News money 2008-06-20 Andanh.com

GM sheds 18,657 with buyouts, retirements Thu, 19 Jun 2008 22:43:00 EST
The departure of 18,657 hourly employees allows General Motors Corp. to take a major step toward solving one of its most pressing problems -- the need to shed workers as it downsizes its truck production to match dwindling demand.

Gas prices rise 5 cents in Louisville area Thu, 19 Jun 2008 22:44:00 EST
The average price of gasoline in the Louisville area rose about a nickel a gallon yesterday despite a sharp drop in oil prices. Midwest flooding may have contributed to the increase, which took the average up to $4.12 a gallon and made prices as high as $4.20 commonplace, according to prices posted by drivers at www.courier-journal.com/gas.

Female director with the Burley Tobacco Growers Cooperative Association has filed a lawsuit against Thu, 19 Jun 2008 22:44:00 EST
A female director of the Burley Tobacco Growers Cooperative Association has filed suit against the association, claiming that its president said at a board meeting that she was having a "lesbian love affair" with a former employee.

Housing fraud arrests multiply Thu, 19 Jun 2008 22:46:00 EST
More than 400 real estate industry players have been indicted since March -- including dozens this week -- in a Justice Department crackdown on incidents of mortgage fraud that stem from the nation's housing crisis.

Q: If the buyer can't meet the closing date we set in the contract, is the deal dead? Thu, 19 Jun 2008 22:46:00 EST
A: The Kentucky Real Estate Commission says the law favors allowing the deal to go through rather than holding the parties to dates and times. What amounts to a reasonable amount of time to close the deal depends on circumstances.

Business People Thu, 19 Jun 2008 21:32:00 EST
Health care, awards and miscellaneous announcements are in today's Business People. Submit new items at courier-journal.com/businesspeople Sign up for the daily Business People newsletter at courier-journal.com/newsletters.

Almost Family to buy Patient Care Inc. Thu, 19 Jun 2008 22:47:00 EST
Louisville-based home-nursing provider Almost Family has agreed to buy Patient Care Inc. for $45.2 million. It's the company's largest acquisition so far.

Continental, United airlines in alliance Thu, 19 Jun 2008 22:48:00 EST
Continental and United airlines, which failed to complete talks this spring to become a single carrier, said yesterday that they would work together in an alliance that they hope will boost revenue to offset rising fuel costs.

WHEN IT COMES TO DEPOSIT, BE FLEXIBLE Fri, 20 Jun 2008 02:06 EDT
Trying to sell a home in a slow housing market? This week, the Herald-Leader will pass along tips from Consumer Reports on the best way to sell your home in a difficult market:

Be flexible on the deposit. To "bind" a deal, the buyer should put down a deposit (separate from the down payment), which varies widely depending on the local market.

You'd like the biggest deposit you can get, but in a slow market, you might have to settle for less.

WHEN IT COMES TO DEPOSIT, BE FLEXIBLE

Charges tied to mortgage crisis Fri, 20 Jun 2008 02:06 EDT
Two former Bear Stearns hedge fund managers were hauled into jail Thursday and charged with lying to investors about the collapse of the subprime mortgage market. The arrests might signal the start of a wave of prosecutions arising from the housing meltdown.

Ralph Cioffi and Matthew Tannin are accused of encouraging investors to stay in their hedge funds, heavily exposed to subprime mortgages, even as they knew the credit market was in serious trouble.

They were indicted on conspiracy and fraud counts in the first criminal charges to hit Wall Street in the housing market meltdown.

The eventual implosion of their two hedge funds cost investors $1.8 billion and started the domino effect that led to the demise of Bear Stearns itself, which barely avoided bankruptcy in a rescue buyout by JP Morgan Chase & Co.

"This is not about mismanagement of a hedge fund," said Mark Mershon, head of the New York FBI office. "It is about premeditated lies to investors and lenders."

