The government is reaching across the Atlantic in its latest bid to revive the U.S. housing market.
On Monday, Treasury Secretary Henry Paulson laid out guidelines for banks seeking to issue so-called covered bonds as a way to finance home mortgages. Four big U.S. lenders - Citi (C, Fortune 500), Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500) - said they support the venture, though none said they have plans to issue the bonds right now.
By issuing covered bonds, a bank borrows money from investors, using assets on its balance sheet - such as home mortgage loans - as collateral. The investor gets a claim on those specific assets in the event the bank that issued the bonds fails, rather than having to line up with other creditors. Until now, covered bonds haven’t been issued in the U.S., though the concept has long been in use in Europe.
But with the housing bust threatening to push the economy into recession - the International Monetary Fund warned Monday that "a bottom for the housing market is not visible" - policymakers and financial institutions have been trying out new ideas in hopes of making mortgages more available, while breaking the cycle of falling house prices and rising foreclosures.
"Covered bonds have the potential to increase mortgage financing, improve underwriting standards, and strengthen U.S. financial institutions by providing a new funding source that will diversify their overall portfolio," Paulson said. The efforts of the big banks would "kick-start" the market’s development, he added.
The move comes as shares of banks and brokerage stocks posted their latest sharp decline and investors fret over the fallout of falling house prices on the health of financial institutions. While the Federal Reserve has slashed short-term interest rates over the past year, partly in response to the sharp decline of house prices, mortgage rates recently soared to highs last seen at the turn of the century.
Banks in Europe have used covered bonds as a primary source of mortgage finance for many years, and the market is worth more than $3 trillion.
Until recently, American lenders have preferred to sell their mortgage loans to investors as securities, in the process known as securitization. But when loans to borrowers with poor credit histories started souring at unusually rapid rates last summer, investors fled the market - a trend that marked the beginning of a credit crisis that has choked off lending in the housing market and, increasingly, elsewhere in the economy.
Monday’s move comes on the heels of the Senate’s approval of a bill that gives the Treasury the authority to buy shares in two struggling U.S fast payday loan no faxing. mortgage firms: Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500). Fannie and Freddie are the biggest providers of mortgage finance in the nation, through their guarantee of mortgage-backed securities and the purchase of mortgages for their own portfolios. Together, the firms hold or guarantee some $5 trillion of mortgages and mortgage securities.
With U.S. house prices having plunged at a double-digit rate over the past year, fears have arisen on Wall Street that Fannie and Freddie will face losses that will eat through their thin capital cushions.
Thus, with the securitization market in disarray and the government potentially on the hook for a bailout, Paulson is looking for ways to shore up the mortgage market.
For investors, one potentially appealing aspect of covered bonds lies in their structure. Because the bonds are backed by a specific pool of mortgages or other loans, investors in the bonds issued by a failed bank wouldn’t find themselves in line with other general creditors. For banks, covered bonds could offer a new way to raise funds for mortgage finance, now that the securitization model is faltering.
Still, while the market can always use a new financing vehicle, covered bonds have drawbacks. One reason banks flocked to the securitization model was that selling their loans to a third party generated lucrative fees and eliminated the need to hold capital against the loans.
Covered bonds, being on the balance sheet, will create new capital requirements for banks that have spent much of the past year raising cash at a hefty cost to existing shareholders.
And while Europe’s covered bond market is certainly large, it’s no stranger to the fears that have shaken other debt markets. In fact, the U.K. covered bond market went into a tailspin late last year. And the yield on covered bonds sold in Europe by the two U.S. banks that have sold the bonds - Washington Mutual (WM, Fortune 500) and Bank of America - have soared since those offerings were made in 2006, Bloomberg reports.
Moreover, Monday’s moves didn’t change the fundamentals of the U.S. housing market. House prices remain above long-term norms, based on income and rental rates, and banks have gotten much stingier about who’s eligible for a loan. Until demand for housing stops declining, changes in mortgage finance aren’t likely to make much of a dent in the big picture.
India's government, victorious in a confidence vote this week, will push to lift restrictions on overseas investors' control of privately run banks, Finance Minister Palaniappan Chidambaram said.
Stalled legislation removing a 10 percent cap on foreigners' voting rights in banks may be revived before laws on pensions and insurance, Chidambaram said today. Prime Minister Manmohan Singh remained in power July 22 with support from new allies who replaced communists opposed to foreign investment.
