Category Archives: markets

Citigroup Girds for Wachovia Takeover Battle With Wells Fargo

By David Mildenberg and Josh Fineman

Oct. 4 (Bloomberg) — Citigroup Inc., hobbled by $61 billion of subprime-related losses, now faces its biggest takeover battle in a fight with Wells Fargo & Co. for control of Wachovia Corp.

Citigroup fell as much as 21 percent yesterday in New York trading after Wells Fargo, the biggest U.S. bank on the West Coast, agreed to acquire all of Charlotte, North Carolina-based Wachovia for $15.1 billion. The bid trumped Citigroup’s government-backed offer of $2.16 billion for Wachovia’s banking operations.

“The taxpayer doesn’t pay a penny” for the Wells Fargo deal, Wells Chairman Richard Kovacevich, 64, said yesterday in an interview. His company’s bid is superior to Citigroup’s also because it’s a higher price and the combining banks “share similar cultures and values.”

Vikram Pandit, Citigroup’s chief executive officer, is counting on the Wachovia purchase to help rebuild after three quarters of losses totaling more than $17 billion. The bank’s market value has dropped 38 percent this year to about $100 billion, leaving it below Wells Fargo. If Wells Fargo winds up with Wachovia, it would creep up on its New York rival with deposits of $787 billion, compared with Citigroup’s $826 billion.

Pandit insisted Citigroup will prevail, citing an exclusive agreement signed by Wachovia. Kovacevich told investors during a conference call the deal with Wachovia is “solid.”

Citigroup dropped 18 percent to $18.35 yesterday in New York Stock Exchange composite trading, after having its biggest share decline in about 20 years. Wachovia rose 59 percent to $6.21. Wells Fargo declined 1.7 percent to $34.56.

Citi’s Claim

Citigroup demanded Wells Fargo abandon the takeover. Buying Wachovia would give Citigroup the third-biggest U.S. bank network and cement its status as the nation’s largest lender by assets.

“Any such agreement between Wachovia and Wells Fargo is illegal,” Pandit, 51, said in the e-mail yesterday. “We continue to vigorously pursue Citigroup’s interest and rights in completing this transaction.”

Citigroup may take legal action to block the deal, or may increase its offer, said a person with knowledge of the deliberations.

“I’m still not convinced that Citigroup can force this sale to happen,” said Elizabeth Nowicki, a professor at Tulane University Law School in New Orleans and a former M&A lawyer at Sullivan & Cromwell. “Citigroup may be facing the chance to get themselves a small settlement, and that’s a nice shot in the arm for a company that’s struggling.”

A court challenge and a bidding war aren’t the only possible roadblocks for Wells Fargo: Its offer may lead to a face-off with federal regulators.

Regulators

The Federal Deposit Insurance Corp., helped broker Citigroup’s purchase when Wachovia’s health faltered. Chairman Sheila Bair said until a review of Wells Fargo’s offer is completed, the agency will stand behind the Citigroup deal.

“We wanted to make clear that until things are settled with what’s going on with this Wells bid, that the Citi deal was still there,” Bair said yesterday in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” to be broadcast over the weekend. Bair said the FDIC is reviewing the offer, and she told Hunt: “You shouldn’t” assume the U.S. opposes Wells’s offer.

Other bank regulators said they haven’t evaluated Wells Fargo’s offer.

“We have not yet reviewed the new Wells Fargo proposal and the issues that it raises,” the Federal Reserve and Office of the Comptroller of the Currency said today in a statement. “The regulators will be working with the parties to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability.”

Wells Fargo’s Plan

Wells Fargo, run by Chief Executive Officer John Stumpf, had avoided bets on the subprime-mortgage market that contributed to $588 billion in writedowns and credit losses for financial firms worldwide. Wachovia in 2006 purchased Oakland, California-based Golden West Financial Corp. for $24 billion, acquiring a portfolio of option-adjustable rate mortgages that helped lead to $9.6 billion in losses this year.

Wells Fargo, in bidding for Wachovia, deviates from a strategy of seeking smaller acquisitions with less risk to fill gaps in its branch network. After the combination, the bank would have $1.42 trillion in assets, which may rank third in the U.S. depending on what other bank mergers are completed. It would have 10,761 branches in 39 states.