BUSINESS NOTES Fri, 20 Jun 2008 02:06 EDT
NATIONAL

CONTINENTAL, UNITED IN ALLIANCE

Continental and United Airlines , which failed to complete merger talks this spring, said Thursday they would work together in an alliance they hope will boost revenue to offset rising fuel costs. Shares of both airlines rose by double-digit percentages in afternoon trading. Continental ended alliance negotiations with American Airlines , the nation's biggest carrier, and British Airways . Under alliances, airlines typically work together to sell tickets on each other's flights, which can result in increased revenue. Continental said it would seek antitrust immunity from the Transportation Department to form joint ventures on trans-Atlantic flying with United and Lufthansa , and eventually on flights to Latin America and Asia. But in the United States, the Continental-United deal will be limited to code-sharing -- selling tickets on each other's flights and offering reciprocal frequent-flier and airport-lounge programs.

FEWER CHANGES FOR GM PICKUPS, SUVS

General Motors Corp. is indefinitely halting a major overhaul of its full-size pickups and sport-utility vehicles as it deals with a drastic drop in sales of those products. GM spokesman Tom Wilkinson said Thursday the automaker instead will work on more modest updates and enhancements as it shifts resources toward higher-mileage vehicles. The move has been largely spurred by skyrocketing gas prices that have radically changed customers' buying habits, he said. "We're delaying it -- at least until we have a better sense of where the market is going," he said.

Kroger settles for $16 million Fri, 20 Jun 2008 02:06 EDT
The grocery chain Kroger Co. has agreed to pay $16 million to settle a race discrimination lawsuit brought by 12 current and former employees, according to a memo from the chain's chairman and chief executive.

The workers claimed in the 2001 federal lawsuit that Kroger blocked promotions of black employees and paid them less than whites.

A judge hasn't yet approved any agreement in the suit, which was filed in U.S. District Court in Louisville in 2001 by employees in six states on behalf of black workers at Kroger nationwide since 1998.

Chairman and chief executive David Dillon said in a memo to about 1,500 employees Tuesday that the money -- minus attorney fees and administration costs -- will be placed in a fund and disbursed among black employees who meet certain criteria.

"We take our commitment to inclusion and our policies against discrimination very seriously," Dillon wrote. "The plaintiffs ... obviously felt strongly that the company was not treating them fairly or respectfully. No one in our company should feel this way."

MSHA warns 16 mining companies over safety Thu, 19 Jun 2008 17:55 EDT
Federal Mine Safety and Health Administration officials said Thursday they told 16 U.S. mining companies they have patterns of violating health and safety rules and warned them to clean up their acts or face heightened enforcement.

All but two of the companies operate coal mines or processing plants, the majority of them in Kentucky and West Virginia, MSHA said. Also receiving warnings were a Kentucky limestone operation and a Michigan iron ore mine.

"Repeated safety and health violations by mine operators will not be tolerated," MSHA Director Richard Stickler said in a statement.

This is the third time in the past year that MSHA has singled out mines with patterns of serious violations.

Seven of eight operations notified last June reduced their serious violation rate by an average of 50 percent within months, according to MSHA. The eighth closed.

United Mine Workers pans MSHA belt-air proposal Thu, 19 Jun 2008 13:36 EDT
Coal mines could continue what critics call the dangerous practice of using conveyer belt tunnels to pump fresh air underground under new rules proposed by the federal Mine Safety and Health Administration.

Flame-resistant belts, fire prevention and detection in belt tunnels and federal approval also would be required under rules MSHA published in the Federal Register on Thursday.

"The objective of this proposed rule is to improve mine safety by significantly reducing the hazard of conveyor belt fires in underground coal mines," MSHA director Richard Stickler said in a statement.

Banning belt air outright would do even better, United Mine Workers spokesman Phil Smith said.

"We've always maintained that the Mine Act says that you can't use belt air," he said. "We believe it's a dangerous practice as demonstrated at Aracoma."