“We seem to have acquired the political space to take the liberalization process forward,'' Chidambaram said in a telephone interview from New Delhi. “We are looking into various aspects of the foreign direct investment regime, trying to see whether further liberalization is possible.''
The Bombay Stock Exchange's banking index is set for its biggest weekly gain since it was created 6 1/2 years ago after Singh's victory. The bill would give ING Groep NV, the largest Dutch financial services company, more control over Bangalore- based ING Vysya Bank Ltd. with its 44 percent stake.
“There is likelihood of further reforms,'' said Tushar Poddar, a Mumbai-based economist at Goldman Sachs Group Inc. “Given the limited time at the government's disposal, and the motley group of new allies, reforms are by no means certain.''
India's stock market surged more than fourfold in the first 3 1/2 years of Singh's administration as the 75-year-old prime minister presided over an economic expansion that averaged 8.9 percent a year, the fastest since independence in 1947. The prime minister's five-year tenure comes to an end in May.
Easing Legislation
Amar Singh, whose Samajwadi Party replaced the communists as the government's main ally, said on July 10 he may back legislation easing curbs on foreign companies seeking to expand in insurance, pensions and banking.
The bill to remove a 10 percent cap on the voting rights of foreign investors in non-state banks is pending in parliament while a parliamentary committee is considering a bill to open the pensions business to overseas investors, Chidambaram said.
The draft bill to raise the foreign investment ceiling for insurers to 49 percent from 26 percent is with the government, he said. The banking and pension bills have been languishing in parliament for three years and the finance minister announced the insurance measures in 2006.
“All three are on the agenda of the ministry of finance,'' Chidambaram said. “Bills in advanced stages of consideration will be taken up first.''
Amending the legislation won't be enough for foreign banks to buy stakes as they can only invest in privately held lenders that have failed or need a bailout easy fast cash. The central bank plans to review its policy after April 2009.
Insurance Restrictions
New York-based American International Group Inc., the world's largest insurer by assets, New York Life Insurance Co. and Prudential Plc, based in London, are among insurers that are restricted to 26 percent stakes in their ventures in India.
“Insurance companies that aren't here and waiting for this to happen will come to India,'' said Analjit Singh, chairman of Max New York Life Insurance Co. “New York Life will exercise its option to raise its stake if the FDI limit is raised.''
Reviving the reforms may entice Lloyd's of London, the world's largest insurance market, to scale up its operations in India, where it writes about $400 million of business, spokeswoman Louise Shield said July 10.
Manmohan Singh's plans to give overseas companies a greater role in India's financial industry were blocked by his erstwhile communist partners, who this month withdrew support over the nuclear accord with the U.S.
Opposition Parties
Singh got 275 votes in his favor and 256 against in the confidence vote in the 541-member lower house, a margin that will force Chidambaram to secure backing from opposition parties to ensure the government's pending legislation is approved.
“In a parliamentary democracy, the ruling party reaches out to all opposition parties,'' Chidambaram said.
Chidambaram also said the government will revisit plans to list shares of government-run companies.
“Listing improves governance. There are many companies looking for capital,'' Chidambaram said, without revealing which company will sell shares. “We have to see what the market is like and what the appetite in the market is like.''
This year, foreign investors, who bought a record $17.2 billion of stocks in 2007, have turned sellers as the benchmark equity index has lost about a third of its value. The central bank expects growth in Asia's third-largest economy may slow to 8 percent this year, dragged down by record high oil prices.
To contain inflation, Reserve Bank of India Governor Yaga Venugopal Reddy has raised interest rates 15 times and ordered banks to set aside more reserves eight times since October 2004. The governor will unveil the next monetary policy statement on July 29, which will be Reddy's last policy announcement if he retires as scheduled in September.
India will announce its decision regarding the country's next central bank governor “well in time,'' Chidambaram said.
Roche Holding on Monday said it was offering $43.7 billion to take over the remaining shares of Genentech Inc. and create the seventh-largest pharmaceuticals company in the U.S.
Roche, which already owns 55.9% of the San Francisco-based drug maker, said it was offering $89 per share, 8.8% above the closing price Friday and 19% above the price a month ago. It’s the largest offer ever made by a Swiss company for a takeover.
