevent the fee from being passed to bank account holders.

U.S. Chamber of Commerce President Thomas Donohue said Tuesday he expected any new fee imposed would be passed on to consumers.

"If you don’t pass it on to the consumer, than you’re going to have smaller profits, and then if you have smaller profits, your stock goes down," Donohue said.

The total revenue collected from the tax would be no higher than $120 billion, since that is the highest conservative estimate of the cost of TARP, the senior administration official said. However, the Treasury Department expects the total loss number to shrink over the course of future years.

- CNN White House Correspondent Dan Lothian contributed to this report. 

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India’s industrial production grew at the fastest pace in 25 months in November, strengthening the case for the central bank to raise interest rates in the first half of this year.

Output at factories, utilities and mines rose 11.7 percent from a year earlier after gaining 10.3 percent in October, the statistics agency said in New Delhi today. The gain exceeded the median estimate of 10 percent in a Bloomberg News survey of 25 economists.

The acceleration of India’s economy, Asia’s third-largest, parallels a rebound in China that may also see policy makers there boost borrowing costs in the coming months. India’s biggest stock-market advance in 18 years, along with fiscal and monetary measures, have stoked demand for cars made by Maruti Suzuki India Ltd. and plasma screens from LG Electronics Inc.

“The pace of growth is much stronger than anticipated and clearly indicates that consumption is in a self-propelling mode,” said Shubhada M. Rao, chief economist at Yes Bank Ltd. in Mumbai. “And with inflation surging, the probability of an increase in the cash reserve ratio in the central bank’s Jan. 29 policy statement is now very high.”

India’s bonds fell after the report. The yield on the 6.35 percent note due in January 2020 climbed to the highest level in almost two months, rising by five basis points to 7.71 percent as of 1:05 p.m. The Bombay Stock Exchange’s Sensitive Index declined 0.51 percent at 2:11 p.m., after rising 0.4 percent earlier, on concern a faster recovery will prompt the central bank to raise rates.

Stimulus Measures

Economies are recovering across Asia after the region’s policy makers unveiled about $1 trillion in stimulus measures and cut rates to spur growth. China’s industrial production rose 19.2 percent in November and its exports climbed 17.7 percent in December.

Recent data show growth is gaining traction in India as well, with manufacturing rising at the fastest pace in seven months in December, according to the Purchasing Managers’ Index compiled by HSBC Holdings Plc and Markit Economics. Exports surged to a 15-month high in December after rising 18.2 percent in November, the first increase in 14 months.

RBI Governor Duvvuri Subbarao “should begin monetary action by shrinking the excess liquidity in the local money markets and then move to increasing policy rates around March and April,” said Rajeev Malik, an economist at Macquarie Group Ltd. in Singapore. The central bank “will be concerned about the excess liquidity and second-order inflationary effects of high food inflation.”

Food Prices

India’s benchmark wholesale-price inflation rate rose to 4.78 percent in November, more than three times October’s 1.34 percent. Wholesale food prices soared 18.22 percent in the week to Dec. 26 from a year earlier, near the most in 11 years. The government is next due to release food inflation data on Thursday.

“This release, together with the likelihood of a strong December inflation number on Thursday, seals India’s near-term interest rate fate,” said Robert Prior-Wandesforde, Singapore- based senior Asia economist at HSBC Holdings Plc. He expects the RBI to start increasing its key policy rates in April after raising lenders’ reserve requirements at this month’s meeting.

Subbarao slashed the cash reserve ratio by 400 basis points to 5 percent between October 2008 and January 2009 to shield the economy from the global recession. The central bank has left its reverse repurchase rate and repurchase rate unchanged since April, after respective cuts of 2.75 and 4.25 percentage points.

Fridges, TVs

By comparison, China’s one-year lending rate is at a five- year low of 5.31 percent and its one-year deposit rate is 2.25 percent.

Manufacturing output increased 12.7 percent in November from a year earlier, accelerating from an 11.1 percent gain in October, today’s report showed. Mining grew 10 percent, compared with 9 percent in the previous month and electricity rose 3.3 percent from 4.7 percent. Production of consumer durables such as refrigerators and televisions surged 37.3 percent in November, compared with a 20.2 percent gain.

Prime Minister Manmohan Singh last year cut taxes on consumer products, increased spending on roads and utilities, raised salaries for government workers and waived farm loans.

The central bank injected about $130 billion into India’s banking system by reducing interest rates and lowering lenders’ reserve requirements. That helped the $1.2 trillion economy to grow 7.9 percent in the three months ended Sept. 30, the most in 1 1/2 years.

Surpassing China

Faster growth has attracted overseas inflows into stocks, taking the Sensitive Index to the highest in 18 years in 2009. The rupee gained 4.8 percent.

India’s growth may quicken to 10 percent in a “couple of years,” exceeding that of China as early as 2014, Kaushik Basu, chief economic adviser to the South Asian nation’s finance ministry, said Jan. 4. The government has no plans to “suddenly” withdraw last year’s stimulus, he said.

The strength of the Indian economy is enticing foreign companies to expand and set up operations. Toyota Motor Corp., Volkswagen AG and other carmakers introduced 10 new models at the Delhi Auto show last week. Passenger car sales hit 1.43 million units in 2009, the most in three years, according to the Society of Indian Automobile Manufacturers on Jan. 8.

ArcelorMittal, the world’s biggest producer of steel, and Posco, the sixth-biggest maker of the alloy, plan to set up new steel mills in southern India. Posco will invest 323 billion rupees ($7 billion) on a mill in Karnataka state, the regional government said Jan. 7. ArcelorMittal plans to sign an accord in June for a 300 billion-rupee project in the same state.

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Man doth not live by financial capital alone but also by human capital. And, of course, Warren Buffett had a lot to say about that, too, when he took Phil DeMuth and me to dinner a couple of weeks ago in bitterly cold, snowy Omaha.

"It’s vital to be able to communicate well," he said. "Just being able to communicate with others on the job adds at least 50% to your value." Apt words indeed from the man whose annual report (I would guess) is read by more people than all of the other annual reports in the world combined, and whose words have probably saved more lives than any book except the Bible.

"It’s also incredibly important to get along with people," Buffett also said. He talked at length about his early days working with Ben Graham’s firm and how he made it a point to not only work very hard but to get along well with everyone he worked with, and still makes it a point. He spoke highly of an old standard, Dale Carnegie’s "How To Win Friends and Influence People" — a book that still teaches me and one that I consult almost every day.

I asked him about the problems of having a significant part of the labor force that has little intellectual aptitude and learns very little in schools. "For some of them," he said, "there will be better and better tools, tools that allow even people with modest skills to do useful work."

But when I pressed him about the segment of the population that does not really care to learn at all, such as members of violent gangs or others who just refused to learn, he sighed and said that the government would have to come up with some make-work projects for them, projects that paid a modest wage and allowed such people to have some feeling of self-esteem. (I wonder whether they would rather do those jobs than what they are doing….)

But what about people who refused to learn how to do work that is a way to convert human capital into financial capital, i instant payday loans completely online.e., people who refuse to learn to do value investing? He threw up his hands. "I learned it right away when Ben Graham said it," he said. "It was like a vaccination that just took right away. Some people can get the same shot and it doesn’t take at all. Some do get it right away." (I am paraphrasing.)

He was kind enough to sign a copy of his famous article, "The Superinvestors of Graham-and-Doddsville," about value investing compared with other forms of investment, "To Ben Stein, who understood this a long time ago," and I only wish it were true.

In my case, the vaccination only works sporadically. (Buffett has also famously said that in any card game there’s always one sucker and if you don’t know who it is, it’s probably you. I do know who it is, and it’s definitely usually little me…except when it isn’t.)

The overall vibe I get from Warren Buffett, besides his astonishing kindness, mind-boggling intelligence, and perfect, self-deprecating humor, is a reminiscence of something once said by a childhood neighbor who knew Ted Williams. The great baseball player, said my neighbor, had vision so good he could see the stitches on a fastball zooming towards him. No matter how much he might try to explain to you how to do it, if you did not have the natural talent to do it, you couldn’t do it.

