A powerful new type of Internet attack works like a telephone tap, except operates between computers and Web sites they trust.
Hackers at the Black Hat and DefCon security conferences have revealed a serious flaw in the way Web browsers weed out untrustworthy sites and block anybody from seeing them. If a criminal infiltrates a network, he can set up a secret eavesdropping post and capture credit card numbers, passwords and other sensitive data flowing between computers on that network and sites their browsers have deemed safe.
In an even more nefarious plot, an attacker could hijack the auto-update feature on a victim’s computer, and trick it into automatically installing malware pulled in from a hacker’s Web site. The computer would think it’s an update coming from the software manufacturer.
The attack was demonstrated by three hackers. Independent security researcher Moxie Marlinspike presented alone, while Dan Kaminsky, with Seattle-based security consultancy IOActive Inc., and security and privacy researcher Len Sassaman presented together.
They reached essentially the same conclusion: There are major problems in the way browsers interact with Secure Sockets Layer (SSL) certificates, which is a common technology used on banking, e-commerce and other sites handling sensitive data.
Browser makers and the companies that sell SSL certificates are working on a fix.
Microsoft Corp., whose Internet Explorer browser is the world’s most popular, said it was investigating the issue. Mozilla Corp., which makes the No. 2 Firefox browser, said most of the problems being addressed were fixed in the latest version of its browser, and that the rest will be fixed in an update coming this week.
VeriSign Inc., one of the biggest SSL certificate companies, maintains that its certificates aren’t vulnerable.
Tim Callan, a product marketing executive in VeriSign’s SSL business unit, added that the “tap” won’t work against so-called Extended Validation SSL certificates, which cost more and involve a deeper inspection of a company’s application for a certificate.
The attack falls into a class of hacks known as “man-in-the-middle,” in which a criminal plants himself between a victim’s computer and a legitimate Web site and steals data as it moves back and forth.
Jeff Moss, founder of the Black Hat and Defcon conferences who this summer was appointed to the Homeland Security Department’s advisory council, said the fact a hacker has to actually break into a victim’s network for the attack to work can limit its usefulness.
“That’s the nice mitigating thing,” he said.
But he warned that “for targeted attacks it’s absolutely deadly. This is the way you can get everything. If you can get in the middle, you can get everything. It’s a big, giant wake-up call for the industry.”
SSL certificates are a critical technology in assigning trust on the Web.
Sites buy them to encrypt traffic and assure visitors it’s OK to enter confidential information. Companies that sell SSL certificates verify that someone trying to buy a certificate actually owns the site that certificate will be attached to.
The presence of an SSL certificate on a site is designated by a padlock in the address bar. But many people don’t pay attention to whether a padlock is present or not.
Browsers do care, though, which is why this week’s talks were significant.
Browsers are programmed to block sites that don’t have a valid SSL certificate, or have a certificate displaying a Web address that doesn’t match the address a Web surfer was trying to reach (which can indicate someone has hijacked a person’s Internet session). If the sites aren’t blocked, users are warned about potential danger, and have the option to click through.
The problems outlined by researchers center on a quirk in the way browsers read SSL certificates.
Many SSL certificate companies will allow people to attach a programming symbol called a “null character” into the Web address onto the certificates they receive. Web browsers generally ignore that symbol. They stop reading at that symbol when they’re checking the Web address on a certificate.
The trick in the latest type of attack is that all a criminal would need to do is put the name of a legitimate Web site before that character, and the browser will believe that the site it’s visiting – which is under the criminal’s control – is legitimate.
The criminal could then forward the traffic onto the legitimate site and spy on everything the victim does on that site. It’s a complicated attack, but it highlights a significant weakness in the very technology widely used to assure people it’s safe to navigate sensitive sites.
Jon Miller, an SSL expert and director of Accuvant Labs, said he expects significant attacks against corporations using this technique in the coming months. Criminals who run “phishing” scams, in which people are tricked into visiting phony sites, will also likely latch on.
“What kind of makes this earth-shattering is these aren’t the most sophisticated attacks in the world,” he said. “This is going to become a huge problem.”
There are signs it’s already starting.
VeriSign’s Callan said within hours of the talks, his company got a number of applications for SSL certificates featuring null characters, but they were denied.