Franz Humer, Roche board chairman, said Roche’s investment in Genentech over the years has helped it to focus on innovation and long-term projects, leading to some of the most important breakthroughs in the treatment of cancer and other life-threatening diseases.
"Our long and successful participation in Genentech has provided great benefits to both of our companies and shareholders. It has resulted in one of the biggest success stories in the healthcare industry," he said.
Global Insight analyst Gaelle Marinoni said 8.8% above the closing price Friday was not a big premium but as Roche already owned the majority of shares, the offer was "probably fair."
Minority shareholders "might try to get a little more," she said.
The announcement came as Roche announced its first half net profit declined 2% to $5.6 billion in view of a weaker U.S. dollar and a sharp drop in government purchases of the anti-viral Tamiflu because anti-pandemic stockpiles have been filling up.
Net income was down from $5.8 billion for the same period a year earlier. Roche reports profit figures only for the first six months and full year.
Sales were $19.6 billion, down 4% from the first half of 2007.
Roche has been a partner with Genentech since 1990.
Genentech did not immediately return a message seeking comment.
The combined company would generate more than $15 billion in annual revenue and employ a total of about 25,000 people in the U.S., Roche said in a statement payday loans. The Basel, Switzerland-based company did not specify how many of the 10,700 employees of Genentech would be retained.
Roche said the takeover would improve operational efficiency by reducing complexity, eliminating duplications and increasing scale in the United States.
Roche said Genentech’s San Francisco site would operate as an independent research and early development center and become headquarters of combined U.S. commercial operations.
The statement said it expects the Genentech Board of Directors will establish a committee of independent directors to evaluate Roche’s proposal with the assistance of independent outside financial and legal advisers.
Genentech board members who are employees of Roche will not participate in the evaluation of the proposal, it said.
The statement said Roche plans a cash merger between Genentech and a Roche subsidiary and that all currently outstanding shares and options of Genentech other than shares owned by Roche would be converted into cash.
Precise terms will be determined through negotiations with the independent directors, it said, adding that it expects the merger would be subject to the approval of holders of a majority of the Genentech outstanding shares not held by Roche.
"Roche expects to complete the transaction as soon as possible following negotiation of a definitive merger agreement," it said.
Hector Ruiz was pushed aside Thursday after six tumultuous years as CEO of Advanced Micro Devices Inc., as the chipmaker tries to pull itself out of a deep financial hole caused by a questionable acquisition and a major product gaffe.
Ruiz, 62, who had been the only person to head AMD (AMD, Fortune 500) other than founder and longtime CEO Jerry Sanders, is stepping down as chief executive but will remain on the board of directors. Ruiz, one of the few Hispanic CEOs of a major U.S. corporation, had also been AMD chairman but now takes on the title of executive chairman, a distinction that lets him retain some day-to-day responsibilities.
He’s being replaced as CEO by AMD’s current chief operating officer, Dirk Meyer, 46, an engineer and chip designer who has been helping Ruiz run the company since 2006. That means he knows AMD’s operations intimately but also that he shares some of the responsibility for the company’s financial distress.
"He is the right leader at the right time for this company," Ruiz said.
Meyer had previously led AMD’s microprocessor division, the company’s primary business unit. Microprocessors act as the brains of personal computers.
Nearly all the world’s personal computers and many of the servers inside corporate data centers run on chips made by AMD or its much larger Silicon Valley rival, Intel Corp. (INTC, Fortune 500) Intel commands 80% of the global market for microprocessors. AMD has roughly the other 20%.
Meyer was involved in the design of AMD’s Opteron server chip, which marked the company’s 2003 foray into a lucrative segment of the server market where Intel had a stranglehold. The success of that chip - and Ruiz’s sales savvy in lining up new customers -helped AMD transform itself from a perennial second-fiddle competitor to Intel into a serious rival across all computing platforms.
But the semiconductor industry is notoriously volatile, prone to boom-and-bust cycles. AMD has crashed hard over the past two years, racking up billions in losses and struggling to regain the competitive edge it squandered against Intel.
The management changeover will be welcome news to AMD investors who have questioned Ruiz’s leadership as the company has faltered. But it’s unclear if Meyer’s appointment will be enough to woo Wall Street back to a company that hasn’t yet provided a clear picture about how it intends to mend its battered balance sheet.