But what if you could have made a wager on how many home runs Williams would hit? Or what if, for a few dollars, you could have gotten a share of Ted Williams endorsements? That’s what astute people could have done with Buffett, and it was a rare opportunity.

In the meantime, value investing starts at home, with building up your own value as an earner, enough so that you can some day be a Superinvestor of your ownville. 

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A free-trade agreement between China and Southeast Asia comes into force today, consolidating a sixfold surge in economic activity over the past decade between countries representing a quarter of the world’s population.

The agreement expands a limited 2005 trade area between China and the 10-member Association of Southeast Asian Nations, scrapping tariffs on about 90 percent of goods. By 2015, duties must be cut to no more than 50 percent on “highly sensitive” items, including ambulances in Brunei, popcorn in Indonesia, snowboard boots in Thailand and toilet paper in China.

China’s economic clout in Southeast Asian countries has risen over the past decade as policy makers slashed tariffs on electronics, automobile parts and computer chips. Japan, India, Europe and the U.S. have followed China in courting Asean, home to investments from Intel Corp., the world’s largest maker of computer chips, and Toyota Motor Corp., the biggest carmaker.

“This FTA is going to make a difference at the margin to some Asean countries but not others,” said Razeen Sally, a director of the Brussels-based European Centre for International Political Economy, a trade-policy research group. “Basically it takes down the tariffs but does little on all the non-tariff barriers where you would have much bigger gains to trade.”

China’s trade with Asean has jumped sixfold since 2000 to $193 billion last year, surpassing that of the U.S. China’s share of Southeast Asia’s total commerce has increased to 11.3 percent from 4 percent in that time, whereas the U.S.’s portion of trade with the bloc fell to 10.6 percent from 15 percent, Asean statistics show.

Deficit Widens

During that time, Asean’s trade deficit with China widened by five times to $21.6 billion. The bloc reported a $21.2 billion trade surplus with the U.S. last year, down 12 percent from 2000.

The trade agreement would hit high-tariff industries in Indonesia and the Philippines more than other Asean countries, Sally said. Trade in parts and components, the “central artery” of China-Asean economic ties, won’t be affected much because most of those tariffs are already near zero, he said.

Opposition to the trade agreement has been loudest in Indonesia, where the government has sought to placate concerns that industries including textiles, food and electronics will suffer. Indonesia should renegotiate the deal because the textile industry may see its domestic market share decline by 50 percent as cheaper Chinese goods enter the market, said Ade Sudradjat, vice chairman of the Indonesian Textile Association.

The government is setting up a team to monitor trade practices, Hatta Rajasa, coordinating minister for the economy, told reporters in Jakarta Dec. 30.

“When a nation has cheap products, we must see whether there’s unfair trade in it, such as unfair subsidies,” he said. “We must be proactive.”

Port Inspection

Indonesia, Asean’s biggest economy and home to about 40 percent of the bloc’s 584 million people, has required Chinese exports of garments, electronics, shoes, toys and food to be shipped from designated ports with every container inspected upon arrival. China, poised to overtake Germany as the world’s largest exporter this year, faces 101 trade investigations in 19 countries, state-run Xinhua News Agency reported this month.

Asean governments should resist the temptation to raise non-tariff barriers, the association’s secretary general, Surin Pitsuwan, told Xinhua in an interview published today.

To help its exporters, China has halted the yuan’s gains against the dollar from July last year. In 2009 the yuan has remained largely unchanged against the dollar while Indonesia’s rupiah climbed 15.5 percent, Thailand’s baht advanced 4.2 percent and the Philippine peso increased 2.3 percent.

Asean includes Indonesia, Thailand, Malaysia, Singapore, Brunei, the Philippines, Cambodia, Laos, Myanmar and Vietnam. Wide economic disparity has hindered the group’s efforts to form a single market, as the purchasing power of the group’s four richest countries was 10 times greater than that of the other members last year, according to statistics on the bloc’s Web site.

