AOL Falls on First Trading Day After Spinoff From Time Warner

AOL Inc., the Internet company spun off from Time Warner Inc., fell on its first day of trading after the separation.

AOL, based in New York, declined 52 cents, or 2.2 percent, to $23.15 at 9:35 a.m. in New York Stock Exchange composite trading. The stock, passed over for the Standard & Poor’s 500 Index, is included in the S&P MidCap 400 Index.

Time Warner, the New York-based owner of the Warner Bros. studios and CNN, spun off AOL nine years after their $124 billion combination triggered record losses. An Internet pioneer founded in 1985, AOL now faces declines in subscribers to its online access service and in advertising revenue.

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China Said to Plan 8 Trillion Yuan New Loans Cap for Next Year

China’s banking regulator plans to slow new lending to between 7 trillion yuan ($1 trillion) and 8 trillion yuan next year, a person with knowledge of the matter said.

The China Banking Regulatory Commission’s recommended range compares with 8.9 trillion yuan of new local-currency loans in the first 10 months of this year. The person spoke on condition of anonymity because he isn’t authorized to discuss the matter publicly.

China is trying to ensure credit flow is enough to support an economic recovery while limiting the risk that this year’s credit boom leads to bad loans and asset bubbles. The country will maintain a “moderately” loose monetary policy to keep economic growth from slowing, according to a statement from the annual central economic work conference that ended Dec. 7.

The government’s 4 trillion yuan stimulus package and record bank lending helped ailing exporters refinance debt and provided funding for an acceleration in fixed-asset investment, reigniting economic growth that had fallen to the lowest in more than a decade.

China’s credit boom may erode the quality of bank balance sheets as the jump in lending was “unavoidably” linked to an easing of credit standards, the Bank for International Settlements said in a quarterly report published this month.

A debt-fueled increase in investments “may imply additional demand for loans in the future, to complete the underlying project,” the BIS said. Should China tighten monetary policy, that could “leave projects incomplete and lead to a build-up of bad loans.”

The CBRC’s loan target requires approval from the central government, the person said. The 7 trillion yuan to 8 trillion yuan range is similar to one proposed by Tang Shuangning, former vice chairman of the regulator, on Nov. 21.

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Dubai Company Bonds Dive as Swaps Show Default Risk

The tumble in bonds of Dubai’s state-controlled companies to record lows signals growing concern more borrowers will fall behind on debt payments as Dubai World seeks to restructure $26 billion of obligations.

“We are concerned that it’s just not Dubai World that has issues,” said Oliver Bell, the head of Middle East and Africa investment at Pictet Asset Management in London, which has $120 billion under management. “The health of other government- related entities is in question.”

Dubai World property unit Nakheel PJSC’s $3.52 billion of Islamic bonds due Dec. 14 dropped more than 10 percent yesterday to 46.5 cents on the dollar, according to Citigroup Inc. Bonds sold by DIFC Investments and Dubai Holdings Commercial sank as low as 44.5 cents on the dollar after Moody’s Investors Service cut the credit ratings of six state- run companies. A jump in the cost of DP World Ltd.’s credit- default swaps implied a 33 percent risk that the port operator will renege on debt.

Dubai World, a government holding company that owns 80 percent of DP World, said last week it’s in talks with banks to reorganize debt after requesting a creditor “standstill” on Nov. 25. Debt restructurings may almost double to $46.7 billion in the “near term” as more of Dubai’s businesses need help paying debt, according to Morgan Stanley.

“The ownership structure in Dubai is like spaghetti,” Pictet’s Bell said. “We’re in the process of sorting that spaghetti out.”

Nakheel Bonds

Holders of Nakheel’s bonds are scheduled to take part in a conference call today with trustee Deutsche Bank AG, said two people invited to participate who declined to be identified because the discussion is private.

Nakheel had a first-half loss of 13.4 billion dirhams ($3.65 billion) as revenue fell and it wrote down the value of land and property, according to a document obtained by Bloomberg News after the Dubai market closed. Dubai’s DFM General Index plunged 6.1 percent yesterday to 1,638.05, erasing almost all of this year’s gains.

While Dubai’s government owns 100 percent of Dubai World, it hasn’t guaranteed the company’s debt and creditors must help it restructure, Abdulrahman Al Saleh, director general of Dubai’s Department of Finance, said Nov. 30.