FORT MYERS, Fla. – The Vangelakos’ southwest Florida condominium has marble floors, a large pool overlooking a river and modern furnishings that speak of affluence and luxury. What they don’t have in the 32-story building is a single neighbor.
The New Jersey family of five purchased their unit four years ago, when Fort Myers was in the midst of a housing boom and any hints of an impending financial crisis were buried in lofty dreams of expansion and development. They made a $10,000 down payment and eagerly watched as builders transformed an empty lot into an opulent high rise, one that now symbolizes the foreclosure crisis.
“The future was going to be southwest Florida,” said Victor Vangelakos, 45, a fire captain who planned to eventually retire and live permanently in the condo.
Most of the other tenants in the 200-unit condo didn’t close on their contracts, and the few that did have transferred to an adjacent building owned by the same company because more people live there.
The Vangelakos’ mortgage lender will not allow them to do the same.
That leaves them as the sole residents of the Oasis Tower One.
“It’s a beautiful building,” said their attorney, John Ewing, who is representing 27 others who made deposits on units. “The problem is, it’s a very lonely building.”
When the Vangelakos’ travel from Weehawken, N.J., to spend a week or a few days in their Florida home, they have exclusive use of the pool, game room and gym, but they miss having a few tenants around.
“Being from the city, it’s very eerie,” Vangelakos said. “It’s almost like a scary movie.”
A large, circular fountain in front of the building is dry. The automatic glass doors that lead to the front lobby are locked. On the front desk is a guest sign-in sheet. The last entry: Feb. 13, 2009.
“It’s like time froze here six months ago,” Ewing said.
Vangelakos said they closed on the apartment in the fall, unaware the other tenants had failed to follow through. When they visited around Christmas, they didn’t think much of the emptiness. They were just happy to be there.
“We wanted to believe,” Cathy Vangelakos said. “We were looking for what we were offered.”
On subsequent visits, however, the building grew more deserted.
The lights on the pool and palm trees were off. Their garbage shoot was sealed, a trash bin placed in front of their unit instead.
Despite the empty units, they faithfully parked in their assigned spot on the second story of the parking garage. Then those lights went off, too.
Then there were security concerns. One night, someone pounded on their door at 11 p.m. They called the front desk at the next door building, which contacted police. A search turned up no one, though a pool entrance was open.
Another morning they awoke to find lounge chairs in the pool.
The parents and their children sleep with their cell phones by their beds.
“I’m not a chicken, but this is a big building,” Cathy Vangelakos said.
Betsy McCoy, vice president and associated general counsel with The Related Group, which sold the family their unit, said they have tried to help find a solution – even offering them a unit in the building next door, free of cost, while the situation is resolved.
“They haven’t wanted to take us up on that,” McCoy said Friday. “They frankly rejected every solution and offer and proposal that we’ve come up with.”
McCoy said some of the interested buyers who put down deposits lost their jobs, others were unable to get mortgages and some were just nervous when the financial collapse came.
The Cape Coral-Fort Myers metropolitan area in Lee County has some of the worst economic stress – a combination of foreclosures, unemployment and bankruptcies – in the country, according to The Associated Press’ monthly analysis of more than 3,100 U.S. counties.
The latest AP Economic Stress Index, which assigns each county a score from 1 to 100 with higher numbers reflecting the greatest stress from the recession, found Lee County had a score of more than 20. Anything above 11 is considered stressed.
Victor Vangelakos said they don’t want to move to the tower next door because they would still be paying the mortgage and maintenance costs on the condo they own. They paid $430,000 for the unit and took out a $336,000 mortgage – essentially spending their life savings.
He’d like for The Related Group to buy them out.
“They want us to be refugees in Tower II,” Victor Vangelakos said. “That’s not how I expected us to live here.”
The family’s attorney said he has filed two lawsuits on behalf of would-be tenants because the building wasn’t finished as promised. He said they expected a clubhouse, marina, private cinema and restaurants.
McCoy said those amenities could be developed, but were never promised.
On Friday evening, the pool area was dark, most of the doors locked. Cathy Vangelakos and her 19-year-old daughter, Amanda, stepped into an elevator to head up to their unit. “Going up,” an automated voice chimed.
“Going up,” Cathy Vangelakos said. “That’s all we hear.”