“Citi’s purchase was too cheap for the assets and operations involved,” said Jason Pride, research director at Haverford Trust Co. in Haverford, Pennsylvania. “It’s an excellent strategic deal for Wells Fargo given the geography of the branch network.”

To contact the reporters on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net; Josh Fineman in New York at jfineman@bloomberg.net.

Last Updated: October 4, 2008 00:00 EDT

Bush: Effects of financial bailout will take time

WACO, Texas (Reuters) – President George W. Bush said on Saturday that benefits from the recently passed financial bailout will take time to show up in the U.S. economy.

One day after Bush signed the $700 billion rescue package into law, he sought to assure the public that the government would be careful in implementing the legislation aimed at easing a credit crisis that has created turbulence in global financial markets.

“In addition to addressing the immediate needs of our financial system, this package will also help to spur America’s long-term economic growth,” Bush said in his weekly radio address.

Bush had pressed all week for Congress to approve the legislation, which was dealt a blow on Monday when the House of Representatives rejected it.

A modified version that raised limits on insured bank deposits received final congressional approval on Friday.

“While these efforts will be effective, they will also take time to implement,” Bush said.

“My administration will move as quickly as possible, but the benefits of this package will not all be felt immediately,” he said.

“The federal government will undertake this rescue plan at a careful and deliberate pace to ensure that your tax dollars are spent wisely.”

Bush, a Republican whose two terms in office will end in January after the U.S. presidential and congressional elections on November 4, was spending the weekend at his ranch in Crawford, Texas. 

Responding for the Democrats, Ohio Governor Ted Strickland said the loss of 760,000 U.S. jobs so far in 2008 showed that ordinary people were feeling the pinch of a slowing economy all year long, not just as financial market turbulence reached a crescendo in recent weeks.

 

“The crisis that hit Wall Street a couple weeks ago isn’t news to families on Main Street all across this country,” Strickland said.

 

He also criticized Republican presidential candidate John McCain‘s economic policies and championed those of Democratic contender Barack Obama.

 

John McCain just doesn’t get it. He hasn’t said one thing he’d do to make his economy look any different than George Bush’s economy,” Strickland said.

 

“Right now, the change we need is Barack Obama‘s plan to jumpstart our economy and move America forward.”

 

(Reporting by Tabassum Zakaria; Editing by John O’Callaghan)

Lack Of Confidence, Not Capital, Is Issue

By INVESTOR’S BUSINESS DAILY | Posted Monday, September 29, 2008 4:20 PM PT

Rescue: As the financial turbulence in the U.S. spreads, we’ve heard talk, especially from overseas pundits, of a “crisis of capitalism.” But what we really have is a crisis of confidence, and the sooner it’s solved, the better.


Read More: Economy | Business & Regulation


 

The $700 billion rescue for the troubled global financial system foundered on a 228-205 vote Monday as both sides in the political debate feared being blamed for passing an unpopular bill.

Polls show more than 50% of Americans oppose what the pollsters call a “bailout” (but what we prefer to call a rescue). Meanwhile, a USA Today poll found that nearly a third of Americans think we’re in a depression.

Concern about the financial system is fully justified. But excessive gloom is not. In the most recent quarter, GDP rose 2.1% year over year, 3.1% excluding housing. Hardly a depression. So let’s not talk ourselves into one.

We, too, have qualms about the rescue effort. Washington under Democrat-led Congresses wrote the rules that made this mess possible, and we have little confidence in their ability to get us out of it.

We have even less confidence after watching Democrats try to insert things in the plan — from money for the radical community group ACORN to new taxes on Wall Street — that made no sense at all. We’re glad Republicans opposed these and made the bill better.

But now it’s time for all to hold their noses and vote as soon as possible on a compromise. Both the public and the investment community need to be reassured their leaders aren’t dropping the ball.

Failure won’t just cost billions; it will cost trillions — in lost output, a shrunken job market, smaller retirements and lost productivity. Is this the future we’ll choose for ourselves? We hope not.

Republicans who voted against the bill did so for legitimate reasons. They don’t like government getting too involved in the economy, and this package permits just that. But they also don’t want to be blamed, as the minority party, if the deal turns sour.

That’s already happening. Yes, more than 60% of Republicans voted against the rescue bill, but so did 40% of Democrats. That said, it’s time for Republicans to take a deep breath, pull up their pants and help pass a bill. The nation’s confidence is riding on it.