Dubai Holding LLC is most at risk of being “next in line” in restructuring its debt, Barclays Plc said.

‘Orderly Restructuring’

“The market is pricing in a swift and orderly restructuring with no lasting effect on Dubai Inc.,” Barclays said in a research note yesterday. “Based on our recent experience, we would argue that there is little chance of this materializing, and at this point, risk is skewed to the downside.”

Dubai companies’ ability to tap debt markets will be “severely impaired,” Barclays said.

Dubai World’s Istithmar unit lost control of the W New York Union Square hotel in a foreclosure auction after investing in the property near the top of the real estate market. LEM, an affiliate of Lubert-Adler Real Estate Funds, won an auction for the mezzanine debt on the luxury Manhattan hotel, which was purchased by Istithmar in 2006 for $285 million. LEM bid $2 million for the debt.

Dubai Group LLC, an investment company owned by the emirate’s ruler, Sheikh Mohammed Bin Rashid al-Maktoum, is seeking to sell a $91 million stake in EFG-Hermes Holding SAE, the biggest publicly traded Arab investment bank, cutting its stake to less than 20 percent from 25 percent, two people familiar with the sale said yesterday.

$2 Billion Acceleration

Dubai Financial, a unit of Dubai Group, is offering about 19.1 million shares at 25 Egyptian pounds ($4.60) to 26 pounds each, said one of the people, who declined to be identified before a formal announcement. That’s a discount of as much as 10.8 percent to yesterday’s closing price.

EFG shares rose 0.8 percent to 28.03 pounds in Cairo trading yesterday and are up 61 percent this year. A spokeswoman for Dubai Group didn’t return calls to her mobile phone. EFG Chief Executive Officer Yasser El Mallawany wasn’t available to comment.

Moody’s cut Dubai Electricity & Water Authority, known as Dewa, yesterday to Ba2, two levels below investment grade, from Baa2. Moody’s said Dewa was downgraded in part because an accelerated payment clause was triggered on $2 billion of debt sold through its Cayman Islands-based Thor Asset Purchase Ltd.

‘Liquidity Pressure’

The acceleration creates the “potential for liquidity pressure,” Moody’s said. The Financial Times reported that Fitch Ratings’s lowering of Thor Asset Purchase to BBB-, the lowest investment-grade level, on Nov. 30 triggered the clause.

DP World, the Middle East’s biggest port operator, was cut two levels by Moody’s yesterday to Ba1, one step below investment grade, from Baa2. Emaar Properties PJSC, the United Arab Emirates’ biggest developer, was lowered two levels to B1 and business park operator Jebel Ali Free Zone was pushed down three levels to B1.

“No meaningful government support should be assumed for any entity that is not directly part of or formally guaranteed by the government,” Moody’s analysts Philipp Lotter and David Staples wrote yesterday in an e-mailed statement.

A spokesperson for Emaar wasn’t available to comment when contacted after business hours. A Dubai World spokesman declined to comment on behalf of Dubai Holding and DP World. Spokespeople for Dubai International Financial Centre, DIFC Investment’s parent, didn’t answer calls to mobile phones after business hours.

DP World

Dubai Holding, Borse Dubai Ltd. and Dubai Sukuk Center Ltd. may join Dubai World in restructuring debt, Morgan Stanley analysts Mohamed W. Jaber and Paolo Batori wrote in a report Dec. 7, in which they outlined three scenarios for debt re- workings. The first includes only Dubai World’s $26 billion of debt. The second climbs to $34.8 billion by adding debt from Dubai Holding, while the third totals $46.7 billion by including obligations from other companies.

Credit-default swaps on DP World rose 34.5 basis points to 592.5, implying a 33 percent chance of default over five years with an assumed recovery rate of 25 percent, according to CMA Datavision prices. That’s an increase from a 29 percent probability Dec. 7, and a 21 percent risk of default on Nov. 19.

Sukuk

Credit-default swaps on Dubai’s government debt jumped 42 basis points yesterday to a week-high 542, according to CMA Datavision prices at 5 p.m. in London. That price implies a 31 percent probability of Dubai default, up from 29 percent on Dec. 7. The swaps traded as high as 632 basis points Nov. 27, implying a 36 percent chance of default, CMA prices show.