Jack White’s latest band, the Dead Weather, isn’t Jack White’s band — at least not the way the White Stripes is. When the quartet made its D.C. debut Monday night at a sold-out 9:30 club, the singer-guitarist stayed behind the drum kit for all but one song, while Alison Mosshart (of the Kills) handled most of the lead vocals.
Yet the show provided much evidence of White’s vision, from the two-tone lighting scheme (blue and white) to the style of minimalist blues-rock. Instrumentally, the band resembled the White Stripes, only with a thicker, more epic sound that relied on keyboards almost as much as guitar. Both were played by Dean Fertita (of Queens of the Stone Age); he was supplemented on guitar occasionally by Mosshart and once by White, who stepped forward for “Will There Be Enough Water?”
Performed live, most of the material from the Dead Weather’s debut album, “Horehound,” seemed interchangeable. The band had only a few solid songs and didn’t manage to put two of them back-to-back until the encore set, which segued from “Hang You From the Heavens,” the album’s standout, to Bob Dylan’s “New Pony.”
The musical gestures were broader than in the tighter (and better) duos that brought White and Mosshart to prominence. Although the Dead Weather never stretched out in the manner of Led Zeppelin, clearly a major inspiration, the group did rely on arena rock’s dramatic pauses and grand flourishes. These didn’t always enhance the songs, whose thin melodies were easily trampled. Whatever White meant when he sang “I cut like a buffalo,” “I move like a buffalo” would have been more accurate.
WIMBLEDON, England — It isn’t the Wimbledon men’s final Great Britain was hoping for, and it is unlikely to match Rafael Nadal’s epic victory over Roger Federer last summer. But those poor souls who paid thousands of pounds hoping to see Andy Murray might get their money’s worth Sunday as gutsy, big-hitting American Andy Roddick stands between Federer and history.
Federer is going for his 15th Grand Slam title, which would break Pete Sampras’ record. Playing in his seventh consecutive Wimbledon final, Federer also is trying to win a sixth Wimbledon title and reclaim the No. 1 ranking from Nadal. He had been the world’s top-ranked player for 237 weeks in a row before Nadal surpassed him in August 2008.
The Royal Box will be loaded with luminaries. Bjorn Borg, Rod Laver and Sampras are expected to be among the men in suits.
Federer was in a funk for much of last year, and skeptics wondered whether Nadal had surpassed him. But then he won a fifth consecutive U.S. Open, lost a tough five-setter to Nadal in Australia and won his first French Open. Granted, Nadal wasn’t his final opponent, and the Spaniard skipped Wimbledon because of sore knees, but still, nobody is questioning Federer’s game anymore.
HE’S IN A GROOVE
He showed up in his white blazer and slacks, looking dapper and confident as ever. He has dropped only one set at this tournament, is on an 18-match winning streak and he seems happy off the court, as well. He married longtime girlfriend, Mirka, in April, and they are expecting a baby later this summer.
”I’m just excited Mirka is feeling great, awaiting our first child. It’s quite something on a personal note,” he said. “Also, I’m playing wonderful tennis at the moment. Everything’s just great.”
The only man who can spoil his mood is Roddick, the sixth-ranked American who has a dismal 2-18 record against Federer.
Roddick is 0-7 against Federer in Grand Slams and 0-3 at Wimbledon, including the 2004 and 2005 finals. Roddick’s only victory over Federer in their past 15 meetings was at the 2008 Sony Ericsson Open on Key Biscayne. In front of an electric crowd that night, Roddick got past his nemesis 7-6 (7-4), 4-6, 6-3.
”I’ve played Andy 20 times, so I’ve had plenty of time to understand his game,” Federer said. “He’s always played me quite differently every single time I’ve played him. In the beginning of his career, he was standing way back on the return. In 2004, he chipped and charged a lot. I’ve also played him when he serve and volleyed.
“I’ve had many different looks against Roddick. I enjoy how he leaves everything out on the court. I can only marvel at how incredible his serve is. I like playing against him, not only because of the record.”
Asked what he finds most challenging about playing Roddick, Federer said, “His fighting spirit, his belief.”
It is that spirit that pulled Roddick through a five-set dogfight against Lleyton Hewitt in the quarterfinals, and the belief that carried him to a shocking semifinal victory over Murray and his legions of fans. Roddick brought out a more diversified game, rushing the net more than usual, and placing his serves right on the lines.
