The Federal Reserve says that it has voted to endorse an arrangement to help troubled investment house Bear Stearns. The central bank says it stands ready to provide extra resources to combat a serious credit crisis. The Fed announcement came in a brief two-sentence statement that was issued as stocks were down sharply on Wall Street. It said that the Fed is “monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system.” The plan will provide secured funding to Bear Stearns for an initial period of 28 days, seeking to provide short-term relief for Bear Stearns. Treasury Secretary Henry Paulson praised the move by the Fed, saying the nation’s financial system will be able to weather the problems.
President Bush is conceding that the country is “going through a tough time,” but he’s expressing confidence about an economic rebound. He told the Economic Club of New York that it’s not the first time the economy has been rattled, and that he’s certain it will ride out its troubles. The president said he speaks from the position of optimism. He spoke as evidence of an ailing economy piled up. The dollar fell, oil and gold hit record highs, the economy is shedding jobs, retail sales saw a big drop and the effects of a severe credit squeeze linger. Economic worries have replaced the Iraq war as the number one concern of voters in this presidential election year.
The Bush administration unveiled a new proposal that would give prospective home buyers easier-to-understand information about the lending process and save them money in closing costs. The proposal, from the Department of Housing and Urban Development, is the latest in a series of White House initiatives to help end a housing market crisis. It would require lenders to give borrowers a federal disclosure form that includes a summary of loan terms, interest rates and monthly payments, and information on whether the principal balance can increase and whether the loan has a balloon payment or prepayment penalty. The federal form would be simpler than private-industry forms, which vary state by state. The mortgage broker industry is expected to oppose the proposal because it also requires that lenders disclose their payments to brokers. Brokers get premiums for steering customers toward certain lenders. The proposal could go into effect before the summer.
Federal Reserve Chairman Ben Bernanke has promised to help struggling homeowners all he can amidst a wave of foreclosures. Bernanke, in a speech for the National Community Reinvestment Coalition’s annual meeting, says the central bank is strongly committed to fully using its authority, expertise and other resources to help alleviate personal distress. Record-high foreclosures are aggravating problems in the housing market and for the national economy, which many people fear is on the verge of a recession or in one already.
The Labor Department says more than $11 million will be restored to the settlement fund for former Enron employees whose retirement fund went belly up when the company collapsed. A settlement reached Thursday ends a contempt motion filed by Labor Secretary Elaine Chao in February against Hewitt Associates. Hewitt was hired by the Enron Creditors Recovery Corporation to allocate settlement money owed to Enron employees. In 2006, former Enron workers received about $89 million, the first payment in a lawsuit settlement over money the workers lost through Enron’s employee stock and 401(k) plans. But more than 20,000 workers were overpaid or underpaid by nearly $22 million because of a software glitch blamed on Hewitt. Hewitt is no longer the administrator. The Labor Department says the Recovery Corporation and Hewitt have agreed to restore more $11.2 million to the settlement fund.
Toyota’s San Antonio truck production plant has reduced the number of Tundras it’s building, according to the San Antonio Express-News. The South Side plant is currently producing 650 trucks a day—down from a peak of about 725 trucks a day in the first few months of its operation. That puts it on track to build about 162,500 trucks this year. The plant is capable of producing 200,000 a year. In its first full year of production last year, 138,619 Tundras were built.
General Motors says it is recalling more than 207,000 Buick Regal and Pontiac Grand Prix sedans because they can develop oil leaks that can cause fires. GM says the cars are safe to drive, but drivers should not park them in garages or carports. The automaker says the recall affects 1997 to 2003 Buick Regal GS and Grand Prix GDP models with 3.8-liter supercharged V-6 engines. GM says oil can leak onto the exhaust manifold if a driver brakes hard. If the oil gets hot enough it can catch fire. It says the problem has caused 267 fires and six injuries. The company says owners will be notified when parts are available to fix the problem.
A strike at a General Motors parts supplier could soon affect production at GM’s Arlington assembly plant. American Axle and the United Auto Workers talked for several hours Thursday and agreed to return to bargaining. Workers have been on strike since Monday. The parts shortage from the strike forced GM to close all or part of 28 plants. UAW Arlington local president J.R. Flores says GM has told workers the plant can stay open at least through March.
Texas retail gasoline prices continue to climb higher into record territory this week. The weekly AAA Texas Gas Price Survey shows regular self-serve is averaging $3.16 per gallon across the state–six cents more than last week. Nationally, the average is $3.27 per gallon—eight cents more than last week. Houston’s average is almost $3.16 per gallon—up 7.7 cents. Auto club spokeswoman says prices reached record heights in all parts of the state, except for Amarillo and Texarkana. She says record crude oil prices continue to push retail gasoline prices higher. San Antonio has the state’s lowest average with regular self-serve at $3.12 per gallon–five cents more than last week. Fort Worth surpassed Dallas as the Texas locale with the most expensive gas, averaging $3.17 per gallon. That’s up nine cents from last week.
United Airlines has boosted its ticket prices by as much as much as $50 per round-trip–raising the stakes in the airline industry’s battle against rapidly rising fuel costs. The broad-based domestic increases went into effect late Thursday. A United spokeswoman says the increases are based on the length of the flight. That means trips of under 500 miles will cost travelers $4 to $10 more round-trip, while flying more than 1,500 miles will be $12 to $50 more expensive. The move comes just a week after the Chicago-based carrier raised its domestic fuel surcharge by an additional $6 to $10 per round trip, effectively raising fares. Houston-based Continental Airlines matched the increase. Tim Smith with American Airlines says the Fort Worth-based carrier is studying the fare initiative, but hasn’t taken any action. Southwest Airlines spokeswoman Ashley Rogers told the Associated Press that the carrier is not increasing fares at this time. Farecompare.com reports it’s the fourth week in a row that some airlines have raised ticket prices.
Congressional negotiators will soon be smoothing out the wrinkles in competing versions of a federal budget blueprint just passed by the House and Senate. Lawmakers are supporting about $3 trillion in spending that would increase domestic outlays for things like education and health care, while also trimming the size of the deficit. To accomplish that, they’d allow many of the existing tax cuts put into place by President Bush to expire as scheduled when they were approved. Republicans accuse Democrats of gearing up for what one calls a “massive, economy-choking, tax increase.” Democrats say they’re just trying to fix seven years of a GOP “fiscal train wreck.” The Senate has also rejected calls from all three senators running for president to take a one-year break from pork-barrel spending. The measure failed 71 to 29.
Another burn patient has died of injuries suffered in an explosion at a Georgia sugar refinery, bringing the death toll to 13. Six patients remain in critical condition a little more than a month after the blast at the Imperial Sugar plant in Port Wentworth. Four are in serious condition. Investigators have said the explosion was fueled by airborne sugar dust at the refinery, near Savannah. They have not yet determined what ignited it. The plant is owned by sugar Land-based Imperial Sugar.
The U.S. House Energy and Commerce Committee is investigating a plea deal that would fine BP about $50 million. The plea would be to criminal charges against the British oil giant for the fiery March 2005 BP Texas City refinery explosion that killed 15 people and hurt more than 170 others. Prosecutors and BP have defended the deal, but it’s drawn criticism from relatives of the dead and the workers who were hurt.
Baker Hughes in Houston says the number of rigs actively exploring for oil and natural gas in the United States decreased by ten this week–to reach 1,792. One year ago the rig count stood at 1,740. Texas lost three rigs. Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom.