The Federal Reserve has approved proposed rules aimed at ending “unfair and deceptive” credit card industry practices. The rules target credit card companies that arbitrarily raise interest rates or don’t give borrowers adequate time to pay their bills. Such practices have cost billions of dollars worth of debt for people already struggling to cope with the economic downturn. They would also restrict practices such as allocating payments to balances with lower interest rates when a borrower has balances with different rates. A payment could not be deemed late unless the borrower is given a reasonable period of time, such as 21 days, to pay. Federal Reserve Chairman Ben Bernanke says the rules should “establish a new baseline for fairness in how credit card plans operate.” He says they should help consumers better predict the costs involved in using their credit cards. Consumers and lawmakers are praising the proposals as needed and overdue. The banking industry opposes them, saying they would limit consumer choice. The legislative director for the Consumer Federation of America says that while he hasn’t yet seen the details, the rules “appear to address some of the most significant abuses in the credit card marketplace right now.” New York Congresswoman Carolyn Maloney, a Democrat, who has introduced legislation to protect consumers from credit card abuse, says that she is pleased the Fed had adopted some aspects of her legislation.
The Federal Reserve is expanding efforts to battle the global credit crisis, in conjunction with European central banks. The Fed says it is boosting the amount of emergency reserves it supplies to U.S. banks to $150 billion this month, up from the $100 billion supplied in April. The latest moves are part of a series of actions the Fed has made since the credit crisis struck in August. The efforts are designed to increase reserves to encourage lending to consumers and businesses. It is also expanding the types of assets that investment banks can use as collateral to receive loans from the central bank. In March, the Fed used powers it obtained during the great depression to begin making loans to investment banks. Previously, the Fed only made direct lends to commercial banks.
The weekly AAA Texas Gas Price Survey found pump prices reached new record highs in all 11 regions surveyed. But there may be hopeful news on the horizon. Auto club spokeswoman Rose Rougeau says a recent federal report shows demand for gasoline fell by about six percent in February from the month before. She says that may suggest high prices at the fuel pump may be cutting demand for gasoline. The survey shows regular self-serve averaging almost $3.53 per gallon this week—almost six cents higher than last week. Nationally, the average price rose almost seven cents to over $3.62 per gallon. Houston’s average is up almost a nickel to just over $3.50 per gallon. The most expensive gas in Texas was in Texarkana, where it rose four cents to $3.53 per gallon. The cheapest gas was in San Antonio, where the average price climbed eight cents to $3.49 per gallon.
Natural gas prices are expected to rise as commercial demand increases, according to the Federal Reserve Bank of Dallas. They cite higher oil prices, several cold spells, seasonal gains in demand, reduced inventories and expectations of increasing natural gas use to generate electricity. But the report says as U.S. manufacturing activity improves, higher prices for domestic supplies can be expected. And the bank says once LNG imports become the marginal source of U.S. supply, much higher international natural gas prices should prevail.
The Labor Department says the nation’s payrolls contracted again last month, but not as much as economists feared. Some 20,000 jobs were lost, the fourth straight month of contraction in payrolls. At the same time, the unemployment rate fell to five percent. That number is derived from a separate government survey. Forecasts had called for the unemployment rate to rise, so that was also better than expected. Construction, manufacturing and retailing all saw large job losses last month.
U.S. factories saw demand for their products rebound in March, following a two-month slump. The Commerce Department, in a new report on Friday, says orders placed with U.S. manufacturers rose 1.4 percent in March. That was an improvement from the 0.9 percent dip reported in February and the 2.3 percent drop in January. The latest report on manufacturing activity was better than many economists were forecasting. They were predicting a smaller, 0.2 percent rise in orders.
President Bush is confident that good economic news is on the way. He says new rebate checks will help the economy “come on.” Bush says the slow growth of the economy is “not good enough for America.” Rebate checks of up to $600 for individuals and $1,200 started to hit bank accounts this week. They are part of a broader economic stimulus plan that also includes tax breaks for businesses as an incentive to invest. Bush called it “a robust attempt to inject life” that hasn’t fully kicked in yet. His pep talk about the economy came while visiting a technology plant in a St. Louis suburb.
The president has sent lawmakers a $70 billion request to fund U.S. operations in Iraq and Afghanistan into next spring. The request fills in the details of the $70 billion placeholder that the White House asked for when it sent its budget to Congress in February. Congressional analysts say Bush’s request would bring the total spending to fight terrorism and conduct the wars in Iraq and Afghanistan to $875 billion. The bulk of the money, $45 billion, would fund combat operations, but there’s also $3 billion to deal with roadside bombs and $2 billion to cope with rising fuel costs.
Reliant Energy says it’s offering low-income and senior customers a summer program similar to one offered by Dallas-based TXU Energy. The Houston-based TXU competitor says it’s calling a moratorium on disconnecting power from July 1st through September for critical care, low income and senior citizens or low-income customers. They’re also providing those customers extended payment plans and other assistance the company said it would also continue its cooling center programs at some community centers in Houston. Reliant’s announcement came after TXU said it won’t disconnect electric service for low-income customers or seniors if they fall behind on their bills this summer–but only if they agree to deferred payments. The utility also said it would provide $25 million to offer discounts for low-income customers. Jim Burke, chairman and chief executive of the Dallas-based utility, says the aid could be in addition to a 20 percent discount authorized by the Public Utility Commission.
Construction and engineering firm KBR says first-quarter profit more than doubled, helped by a gain from an arbitration award. The Houston-based former subsidiary of Halliburton says quarterly earnings rose to $98 million from $28 million a year earlier. Revenue rose 24.3 percent to $2.52 billion from $2.03 billion, in the same period last year. Wall Street expected $2.3 billion in revenue, according to Thomson Financial. Earnings benefited from a $51 million gain from a favorable arbitration award and were negatively offset by a $12 million charge related to a U.S. embassy project in Macedonia.