The Federal Reserve has slashed a key interest rate by half a percentage point as it seeks to revive an economy hit by a long list of maladies stemming from the most severe financial crisis in decades. The central bank reduced its target for the federal funds rate, the interest banks charge on overnight loans, to one per cent, a low last seen in 2003-2004. The funds rate has not been lower since 1958, when Dwight Eisenhower was president. The cut marked the second half-point reduction in the funds rate this month. The Fed slashed the rate by that amount in a coordinated move with foreign central banks on October 8th.
Officials at Rice University and Baylor College of Medicine–one of only nine stand-alone medical schools in the United States–are discussing a possible merger. The Houston Chronicle reports the merger would enhance the reputation of Rice–Texas’ top private university–and bring Baylor the security of a university affiliation. The newspaper reported such an affiliation is often necessary to keep medical schools afloat financially. In a joint statement, the schools said they have a long history of valuable collaborations and are exploring the possibility of a closer affiliation through preliminary talks. The statement said the schools would provide no further details at this time.
The president of the University of Texas Medical Branch has told employees he’s unsure whether they will have jobs because a lot of people have a say in what happens to the Hurricane Ike-damaged academic medical center. Ike caused nearly $710 million in losses to UTMB and officials said about $100 million of the damage is covered by insurance. UTMB planned to lay off one-third of its 12,000-employee work force but reversed course earlier this month. That’s because state legislators helped secure funding to save the 4,000 jobs at the state’s oldest medical school. The Galveston County Daily News reports UTMB President David L Callender told 600 employees that he did not have any answers about possible layoffs. Administrators have organized several job fairs on campus to help employees find a new place to work if they want to. UTMB will continue to pay salaries to employees who are not working until November 14th. After that, if the legislature does not come up with another emergency funding plan, many medical branch employees are likely to be out of their jobs.
Centex’s CEO predicts the housing market’s woes will probably get worse before they get better due to the nation’s financial crisis and rising unemployment, and says Congress should pass another housing stimulus package. Timothy Eller made the remarks during a conference call with Wall Street analysts on the company’s fiscal second-quarter 2009 results. Eller says Congress should offer tax incentives for homebuyers and take steps to prevent homeowners from going into foreclosure.
The Justice Department has approved a much-anticipated merger between Delta and Northwest, clearing the way for the creation of the world’s largest airline. Federal regulators said the merger would likely benefit consumers without substantially reducing competition. Another hurdle remains ahead, however: a federal lawsuit seeking to block the deal. Trial is set for November 5th in San Francisco. The combined airline would be called Delta and keep its Atlanta headquarters and its chief executive, Richard Anderson. Northwest would become a wholly owned subsidiary of Delta during the integration process. Wednesday’s decision caps a six-month Justice Department investigation of the deal.
Average U.S. air fares are the highest in the 13 years that the government has been tracking them. The Transportation Department said Wednesday that domestic fares jumped 8.1 per cent in the second quarter compared with a year ago. The government says the average domestic itinerary fare in the second quarter jumped to $352, breaking the record set in the first quarter of 2001. The highest fares were in Cincinnati, and the lowest were at Dallas Love Field.
Sam’s Club is building its first Hispanic-themed store in Houston. Más is testing the concept with a store opening in the first half of 2009 on the North Freeway. It will stock more imported beverages, spices and candies from Mexico and Central America than in its Sam’s Clubs. Annual memberships will be separate from a Sam’s Club membership.
DineEquity is selling 22 Houston-area Applebees restaurants to a franchisee with Kansas-based Peterson Group. It’s part of the Dallas-based Applebee’s plan to sell 66 Applebee’s in Houston, Dallas and Albuquerque, New Mexico.
The Port of Houston Authority has approved a $5.5 million amendment to its contract with Direct Energy. Recent additional usuage required the port to extend its contract at the same fixed price.
The U.N. General Assembly has overwhelmingly approved a resolution urging the United States to repeal its 47-year-old trade embargo against Cuba. The vote in the 192-member world body was 185 to three, with two abstentions. Last year, the vote was 184 to four with one abstention. Cuban Foreign Minister Felipe Perez Roque said before the vote that it will be up to the next U.S. president to decide whether the embargo is a failed policy. But he stressed that the United States will never bring the Cuban people to their knees. U.S. diplomat Ron Goddard said the embargo is justified because the Cuban government is undemocratic and restricts political and economic freedom.
Government data show orders to U.S. factories for big-ticket manufactured goods posted an unexpectedly strong showing in September. A surge in demand for airplanes and autos pushed orders up by the largest amount in three months. The Commerce Department reported that orders for durable goods rose by 0.8 per cent, surprising economists who had expected a decline. Orders had fallen by 5.5 percent in august, which was the biggest setback in nearly two years. The September increase was the largest gain since a 1.4 per cent rise in June, but all the strength came in the transportation sector. Demand for commercial aircraft, an extremely volatile category, shot up by 29.7 per cent and orders for motor vehicles rose by three per cent, the biggest gain in more than a year.
The Treasury Department says it has made the first payments from the $700 billion rescue fund, a total of $125 billion in stock purchases from nine major financial institutions. Treasury officials released a report on the payments, showing that the $125 billion in purchases of bank stock were made on Tuesday. The program is designed to inject fresh capital into the nation’s banks as a way to encourage them to resume more normal lending. The report showed that the payments included $25 billion each to Citigroup, JPMorgan Chase and Wells Fargo. In addition, Bank of America received $15 billion and Merrill Lynch, which is being acquired by Bank of America, got $10 billion.
Some help for troubled borrowers could be coming from the government as soon as tomorrow. Sources say officials are planning to unveil a plan that would guarantee around $500 billion in loans. They say about $50 billion could come from the financial industry bailout, for loan modifications that would lower interest rates for a five-year period. The program would be run by the Federal Deposit Insurance Corporation, and could guarantee around three million loans. Details are still being finalized.
General Motors says its third-quarter worldwide sales fell 11 per cent on weak U.S. demand, falling short of Toyota’s total for the period. Detroit-based General Motors said it sold a total of 2.11 million vehicles in the third quarter, while Toyota’s sales fell four per cent to 2.24 million. Japan-based Toyota also blamed a continued drop in U.S. demand for its decline. For the first nine months of the year, GM sales fell 5.8 per cent to 6.66 million vehicles.
An automotive trade publication reports General Motors is postponing nearly all of its spending on product development in 2009 and 2010 as part of a cost-cutting effort. Automotive News, citing sources familiar with GM’s plans that it didn’t name, has reported on its Web site that the Detroit-based automaker also is cutting spending on engineering, design and development. The report says General Motors hopes to save as much as $1.5 billion and that the introduction of key vehicles such as the new compact Chevrolet Cruze, due to start production in 2010, could be delayed. GM spokesman Tom Wilkinson says the company isn’t commenting on specific product programs, but continues to align resources behind highest-priority ones. He says GM evaluates its product programs monthly.
IKB Deutsche Industriebank announced its main shareholder has completed the sale of its majority stake to Lone Star Funds. IKB Deutsche Industriebank was an early victim of the subprime lending crisis. Germany’s state-owned KFW Development Bank has transferred its roughly 91 per cent holding in IKB to the Dallas-based private equity firm. KFW has not given details of the deal, which was reached in August. IKB lends to small and medium-sized German companies.
BP has started the second well at its Thunder Horse field in the Gulf of Mexico. BP is now extracting gas and more than 100,000 barrels of oil a day from the field after it began pumping fuel from the first well in June. The company plans to have four wells open at the site by the end of the year. The project had been delayed for about three years because of hurricanes and equipment failures.
Houston Rockets owner Leslie Alexander announced an exclusive partnership today with a Chinese company to distribute his wine brand. Alexander formalized the agreement with Topchoice Faniya at a signing ceremony at the Toyota Center, a few hours before the Rockets’ regular-season opener against Memphis. Alexander has owned the Rockets since 1993 and has made business connections in China since signing Yao Ming in October 2002. Alexander established his vineyard in New York in 2000. He said all future vintages will be distributed in China, starting with the 2007 version. The Rockets also announced a separate partnership with Uni-President Enterprises, a Chinese food producer and distributor. The agreement includes signage rights in the Toyota Center.
Environmentalists are welcoming a report by an independent panel of scientific advisers which found flaws in the government’s assurance that a controversial chemical–bisphenol a–is safe for use in food containers. BPA is used to make plastic for food packaging, baby bottles and other consumer and medical products. Consumer groups wanted the Environmental Protection Administration to ban the chemical in products for infants because of concerns that it can interfere with their development. But the Food and Drug Administration recently said there is no harm from the low doses of BPA that babies, children and most adults get by eating foods from containers made with the chemical. The report by independent experts, obtained by the Associated Press, said the margins of safety outlined by FDA are inadequate.
The next version of Microsoft’s widely-deployed Windows operating system is promised to be an improvement over its current version, the often-criticized version known as Vista. Microsoft says it will not nag users nearly as much. PC users will be able to test the new edition early next year. The world’s largest software maker also is making Word, Excel and other key elements of office–its flagship “productivity” programs—able to run in a Web browser. The move is meant to help confront rivals such as Google that offer free word processing and spreadsheet programs online, threatening one of Microsoft’s most precious profit centers. The came at a Microsoft conference for software developers. The forthcoming Windows 7 will let users choose to see fewer alerts and warnings from their computers. Rampant notifications alerting people to security risks irritated many Vista users.
Centex says it narrowed its loss in the fiscal second-quarter from the prior-year period, but the homebuilder saw revenue and new home orders plunge as dismal market conditions continued. The Dallas-based company said it lost $171.9 million in the three months ended September 30th. That compares with a loss of $643.8 million in the same period last year. Revenue dropped 54 per cent to $1.01 billion from $2.22 billion last year. Analysts polled by Thomson Reuters had expected revenue of about $1.3 billion. Orders tumbled 54 per cent to 2,728 houses.