Relief is on the way for thousands of homeowners facing foreclosure. President Bush signed a massive housing bill intended to provide mortgage relief for 400,000 struggling homeowners and stabilize financial markets. It's regarded as the most significant housing legislation in decades. Homeowners who cannot afford their payments can now refinance into more affordable government-backed loans rather than losing their homes. It also offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac and tightens controls over the two government-sponsored businesses. White House spokesman Tony Fratto says the Federal Housing Administration will begin to implement the new policies right away.
Centex Chief Executive Timothy Eller says he expects negative economic conditions to continue to erode consumer confidence at least into next year, dampening prospects for an improved housing market. Eller told Wall Street analysts on Wednesday that weak U.S. employment growth and rising foreclosures, energy costs and mortgage interest rates eroded consumer confidence and hurt the Dallas-based home builder's sales in its latest quarter. The remarks come a day after Centex reported a fiscal first-quarter loss of $150.1 million. Revenue dropped 41 percent from a year earlier and sales and new home orders each plunged 35 percent. But the builder managed to reduce impairment charges from previous quarters and bolstered its cash reserves.
The California-based Mervyns chain has filed for Chapter 11 bankruptcy protection, the latest casualty of the tough retailing environment. The chain, along with some its affiliates, filed for protection from its creditors in U.S. Bankruptcy Court for the District of Delaware. It said that all of its stores will remain open and business will continue as the company reorganizes. The privately held retailer, which had been languishing for several years, operates about 175 locations in seven states—including Texas—but primarily in California. Earlier this month, Steve & Barry's, once a growing force in low-priced clothing, also filed for Chapter 11. The growing list also includes home furnishings chain Linen 'n Things, catalog retailer Lillian Vernon and specialty retailer Sharper Image. Mervyns' filing didn't come as a surprise to the industry. A growing number of vendors were delaying shipments to the company's stores and key lenders that provide finance and credit to apparel makers stopped approving orders in recent weeks.
United Title of Texas has closed all its Texas offices, including six in Houston, amid financial troubles related to its Colorado-based parent company. Austin-based United Title will cease operations in Texas, affecting about 190 employees statewide and about 60 in Houston. Offices affected include ones on Richmond, in Clear Lake, Pearland, Cinco Ranch, Cypresswood and The Woodlands. The company's title files are being turned over to First American, one of the parent firm's largest underwriters.
A General Motors official says the automaker plans to cut 15 percent of its U.S. and Canadian salaried work force--or around 5,100 jobs--by November 1st. The GM official declined to confirm the specific numbers, but indicated they were generally accurate. The official asked not to be named because the company had not planned to release the numbers until later. GM had said in mid-July that it would cut white-collar costs in the U.S. and Canada by more than 20 percent, but it wouldn't say how many workers would leave. GM President and Chief Operating Officer Fritz Henderson said at the time the company hoped most of the cuts would be made through attrition, retirements and buyout offers.
A union says enough American Airlines flight attendants have agreed to early retirement or will take leave that layoffs will not be necessary next month. Fort Worth-based American has said it needed to eliminate 900 flight attendant jobs this summer as airlines trim their schedules while dealing with crippling higher fuel costs. An online statement from the Association of Professional Flight Attendants says, "based on the overage leave proffer results, none of our members will be furloughed effective August 31st, 2008. American also confirms no flight attendant furloughs will be necessary next month because enough workers are retiring or going on leave.
Lawmakers continued pressing officials with Houston-based military contractor KBR about deficient electrical work in Iraq. The problems are being blamed for the electrocutions of at least 16 people. Lawmakers want to know what's being done to protect U.S. troops. California Democrat Henry Waxman says deficiencies have been acknowledged, but little has been done about them. Pentagon officials also were under the gun in the House Oversight and Government Reform Committee hearing. An initial report found no evidence that KBR or the Defense Contract Management Agency were aware of any life-threatening hazards at an army barracks in Iraq. That's where Army Sergeant Ryan Maseth of Pittsburgh was electrocuted. KBR holds a multi-billion-dollar contract to provide basic services including food and shelter for U.S. soldiers.
The deal to take Clear Channel Communications private has closed. Bain Capital Partners and Thomas H. Lee Partners bought the San Antonio-based company for $17.9 billion--paying investors $36 per share. The equity firms assumed another $5.9 billion in debt. The deal keeps chief executive Mark Mays, the son of one of the company's founders, along with some other members of the management team in place. The buyout was announced in November 2006, but was delayed by investors who wanted more money and a chance to continue owning a portion of the company. By the time they were satisfied, the credit market seized up and lenders were reluctant to fund the deal. After a series of lawsuits, the deal was renegotiated down from $39.20 per share. Shareholders last week approved the new buyout plan.