The contracts, which fall as perceptions of credit quality improve, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A basis point is 0.01 percentage point and is equivalent to $1,000 a year on a contract protecting $10 million of debt.

A $1.25 billion, 2012 Islamic bond from DIFC Investments, the company controlled by state-owned Dubai International Financial Center, dropped almost 9 percent to 51.5 cents on the dollar, the lowest price since Bloomberg began tracking the data in November 2008. The company’s rating was cut four levels by Moody’s to B2, five levels below investment grade.

Islamic bonds, known as sukuk, are governed by Shariah laws barring investors from profiting from the exchange of money.

Dubai Holding Commercial Operations’ floating-rate, dollar- denominated bond due 2012 slumped 16 percent to a record-low 44.5 cents on the dollar after trading as high as 86 cents in October. The unit of Dubai Holding, owned by Sheikh Mohammed, was lowered to four levels below investment grade at B1 by Moody’s.

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Senate Democrats Said to Agree to Drop Health ‘Public Option’

Senate Democrats reached an agreement to drop plans to establish a government-run health insurance program, a person familiar with the negotiations said. They opted instead to set up a program that would let private insurers sell coverage under the oversight of the U.S. Office of Personnel Management, the person said.

The agreement was negotiated by 10 Senate Democrats seeking an alternative to the government-run program.

Jim Manley, a spokesman for Senate Majority Leader Harry Reid, said that the leader sent “several options” to the Congressional Budget Office, including the proposal by the group of senators to allow the federal agency to administer national insurance plans. He said that some might see that as another form of the public option.

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Americans Grow More Pessimistic on Economy, Nation’s Direction

Americans have grown gloomier about both the economy and the nation’s direction over the past three months even as the U.S. shows signs of moving from recession to recovery.

Almost half the people now feel less financially secure than when President Barack Obama took office in January, a Bloomberg National Poll shows.

Those concerns have put consumers in a miserly mood as they head to the mall for holiday shopping, with half the country planning to spend less on gifts than last year and few buyers willing to run up credit-card debt for Christmas.

“The recession may be over, but the administration seems to be losing the battle when it comes to winning the hearts and minds of Americans,” says Chris Rupkey, chief financial economist for Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “This is important because the spending of consumers is the main factor that will turn the economic recovery into a self- sustaining one.”

Obama yesterday addressed anxiety over the economy with a speech proposing new spending on the nation’s transportation system, tax credits to spur hiring by small businesses and incentives to make homes more energy efficient.

Unemployment in November stood at 10 percent, a drop from 10.2 percent in October yet still the second month in a row the figure stood in double digits.

No. 1 Concern

The economy is the country’s top concern, with persistently high unemployment the greatest threat the public sees. Eight of 10 Americans rate joblessness a high risk to the economy in the next two years, outranking the federal budget deficit, which is cited by 7 of 10. An increase in taxes is named as a high risk by almost 6 of 10.

Fewer than 1 in 3 Americans think the economy will improve in the next six months. They are pessimistic that the government will succeed in reducing unemployment or lowering the budget deficit.

A year into Obama’s presidency, only 32 percent of poll respondents believe the country is headed in the right direction, down from 40 percent who said so in September.

The mood among members of Obama’s own Democratic Party has shifted most dramatically: While Democrats remain the most positive, the proportion saying the country is on the right track dropped to 58 percent from 71 percent in September. Among independents, 26 percent say the country is on the right track, down from 29 percent in September.

The poll of 1,000 U.S. adults was conducted Dec. 3-7 by Selzer & Co., a Des Moines, Iowa-based firm. The margin of error is plus or minus 3.1 percentage points. The poll includes 714 likely voters in the 2010 general election, the margin of error for questions based on likely voters is plus or minus 3.7 percentage points.

Skeptical Over Stimulus

The country has grown increasingly skeptical of the centerpiece of Obama’s economic agenda, the $787 billion economic-stimulus package, with 60 percent of Americans saying it hasn’t helped the economy, up from 49 percent who said that three months ago.

Michele Crawford, 37, a Las Vegas health-care worker who identified herself as a Democrat, says the stimulus plan put too much money in the hands of corporations rather than sending it directly to families through tax cuts.

“I think that was the wrong approach,” Crawford says.