Rates on 30-year mortgages jump to 6.42 percent Thu, 19 Jun 2008 13:16 EDT
Rates on 30-year mortgages kept surging this week, rising to the highest level in nearly nine months, reflecting more concerns about what the Federal Reserve will do to combat a growing inflation threat.

Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.42 percent this week. That was up sharply from 6.32 percent last week.

It was the highest level for 30-year mortgages since they averaged 6.42 percent for the week of Sept. 27 and marked the fourth straight week that they have been above 6 percent.

Frank Nothaft, chief economist at Freddie Mac, said the increased concerns about inflation were fueled by reports in the past week showing that both consumer prices and wholesale prices rose by significant amounts in May. This spurred further increases in the futures market where investors place bets on future Fed actions. That market is pointing to a Fed rate increase in September.

In a speech earlier this month, Federal Reserve Chairman Ben Bernanke signaled deepening worries about inflation and said the Fed would "strongly resist" any tendency for Americans' expectations about price increases to become unsettled.

Court limits employer access to worker messages Thu, 19 Jun 2008 13:16 EDT
A federal appeals court has made it more difficult for employers to snoop legally on e-mails and text messages their workers send from company accounts.

Under Wednesday's ruling by the 9th U.S. Circuit Court of Appeals, employers that contract an outside business to transmit text messages can't read them unless the worker agrees.

Users of text-messaging services "have a reasonable expectation of privacy" regarding messages stored on the service provider's network, Judge Kim Wardlaw wrote in the three-judge panel's unanimous opinion.

The ruling limits employers' access to employee e-mail on internal servers.

The text-message part of the ruling will affect more employers than the e-mail portion because most U.S. companies pay outside parties for text-messaging but keep e-mail on internal servers, analysts said.

Kerkorian increases stake in Ford to 6.49 percent Thu, 19 Jun 2008 13:06 EDT
Billionaire investor Kirk Kerkorian's Tracinda Corp. reported Thursday it has increased its stake in Ford Motor Co. to 6.49 percent and remains willing to consider supporting the automaker's turnaround effort with additional capital.

With the increase of about 20 million shares, Tracinda now owns 140.8 million Ford shares, according to the investment company's filing with the Securities and Exchange Commission. It previously had disclosed a 5.5 percent stake.

The filing came two days after Chief Executive Alan Mulally and Executive Chairman Bill Ford met with officials from Tracinda including Kerkorian to discuss the Dearborn-based automaker's transformation plan.

Ford President of the Americas Mark Fields told The Associated Press in an interview Thursday that the increased stake "is an indication of confidence that we have the right (turnaround) plan and the right management team."

Fields said he isn't sure what Kerkorian's motives are and doesn't worry about them.

Hundreds swept up in mortgage fraud arrests Fri, 20 Jun 2008 09:44 EDT
More than 400 real estate industry players have been indicted since March - including dozens over the last two days - in a Justice Department crackdown on incidents of mortgage fraud nationwide that stem from the country's housing crisis.

The FBI put the losses to homeowners and other borrowers who were victims in the schemes at over $1 billion.

"Mortgage fraud poses a significant threat to our economy, to the stability of our nation's housing markets and to the peace of mind of millions of American homeowners," Deputy Attorney General Mark Filip said at an afternoon news conference.

Since March 1, 406 people have been arrested in the sting dubbed "Operation Malicious Mortgage" resulting from 144 cases across the country. Sixty people were arrested on Wednesday alone, including in Chicago, Miami, Houston and a dozen other regions policed by the FBI.

Law enforcement officials said their stepped-up focus on mortgage cases aims to combat problems that have grown out of the risky lending practices prevalent until the mortgage market collapse started last year. Officials have identified 10 "mortgage fraud hotspots" nationwide in California, Colorado, Texas, Minnesota, Michigan, Illinois, Ohio, New York, Georgia and Florida.

