The heads of the U.S. automakers are pleading with Congress for an expanded $34 billion rescue package. They were greeted with fresh skepticism in their encore appearance on Capitol Hill. GM CEO Rick Wagoner admitted that mistakes were made, and said "we're learning from them." The Big Three executives made the trip from Detroit in new-model hybrid autos made by their respective companies, two weeks after a botched appeal for $25 billion in which they were chided for flying on private jets to beg for money. Chrysler CEO Bob Nardelli promised that his company, recipient of a previous government-subsidized rescue loan in the 1970s that it repaid, would repay taxpayers by 2012 and would devote itself to manufacturing "fuel-efficient cars and trucks that people want to buy." Senator Richard Shelby of Alabama, the senior Republican on the panel, complained that the price tag on the package had jumped since the trio last appeared just two weeks ago. Even Banking Committee Chairman Chris Dodd, a Democrat who supports helping the industry, said detailed plans submitted earlier this week by the three auto companies left a lot of questions unanswered. The Connecticut Democrat said that if the problem were simply one of car makers failing to adapt to global competition, "I'd let them fail." But at a hearing, Dodd also said that such an approach would amount to playing "Russian roulette with the economy of the United States." He said he thought automakers had made a better case for federal assistance than the financial industry, which has benefited from a $700 billion rescue plan.
Congressional officials say the auto bailout plan to tap fuel-efficiency loans for emergency aid to the Big Three doesn't come close to covering the $34 billion carmakers say they need to survive. The officials say budget analysts have told top Democrats privately that diverting funding for the $25 billion innovation program would yield only $10 billion to $15 billion in short-term operating loans. A group of auto state Republicans and Democrats is pushing a bill, backed by the White House, that would tap the program to finance an emergency bridge loan. It was designed to help automakers produce greener vehicles. The officials spoke on condition of anonymity because they were not authorized to disclose the analysis.
AT&T's joining the recession's parade of layoffs. The Dallas-based telecommunications company announced today that it plans to cut 12,000 jobs. That's about four per cent of its work force. The nation's largest telecom says the layoffs will take place this month and throughout next year. It also says it plans to reduce capital spending next year. It's not yet clear what departments and cities would suffer the cuts. However, like most telecom companies, AT&T has been seeing many customers defect from landline phones to wireless services. The company also notes that it'll still be hiring in 2009 in parts of the business that offer cell phone service and broadband Internet access. AT&T plans to take a charge of about $600 million in the fourth quarter to pay for severance costs. The company notes that many of its non-management employees have guaranteed jobs because of union contracts. It says all affected workers will receive severance "in accordance with management policies or union agreements."
The number of new claims for jobless benefits fell unexpectedly last week, but the number of people continuing to claim benefits reached a 26-year high. The Labor Department says initial claims for unemployment insurance dropped to a seasonally adjusted 509,000, from an upwardly revised figure of 530,000 for the previous week. That's significantly below analysts' estimates of 537,000, according to a survey by Thomson Reuters. But the number of people continuing to claim unemployment benefits reached 4.09 million, the highest level since December 1982, when the economy was in a steep recession.
Retailers are reporting steep sales declines for November as a surge of shopping after Thanksgiving that was fueled by deep discounts wasn't enough to save a dreary month. As merchants report their November sales figures, it's clear that shoppers are still slashing their spending as they worry about layoffs and their shrinking retirement funds. Costco, usually a strong performer, reported a bigger-than expected drops in same-store sales. Other retailers that saw declines in same-store sales are Bon-Ton Stores, Limited Brands and Pacific Sunwear of California. Same-store sales, or sales at stores open at least a year, are considered a key indicator of a retailer's health.
Orders to U.S. factories plunged in October by the sharpest amount in over eight years as a deepening recession caused big cutbacks in demand for steel, autos, computers and heavy machinery. Analysts expect the weakness will continue for some time. The Commerce Department says factory orders dropped 5.1 per cent in October, the largest decrease since an 8.5 per cent fall in July 2000. It was larger than the four per cent drop that economists had been expecting. They believe manufacturing will continue to be under pressure for many more months, reflecting a deepening recession that is already the longest slump in a quarter-century.
The U.S. Department of Justice has asked Allied Waste Industries and Republic Services to sell some waste-hauling routes and landfills in Houston and two other Texas cities before they can merge. Houston-based Waste Management ended efforts to acquire Phoenix-based Republic last month, but could pick up pieces of Republic's business with the Department of Justice order. Republic and Fort Lauderdale-based Allied agreed last June to a $9 billion merger. The Texas Attorney General's office and others helped reach an agreement to ensure the merger doesn't reduce competition in three Texas markets.