For now, former President George W. Bush continues to get most of the blame for the hard economic times. Six of 10 poll respondents say the economic difficulties Obama confronts were mostly inherited.

Blaming Bernanke, Geithner

Still, there are signs the economic doldrums are tarnishing current officeholders.

Americans have turned against the administration’s leading economic spokesman, Treasury Secretary Timothy Geithner, with 33 percent viewing him unfavorably against 26 percent with a favorable view. As recently as September, a slim plurality viewed Geithner favorably.

Federal Reserve Chairman Ben S. Bernanke, another public face of economic policy though he is independent of the White House, also declined in popularity. A third of the country views Bernanke favorably, down from 41 percent in September.

Bernanke’s standing fell even though the Fed as an institution improved, with 50 percent holding a favorable opinion versus 44 percent three months ago.

Four out of 10 respondents have no opinion on either Geithner or Bernanke.

Some of the malaise may stem from middle-class households bracing for the expectation of greater burdens ahead, says J. Ann Selzer, president of Selzer & Co. Almost 9 in 10 poll respondents say they believe middle-class Americans will have to make sacrifices to decrease the deficit.

‘We’re Under Water’

When asked about changes in measures of personal economic well-being -- household income, job security, quality of health care, retirement savings and home equity -- the responses changed little from September. Only 1 in 3 Americans indicated an improvement in any category.

For many consumers, that uneasiness means a shorter Christmas shopping list.

Cindy Gamet, 54, an environmental project manager who lives in Greeley, Colorado, says her family’s prolonged encounter with financial insecurity is leading her to cut back further this holiday season.

“The economy has been on the decline for some time,” Gamet says. “Our major investment, which was our home, it went south. So now we’re under water.”

‘We’re Spenders’

Though it goes against her inclination -- “we’re spenders,” Gamet says -- she and her husband plan to limit gifts for their grandchildren and forgo presents to their adult children.

“We’re going to do what we can for the kids, but the adults are just going to have to understand,” Gamet says.

Just 8 percent of people plan to spend more on gifts this year than they did last year, while 47 percent say they will spend less.

The country is especially leery of taking on new debt for the holidays, with 82 percent of respondents saying they plan to pay for Christmas gifts solely from cash on hand or savings.

The Grinch may even have come to the Internet, where commerce has been shifting in recent years. Only a quarter of respondents -- 27 percent -- say they will buy more gifts over the Web this year, while 42 percent say they will buy fewer and 22 percent say they will buy nothing at all.

To see the methodology and exact wording of the poll questions, click on the attachment tab at the top of the story.

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This Decade to Be Warmest on Record; 2009 Won’t Be Hottest Year

This decade is set to be the warmest on record though 2009 won’t be the hottest year, meteorologists said today, lending fuel to both skeptics and supporters of a global warming agreement being negotiated in Copenhagen.

Data from the U.K. Met Office and the United Nations’ World Meteorological Organization show this year will be the fifth- warmest, with 1998 holding the record. The global average temperature in 2009 was 0.44 degrees Celsius above the 1961 through 1990 average temperature of 14 degrees (57 degrees Fahrenheit), the WMO said today in the Danish capital.

“This tells us that global warming is still rising,” Vicky Pope, head of climate change advice at the Met Office, said in a telephone interview in Copenhagen, where two weeks of United Nations talks began yesterday to draft a climate deal. “Greenhouse gases continue to increase, and it’s clearly important we reach an agreement in Copenhagen to reduce them.”

Delegates in Copenhagen aim to reach an agreement to reduce output of the greenhouse gases that the UN in 2007 said was “very likely” the main cause of “unequivocal” global warming. The warmest year in the Met Office series, one of three used by the UN, is 1998.

Critics of climate forecasting have seized on the fact that the warmest year occurred 11 years ago, saying that natural factors such as volcanic ash, changing ocean currents and the variable intensity of sun rays are more significant factors that heat-trapping emissions from power plants and factories.

The failure of temperatures to rise above 1998 levels while emissions of carbon dioxide have gone up is an indication the gas is just “one factor out of hundreds” that determine the Earth’s temperature, according to former U.S. Senate Environment and Public Works Committee staff member Marc Morano.