This is a new, more confident Roddick. He, too, is a newlywed, and said that has brought him calm on the court. The former No. 1 hasn’t won a Grand Slam title since the 2003 U.S. Open and he is desperate to prove he’s not a one-Slam wonder. He cried after reaching the semifinals Wednesday, and again after beating Murray on Friday.
HUMBLED BY MOMENT
Roddick usually does a great job describing his feelings, but said he could not put into words what winning Wimbledon would mean.
”I didn’t know if I was going to get to play a Wimbledon final again,” he said. “I’m thankful to have that opportunity.”
Is there a danger he is so excited to make the final he will be satisfied with that?
”That won’t be the case,” he said. “It’s too close.”
Roddick has more than 40,000 followers on Twitter, and has been entertaining them with daily musings. He didn’t need the full 140 characters to express what he was feeling Friday night.
“126 home — 2 left.”
• Hoping to add to the U.S. title haul after Serena Williams’ victory Saturday, top-ranked twins Bob and Mike Bryan fell short and lost the men’s doubles final to defending champions Daniel Nestor of Canada and Nenad Zimanjic of Serbia, 6-7 (9-7), 7-6 (7-3), 6-7 (3-7), 3-6.
It was the third Grand Slam final for Nestor and Zimanjic, who lost in the 2008 French Open final. The Bryans had not dropped a set this Wimbledon, but got broken in the second game of the fourth set and couldn’t recover.
”I remember the scene last year, coming in with two private wives holding hands on their bellies after we won the trophies, and now we have three kids,” said Zimanjic, whose wife had twins in December. ‘To see our names on the winners’ plaque twice in a row is real special. We took a picture. It’s always special to play Centre Court, a full stadium. This is the only place with such a big tradition, and the doubles is still very popular.”
NEW YORK – A New York Police Department rookie just couldn’t wait to get started.
One of the NYPD’s newest officers made his first arrest Thursday just minutes after graduating from the Police Academy in a ceremony at Madison Square Garden.
Officer Dariel Firpo, 23, was leaving the midtown Manhattan ceremony when he saw a 79-year-old man being robbed of his wallet and thrown to the ground by a mugger, police said.
The mugger tried to run away, but Firpo caught him without incident, they said.
“Officer Firpo made us all proud,” police Commissioner Raymond Kelly said. “He’s off to a great start.”
The man Firpo arrested, Jeffrey Grant, was being charged with robbery. Grant, 47, has 48 previous arrests and was just released last week from Sing Sing Correctional Facility in Ossining, N.Y., after serving time for a robbery conviction, police said.
Grant, of Manhattan, was in custody late Thursday and couldn’t be contacted. The name of his attorney wasn’t yet on record.
The mugging victim was treated at a hospital for a broken wrist.
Firpo’s feat “may be the fastest police action upon graduation in department history,” said chief police spokesman Paul Browne, who was at the graduation ceremony for the class of 250 new officers.
Firpo, who graduated from Lehman College in January with a degree in political science, said he wants to focus on community affairs while working in the nation’s biggest police department.
“I’m really trying to stick in the community,” he said.
WASHINGTON – President Barack Obama is getting an update on the nation’s economy from former Federal Reserve Chairman Paul Volcker.
Volcker is chairman of Obama’s economic recovery advisory board. He is set Friday to brief the president and his economic team on how the $787 billion stimulus package is working. After the private meeting, the president plans to give brief remarks.
The economy has dominated Obama’s schedule since taking office.
On Thursday, Obama met with state officials about their plans to spend their economic stimulus dollars and then met with business leaders about their worries. Obama has been striking an optimistic tone despite the flailing economic indicators.
RAMALLAH, West Bank – The Western-backed Palestinian prime minister submitted his resignation Saturday, improving the odds of a possible unity government of Fatah moderates and Hamas militants, followed by new Palestinian elections.
Salam Fayyad announced that he will step down once a new government is formed, but no later than the end of March. Unity talks between the Islamic militant Hamas and the Fatah movement of moderate Palestinian President Mahmoud Abbas are to resume this week in Cairo. Abbas aides noted that if the negotiations fail, Abbas might reappoint Fayyad.