Americans must be made to realize it’s not Wall Street that’s being “bailed out,” as the media keep putting it. It’s Main Street.

The reason President Bush and Treasury Secretary Paulson moved so quickly and boldly is they fear a “seizing up” of financial markets. That means banks will stop lending to one another. It means companies that finance in the money markets — as many medium- and large-size businesses do — will be frozen out.

No lending, no business. Here’s where Main Street comes in. Thousands and maybe millions will be laid off as commerce grinds to a halt. That’s a real threat. Republicans will never get a perfect bill out of this Congress; compromises must be made by both sides.

We hope the $700 billion requested of Congress is enough to cover the problem. But we also note that on Monday, without Congress’ interference, the Fed made $630 billion available to world financial markets. That brings this rescue to $1.4 trillion.

The ability of the nation’s and the world’s financial markets to finance this shouldn’t be questioned. As the nonpartisan Congressional Budget Office noted Monday, the cost of any eventual rescue plan would likely be “substantially smaller” than $700 billion because of asset resales. And, around the world, there’s some $70 trillion or so in investment capital, according to estimates.

We’re not short on capital, as we said, but on confidence. Passing a bill, even if flawed, would go a long way to restoring the latter.

 

Huge shifts ahead after financial titans fall (Wash Post)

Investment banks took ever-greater risks on esoteric investment

Employees leave the New York Stock Exchange on Friday after a tumultuous week. Stocks rallied Friday with the Dow rising 369 points.

Employees leave the New York Stock Exchange on Friday after a tumultuous week. Stocks rallied Friday with the Dow rising 369 points.

The credit crisis shaking the global economy is forcing a dramatic reconfiguration of Wall Street, where the financial industry in recent years has been driven to take ever-greater risks on increasingly esoteric investments.

The fragility of Wall Street’s architecture was exposed this week when two icons of investment banking and the world’s largest insurance company were fed into the maw as their competitors pushed for a historic government bailout to help salvage their own shaky businesses.

It is too early to tell whether Wall Street has truly been transformed by the series of upheavals or is simply witnessing a shuffling of its players. But as dealmakers and policymakers now sift through the debris, some shifts are already evident, both in the structure of high finance and the culture of those who practice it.

“The competitive landscape of finance is changing before our eyes and the losers are the investment banks,” said Roger Leeds, director of the Center for International Business and Public Policy at Johns Hopkins University. “What we’re having now is a fundamental correction, not only of the market but of the institutions themselves.”

Three out of five fallen
Three of the five free-standing investment banks have fallen. Bear Stearns was sold at a fire sale, 158-year-old Lehman Brothers went bankrupt and Merrill Lynch is being acquired by Bank of America. The surviving titans, Morgan Stanley and Goldman Sachs, remain under pressure and have been weighing their options.

As financial analysts survey the horizon, they see the emergence of a handful of giant, global firms that manage a wide range of business activities alongside several boutique advisory firms that court blue-chip clients. Newer players will remain on the scene, including hedge funds and private-equity firms — both lightly regulated entities that manage pools of money for wealthy investors and often buy large holdings in securities or sometimes directly invest in companies.

These changes could be accompanied by a cultural shift as the sheen comes off a longtime career destination for those with the brains, ambition and fortitude to place high-stakes wagers in return for outsize paydays.

Already, the shakeout is costing jobs and ruining fortunes. New York Mayor Michael Bloomberg estimates 40,000 workers in New York state, including many well beyond Wall Street, could lose their jobs as a result of the financial crisis.

Birth of a new system?
Whether these changes portend a permanent remaking of Wall Street remains uncertain. The answer could turn in part on whether the government’s rescue plan announced Friday succeeds. If the massive bailout fails, the destruction wrought on global financial markets could be staggering, ultimately clearing the way for the birth of a new system.

If the federal plan works, most of Wall Street could be spared and the business model that has powered it in recent years — centered on complex securities, tremendous borrowing and opaque dealings — could resume much as before. That is, unless the inevitable excesses are tamed by new regulation.

The fall of the investment bank was of its own making, analysts said. Starting in the 1980s, investment banks began straying from their traditional roles as intermediaries to mergers and acquisitions, investment advisers to corporations and individuals, traders of securities and portfolio managers for wealthy clients.