‘Natural Variability’

“You can’t distinguish rising CO2 from natural variability,” Morano said in a telephone interview from Washington. “To sit there and say that CO2 is the sole driving factor as Al Gore and many others have tried to do is no longer scientifically tenable.”

The warmest year remains 1998, according to the data series. That’s because that year had a strong El Nino, a periodic warming of equatorial waters in the eastern Pacific that affects the world climate, Pope said. Nine years from the past decade follow 1998 on the list, and the Met Office said it expected temperatures to keep rising as a result of greenhouse gas emissions.

“We would expect roughly half the years from 2010 to 2020 to be warmer than 1998,” said Pope. She said given the current rising emissions trend, “it’s very challenging to constrain temperature rises to 2 degrees Celsius,” a key goal for the 27- nation European Union and other major emitters including the U.S., China and India.

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Most Asian Stocks Drop on Bernanke, Japan Stimulus; Yen Gains

Most Asian stocks fell after Federal Reserve Chairman Ben S. Bernanke said the U.S. economy faces “formidable headwinds,” and Japan unveiled an $81 billion stimulus program.

The Nikkei 225 dropped 0.49 percent at 2:40 p.m. Tokyo time and the MSCI Asia Pacific Index gained 0.12 percent to 120.73. Malaysia’s ringgit gained 0.3 percent to 3.3877 per dollar and South Korea’s won traded near a 14-month high at 1,153.65.

While Bernanke said yesterday that the U.S. recovery would be restrained by a weak labor market and tight credit, Asian reports showed the region continues to emerge from the first global recession since World War II. Australian business confidence climbed to the highest level in more than seven years. Taiwan’s exports leapt 19.4 percent and Japan’s current-account surplus soared 43 percent from a year earlier.

“Generally, Bernanke was dovish,” said Gerrard Katz, head of currency trading at Standard Chartered Plc in Hong Kong. “If the data from the U.S. continues to improve, it’s going to be good for exports and I’d expect further pressure on the dollar against Asian currencies.”

U.S. index futures were little changed, with Standard & Poor’s 500 Index futures 0.2 percent higher. The S&P 500 erased gains yesterday as investors speculated the economy isn’t growing fast enough to shield banks from further losses.

“The economy confronts some formidable headwinds that seem likely to keep the pace of expansion moderate,” Bernanke said in a speech to the Economic Club of Washington.

Stocks Lower

About five stocks declined for every three that rose in the MSCI Asia index. Shipping lines declined the most among the 33 industry groups in the Topix after the Baltic Dry Index, a benchmark for commodity cargo rates, dropped for the first time in four days yesterday in London.

Nippon Yusen K.K. lost 6 percent to 266 yen, while Kawasaki Kisen Kaisha Ltd. retreated 5.4 percent to 264 yen, the two biggest declines in the Nikkei 225. Mitsui O.S.K. Lines Ltd., the operator of the world’s largest merchant fleet, slipped 4.1 percent to 494 yen.

China’s Shanghai Composite Index declined 1.3 percent, the most since Nov. 27. China Shenhua Energy Co. and Zijin Mining Group Co., the nation’s biggest producers of coal and gold, retreated more than 1 percent. Jiangxi Copper Co., China’s biggest producer of the metal, sank 1.5 percent in Shanghai.

“Commodity stocks need a break now as the pick-up in demand amid the economic recovery has already been priced in,” said Chen Wenzhao, a strategist at China Merchants Securities Co. in Shanghai.

The yen rose for a second day against the euro, climbing to 132.00 in Tokyo from 132.71 yesterday in New York and to 88.94 per dollar from 89.51.

Japan Plan

Japan’s 7.2 trillion yen spending plan includes 3.5 trillion yen ($39.3 billion) to help regional economies, 600 billion for employment and 800 billion for environmental projects. The government is battling falling prices and the surging yen, which strengthened 17 percent from its low in March.

Asian bonds rallied. The yield on South Korea’s 5 percent note due September 2014 fell five basis points to 4.71 percent, according to Korea Stock Exchange. The yield on the Philippine government’s 10-year bond fell 10 basis points to 7.65 percent.

Taiwan’s exports jumped from a year earlier last month, compared with a 4.7 percent decline in October, the Ministry of Finance said in Taipei late yesterday. Japan’s current-account surplus rose to 1.4 trillion yen in October as a decline in exports eased, the Ministry of Finance said in Tokyo today.