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Shoppers appear to have given the nation’s stores a needed last-minute sales surge.

Early readings from Toys R Us, Sears Holdings Corp. and several mall operators show packed stores on Christmas Eve following a busy week fueled by shoppers who delayed buying, waiting for bigger discounts that never came or slowed by last weekend’s big East Coast snowstorm.

Stores are counting on these stragglers in a season that so far appears slightly better than last year’s disaster. The jury is still out, because the week after Christmas accounts for about 15 percent of sales as gift card-toting shoppers return to malls.

"The procrastinators were really out in force," says David Bassuk, managing director in the retail practice of AlixPartners, a global business advisory firm.

"But I think retailers needed to be more aggressive to fight for those sales. A lot of people are still willing to hold out until after Christmas because the deals weren’t as good."

A Christmas Eve snowstorm in the nation’s heartland was slowing some shoppers after snarling roads in the mountain states a day earlier.

Wally Brewster, spokesman at General Growth Properties said merchants in his centers said they had made up for lost sales.

Still, he expects overall holiday sales will be only about even with a year ago payday loans with no faxing.

Caution remained. Karen MacDonald, spokesman for mall operator Taubman Centers Inc., noted that stores said many shoppers, remembering the 80 to 90 percent clearance sales they found last year, were asking whether the discounts were going to get any deeper.

And Rebecca Stenholm, a company spokesman for mall operator Macerich Co., reported that more people were using cash to pay for gift cards than a year ago, reflecting tight credit and a desire to pay down debt.

The full picture won’t be known until merchants report December sales Jan. 7. But most expect merchants’ fourth-quarter profits should be intact because they didn’t have to cut prices more than they’d planned as they were cushioned by lean inventories.

ShopperTrak is sticking to its prediction for a 1.6 percent gain, compared with a 5.9 percent drop a year ago.

The National Retail Federation expects that total retail sales will slip 1 percent, though some experts say that might be a bit too cautious.

A year ago, they fell 3.4 percent by the trade group’s calculations.

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Senate Democrats are preparing to drop a compromise health-care plan that would allow 55- to 64-year-olds to buy into Medicare because of opposition from Connecticut Sen. Joe Lieberman, two senior Democratic sources said Monday.

"It’s what the White House wants, and there aren’t many other options that allow us to finish by Christmas," said one source.

Lieberman, an independent who caucuses with the Democrats, has emerged as the majority party’s main obstacle to its efforts to get a health care bill through the Senate before Christmas. He ratcheted up his public opposition to the bill Sunday by threatening to join a Republican filibuster if the legislation contains either a government-run public health insurance option or a proposed alternative that would expand Medicare to people as young as 55.

"I think the danger always is you try to add too much onto a bill," he told reporters Monday evening. He said he supports the "core" of the bill, including tighter regulations on private insurers — but he wants Democrats to "take off some of this stuff that runs the risk of creating federal debt, and moves toward a government takeover of insurance, which I think would be bad."

Unanimous Republican opposition so far means Senate Democrats need all 60 votes in their caucus to close debate on the sweeping health care bill. Final passage of the bill would then require only a simple majority of 51.

Lieberman supported letting older workers buy into Medicare in 2000, when he was the Democratic vice presidential candidate, and as recently as September in comments to a Connecticut newspaper.

But he said Monday that the idea was "no longer necessary," since the Senate bill includes subsidies to help people over 55 and older buy insurance coverage before they become eligible for Medicare.

"I was suggesting various ideas for health care reform that did not involve the public option, and that was the focus at that time," he said. "But the important thing is I’m for health care reform, and if we get together, we’re going to deliver a health care reform bill that will provide the ability to get health insurance to 30 million people that don’t have it now."

And Lieberman spokesman Marshall Wittmann said that now, "We have a huge national deficit and a program that analysts indicate is in dire fiscal straits in 2009."