Driven by competition and the hunger for bigger profits, they began to aggressively push exotic products like asset-backed securities and other derivatives.

The investment banks not only sold these instruments to investors but also began purchasing them for the firms’ own accounts, using larger and larger amounts of borrowed money. The more risks investment bankers took, the more money they made. Internal controls were lax.

“I don’t think they had a good appreciation of the risks they were taking,” said Ray Hill, a finance professor at Emory University.

Balkanized oversight

Nor were government regulators fully aware of the gathering storm. They were hobbled by balkanized oversight and gaps in disclosure rules.

“The problem is transparency because regulators weren’t able to assess risks at investment banks in the way they are able to with commercial banks,” said Mark Gertler, an economics professor at New York University.

Two of the big five investment houses have landed in the arms of commercial banks with Bank of America’s purchase of Merrill and J.P. Morgan Chase’s takeover of Bear Stearns. Meanwhile, the British bank Barclays is acquiring choice bits of Lehman (a bankruptcy judge in New York yesterday approved the sale of nearly all Lehman’s assets), and Morgan Stanley is considering a merger with Wachovia, one of the country’s largest commercial banks.

With the merger of investment banks into commercial banks and leaders of both political parties pressing for new regulations to enhance transparency and control over banks’ investments, analysts say the new Wall Street could be a throwback to previous decades.

Investment and commercial banking was separated by law in 1933, when Congress passed the Glass-Steagall Act in response to a banking crisis that ushered in the Great Depression. By banning banks from selling stocks and bonds, the government aimed to end abuses that caused the collapse of thousands of banks across the country, wiping out the deposits of millions of customers who, at the time, did not have the benefit of federally guaranteed deposit insurance.

In recent decades U.S. banks, facing competition from foreign counterparts that had no restrictions barring them from owning brokerages, found loopholes in the law to open or acquire new business lines. In 1999, Congress conceded to the new reality, repealing the 1933 law with the passage of the Gramm-Leach-Bliley Act.

Commercial banks moved increasingly into the traditional domain of investment houses, in some cases acquiring them outright, such as the marquee purchase of Chase Manhattan Bank by J.P. Morgan in 2000. As investment banks faced heightened competition in their traditional business lines, these enterprises leveraged up with borrowed money and went looking for profits, betting on ever-riskier securities and derivatives. That is the trend the crisis of 2008 may reverse, at least for a time.

“It will tend to tone down some of the behaviors,” said Thomas Atteberry, a partner in First Pacific Advisors, who moved 5 percent of his company’s portfolio out of mortgage-related securities in 2006 in anticipation of a credit market meltdown.

‘Take risks to get paid’
But even as the formal line between different stripes of banks became blurry, investment and commercial banking remained divided by culture.

“Investment bankers get paid for performance, so they take risks to get paid,” said Sam Weiser, a former Citigroup employee who now is chief operating officer of the Chicago-based hedge fund Sellers Capital. “The prevailing goals of commercial bankers are to protect assets.”

Investment banks also tend to be more decentralized. “What makes Merrill’s investment banking model work is that they attract high-powered, entrepreneurial people who build businesses within a business, and commercial banks do not work that way,” said Hill, the Emory finance professor. “The question is: Does the culture of Merrill that made it so successful, is that going to survive in a huge organization?”

Traditionally, many investment bankers shunned their colleagues on the commercial side as stodgy and risk-averse. But now, as institutions meld so must the psychology, analysts say.

“There will be a merger of two ways of doing business,” said Seamus McMahon, a financial services partner at Booz & Co., a global management consulting firm. “The stand-alone investment bank may have been an accident of history. It had its run and it’s over or at least vastly diminished.”

The new management, analysts say, will emerge from the ranks of commercial bankers.

“That is the superior force, and that changes the nature of how things are approached,” said Len Rushfield, adjunct professor of finance at Pepperdine University. “The commercial banking world is built on relationships and continuity and not on high levels of incentive compensation.”

Future for compensation levels
The first test for the future of Wall Street banking could come over compensation levels: whether the investment banking stars who placed big bets and were awarded big salaries and bonuses in return continue to get paid.

When John Thain was still Merrill’s chief executive earlier this year, for example, he hired a legendary trading manager from Goldman Sachs named Thomas K. Montag. The tab, disclosed in a filing with the Securities and Exchange Commission: annual salary of $600,000, signing bonus of $39.4 million plus a promise to reimburse him for Goldman shares he forfeited for an estimated total of $50 million.