A business sentiment index in Australia climbed 3 points to 19, the most since May 2002, according to a National Australia Bank Ltd. survey of more than 540 companies questioned between Nov. 23 and Nov. 27, and released in Sydney today. A figure above zero shows optimists outnumber pessimists.

Recovery Under Way

“We still remain confident that the recovery’s under way,” said Matt Riordan, who helps manage $5.1 billion at Paradice Investment Management in Sydney. “The companies we’re talking to are seeing signs of things improving. The big question from where we sit now is the speed by which it happens.”

Commodities from gold and copper to corn gained as the Dollar Index that measures the currency against six major trading partners fell 0.1 percent, dropping for a second day. Gold increased for the first time in four days, rising 0.7 percent to $1,166.70 an ounce. That was still down 4.9 percent from its record $1,226.56 an ounce on Dec. 3.

Copper, used in homes and cars, increased 0.7 percent to $7,047 a metric ton on the London Metal Exchange. Corn was up 1 percent at $3.8750 a bushel.

Crude oil rose for the first time in five days, gaining as much as 0.6 percent to $74.39 a barrel in New York as the dollar weakened and some investors took the view a decline below $75 made it an attractive investment.

Oil recouped some of yesterday’s 2 percent loss, made after Bernanke’s comments on the pace of the U.S. economic recovery raised concern fuel demand won’t recover rapidly in the world’s largest energy user.

“Markets had for a while started to get used to the $75 to $80 a barrel range for oil, and the move to the lower part of that range is probably attracting some buying,” David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney, said by telephone.

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Treasury Said to Link Citigroup Sale to TARP Payback

The U.S. Treasury Department aims to hold off on selling its 34 percent stake in Citigroup Inc. until the bank and regulators agree on a broader plan to repay all obligations remaining from last year’s $45 billion government bailout, a person close to the department said.

Treasury officials are concerned that a sale now of its 7.7 billion shares in the New York-based bank may weaken investor demand should Citigroup subsequently be required to raise capital as a condition of exiting the bailout program, said the person, who declined to be identified because the government hasn’t publicly discussed the plans.

Citigroup executives have pressed Treasury for at least three months to sell the stake as a first step toward leaving the bailout program, according to people familiar with the matter. They want to escape government-imposed pay limits that may make the company vulnerable to employee-poaching by unfettered rivals. Bank of America Corp., the only other large U.S. bank under pay limits, last week announced a plan to exit the program.

“This should be well thought-out for the benefit of all constituencies, and in this case that includes shareholders, the government and the taxpayers,” said Dennis Santiago, chief executive officer of analysis firm Institutional Risk Analytics in Torrance, California. “Just because Bank of America goes doesn’t mean you have to rush Citigroup.”

Kuwaiti Sale

The Kuwait Investment Authority, the Gulf nation’s sovereign-wealth fund, said yesterday it sold its stake in Citigroup for $4.1 billion, earning a $1.1 billion profit.

Citigroup shares fell to $4.00 in European trading today, down 1.5 percent from their $4.06 close in New York trading on Dec. 4. The shares have tumbled 47 percent this year, paring Citigroup’s market value to about $92 billion.

The government is trying to wind down bailout programs extended as financial markets convulsed late last year. Treasury Secretary Timothy Geithner said in a Dec. 4 interview that most taxpayer money injected into banks through the Troubled Asset Relief Program will eventually be recovered.

While holding off on a sale of its Citigroup stake, the Treasury has pushed regulators behind the scenes to accelerate discussions with all large banks about their plans to exit TARP, the person close to the department said.

Commercial Property

Mounting defaults on commercial property may keep regional lenders from repaying bailout funds until at least 2011. Unpaid loans on malls, hotels, apartments and home developments stood at a 16-year high of 3.4 percent in the third quarter and may reach 5.3 percent in two years, according to Real Estate Econometrics LLC, a property research firm in New York.

That’s a bigger threat to regional banks, which are almost four times more concentrated in commercial property loans than the nation’s biggest lenders, according to data compiled by Bloomberg on bailout recipients. The concentration makes regulators less likely to let regional lenders like Synovus Financial Corp. and Zions Bancorporation leave the Troubled Asset Relief Program, analysts said.