$1.19 billion quarterly loss
The executive changeover came as AMD reported that it lost $1.19 billion in the second quarter, worse than the $600 million it lost in the same period a year ago 1500 payday loans. Taking one-time events into account, AMD’s adjusted loss totaled 60 cents per share, versus the 52 cents expected by analysts polled by Thomson Financial.
AMD’s revenue rose to $1.35 billion from $1.31 billion, but it was short of the $1.45 billion in revenue expected on Wall Street.
AMD shares were down 20 cents, or 3.8%, to $5.10 in after-hours trading. The stock had finished trading Thursday up 24 cents, or 4.7 percent, at $5.30. AMD’s stock was above $40 per share as recently as 2006, and the resulting fall has vaporized $20 billion in shareholder wealth.
Ruiz’s tenure will be marked by the way AMD became a much more dangerous rival to Intel than it had ever been in AMD’s nearly 40-year history. He also was an effective advocate for pushing AMD’s antitrust claims against Intel to regulatory authorities around the world. On Thursday, in fact, European regulators broadened their antitrust case against Intel, claiming that it has deliberately squeezed AMD.
Yet Ruiz ultimately takes the blame for a series of management mistakes and technical problems.
Technical glitches, poor investments
One notable fumble happened in the aftermath of the original Opteron chip’s success. A technical glitch delayed the launch of the Opteron’s successor by eight months, forcing AMD to slash the price of its existing chips to stay competitive.
AMD also continues to be hurt by the heavy debt it took on to finance its $5.6 billion acquisition of graphics chipmaker ATI Technologies in 2006. AMD says ATI is now worth just over half the price it paid.
The deal was done to improve the graphics abilities of AMD’s chips - increasingly important with more Internet video and high-definition movies being watched on computers. But it has forced AMD to sell off parts of itself and tap the market for urgent cash infusions to stay afloat.
In November, the company sold an 8.1% stake to the Abu Dhabi government’s investment arm.
One of Ruiz’s primary jobs as executive chairman will be helping sort out AMD’s manufacturing strategy. The company has been working on that for more than a year but needs to crystallize it soon as it looks to cut the ponderously expensive costs of making computer chips.
AMD could end up selling some of its factories, which require constant multibillion-dollar overhauls to stay cutting-edge. AMD might also offload ancillary businesses like the underperforming units that make cell phone chips and chips for digital TVs.
Now-defunct IndyMac Bancorp Inc. is under investigation by the FBI for possible fraud in connection with home loans made to risky borrowers, The Associated Press has learned.
It was not immediately clear how long the FBI’s probe of the bank has been ongoing.
The investigation is focused on the company - which was taken over last Friday by the FDIC - and not individuals who ran it, a law enforcement official said Wednesday. The official spoke on the condition of anonymity because he was not authorized to speak publicly about the investigation.
IndyMac Bank’s (IMB) assets were seized by federal regulators after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures.
The bank is the largest regulated thrift to fail and the second largest financial institution to close in U.S. history, regulators said.
The Office of Thrift Supervision said it transferred IndyMac’s operations to the Federal Deposit Insurance Corporation because it did not think the lender could meet its depositors’ demands.
FDIC spokesman David Barr could not immediately be reached for comment Wednesday.
Shortly after the FDIC took over operations, Barr said most depositors were given immediate access to up to $100,000 in their accounts and 50% of any money beyond that threshold. Depositors with joint accounts or retirement accounts could immediately withdraw greater sums.
Depositors were given receivership certificates for any money they couldn’t immediately withdraw and may be able to receive some of that money after the bank’s assets are sold off.
Early this week, hundreds of worried IndyMac customers lined up out of the bank’s headquarters branch in Pasadena, Calif., demanding to withdraw as much money as they could or get answers about the fate of their funds.
Over the last year, and faced with a cratering housing market, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors.
Countrywide Financial Corp., (CFC, Fortune 500) the nation’s largest mortgage lender, is also under scrutiny.
Additionally, two former Bears Stearns managers were indicted last month on conspiracy and securities and wire fraud charges alleging they lied to investors in a hedge fund that tanked last year as the subprime market collapsed cash advance loan. Those charges marked the first criminal charges to arise on Wall Street from the subprime mortgage debacle.
