World leaders meeting in Pittsburgh are pledging to overhaul lax financial regulations and work harder to control dangerous imbalances that contributed to a financial meltdown. The details come from drafts of the concluding statement of the Group of 20 Summit. The statement deals with restraining excessive bonuses for bankers and stopping financial institutions from engaging in the risky practices that contributed to the crisis. President Barack Obama and the other leaders have also declared that from now on, the G-20 will be the primary way of coordinating global economic policy. The group will take over the job that had been done for more than three decades by a smaller group of the wealthiest countries known as the G-7. The G-20 includes not only Russia, but China and developing countries such as India and Brazil. British Prime Minister Gordon Brown says "the old system of international economic cooperation is over. The new system, as of today, has begun."
New U.S. home sales posted a tepid 0.7 per cent increase last month, missing Wall Street expectations and providing more evidence that the housing market recovery remains tentative. The Commerce Department says sales inched up to a seasonally adjusted annual rate of 429,000 from a downwardly revised 426,000 in July. Economists surveyed by Thomson Reuters had expected a pace of 440,000. While it was the fifth straight increase and the strongest report in 11 months, sales were down 4.3 per cent from the same month last year. The median sales price of $195,200 was off 11.7 per cent from $221,000 from a year earlier, and 9.5 per cent below July's level of $215,600.
Orders for goods expected to last at least three years fell unexpectedly in August due mainly to a sharp drop in demand for commercial aircraft. The second decline in orders for durable goods in three months is evidence that any recovery in manufacturing will be slow and gradual. The Commerce Department says orders for durable goods dropped 2.4 per cent in August, after increasing a revised 4.8 per cent in July. Wall Street economists expected a 0.5 per cent increase, according to a survey by Thomson Reuters. Orders for commercial aircraft and parts--a volatile category--plummeted 42.2 per cent after nearly doubling in July. Excluding aircraft and other transportation goods, orders were flat in August, also below analysts' expectations of a 0.5 per cent rise.
In a partnership with Comerica, sixth graders at Paul Revere Middle School are learning the value of saving in a program designed to promote financial literacy. Comerica's Vanessa Reed says an in-school banking center has been set up.
"They get to make regular deposits into the accounts, so they actually get to see the process in action—it's a hands-on program, basically—to make sure that they have the tools and the resources that they need to manage their finances."
Ed: "Because I remember when I was in school, I mean we didn't learn stuff like this. You know, you didn't learn how to balance a checkbook, even."
"Right! It's need today."
Ed: "What kinds of reactions are you getting from the kids?"
"Actually, the kids seem pretty excited about opening their own bank account. Lots of them have money. Most times they're just putting it into their piggybank at home, but it's not earning any interest. And so what we're teaching them is about the power of compound interest, and they'll actually see their money grow."
This is Comerica's pilot Youth Savings Program, and will be expanded to other area schools.
The deadline has been extended by one month for those who invested in the state prepaid college tuition program seeking full refunds. The previous deadline was October 30th for people who paid into the Texas Guaranteed Tuition Plan to request full refunds. The new deadline is November 30th. The Fort Worth Star-Telegram reports letters went on Thursday to investors. A large number of inquiries prompted the extension by the Texas Comptroller's Office. After November 30th, people who paid into the plan will receive only the money they put into the plan if they request a refund. They will not get any earnings, no matter how long their money had been invested. Fees will be deducted from their refund. Some legislators have challenged the moneysaving decision.
California air regulators have approved the nation's first statewide carbon fee on utilities, oil refineries and other polluting industries, despite industry objections. The money raised by the California Air Resources Board is intended to pay for the bureaucratic expenses of carrying out a 2006 law. It requires the state to reduce greenhouse gas emissions statewide by 25 per cent over the next decade. The fee will be imposed at the end of 2010 and raise $63.1 million annually during its first three years. The amount will level off at $36.2 million during the fifth year. Oil companies, manufacturers and utilities say regulators have unfairly singled them out. Some business leaders also question the timing of the fee. It comes while California is enduring a record 12.2 per cent unemployment rate.
The House has acted to head off a government shutdown next week by temporarily extending spending on most federal programs at current levels while boosting lawmakers' office budgets by more than eight per cent. The House passed the stopgap funding bill, by a 217-190 vote. It would keep the government running for another month and also patches over problems in the financially struggling Postal Service and funds soon-to-expire highway programs for another month as well. But in an unusual step, those measure were tacked onto a $4.7 billion House-Senate compromise bill that will fund Congress' own budget. That measure was chosen because it can't be amended before being presented to President Barack Obama, which saves time —and spares Democrats politically difficult votes.