In November, the Federal Reserve asked nine of the biggest U.S. banks to submit plans to repay the government’s capital injections. In testimony last week before the Senate Banking Committee in Washington, Federal Reserve Chairman Ben S. Bernanke said Bank of America got approval to exit TARP only after regulators “felt it was safe and reasonable and appropriate.”

Charlotte, North Carolina-based Bank of America, the biggest U.S. lender, agreed to raise at least $18.8 billion of capital, according to a Dec. 2 press release. It said later that it had raised $19.3 billion.

Free to Sell

JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, all based in New York, repaid their bailout funds in June. San Francisco-based Wells Fargo & Co., which still has $25 billion of TARP money, isn’t subject to pay limits because it never needed a second helping of bailout funds, as Citigroup and Bank of America did.

In October, Citigroup CEO Vikram Pandit, 52, said he was “focused on repaying TARP as soon as possible.” He said, “We’re going to do so in consultation with the government and our regulators.” At least twice since September, he has said the Treasury is free to sell its shares at any time.

The Treasury got the shares in September, when $25 billion of the bailout funds were converted into common stock. The shares are now worth $31.2 billion, based on the closing price on Dec. 4, giving Treasury a paper profit of more than $6 billion.

Kuwait, Singapore

The Kuwait investment fund that got about 900 million shares in a related preferred-stock conversion last year yesterday converted them before selling the stock. In September, a Singapore government fund that got about 2.1 billion shares in the conversion said it had used open-market sales to reduce the stake to less than 1.14 billion shares.

The U.S. government doesn’t want to be viewed as trying to time the market, so part of Citigroup’s TARP exit plan would include a formal process for disposing of the common stake, the person said. Even if Treasury sold now at a profit, it might be second-guessed later if the shares rose further, the person close to the department said.

“We don’t comment on individual banks but are committed to maximizing returns on bank investments and restoring stability at the least possible cost to taxpayer,” Treasury spokesman Andrew Williams said.

Citigroup spokesman Jon Diat declined to comment on the Treasury’s plans or the bank’s timeline for repaying TARP funds.

Asset Guarantees

Citigroup’s discussions with banking regulators over a TARP exit may gain momentum now that Bank of America’s plan is set and regulators focus on Citigroup, the person close to Treasury said. The bank’s regulators, which include the Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., haven’t commented on when the bank might be allowed to exit.

Citigroup still has $20 billion in bailout funds along with guarantees from the Treasury, FDIC and Federal Reserve on $301 billion of devalued securities, mortgages, auto loans, commercial real estate and other assets. Citigroup paid $7 billion in advance for the guarantees, which last five to 10 years, depending on the type of underlying assets.

The lender’s exit plan may be more complicated than Bank of America’s because the government must decide how to handle the Treasury’s common stake and what to do about the asset guarantees, the person close to the department said.

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Obama Pressed by Companies to Back 10-Year C02 Peak

Now that U.S. President Barack Obama has given fresh impetus to climate-change negotiations in Copenhagen, corporate leaders supporting an agreement to control greenhouse-gas emissions are pressing anew for action.

Two weeks of talks among 192 nations open today in the Danish capital, and Obama’s decision to show up on the final day helps ensure “an ambitious outcome,” United Nations climate chief Yvo de Boer told reporters in Copenhagen yesterday.

The International Energy Agency, a trade group for the U.S. and 27 more oil-consuming nations, and companies from Allianz SE to Coca-Cola Co. say envoys can agree to halt the growth of emissions within 10 years and keep global temperatures from rising by more than 2 degrees Celsius (3.6 degrees Fahrenheit).

“We need a signal at Copenhagen to cap emissions by 2020 and a 2-degree scenario,” Fatih Birol, chief economist for the agency, said in a phone interview. “All the measures we suggest will bring energy security, because we’ll use less oil” and more clean energy, said Birol, who plans to visit Copenhagen for the second of the two weeks of talks.

World leaders already have said the talks will fail to reach the original goal of completing a treaty, a deadline moved to next year. While Obama and de Boer didn’t specify how much can be achieved in Copenhagen, company executives and lobbyists say they want quantifiable goals that have been sought for years by environmentalists and scientific groups.