Fayyad, a respected economist, was appointed prime minister by Abbas in June 2007, following Hamas’ violent takeover of Gaza. The takeover led to a deep split between Fayyad’s internationally backed administration in the West Bank and the widely shunned Hamas government in Gaza whose borders were sealed by Israel and Egypt.
Still, both sides appeared optimistic Saturday about a power-sharing deal.
“Everyone needs a lifeline,” Ahmed Yousef, a Hamas official, said of the rivals. Previous unity accords collapsed in acrimony, but both sides seem to have stronger reasons now to compromise.
After Israel’s recent military offensive in Gaza, Hamas needs Fatah’s international respectability to help end the crippling border blockade and obtain foreign funding to rebuild Gaza. Last week, dozens of donor countries promised $5.2 billion for Gaza reconstruction and the Fayyad government at a pledging conference in Egypt.
Abbas, meanwhile, needs to find a way to blunt political challenges by Hamas, which maintains his four-year term expired in January. Abbas’ support at home has eroded steadily, both because of his perceived lack of decisiveness during the Gaza war and because his yearlong peace talks with Israel produced no results. Abbas is the leading Palestinian proponent of a peace deal with Israel, but with a right-wing government poised to take power in Israel, chances for new talks are slim.
Fayyad said Saturday he was resigning to “support the efforts being exerted to form a national consensus government that would reunite the homeland.”
Hamas has repeatedly demanded that Fayyad step down and officials of the militant Islamic group reacted dismissively.
“This government did not work for the sake of the Palestinians, it worked for its own agenda. This end was expected for a government that was illegal and unconstitutional,” said Fawzi Barhoum, a Hamas spokesman in Gaza.
Despite the sour note, preparations for Egyptian-brokered unity talks were moving forward.
Starting Tuesday, leading Hamas and Fatah officials will meet at an office of the Egyptian intelligence service in Cairo, said Nabil Shaath, a senior Fatah negotiator.
The officials will work in five committees to talk about forming a unity government, holding new elections, reforming the security services, carrying out confidence-building measures and finding a role for Hamas in the Palestine Liberation Organization.
Any agreement on forming a new government must be comprehensive, Shaath said. The talks are to go on for 10 days, but the two sides would keep going after that if there is no agreement, he added.
“We want the dialogue to succeed because we have no alternative,” he said.
A unity government could consist of Hamas and Fatah politicians or of independents nominated by the two movements. It would be asked to prepare for presidential and legislative elections in the West Bank and Gaza.
The next legislative elections are due in January 2010, but Hamas officials confirmed privately that they’ve raised the possibility of postponing the vote for several more months, arguing that both sides need time to improve their standing with the voters.
It was not clear how the international community would respond to a unity government and whether it would keep sending the foreign aid promised to Fayyad. In the past, the U.S. and most European countries rejected any governing role for Hamas.
However, positions appear to have softened among some European nations, particulary after Israel’s Gaza offensive which ended with a temporary cease-fire Jan. 18.
Hamas remains in control of Gaza, despite the Israeli military onslaught and the border blockade, underscoring the need for the international community to find a way to deal with the militants. Also, the war deepened the humanitarian crisis, with some 15,000 homes destroyed or damaged, and more than 900,000 of Gaza’s 1.4 million people receiving food aid.
In other developments, an internal report by European Union diplomats said Israel is undermining prospects for establishing a Palestinian capital in east Jerusalem because Israel keeps building homes for Jews there and demolishes Palestinian-owned homes.
“Long-standing Israeli plans for Jerusalem, now being implemented at an accelerated rate, are undermining prospects for a Palestinian capital in East Jerusalem and a sustainable two- state solution,” said the 20-page report, made available to journalists by the Israel Committee Against House Demolitions. An EU diplomat verified its authenticity.
Israeli government spokesman Mark Regev would not comment on the report, saying he had not seen it. However, he said Israel offered Palestinians in Jerusalem citizenship after capturing the sector in the 1967 Mideast war, and that Arab and Jewish residents of the city are treated the same. Palestinians complain of systematic discrimination by municipal authorities.
CLARENCE, N.Y. – A commuter plane that smashed into a house apparently plunged flat to the ground rather than nose-diving, ending up pointed away from the airport it was trying to reach, investigators said Saturday.
Investigators did not offer an explanation as to why the plane was pointed away from the Buffalo airport, but it does raise the possibility the pilot was fighting an icy airplane: Air safety guidelines says a pilot can try a 180-degree turn to rid a plane of ice.