Phone scam reported in Kentucky Fri, 20 Jun 2008 02:06 EDT
Hundreds of Central and Eastern Kentuckians were preyed on Wednesday night in a telephone scam designed to steal people's banking information.

But officials say the plan did not appear to be very successful. That's in part because the calls were made between 9:30 p.m. and midnight, said Heather Clary, spokeswoman at the Better Business Bureau of Central and Eastern Kentucky.

The automated message states that it is from Commonwealth Credit Union and claims the person's account has been suspended because of suspicious activity. It gave a phone number to call to fix the problem. The number, which has since been disconnected, had another automated message that asked callers to follow a series of directions, eventually prompting them to enter their bank account information.

Officials from the CCU and the BBB said the calls did not come from Commonwealth Credit Union. And no one who has reported the incident to either the credit union or BBB has fallen for the scam.

Kaye Arnold of Lexington said she got the call just before midnight; she was reading. She waited until morning to call the credit union, where she has been a member for about 20 years.

Flocking to freebies Thu, 19 Jun 2008 08:23 EDT
One hundred chances to win 52 free meals each caused fans of Chick-fil-A to flock to the latest Lexington location of the restaurant chain.

Chick-fil-A, which is scheduled to open at 6:30 a.m. Thursday at 2514 Nicholasville Road, promised restaurant fare for a year (coupons for 52 combo meals) to the first 100 people in line.

The chain's grand openings have become something of a tradition, with repeat customers from throughout the country arriving in advance and camping out in the parking lot.

By 11:30 a.m. Wednesday, the 100th person had arrived in line. Nabbing the first slot in line required a Tuesday appearance.

Richard and Joanna Miller of Tavares, Fla., arrived a little before 5 p.m. Tuesday. It is the first time in seven grand openings that the couple has won the slot.

Leveridge rejoining Central in Winchester Thu, 19 Jun 2008 02:05 EDT
The former president of Chase bank in Lexington is coming out of retirement to become president of Central Bank's Winchester market.

Glenn Leveridge, 60, left Chase in April and will rejoin Central in Winchester on June 30. He was at Central for 12 years until 1989, when he was named president of the Bank of Lexington & Trust Co.

"I grew up in Jackson, Ky., and I'm a small-town banker at heart," he said in an interview Wednesday. "I'm really excited about the Winchester market."

Competing with Chase will be a challenge, but "I'm a professional banker and I like the spirit of competition," Leveridge said. "I really enjoyed my 19 years with JPMorgan Chase. Those were 19 of my finest years. I'm going to take the same enthusiasm to this job as I did with that one."

Chase is No. 2 behind Central in total deposits in the local market. Chase has $1.09 billion and Central $1.12 billion, according to the Federal Deposit Insurance Corp.

Credit pinch could grow to $1 trillion Thu, 19 Jun 2008 02:05 EDT
There are new signs that the worst of the global credit crisis is yet to come, and that banks and brokerages caught up in the market turmoil could lose $1 trillion by the time it has passed.

Major U.S. investment banks this week announced yet another painful quarter amid the implosion of mortgage-backed securities and risky credit investments. Regional banks have scrambled to secure fresh capital to stay in business, and by Wednesday there was new talk that embattled investment bank Lehman Brothers might be forced into a sale.

That news helped push the Dow Jones industrial average down more than 130 points, after briefly dipping below the 12,000 mark for the first time since mid-March.

With each passing quarter, Wall Street's top bankers have indicated that the worst of the market turmoil was over -- only to face more pain months later. The uncertainty has caused already battered investors to lose confidence in financial companies, and expectations have increased that more layoffs, asset sales and capital raising will be needed in the weeks ahead.

"We thought this was going to be the kitchen-sink quarter, and we're finding out that CEOs and CFOs still don't have a handle on the credit crisis," said William Rutherford, who runs Rutherford Investment Management.