In all, the FBI is now investigating 21 companies tied to the subprime mortgage crisis, up from 19 last month. Authorities are looking into at least 1,400 mortgage fraud cases nationwide, and more than 400 real estate industry players have been indicted since March.
FBI Director Robert Mueller has said the investigations focus on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments. Losses homeowners and other borrowers are estimated at over $1 billion.
Biotechnology company Genentech Inc. says sales of its cancer treatments, led by blockbuster drugs Avastin and Rituxan, drove nearly 5% growth in second-quarter profit, but the results did not meet Wall Street forecasts.
The South San Francisco, Calif.-based company Genentech Inc. (DNA) says its quarterly profit rose to $782 million, or 73 cents per share, from $747 million, or 70 cents per share, in the prior-year period. Revenue rose 8% to just under $3.24 billion from $3 billion easy quick payday loans.
Excluding 2 cents per share for acquisitions and special items, the company earned 75 cents per share in the latest quarter.
Analysts polled by Thomson Financial expected profit of 86 cents per share on revenue of $3.23 billion.
Pittsburgh Steelers chairman Dan Rooney and his son, team president Art Rooney II, want to buy Dan Rooney’s brother’s shares in the team.
The Steelers report that some of Dan Rooney’s four brothers want to focus their business efforts elsewhere.
The Rooney family owns racetracks in New York and Florida and they’ve added forms of gaming that are inconsistent with NFL gambling policy.
The team says the NFL is working with the Rooneys on an agreement concerning separation of gambling interests and on restructuring the ownership if part of the team is sold.
Dan Rooney says he’ll work to keep the team in the Rooney family and in Pittsburgh free credit report.com. Art Rooney II says the discussions should have no affect on the team or its fans.
Russian President Dmitry Medvedev, joining his first summit of world leaders today, likely will try to repair ties frayed by predecessor Vladimir Putin's confrontational tactics.
“Medvedev is playing the role of a good cop after Putin to improve Russia's image in the West,'' said Yevgeny Volk, an analyst in Moscow for the Washington-based Heritage Foundation. “He's a polite person, an educated and intelligent guy.''
The new president will use his softer touch to push for greater weight in the global financial system. In doing so, he will open a new front in a campaign for influence begun by Putin, who mainly focused on expanding Russia's geopolitical clout.
“Russia today is a global player,'' Medvedev told an investment forum in St. Petersburg in May. “We must recognize its responsibility for the destiny of the world and we want to participate in shaping the new rules of the game.''
Fundamental disagreements remain between the East and West, and there is little chance the new president will resolve them at this week's summit of the Group of Eight industrialized nations in Hokkaido, Japan.
Russia, the world's biggest energy exporter, is challenging the U.S. and its European allies on a range of fronts. It opposes NATO's eastward expansion, Kosovo's independence and U.S. plans for a missile-defense system in former Soviet satellite states.
Medvedev, Putin's handpicked successor, has avoided the former president's aggressive tone since his May 7 inauguration. During his eight years as president, Putin threatened to point nuclear missiles at U.S. allies in eastern Europe.
`Frightening Monster'
Now that he has established a new center of power as prime minister, Putin has continued railing against the U.S. In a Le Monde interview on May 30, the 55-year-old former KGB colonel called the country a “frightening monster.''
Medvedev, a 42-year-old lawyer, already has made strides toward mending relations. He earned positive reviews from European Commission President Jose Manuel Barroso, 52, after meeting European leaders in Siberia last month. They began talks on an agreement defining all future cooperation between the two sides.
“I hope to have very good working and, if possible, personal relations with President Medvedev,'' Barroso said.
In Japan, the Russian president plans to meet President George W. Bush today for the first time as leaders at 11:30 a.m. The two met in April while Medvedev was president-elect.
Meeting Brown
Medvedev also will hold talks with U.K free credit report online. Prime Minister Gordon Brown, the first encounter between the two countries' leaders since the 2006 radiation-poisoning murder in London of dissident ex-KGB agent Alexander Litvinenko. Russian authorities refused to extradite a former KGB bodyguard wanted for the crime, sending bilateral ties to a post-Cold War low.
The talks will be a “step forward,'' Medvedev aide Arkady Dvorkovich said July 3.