Emergency meeting Senate Democrats held an emergency meeting Monday night to discuss the issue, which threatens to derail the Obama administration’s push for a sweeping reform of U.S. health insurance. Although a final decision was not made at Monday night’s meeting, a second Democratic source said a final decision could be made at a White House meeting Tuesday between the Senate’s Democratic majority and President Barack Obama.

"I think there is a fundamental understanding of the direction we’re going in," said Sen. John Kerry, D-Massachusetts. Before the meeting, liberal Democrats Tom Harkin of Iowa and Jay Rockefeller of West Virginia indicated that the Medicare buy-in would likely be dropped.

While they didn’t like the idea, they suggested they would support a health care bill anyway payday loan lenders. Democrats "may have to do what Mr. Lieberman wants," Harkin told CNN. The Medicare expansion was part of a package of provisions announced by Reid last week as an alternative to a government-run public health insurance program, which lacked enough support among Democrats to break a filibuster.

Negotiated by a team of 10 Democratic senators — five liberal and five moderate — the compromise package was hailed by Reid, Obama and others as an important step forward in the health care debate. The package also would allow private insurers to offer non-profit health coverage overseen by the government.

Many senators have reserved judgment on the compromise proposal until the non-partisan Congressional Budget Office (CBO) provides its analysis of how much it costs. Senate Majority Leader Harry Reid would discuss no specifics of a bill after Monday night’s caucus, telling reporters he would wait until the CBO finished its estimate of a revised bill’s price tag.

But he said the measure "saves lives, saves money, and saves Medicare." "I am confident that by next week we’ll be on our way to forward this bill to the president," he said.

Backing public option Most Democrats support the public option as a non-profit competitor to private insurers that would expand coverage and bring down prices. Republicans and some moderate Democrats, along with the health insurance industry — one of the major employers in Lieberman’s home state — oppose a public option, calling it a first step toward a government takeover of the U.S. health care system.

Lieberman first expressed possible opposition to the health care bill in late October, saying he would join a GOP filibuster if the measure contained the public option. Asked about Lieberman’s position then, Reid said: "Joe Lieberman is the least of Harry Reid’s problems."

Another potential obstacle for Reid is moderate Democrat Ben Nelson of Nebraska, who said Sunday said he cannot support the Senate bill without tighter restrictions on federal funding for abortion. The Senate last week defeated an amendment proposed by Nelson and two other senators that would adopt tougher language on abortion funding contained in the House health care bill.

A compromise on the abortion language is possible, said Nelson, one of 10 Senate Democrats who negotiated in private last week on the public option compromise.

If the Senate eventually passes a health care bill, its version will have to be merged with the version the House of Representatives passed in November, which includes a public health insurance plan.

The final bill would then need approval from both chambers before going to Obama to be signed into law. Obama and Democratic leaders have said they want the bill completed this year. The Senate would need to finish its work this week to leave a realistic chance of meeting that schedule.

–CNN’s Dana Bash, Ted Barrett and Tom Cohen contributed to this report.  

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San Francisco brokerage Charles Schwab said Monday that fourth-quarter earnings will come in lower than the third quarter.

The firm said earnings per share will be 2 cents to 4 cents lower than the prior quarter due to lower interest rates and slower trading in recent weeks.

Schwab (NASDAQ: SCHW) also said Monday that it plans to waive $108 million in fees on its money market funds, an 8 percent increase from the firm’s earlier forecast.

The earnings warning indicates Schwab expects to earn 13 cents to 15 cents per share in the current quarter, down from 17 cents in the third quarter and 27 cents per share in last year’s fourth quarter Payday advance.

November’s daily average trading — a key performance measure at Schwab — was down 11 percent from October and down 27 percent from November 2008, when financial markets were in a tailspin.

“Continued declines in the rate environment have led to heightened revenue pressures … and client trading volumes have slowed in recent weeks,” said Joe Martinetto, Schwab’s chief financial officer.

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The Toronto stock market fell sharply Thursday in a broad-based decline despite solid earnings reports from two of the big Canadian banks as investors opted for caution ahead of Friday's U.S. non-farm jobless report.