Fifth Third stock plummets 27% Thu, 19 Jun 2008 02:05 EDT
Fifth Third Bancorp shares plummeted 27 percent Wednesday after the regional bank, facing rising loan losses, said it will slash dividends and try to raise $2 billion with a stock offering and sale of non-core businesses.

Fifth Third also predicted second-quarter earnings would fall far below Wall Street expectations. The bank cited the U.S. housing and credit crisis that has battered the financial sector, hitting particularly hard in key states such as Ohio, Michigan and Florida.

Investors rushed to unload Fifth Third shares, which fell $3.47, to close at $9.26, in very heavy trading. The stock, which traded as high as $43.20 within the last year, has lost more than half its value in just three weeks, after closing at $18.85 on May 28.

Fifth Third is planning a $1 billion offering of convertible preferred shares. It also plans to raise $1 billion by selling unspecified operations.

The company is cutting its quarterly dividend by nearly two-thirds to 15 cents from 44 cents. The smaller dividend will be paid on July 22, when the company will report second-quarter earnings.

Home sellers should offer bonuses Thu, 19 Jun 2008 08:37 EDT
Trying to sell a home in a slow housing market? This week, the Herald-Leader will pass along tips from Consumer Reports on how to sell your home in a difficult market.

Sweeten the deal. Sellers are offering some unusual sales incentives -- plasma TVs, cars, boat slips, vacations and golf carts -- but cash might still be king.

For example, some sellers have agreed to pay condo maintenance fees for the buyer. Other ideas include covering moving expenses or a month's mortgage payment.

HOME SELLERS SHOULD OFFER BONUSES

Lexington's Nougat Magazine may fold Wed, 18 Jun 2008 02:05 EDT
Nougat Magazine has published its last issue unless a group of former staffers and investors can buy the 4-year-old Lexington arts, lifestyles and culture monthly, Publisher Miki Wright said Tuesday.

The investors plan to skip the July edition and to resume publication in August with few changes in the basic format, she said.

"I've agreed to consult and help them learn the layout and whatever," said Wright, who single-handedly published the 28-page June issue that is being distributed free at 450 locations in the Lexington area.

"It's too much for one person," she added.

In A Letter From the Editor, Wright said the main reason Nougat is closing is the economic slowdown.

Stocks drop as credit woes continue, oil rises Fri, 20 Jun 2008 17:54 EDT
Stocks capped a difficult week with steep losses Friday amid escalating worries about the financial and automotive sectors and a rebound in oil prices. The major indexes fell by more than 1 1/2 percent on the day, and the Dow Jones industrial average gave up more than 200 points to end at its lowest level in three months.

While investors have seen other triple-digit days in the past year since concerns about the economy began emerging, the Dow's first finish under 12,000 since mid-March could deal Wall Street a psychological blow.

An afternoon downgrade of automakers helped draw out sellers in the stock market while Treasury prices rose as investors sought the safety of government debt.

A Merrill Lynch downgrade of regional banks added to the market's initial anxiety, which ballooned Thursday when Citigroup Inc. warned of significant debt markdowns for the second quarter, Washington Mutual Inc. announced 1,200 job cuts and Moody's Investors Service decided late in the day to downgrade the two biggest bond insurers.

Troubling news about the financial sector piled up all week, sending stocks to steep losses. Early on, the investment banks posted profit declines, Fifth Third Bancorp said it need to raise $2 billion in capital and two Bear Stearns hedge fund managers were charged with lying to investors - causing many investors to flee from stocks.

China fuel price hike may not sap demand Fri, 20 Jun 2008 13:09 EDT
The jump in China's state-controlled fuel prices will inevitably squeeze consumers at both filling stations and grocery stores. But analysts say the hike is unlikely to make an immediate or huge dent in the country's hunger for oil.

China's economy is booming, and people are buying cars and air conditioners as their incomes grow. There is huge pent up consumer demand in a country of 1.3 bilion where per capita energy consumption is still far below wealthier countries.