Other possible explanations are that the aircraft was spinning or flipped upon impact.
Flight data showed the plane’s safety systems warned the pilot that the aircraft was perilously close to losing lift and plummeting from the sky. The ensuing crash killed 49 people on the plane and one in the house.
Continental Connection Flight 3407 was cleared to land on a runway pointing to the southwest, but it crashed with its nose pointed northeast, said Steve Chealander, a National Transportation Safety Board member.
The Newark, N.J.-to-Buffalo flight didn’t nose-dive into the house, as initially reported by some witnesses, Chealander said.
It will take as many as four days to remove human remains from the site, which he called an “excavation.”
“Keep in mind, there’s an airplane that fell on top of a house, and they’re now intermingled,” he said.
The plane – on its descent to Buffalo Niagara International Airport in a light snow and mist – plunged suddenly about six miles shy of the runway and exploded.
A “stick shaker” and “stick pusher” mechanism had activated to warn Capt. Marvin Renslow that the plane was about to lose aerodynamic lift, a condition called a stall. When the “stick pusher” engaged, it would have pointed the nose of the plane toward the ground to try to increase lift.
Crash investigators picked through incinerated wreckage Saturday, gathering evidence to determine what brought down the plane. Icing on the aircraft is suspected to have played a role, but officials have stopped short of calling that the cause.
Chealander said indicator lights showed that deicing equipment on the tail, wings and propeller appeared to be working and that investigators who examined both engines said it appears they were working normally at the time of the crash.
Experts were analyzing data from the black boxes, including statements by crew members about a buildup of ice on the wings and windshield of the plane, Chealander said.
If ice is a problem in flight, guidelines from the Aircraft Owners and Pilots Association Air Safety Foundation say pilots can take a number of steps, including changing speed, pulling the nose up or down, or trying a 180-degree turn.
On Friday, U.S. Sen. Robert Menendez, D-N.J., said Transportation Secretary Ray LaHood had told him he believes the aircraft made a 180-degree turn at 5,000 feet.
But there could be other explanations for why the plane was facing the wrong way.
Chealander said the NTSB would use data on the black boxes to determine whether the plane was in a flat spin before it crashed. Flight data indicated “severe” pitching and rolling before impact, so the violent nature of the crash also could have turned the aircraft around.
Other aircraft in the area Thursday night told air traffic controllers they also experienced icing around the time that the plane went down.
Icing is one of several elements being examined by investigators, Chealander said, adding that a full report will probably take a year.
DNA and dental records will be used to identify the bodies, he said.
One aspect of the investigation will focus on the crew, how they were trained and whether they had enough time to rest between flights. Other investigators focused on the weather, the mechanics of the plane and whether the engine, wings and various mechanics of the plane operated as they were designed to.
CHARLOTTE, N.C. – The financial collapse has hit the city known as Wall Street South.
For years, Bank of America Corp. and Wachovia Corp. helped turn Charlotte into a financial powerhouse. Now, the big banks have thrust it into the same predicament as the real Wall Street – the city is losing thousands of jobs and an unquantifiable amount of prestige. Residents who invested heavily in the banks have seen their wealth dissipate and lifestyles change radically.
“It’s kind of sad, disheartening because the banks have been the backbone of Charlotte for so long,” said Carl Clayton, a 55-year-old retired school teacher.
The loss of so many bank jobs is causing upheaval in other industries. Consumers who have been laid off or fear being out of work are curtailing their spending, forcing restaurants and retailers to close – among them Morton’s, a high-end steakhouse, and a 15-month-old Home Depot Design Center. Even some of the Charlotte’s lively night clubs have shuttered their doors.
“There’s a bit of a state of disbelief,” said Bob Morgan, president of the Charlotte Chamber of Commerce. “We are seeing things happen that no one else has contemplated before.”
Charlotte remains the nation’s second-biggest bank town by assets – second to New York, and in front of San Francisco. But, Morgan said, “we don’t know what the city is going to look like once we emerge.”
“We do know that tremendous wealth has already been lost.”
A big reason why is the amount of banking shares owned by people who have worked for Wachovia, now owned by Wells Fargo & Co., and Bank of America. Both have used their stock to compensate employees.