The two leaders likely will discuss BP Plc's battle with a group of Russian billionaires for control of TNK-BP, a joint oil-production venture. London-based BP and the Russians each have a 50 percent stake in the company, which provides a quarter of BP's total output and a fifth of its proved reserves.
BP is resisting efforts by the Russians to replace management. The case has prompted warnings from the U.K. and the European Union that the row may damage foreigners' confidence in the security of investing in Russia.
On financial issues, Medvedev wants to translate Russia's economic might into greater influence. Russia has more than $500 billion of currency reserves and is the G-8's fastest-growing economy.
Seeking Balance
The world's financial structure “should be based on a balance between leading economies,'' Medvedev told reporters from G-8 nations in an interview released July 3.
Medvedev said in the same interview the global financial crisis showed that no single country or currency can guarantee stability. The Russian ruble should become one of the world's reserve currencies, he said.
“The West shaped most of the global financial and economic architecture in its own interests,'' Russian Foreign Minister Sergei Lavrov said June 20. “Now, with the rapidly growing emerging economies of China, Russia, India and Brazil experiencing a burst in their financial and economic potential, this system's inadequacy is becoming clear.''
Russia's past attempts for a greater say in such matters have been thwarted. Last year, it proposed former Czech prime minister and central bank Governor Josef Tosovsky to head the International Monetary Fund, a post the EU traditionally selects. The EU's candidate, former French Finance Minister Dominique Strauss-Kahn, won the post.
“Russia sees the current balance of forces as transitional,'' said Fyodor Lukyanov, an analyst at the Council on Foreign and Defense Policy in Moscow. “It is readying itself for a new world order.''
Oil dropped below $144 a barrel on Friday, but was still within sight of record highs reached in the previous session when traders bought into the market ahead of a holiday weekend in the United States.
U.S. crude oil was down $1.44 at $143.85 a barrel by 1:00 p.m. EDT, below an all-time high of $145.85 hit on Thursday. The contract has risen more than 50 percent this year.
London Brent was down $1.66 at $144.42.
Prices fell more than a dollar after Iran said it would make a response later on Friday to proposals from six world powers to try to resolve a long-running dispute over its nuclear development program.
Iran subsequently handed its response to European Union foreign policy chief Javier Solana, but did not give any details about its content.
The United States, China, Russia, Germany, Britain and France have offered trade and other incentives to Iran, which is facing sanctions because it has refused to give up its nuclear program cash advance.
PRE-HOLIDAY RUSH
Investors had rushed into crude oil ahead of the U.S. independence day holiday on July 4, because they were wary of any escalation in tensions between Iran and Israel that have contributed to oil’s rise to a record of $145.85 this week.
When it comes to advertising on the Internet, industry experts say "funny" sells. Viral video ads are a relatively new market and in just a short time have managed to change the rules of traditional advertising.
"We’re trying to experiment out there and do things that are interesting and engaging," said Reuben Hendell, CEO of MRM Worldwide.
That includes over the top humor and ads that masquerade as home videos. BMW recently went as far as making a 30-minute mockumentary about a fictional Bavarian town that comes up with a plan to catapult the latest BMW 1-series vehicle from Germany to the United States.
The goal is to create buzz and hopefully tap into new customers.
"We never target demographically. We always focus psycho-graphically," said Jack Pitney, vice president of Marketing at BMW North America. "It means what kind of mindset do we think this vehicle will really resonate with? In the end it could be an 18-year old and it could be an 80-year old. But if they share a similar mindset we think we have the right car for them."
BMW went to great lengths to keep the public guessing about whether there was any truth to the spot payday advances. They created Web sites for the made-up German town as well as one of the characters. Another character was given his own Facebook profile where he made 800 friends. It was months before BMW finally took ownership of the ad.
Industry experts say there’s still a learning curve in how far they can take the joke. "If you get too quirky or a little too obtuse with what you’re trying to say, people might just miss the whole idea," Hendell said.
Or you could end up scaring people - like a recent Internet ad that showed cell phones popping popcorn making people wonder if cell phones can be damaging to the brain. That ad like the BMW mockumentary was also a hoax.
In the end, BMW’s audience got the joke. The company says it received 10 million hits as well as better than anticipated sales of the 1-series model featured in the viral video ad.
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