GE, HSBC, Nike

Supporters of the temperature and 2020 targets include 850 business leaders who signed this year what’s called the Copenhagen communiqué, a project by the University of Cambridge in the U.K. Signatories include General Electric Co. Chief Executive Officer Jeffrey Immelt, Coca-Cola CEO Muhtar Kent, BP Plc CEO Tony Hayward, HSBC Holdings Plc Chairman Stephen Green, Nestle SA CEO Paul Bulcke and Nike Inc. CEO Mark Parker.

Executives from many of these companies are joining the 15,000 delegates who will come to the city’s Bella convention center today for talks through Dec. 18.

White House press secretary Robert Gibbs announced on Dec. 4 that Obama will show up for the conclusion of the talks, when most of the 100 or so heads of government will arrive and help guide final decisions. Earlier Obama had planned to stop by on Dec. 9. “There is progress toward a meaningful Copenhagen accord,” Gibbs said.

Obama found after speaking with UK Prime Minister Gordon Brown and other leaders that there’s an “emerging consensus” to provide $10 billion a year by 2012 to help poor countries deal with global warming.

‘Fair Share’

“The United States will pay its fair share of that amount and other countries will make substantial commitments as well,” Gibbs said in the statement. The administration also believes longer-term financing should be considered in Denmark, he said.

Negotiators in the Danish capital must provide companies with the certainty they need to make annual investments that may rise to trillions of dollars, said John Hawksworth, chief of macroeconomics at PricewaterhouseCoopers in London. Businesses need to know the scale of planned carbon cuts in order to gauge how expensive tradable carbon allowances will become, he said.

“The fundamental thing is to come up with a deal on the intermediate targets for 2020,” Hawksworth said in a telephone interview. “Once you’ve got the price on carbon, that sends the signal that businesses need in order to make the long-term investments in low carbon technologies and processes.”

Allianz, Europe’s largest insurer, supports the 2-degree limit as well as financing for developing countries to adapt to climate change, said Nick Tewes, a spokesman. By limiting the risks associated with climate change, the insurer will also minimize its potential claims, he said.

U.S. Chamber Opposition

Those on the other side of the issue also will be in Copenhagen, including representatives of the Washington-based U.S. Chamber of Commerce, the biggest U.S. business-lobbying organization. The group has questioned mandatory emissions cuts as part of an international accord and is calling for an emphasis on clean-energy technology.

The Chamber is fighting against U.S. legislation, which passed the House and is stalled in the Senate, to require a cut in greenhouse-gas pollution. It would cap emissions and set up a market to trade pollution allowances.

The U.S. Environmental Protection Agency may act as soon as today to issue a final rule giving it the power to regulate carbon-dioxide pollution.

Greenpeace, Corporate Link

The Paris-based IEA estimates that efforts to keep warming to less than 2 degrees since industrialization will add $10.5 trillion to the investment needed by 2030 to upgrade power stations, pipelines and refineries. The IEA also backs keeping the concentration of heat-trapping carbon dioxide to 450 parts per million, compared with about 385 now.

Amsterdam-based Greenpeace has called for an increase of no more than 2 degrees for at least seven years, said Kaisa Kosonen, a climate adviser for the environmental group. Greenpeace calls for global emissions to peak by 2015, five years earlier than the corporations.

Enel SpA, Italy’s largest utility, wants competitors around the world to accept CO2 regulations similar to those the Rome- based company already faces in the European Union.

“In order to get these targets, for 2 degrees of 450 parts per million, and emissions cuts, you need private investors like us,” said Simone Mori, head of regulation and environment at Enel, who may travel to Copenhagen.

Opponent Inhofe

The two-degree target has been a goal for the 27-nation European Union since 1996. In July, major greenhouse-gas polluters including the U.S., China, India and Japan signed up to the target, which has also been discussed in the UN negotiations as a possible long-term “shared vision.”

The move marked the first time developing nations had set such a target to fight climate change.

The talk of momentum doesn’t sway one of the U.S. Congress’s biggest climate-change skeptics, Republican Senator James Inhofe of Oklahoma, who also will come to Copenhagen. He says the meeting is doomed, even with Obama’s entourage attending on the last day.

“No amount of lofty rhetoric or promises of future commitments can save it,” Inhofe said in a statement. That’s in part because legislation pending in the Senate to cap emissions “is dying on the vine.”

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