Analysts wonder if Bank of America Chairman Kenneth D. Lewis would agree to pay that amount.

If Wall Street loses its lure of big riches, it could have trouble attracting top talent.

“Most business students don’t go into investment banking because they love finance so much, but because it pays well,” said Francisco Cabeza, a student at the University of Pennsylvania’s Wharton School of Business who has a job offer at a private-equity firm in London.

Richard X. Bove, an analyst at Ladenburg Thalmann & Co., predicted that the crisis could spark a start-up boom on Wall Street, with hot demand for small boutique investment firms focused on one or two specialties. He said these firms could fill a niche as behemoths like Bank of America and Citigroup grow so large that they cannot serve all their corporate clients because of conflicts of interest.

World centers to benefit
Some analysts also see some of Wall Street’s influence being redistributed overseas as business migrates to other places with money. “New York will be the first among equals but absolutely not the place. Normally it was London and New York,” said McMahon, the management consultant. “I think we’ll see Abu Dhabi grow. Singapore. I think we’ll see India if they can get their regulations straightened out.”

Nor was the earthquake that rocked U.S. financial markets a tragedy for all involved. For those with strong enough balance sheets and money to spend, the recent weeks have presented a unique chance to buy. Bank of America’s Lewis was one notable winner.

Even Lewis posits that a chastened financial industry is entering a new phase.

“It seems unlikely that most companies would simply volunteer to pull back the reins on profit and growth in a hot market. But, in fact, that’s precisely what needs to happen,” said Lewis, according to a prepared text of a speech he gave Friday in Washington. “We must embrace the reality of what will be, at least in the short term, a smaller industry with a simpler approach to finance.”

Special Correspondent Heather Landy in New York and staff writer Robin Shulman contributed.

© 2008 The Washington Post Company

Financial Repression Dogs China (Cato Institute)

by James A. Dorn  James A. Dorn is a China specialist at the Cato Institute and coeditor of China’s Future: Constructive Partner or Emerging Threat?  Added to cato.org on October 10, 2006  This article appeared in the Australian Financial Review on October 3, 2006.

Since the start of the reform movement in late 1978, China’s leaders have declared that their top priority should be to achieve robust economic growth and improve the standard of living. They chose this path of ”peaceful development” to minimise the likelihood of civil and economic unrest that dominated the Mao regime. China’s accession to the World Trade Organisation in December 2001 was evidence of the commitment to liberalise trade and the financial sector.

Progress has been made since 2001, but much remains to be done. It is clear that opening capital markets without reforming state-owned banks and without maintaining monetary stability could lead to substantial capital flight and exacerbate the problem of non-performing loans. Moreover, there must be an effective legal system to protect newly acquired private property rights.

If Beijing chooses to keep the yuan, also known as the renminbi (RMB), undervalued and maintains capital controls, China will continue to experience stop-go monetary policy as the domestic money supply responds to the balance of payments and the People’s Bank of China tries to sterilise capital inflows–that is, withdraw excess base money.

The State Council announced earlier this year that it wanted to achieve an external balance in 2006, but China’s overall trade surplus will match or exceed last year’s historic high of $US102 billion. Likewise, the PBC constantly says its goal is to pursue a ”sound monetary policy” and ”keep the RMB exchange rate basically stable at an adaptive and equilibrium level”. Yet, money and credit continue to grow at rates inconsistent with long-run price stability, and the exchange rate is still pegged at a disequilibrium level.

In a May 23, 2006 press release, the PBC recommended ”better coordination among the various macro-policies, transformation of government functions, and institutional innovation”. It also promised that the ”foreign exchange system reform will be deepened”, and committed itself to ”preserve the continuity and stability of monetary policy, and promote appropriate growth of money and credit, in order to provide a stable monetary and financial environment for economic restructuring”.

Those objectives are laudable, but the rhetoric has failed to match the reality. In its monetary policy report for 2003, the PBC said it would maintain the yuan exchange rate ”at an adaptive and equilibrium level”. Yet, the yuan/dollar rate remained fixed at 8.28 from 1994 until July 21, 2005, when it was revalued by 2.1 per cent, and has only appreciated slightly since then to about 7.98 yuan.

