Treasury Secretary Henry Paulson is pushing for changes because of lessons already learned from the mortgage meltdown and credit crisis. Paulson says a presidential working group wants stronger regulatory oversight of mortgage lenders. It wants federal and state regulators to beef up monitoring of mortgage lenders, including new licensing standards for mortgage brokers. The group also calls for improvements in credit-rating agencies that are under fire for failing to correctly measure risk on complex mortgage investments. Paulson says the group also wants improved disclosures and assessments of risks. The group was set up in the wake of the 1987 stock market crash. Paulson says the effort is not about “finding excuses and scapegoats.”
The Senate has embraced the idea of extending President Bush’s tax cuts aimed at low-income workers, married couples and people with children after he leaves office. But the chamber rejected a plan to extend the cuts for middle- and higher-income taxpayers, investors and people inheriting businesses and large estates. The overwhelming 99-1 vote was largely symbolic. But it put Senators in both parties on the record for when the tax cuts expire in three years. Republicans complain that a plan for future tax cuts by Montana Democrat Max Baucus would still permit increases in income tax rates and higher taxes on investments and stock sales.
Chrysler is telling employees worldwide to take a mandatory two-week vacation in July. Chrysler informed employees of the plan in an e-mail sent to employees that was obtained by the Associated Press. Chrysler spokeswoman Mary Beth Heilprin confirms the e-mail was sent. Chrysler plans a corporate-wide shutdown the weeks of July 7 and July 14. Heilprin says some employees may be asked to stay on to work on special projects. It’s common for automakers to shut down plants in July, but this also would affect salaried workers. Chrysler says the shutdown should help it boost productivity and efficiency. Heilprin didn’t have any details about why the decision was made.
Crude oil futures prices ended higher on the New York Mercantile Exchange. The near-month contract for the benchmark grade rose 41 cents, closing at $110.33 a barrel–a new record. U.S. gasoline prices at the pump surged 2.1 cents overnight to a national average of $3.26 a gallon, according to AAA and the Oil Price Information Service.
The U.S. dollar continues its slide overseas. It dipped below 100 Japanese yen for the first time in 12 years and hit record lows against the Euro. The drop comes amid a growing consensus that synchronized efforts by central banks will not stop deterioration in the U.S. economy. The Euro exceeded $1.56 for the first time, so that ?1 equals 64 cents. The dollar fell as low as ¥99.75 in Tokyo before bouncing back to ¥100.16. The dollar has been declining on growing speculation that the Federal Reserve will cut interest rates further to in a bid to shore up the American economy and calm jittery financial markets. An analyst in Japan says the dollar’s slide likely won’t stop until worries subside about the U.S. credit crunch, set off by a spike in defaults on risky mortgages.
Gold futures hit $1,000 an ounce for the first time Thursday morning as the dollar continues to decline and crude oil prices rise. That’s a jump of nearly 20 percent since the beginning of the year, and follows a year that saw gold prices rise nearly 32 percent. Gold futures hit the benchmark after the dollar fell below ¥100 during Asian trading Thursday and also sank to all-time lows against the Euro. Gold has been pushing up against the $1,000 an ounce mark for weeks mainly due to the weaker dollar. Interest rate cuts–and the prospect of more on the way–have weakened the dollar so much that foreign investors can buy dollar-based commodities like gold more cheaply.
The amount of goods held by businesses on shelves and backlots surged by eight-tenths of a percent in January. The rise in inventories reported by the Commerce Department is the largest in nearly two years. The increase is larger than forecast, following a seven-tenths percent increase in December. The rising level of inventories comes as business confidence slumps in the wake of the sharp slowdown in economic activity overall.
Retail sales fell by a much worse-than-expected amount in February. The Commerce Department says retail sales plunged by six-tenths of a percentage point last month. That’s far worse than the small two-tenths of a percentage point increase that analysts had been expecting. The weakness was widespread–with sales of autos, furniture and appliances all down.
Continental Airlines pilots picketed in New York this week as a prelude to contract negotiations that begin in two months. The chairman of the Continental pilots union says they gave up more than $200 million in concessions in 2005 to help the airline overcome the threat of bankruptcy. Negotiations will center on pay, retirement and insurance benefits. The pilots earlier this week voted to increase the amount of the union’s merger fund, with Continental and United discussing the possibility.
Amtrak workers who came close to striking earlier this year have ratified a new contract. About 10,000 workers represented by nine unions had been working under outdated contracts for eight years. The parties finally announced a tentative contract January 18th, following years of fruitless mediation. The White House intervened late last year, just before a deadline ran out that would have permitted the workers to strike. The new contract is based on recommendations by a presidential emergency board. It makes wage increases retroactive from 2000, a provision Amtrak had resisted. The last of the nine unions ratified the agreement this week. Amtrak spokesman Cliff Black says several unions that were not part of the mediation process have followed with their own agreements, and others are in negotiations. The railroad has about 16,000 union-covered employees.