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May 5, 2012 at 12:58 PM
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Buffett: Berkshire will stay on course

OMAHA, May 5 (UPI) -- Warren Buffett Saturday assured his stockholders in Omaha Berkshire Hathaway will not stray from its bedrock investment strategy once he steps down.

Buffett, who recently announced he has prostate cancer, said at the company's annual meeting his successor as chief executive officer also will have the responsibility of "chief risk officer" with a sharp eye on finding good companies that will produce solid long-term returns.

Buffett told the audience the new CEO would also have to have the sharp negotiating skills that will enable Berkshire Hathaway to strike large-scale deals that will pay off for stockholders, CNBC said.

The idea of who will step into Buffett's shoes is a high-priority topic of discussion at this year's annual meeting, The Wall Street Journal said. Although Buffett is in no immediate danger from his cancer, he is 81 years old and Berkshire Hathaway share prices have eroded as the U.S. economy struggles.

Still, Berkshire Hathaway continues to make money and the company leadership has come out against a proposal to publicly lay out its succession plan.

Big banks vie for Facebook bragging rights

NEW YORK, May 5 (UPI) -- A banker in New York said bragging rights are among the top assets involved in helping Facebook with its initial public offering.

Facebook executives visited three prominent investment banks in New York in advance of their "road show" that begins Monday, The Wall Street Journal reported Saturday.

The so-called road show is meant to stir up excitement for Facebook's public debut, which could almost be considered redundant.

The company is expected to sell shares between $28 and $35 per share that are predicted to value the company at $96 billion.

The level of interest is high enough that Facebook has negotiated low fees for banks helping with the IPO.

Facebook is paying 1.1 percent of the IPO proceeds, about a third of the average 2.9 percent for such services, the Journal reported.

Instead of lucrative fees, "You get the ability to go to another company and say, 'We were on Facebook,'" one banker told the Journal.

Even beyond the IPO, investment banks may be scratching around for business from Facebook, which recently paid $1 billion for Internet startup Instagram and $550 million for a deal to buy AOL patents from Microsoft -- but conducted both deals by itself, without hiring any bank's mergers and acquisition team to get the deals done.

Banks are prepared to loan Facebook up to $8 billion to cover withholding tax obligations generated by the IPO and may be able to secure personal wealth management deals with some of the millionaires the IPO creates, the Journal said.

Beyond that, banks are not expecting Facebook to be spending a lot of money in New York.

Nonetheless, executives from Facebook visited the headquarters of Goldman Sachs Group, Morgan Stanley and JPMorgan & Chase last week.

Morgan Stanley was somewhat discreet about the visit, giving Facebook executives a route out of the building that enabled them to avoid TV news cameras.

JP Morgan took a different approach, decorating their building with two "thumbs-up" shaped symbols, which are the symbols Facebook members use to signal something they like.

Judge refuses to dismiss case against UBS

NEW YORK, May 5 (UPI) -- A federal judge in Manhattan said he would not dismiss a lawsuit against Swiss bank UBS filed by the federal regulator for two giant U.S. mortgage brokers.

The Federal Housing Finance Agency, which oversees the Federal Home Loan Mortgage Corp., known as Freddie Mac, and the Federal National Mortgage Association, known as Fannie Mae, has filed suit against 18 banks.

The FHFA contends the banks deceptively sold Freddie Mac and Fannie Mae $200 billion of bundled, mortgage-backed securities during the housing boom, The Wall Street Journal reported Saturday.

Federal Judge Denise Cote refused to grant the dismissal based on the UBS claim the statute of limitations had run its course.

Instead, Cote wrote in his answer to the UBS motion to dismiss that a preliminary review found securities that are "sufficiently suggestive of widespread inaccuracies" that made the value of the securities questionable.

There was reason to believe the quality of the securities were "objectively false," Cote wrote in his refusal to dismiss the case.

Spirit CEO apologizes to dying veteran

MIRAMAR, Fla., May 5 (UPI) -- A Vietnam veteran with cancer said the chief executive officer of Florida's Spirit Airlines has apologized after refusing at first to give him a refund.

CEO Ben Baldanza also issued a statement saying the airline's refund policy is part of the reason the discount airline can keeps fares low, but failing to refund dying veteran Jerry Meekins his fare was a "mistake."

The statement also said Baldanza would "personally" refund the veteran's money and the airline would donate $5,000 to "the charity of his choice, Wounded Warriors."

The controversy began when a doctor told Meekins he should not fly. Spirit Airlines then refused to refund his ticket price of $197, Fox News reported Saturday.

That sparked a flurry of criticism from veterans and a Facebook campaign calling for a boycott of the airline.

Within a week the "Boycott Spirit Airlines" Facebook page had 30,000 supporters and a second Facebook page was calling for the airline's board to fire its CEO.

Baldanza then issued an apologetic statement that said, "A very important part of keeping our airfares reasonably priced is our refund policy.

"Every day we seek to balance customer service with customers' demands for the lowest airfare possible. But sometimes we make mistakes," the statement said.

"He called me personally, and I'm going to take him at his word," Meekins said.

Meekins also said he would never fly Spirit Airlines again.

"In my opinion, and this is just a guess, but the board of directors might have called him up and said, 'Baldanza, what the hell are you doing?'" Meekins speculated. "Give the man back his money."

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