As a result, China’s foreign exchange reserves have more than doubled since 2003. Clearly, financial repression is the hallmark of China’s state-directed financial regime. If China is to carry out its plans for financial liberalisation and have a flexible exchange rate regime, the PBC must have greater independence.

Mohametan-Arab Slave Traders

Mohametan-Arab Trans Saharan Negro slave trade worse than White Christian Europe and America’s [TransAtlantic]

http://www.youtube.com/watch?v=zMGjJJhHvqY&NR=1

Sudan – where the Arab pop meets the African pop – Arabs are predominantly nomadic so they tend to roam…

http://www.youtube.com/watch?v=gGdpwrqH7Jo

Mauritania, a Muslim nation in N Africa, just passed anti slave laws (they’ve been holding black African slaves for over 1400 years in various parts of the Middle East and Africa (Muslims since the seventh century). And liberals have the gall to blame the English and English descended Americans, among other European Christian societies, for the horrors of slavery! Good God.

http://www.youtube.com/watch?v=_vZIUR0kSG8

Good News on the Terror Funding Libel Front

 

There was good news on freedom of speech front yesterday, as the Wall Street Journal won a complete victory in a libel case involving terror finance issues. The lead reporter, the venerable Glenn Simpson, is now 4-0 since 9/11 in these types of cases.

While the victory is a testament to his tenacity and care, it is also a testament to the courage of the WSJ in willing to fight and win these cases. Most are lost simply because the will to fight has gone out of so much of the media, who would often rather settle than protect the truth.

A brief summary: The Tribunel Correctionel in Paris issued a ruling in Ancienne Bauche SA v The Wall Street Journal Europe. The Journal, editor Michael Williams and reporters Glenn Simpson and Benoit Faucon, were all acquitted on charges of felony and civil libel.

The other WSJ cases are: One UK case was lost at trial but overturned by the House of Lords (the ground-breaking and precedent-setting case of Mohammed Jameel); one UK case was thrown out (Yousef Jameel); one UK case was dropped by the plaintiff (Al-Rajhi), and the Bauche case was won at trial.

The cases seem to indicate that careful, fair and accurate reporting on terrorism financing can withstand legal challenge even in Europe, where plaintiffs are heavily advantaged in libel proceedings. The catch: You have to be willing and financially able to defend yourself. To all our benefit, the WSJ had the will.

Bauche, a Paris sugar-trading concern which did business with a trader in Gaza accused by the Israelis of backing terrorism, alleged libel over a July 2007 report regarding the use of commodities to transfer value from an Islamic charity in France to Islamic charities in the territories.

Bauche arranged shipments of sugar to Gaza financed by a charity in Paris called the Comite de Bienfaisance et Secours aux Palestiniens, which is legal in France but is banned by the U.S. for allegedly financing terror. The group won a previous libel case against the Simon Weisenthal Center (currently on appeal).

At a trial at the Palais de Justice in Paris on April 1st, the two reporters testified for about five hours regarding their work on the story, which took six months. Key to the defense was that the article made clear there was no reason to believe that Bauche had knowingly or intentionally supported terrorism.

At the end of the April 1st trial, the public prosecutor made some non-binding observations. She called the article “a serious in-depth investigation,” which lacked invective or innuendo and contained “just stated facts.” The journalist testimony regarding efforts to confirm the story in various places “shows they are serious and their rigour. They have multiple sources. Their sources are checked.” So, she said, “I don’t see how to say there is no good faith.”

In their ruling today, the judges found that the story contained only one possible inaccuracy, which involved whether one of the sugar deals was blocked by the French police (as WSJ stated) or simply canceled by the Gaza trader after intervention by the Israeli police (as Bauche alleged). The potential inaccuracy “is not of the kind that would make the article defamatory as it matters little in what circumstances the transaction failed between one version and the other,” the judges found.

“No impropriety, either intentionally or by negligence, is therefore alleged by [WSJ] against the plaintiff, except to consider, which the tribunal would not admit, that every commercial transaction with Palestinian partners is a priori suspicious.”

In other words, the only thing the WSJ reported was that Bauche had done business with Palestinians, and there’s no crime imputed in that.

Concluded the judges: “The facts reported as to the Bauche company are not damaging to its honor and reputation. The offense of public defamation against an individual is therefore not constituted. The defendants are, as a consequence, freed from prosecution.”

As all serious journalists should be.