The S&P/TSX composite index declined 143.18 points to 11,636.55 with a report showing a surprising contraction of the U.S. service industry during November also limiting advances.

The Institute for Supply Management's non-manufacturing index fell to 48.7 from 50.6 in October. Economists had expected the index to rise to 51.5, which would show continued expansion.

Market sentiment Friday will likely be determined by the U.S. jobless report. Economists expect that employers cut 130,000 jobs last month and that the unemployment rate remained flat at 10.2 per cent.

"It's understandable that the market would tread water at this point,"" said Tim Knepp, chief investment officer of Genworth Financial Asset Management.

"Job creation is going to be the key to sustaining any kind of rally."

The Canadian dollar moved down 0.41 of a cent to 94.81 cents US.

The TSX financial sector stepped 1.3 back per cent amid reports from three major banks Thursday.

"They're bumping into resistance right now, particularly TD and CIBC are kind of at the high end of their trading ranges," said Colin Cieszynski, market analyst at CMC Markets Canada.

"We had the prices run up on anticipation of a recovery in bank earnings, and so now we're getting the recovery in bank earnings but the market had already anticipated that to a certain extent, which is why we're getting this consolidation (over the last three months)."

CIBC shares were ahead $1.52 to C$70 on the TSX after the bank reported fourth-quarter net income of $644 million or $1.56 per share, up from year-ago profit of $436 million or $1.06 per share. Revenues totalled $2.9 billion for the quarter, compared to $2.2 billion last year.

CIBC's provision for loan losses surged 91 per cent from a year ago to $424 million due to higher losses in its credit cards, unsecured personal lending and corporate lending portfolios. But provision for credit losses was down $123 million from the prior quarter, primarily due to lower losses in these same portfolios.

TD Bank Financial Group (TSX: TD) reported net income for the fourth quarter was essentially flat compared with the same period last year at just over $1 billion. TD's provision for credit losses nearly doubled to $521 million but was down from the prior quarter. Its shares fell $1.71 to $66.08 as U.S. personal and commercial banking profits tumbled 51 per cent to $122 million. And continued weakness in the U.S. real estate market brought net impaired loans higher to $879 million, a rise of 163 per cent over the same time last year payday loan.

National Bank Financial Group (TSX: NA) missed expectations reported net income of $241 million or $1.39 per share for the fourth quarter, up from year-ago profit of $70 million or 37 cents per share. Revenues came in at $1.1 billion, rising 43 per cent from $765 million last year and its shares dropped $3.78 to $60.84.

In other earnings news, shares in Bombardier Inc. (TSX: BBD.B) fell 13 cents to $4.56 after the airplane and train manufacturer said its profits fell 26 per cent to $168 million in its summer quarter amid harsh economic conditions that triggered recent layoffs. But the company said it managed to keep revenues at year-ago levels of $4.6 billion and a contract worth US$779 million with AMR Eagle Holding Corp, the parent company of American Eagle Airlines for 22 CRJ700 regional jets.

The energy sector was down 1.17 per cent as the January crude contract on the New York Mercantile Exchange slipped 14 cents to US$76.46 a barrel.

EnCana Corp. (TSX: ECA) shares were down $27.62 to $28.81 after the energy company completed its split into two companies on Monday. EnCana becomes a pure play natural gas company while Cenovus Energy Ltd. is an integrated oil company. Cenovus shares started regular trading Thursday on the TSX and were off five cents to $26.25.

The gold sector was down just over two per cent as the February bullion contract on the Nymex gained $5.30 to a record US$1,218.30 an ounce.

The base metals sector declined 1.5 per cent as March copper was down 1.35 cents at US$3.24 a pound. Sherritt International (TSX: S) lost 14 cents to C$6.48.

Market heavyweight Research In Motion Ltd. (TSX: RIM) also pressured the TSX, moving down $1.35 to $61.53.

The TSX Venture Exchange edged 0.18 of a point lower 1,461.61.

Losses also picked up in New York late in the session as the Dow Jones industrial average fell 86.53 points to 10,366.15.