City Controller Annise Parker has announced the refinancing of $400 million of city pension obligations, which reduces annual interest payments by $7.5 million a year. Similar to refinancing your mortgage, the city will be able to pay off the obligations two years earlier. The deal includes paying off a $300 million promissory note to the Houston Municipal Employees Pension System for which the city's Convention Center Hotel had been used as collateral.
Houston has signed a contract with Siemens to improve the energy efficiency of 271 city buildings. Mayor Bill White says retrofitting in the Clinton Climate Initiative's Energy Efficiency Building Retrofit Program brings together energy service companies, financial institutions and cities in efforts to help reduce energy consumption. Houston is the first large city to sign contracts and begin work on city facilities. The work will affect about 100 fire stations, 81 police stations, five convention and entertainment facilities, 40 libraries, a municipal courts facility and the City Hall complex.
Chicago-based Kimball Hill Homes which builds in Houston and other Texas cities, has decided to shut down, even as it looks for a buyer. Builders are having trouble getting loans to develop lots and start homes as lenders limit their exposure to real estate during the turmoil in the housing and credit markets. Kimball Hill filed for bankruptcy last April.
Federal Reserve Chairman Ben Bernanke is calling on the government to ramp up efforts to stem home foreclosures that are feeding into the country's deep economic troubles. Bernanke says although a flurry of actions have been taken to ease the housing crisis, foreclosures still remain "too high" with adverse consequences for struggling homeowners, squeezed lenders and the broader economy. Bernanke says: "more needs to be done." Bernanke said lenders appear to be on track to initiate 2.25 million foreclosures this year, up from an average annual pace of less than one million during the pre-crisis period, he said. To provide additional relief, Bernanke outlined a number of what he called "promising options" to reduce preventable foreclosures. Among them, he called on Congress to ease the terms of a government program called "Hope for Homeowners." It lets distressed homeowners refinance into more affordable, federally insured mortgages if the lender writes down the amount owed on the mortgage and pays an upfront insurance premium.
The head of the government's financial system rescue effort says it is critical that the program maintain adequate resources and flexibility to deal with unexpected challenges. Beel Kashkari, the Treasury Department official who is in charge of the $700 billion rescue effort, says in Congressional testimony that the administration believed it was critical the program maintain the flexibility and resources it needs to address new challenges as they arise. He says those goals were essential for the Bush administration's remaining time in office, but also to leave the fund with the resources needed to meet challenges that will be faced by the incoming administration of President-elect Barack Obama.
The top U.S. securities regulator says the government must start to build an "exit strategy" that includes taxpayer protections for its massive financial rescue plan. Securities and Exchange Commission Chairman Christopher Cox says with the government "`deeply involved" in many private financial institutions, it "must now begin to build a framework for our exit strategy." The Federal Deposit Insurance Corporation's Sheila Bair made the same point earlier this week, and lawmakers are starting to press the administration for an exit strategy explanation. The SEC isn't directly involved in the government's multitrillion-dollar bailout efforts but oversees brokerage and securities operations of the big banks that have received billions in taxpayer funds.
The Federal Reserve says commercial banks borrowed slightly less from its emergency lending program, while investment firms stepped up their loans. The Fed's report shows commercial banks averaged $90.3 billion in daily borrowing over the past week. That was down from $93.6 billion in average daily borrowing logged over the week ending November 26th. Investment firms drew $57.2 billion over the week ending Wednesday. That was up from an average of $52.4 billion the previous week. This category was recently broadened to include any loans that were made to the U.S. and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch.
Gasoline prices continue to tumble across Texas, settling at $1.69 per gallon this week. AAA Texas reported the average retail price per gallon slipped six cents, compared to the Thanksgiving holiday week. The nationwide average for gasoline declined eight cents, reaching $1.78. AAA Texas says gasoline prices this week are about $1.20 less than one year ago. Amarillo has the least expensive gasoline, at $1.57 per gallon. The association's survey found El Paso with the most expensive gas, averaging $1.80, which is down 12 cents from last week. Association spokeswoman Sarah Schimmer says motorists are reaping the benefit, with dramatically gasoline lower prices, as the price of oil continues to fall.
The Texas Motor Transportation Association has launched a new Web site to connect job seekers with employers in the trucking industry. Resumes can be posted, and employers can post job opportunities. The group says 110,000 additional drivers will be needed by 2014 to meet the increase of freight.