Bank of America’s shares have been among the hardest hit among financial companies. The company has lost more than 56 percent of its value since it closed on its acquisition of investment bank Merrill Lynch & Co. at the beginning of the year. The stock is down nearly 85 percent from a year ago.
Last year, before Wachovia was acquired by Wells Fargo, its shares had slid 85 percent.
Clayton estimates he has lost about $60,000 because of stock holdings in the two banks, along with other North Carolina banks, including BB&T Corp.
“I had a lot of bank stock, but now it’s gone,” Clayton said. “What wealth I had, is gone.”
Residents and employees never expected such a downfall. Wachovia, once headquartered in Winston-Salem, N.C., joined the Top 5 ranks of national banks after it was acquired by Charlotte-based First Union Corp. in 2001. The combined company took Wachovia’s name.
Banker Hugh McColl Jr. led NationsBank Corp. through some 70 acquisitions starting in the early 1980s. His biggest coup was San Francisco-based BankAmerica Corp., a financial institution bigger than NationsBank. He adopted the name and also moved the headquarters to Charlotte.
Some say Charlotte’s troubles began in 2006, when Wachovia acquired mortgage lender Golden West Financial Corp. for roughly $25 billion at the height of the housing boom. With that purchase, Wachovia inherited a $122 billion portfolio of deteriorating mortgages, leaving the company with huge losses. Charlotte residents were unnerved as they watched Wachovia falter and then be taken over by Wells Fargo in what amounted to a fire sale late last year.
Down the street, at Bank of America, things were looking just as bleak. A series of bad bets in the investment banking unit over the past year sank companywide profits, and as Bank of America completed its acquisition of struggling investment bank Merrill Lynch & Co., shareholders watched its stock price slide to historic lows.
Both Wells Fargo and Bank of America have said they remain “committed” to Charlotte.
Wells Fargo, based in San Francisco, has said Charlotte will be its eastern headquarters, though it remains unclear exactly what that means. The fear is that Wells Fargo, as it completes its integration of Wachovia, will keep shedding Charlotte positions. Wachovia has about 20,000 employees in the city.
Bank of America, meanwhile, with about 15,000 employees in Charlotte, is eliminating some 35,000 jobs companywide.
North Carolina already has nearly 400,000 unemployed workers. The jobless rate was 8.7 percent in December, the highest since 1983, according to the most recent available data.
Charlotte, with a population of nearly 700,000, is the 20th-largest city in the country. About 45 percent of the residents of its home county, Mecklenburg, make more than $50,000 a year, according to data supplied by the Charlotte Chamber of Commerce.
Outside the downtown offices buildings filled with bank employees, there’s a sense of disbelief as people huddle together drinking coffee or smoking cigarettes and then shuffle off to their jobs. When a reporter approached employees for interviews, they declined to speak, or said they didn’t want to give their names, worried about keeping their jobs.
Charlotte relies on the banks for more than employment – its lifestyle, even its skyline has depended on Wachovia and Bank of America.
Wachovia sponsors the city’s annual PGA tournament, among the most popular on tour, while Bank of America’s name is on the football stadium and the bank is a sponsor of one of NASCAR’s top auto races. Both fill towering downtown office buildings – Wells Fargo, now by way of Wachovia, is building a 48-story headquarters and adjoining city arts campus. The bankers and traders who work for both helped create the demand – and now vacancies – for the high-rise condos near by.
“I have received more calls over the past month from people wanting to list their homes, with a majority of them having financial problems,” said Rich Ferretti, a broker at Jamison Reality in Matthews, a suburb of Charlotte.
Stores in the city’s affluent SouthPark area are less crowded on the weekends. And a recent happy hour at Capital Grille, located just across from Bank of America’s headquarters, was sparsely attended.
Charlotte also faces civic and philanthropic repercussions. Unlike Wachovia, Wells Fargo’s executives have few North Carolina ties. Bank of America typically offers up the lead gift on projects.
“We will honor our existing commitments and we are still in the process of determining any future commitments,” Wells Fargo spokeswoman Mary Eshet said.
Now, the city is waiting for major changes.
“A lot of our friends work for the banks,” said Leslie Hunter, a 38-year-old mother of two. “People are not stopping everything, but their awareness has increased.”
After being laid off from his bank consulting job 11 months ago, Jim Edwards’ daily routine of networking, applying for jobs and going to the gym keeps his spirits up.