Treasury Secretary Timothy Geithner says he is seeing encouraging signs of a global economic rebound but the world still has a way to go to emerge from the severe recession. Geithner says that the United States is not going to walk away from the greatest crisis since the Great Depression and not reform the flaws in the financial system that triggered the crisis. He said it was very important that leaders of the Group of 20 nations meeting in Pittsburgh to pursue policies to promote an economic rebound that they do not sow the seeds for a future downturn.
House lawmakers are trying to pry open the books of the famously secretive Federal Reserve with legislation that would subject the central bank to a sweeping congressional audit. The effort is overwhelmingly bipartisan. Hardline conservatives and liberal Democrats have banded together in their criticism of the Fed as a major power broker in the financial system that doesn't answer to Congress. The debate comes as lawmakers consider a proposal by President Barack Obama that would give the fed new powers to prevent another economic crisis.
Î¾Federal Reserve Chairman Ben Bernanke says a government program intended to spark lending to consumers and businesses is still necessary even with other emergency lending programs winding down as the economy recovers. Bernanke says "an ongoing need still clearly exists" for the term asset-backed securities loan facility, which also is aimed at ensuring loans flow to the troubled commercial real estate market. Investors use the money to buy securities backed by auto and student loans, credit cards, business equipment and other things. The TALF goes to the heart of efforts by the Fed and Obama administration to get credit flowing more normally again, a key ingredient to a lasting economic recovery. Originally set to expire this year, the Fed in August extended the program into 2010.
Banks reduced their borrowing from the Federal Reserve's emergency lending facility over the past week, and cut back their use of other programs designed to ease the financial crisis. The reductions indicate that banks are having an easier time borrowing in private markets for short-term loans. Banks averaged $28.2 billion in daily borrowing over the week ended Wednesday, down from $28.7 billion in the week ended September 16th. The Fed has pumped trillions of dollars into the financial system through an array of short-term lending programs in an effort to ease the crisis that worsened with the fall of Lehman Brothers last September. The identities of the financial institutions that receive emergency loans are not released. They pay just 0.50 per cent in interest for the emergency loans.
Key regulators and lawmakers are considering an infusion of federal bailout money for small community banks. California Bankers Association Chairman Dan Doyle says officials from the Treasury Department, Federal Deposit Insurance Corporation and House Financial Services Committee discussed the plan by phone. Doyle was on the call. The new loans could go to smaller banks that were deemed too risky to receive money in last fall's $700 billion financial bailout. These banks are now struggling as commercial real estate and other loans go sour. Doyle says larger banks would not be eligible for the latest round of loans. The move could prevent some small bank failures. That would ease pressure on the FDIC's dwindling fund that insures bank deposits.
The decades-long home of the Dallas Cowboys will be turned to rubble. The Irving City Council approved spending $5.9 million to implode hole-in-the-roof Texas Stadium. The team this year began play in the new $1.15 billion Cowboys Stadium in Arlington. The Cowboys were 213-99 in regular-season and postseason games at Texas Stadium since 1971. The destruction could be a tourism draw for the Dallas area. Irving city leaders want to work with travel companies to attract fans to watch the demolition, at a date to be determined, possibly from cities with ardent rivals of the cowboys. Maura Gast with the Irving Visitors and Convention Bureau and says money raised by a possible "implosion auction" could go to charity.
American and United Airlines this week have added $10 surcharges for most of their tickets for travel on three busy days around Thanksgiving and New Year's holidays. According to Farecompare.com, both carriers added the charge for most of their fares for travel on November 29th, the Sunday after Thanksgiving, as well as January 2nd and 3rd. The add-on is technically a fuel surcharge. Farecompare noted that the Sunday after Thanksgiving is one of the busiest travel days of the year, and that the two dates in January are heavily traveled as well. Rick Seaney of Farecompare.com said the airlines probably added the charge because it was a quick, targeted way to charge more on busy travel days. American added the charge on Wednesday and United matched on Thursday.
Hewlett-Packard says revenue and profit in its next fiscal year should be in line with what analysts were expecting. The technology company's chief financial officer, Cathie Lesjak, told financial analysts that revenue should be between $117 billion and $118 billion in fiscal 2010. Its current fiscal year ends in October. HP's profit, excluding one-time items, is expected to be $4.20 to $4.30 per share. Analysts polled by Thomson Reuters had expected sales of $118 billion and profit of $4.25 per share. Lesjak said HP's personal-computer business is expected to grow three to five per cent over 2009, while its cash-cow printer-ink business could be flat to up just two per cent.
The number of rigs actively exploring for oil and natural gas in the U.S. this week has risen by seven to 1,017. Houston-based Baker Hughes said that 710 rigs were exploring for natural gas and 297 for oil. Ten were listed as miscellaneous. A year ago this week, the rig count stood at 1,995. Texas declined by six. The rig count tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted a record low of 488 in 1999.