The Nasdaq composite index dropped 11.89 points to 2,173.14 while the S&P 500 index ticked 9.32 points lower to 1,099.92.

In other corporate news, WestJet Airlines Ltd. (TSX: WJA) stock slipped 29 cents to $11.65 after the carrier said it expects the ongoing transition to a new reservation system will have a negative impact on its fourth-quarter passenger revenue. The Calgary-based airline said revenue is expected to be at least 11 per cent below last year.

Shares in uranium giant Cameco Corp. (TSX: CCO) gained 26 cents to $32.93 after the company approved a 17 per cent increase in the annual cash dividend to 28 cents a share from 24 cents, beginning in 2010.

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Despite the frenetic pace of bank failures this year, 552 lenders are still at risk of going under, according to a government report published Tuesday.

The Federal Deposit Insurance Corp. said that the number of banks on its so-called problem list climbed to its highest level since the end of 1993. At that time, the agency red-flagged 575 banks.

Mounting bank failures have proven costly for the FDIC, the government agency created to cover the deposits of consumers and businesses in the event that a bank is shut down.

On Tuesday, the agency revealed its deposit insurance fund, as a result, slipped into the red for the first time since 1991.

At the end of the quarter on Sept. 30, the value of the fund was $8.2 billion in the hole. But that number accounts for $21.7 billion the agency has set aside in anticipation of future bank failures.

FDIC Chairman Sheila Bair, who has won praise both in Washington and on Main Street for shepherding the industry through a particularly difficult period, said the industry’s fate is tied to the broader recovery.

"I think that it really is all about the economy at this point," said Bair.

The banks that end up on the problem list are considered the most likely to fail because of difficulties with their finances, operations or management.

Still, history has shown just 13% of banks on the list have failed on average.

Regulators however, never make public the names of the banks on the list out of fear the publicity could cause customers to pull out their deposits.

Tuesday’s report did reveal that the number of assets controlled by those institutions climbed to $345.9 billion from $299.8 billion in the previous quarter.

The ongoing recession has already claimed 124 banks so far this year. But fears persist that the number will multiply in months ahead because banks are still taking losses on mortgage-related loans and face growing problems with commercial real estate.

In the event of a failure, the FDIC fully insures individual accounts up to $250,000 for single accounts.

Fund in focus

In anticipation of future bank failures, the FDIC has been scrambling to shore up its ailing deposit insurance fund low fee payday loans.

Earlier this year, the agency imposed a special assessment on all banks. And just recently, it approved having banks prepay their insurance premiums for the next three years.

The move is expected to generate roughly $45 billion for the FDIC. However, due to accounting rules, the fund would not be back in the black until 2012.

One lingering question is whether, at some point, the agency would need to tap its $500 billion credit line with the Treasury Department, which was approved earlier this year.

The agency however, has been averse to the idea, hoping instead it can instead navigate the crisis using the tools already at its disposal.

Mixed signals

Tuesday’s report however, wasn’t all bad news.

The roughly 8,100 institutions that make up the nation’s banking industry earned $2.8 billion during the third quarter. In the previous quarter, banks were in the red, losing a combined $4.3 billion.

Stronger sales and the rising values of some securities certainly helped, but those gains were capped as lenders again set aside massive amount of cash to cope with future loan losses. All told, banks earmarked $62.5 billion for future loan losses.

While that was down slightly from the previous quarter, Bair cautioned not to read too much into the numbers, adding that number could jump back up in the current quarter.

"I think we need to live with this a bit longer," she said. "I wouldn’t read too much in quarter-to-quarter trends."

One persistent trend, however, was that credit continued to remain tight. In fact, loan balances at the nation’s lenders fell 2.8% of $210.4 billion, representing the largest quarterly decline since banks started reporting this figure in 1984.

Some economists have argued that the lack of available credit to borrowers, such as small business owners, is choking off the economic recovery. Banks, on the other hand, have argued that demand for loans is way off, as both consumers and businesses try to pay down debt. 

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