“I’ve been out of work and living on my retirement income,” said the 62-year-old, who added it’s been a struggle finding employment because no one is hiring.
While many unknowns remain, Mayor Pat McCrory is optimistic.
“Charlotte does have very strong resilience and I anticipate that a lot of the talent that’s moving out of the banks will stay,” he said in an interview with The Associated Press.
Some job relief may be moving in. GMAC Financial Services and Morgan Stanley are rumored to be looking to move at least parts of their companies to the Charlotte area.
GMAC Financial Service’s chief executive, Al G. de Molina, used to be Bank of America’s chief financial officer. Morgan Stanley has already hired at least four former Wachovia executives to help the New York-based firm’s retail banking expansion effort.
McCrory wouldn’t talk about the two firms, but said the large amount of talent in Charlotte will “attract others in the financial services industry to set up here.”
“We’re going through a major adjustment, but when the economy rebounds, I think Charlotte will rebound the quickest,” he said.
Source:yahoo
WASHINGTON – Secretary of State Hillary Rodham Clinton has said no nation is more important to the United States than China. But ties between the two powers may be off to a rocky start just days into the Obama administration.
In his inaugural address Tuesday, President Barack Obama spoke of how earlier generations of Americans had “faced down fascism and communism.” China’s state broadcaster quickly faded out the audio of its live broadcast, the camera cutting back to a flustered studio anchor.
Then, on Thursday, Obama’s choice to lead the Treasury Department, Timothy Geithner, wrote that Obama believes China is “manipulating” its currency, which American manufacturers say Beijing does to make its goods cheaper for U.S. consumers and American products more expensive in China.
Chinese officials closely follow U.S. political rhetoric and frequently decry what they consider foreign interference in China’s internal affairs. The United States often criticizes China about human rights and trade abuses, but Washington and Beijing find themselves increasingly intertwined in a host of crucial economic, military and diplomatic efforts.
State media in China reported Saturday that a deputy governor of China’s central bank dismissed Geithner’s comment. Su Ning was cited as saying by the official Xinhua News Agency that the remarks were “not in line with the facts.”
“We thought in the face of the financial crisis, there would be a spirit of self-criticism beneficial to finding ways of resolving the issue and overcoming the crisis,” Su said, adding that it was imperative to avoid any excuses to encourage trade protectionism.
Earlier, China’s foreign minister, Yang Jiechi, said Beijing was committed to working with the Obama administration to strengthen ties and cooperation.
Selig Harrison, director of the Asia program at the U.S.-based Center for International Policy, said it was “very ill-advised for the new administration to confront China as if this were 10 years ago and we were in a strong financial position internationally.”
“We are dependent on Chinese goodwill for our economic survival and viability, and, therefore, it seems to me that this type of posture is very risky,” he said.
Despite an early face-off with China over an intercepted U.S. spy plane, former President George W. Bush made it a priority to strengthen relations with China while also pushing the country to live up to what he considered its duties as an emerging global superpower and a veto-holding member of the U.N. Security Council.
Trade ties between the United States and China often are tense. China says it has made progress on currency changes and worries about bills introduced in Congress that would impose economic sanctions on China unless it moves more quickly to let its currency rise in value against the dollar.
Although Geithner said China is “manipulating its currency,” he suggested Thursday that now might not be the right time to brand Beijing as a currency manipulator under U.S. trade law, which could lead to U.S. trade penalties against imports from China.
His testimony may not have been a complete shock to China. Yang, the foreign minister, has said he studies American television and newspapers. Obama and Clinton, during their long campaigns to secure the Democratic nomination for president, made no secret of their desires for a tougher position with China about its human rights record and its trade practices.
Still, Obama’s young administration is not complete. He has yet to name many of the officials who will be dealing with China issues. He also has not yet decided whether to continue the high-level economic discussions the Bush administration has held twice a year with China since late 2006.
Bonnie Glaser, an analyst with the Center for Strategic and International Studies think tank, said the Chinese have said during the past few months that they want a good start to their relationship with the new U.S. administration.
“Everybody just needs to be a little patient on this,” Glaser said. “I would not draw any premature conclusions that the administration has decided to take a tougher stance, and hopefully the Chinese will be patient while the administration works this out.”
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