Also, the price hike of up to 18 percent is likely to prompt refiners to boost production of crude oil, gasoline and other refined products. Previously, they had held back because they were losing money on the wide gap between global crude oil prices and state-set retail prices, which had created widespread fuel shortages.

"Do not expect an immediate fall in China's oil imports - the price effect on demand will work in China as well, but it will take some time to work through," Wang Tao, an economist for UBS Securities, said in a report issued Friday.

Crude oil prices edged higher Friday in Asian trading - approaching $133 a barrel on the New York Mercantile Exchange - after tumbling the day before on news the National Development and Reform Commission would raise prices for gasoline and diesel fuel by 16 percent and 18 percent respectively.

Ford cuts sales view, delays new pickup 2 months Fri, 20 Jun 2008 17:29 EDT
Faced with a continuing plunge in pickup truck and sport utility vehicle sales, Ford Motor Co. on Friday tried to deal with the mess by delaying production of the new F-150 pickup truck and announcing further factory cuts.

Shortly after Ford's announcement, Standard & Poor's Ratings Services said it is reviewing ratings on Ford, Chrysler LLC and General Motors Corp. with the possibility of lowering them due to the deteriorating U.S. auto market. Also, Moody's Investors Service changed its ratings assessment for Ford and Chrysler from stable to negative.

Lower credit ratings can boost the a company's borrowing costs.

Shares of GM sank to their lowest level in more than 26 years while Ford tumbled more than 8 percent.

Dearborn-based Ford also said Friday that its loss on automotive operations will worsen in 2008 and that it will be difficult for the company to break even in 2009 as it had predicted just one month ago.

US steel industry wins trade case against China Fri, 20 Jun 2008 18:19 EDT
U.S. steel pipe manufacturers, who have been battling a surge in imports from China, won a major victory Friday when the International Trade Commission cleared the way for the imposition of stiff penalty tariffs for the next five years.

The commission voted 5-0 that the U.S. industry was being harmed by the import of circular steel pipe. The decision marked the first time a U.S. industry has won a decision to impose tariffs on a Chinese product based on the argument that the Chinese government was unfairly subsidizing a Chinese industry.

The ruling means penalty tariffs ranging from 99 percent to 701 percent will be imposed on Chinese imports of circular welded pipe, a form of pipe used in a variety of construction jobs, such as home plumbing and sprinkler systems.

For more than two decades, the U.S. government had refused to consider subsidy cases against the Chinese government because China was classified as a non-market economy.

However, the Bush administration, facing increasing anger over soaring trade deficits with China, reversed course last year and announced it would treat China in the same way as other countries in disputes involving government subsidies.

Canadian court allows largest ever leveraged buyout Fri, 20 Jun 2008 20:19 EDT
BCE Inc. on Friday won the right to go ahead with the largest leveraged buyout in history, a US$35 billion deal that the telecommunications company's bondholders fought, saying it would reduce their holdings to junk.

Canada's Supreme Court overturned a lower court ruling that the sale of BCE, the parent of telecommunications holding company Bell Canada, to the Ontario Teachers' Pension Plan and its minority U.S. partners didn't adequately consider bondholders' interests.

The court's rationale for its unanimous decision is to be released later.

"We're pleased with the Supreme Court's decision and we're continuing to work to complete an acquisition of BCE," Ontario Teachers' Pension Plan spokeswoman Deborah Allan said.

The last hurdle to the deal also looks to be gone as the banks said they would proceed with the deal. The banks are slated to provide billions in financing to complete what is a US$51 billion cash and debt takeover.

Edwards arranges business, family
What was Julie Edwards’ reaction to being named Florist Mom of the Year? She accused the messenger of lying.

New Italian eatery open for business
The Glasgow-Barren County Chamber of Commerce hosted a ribbon cutting for Sorrento Restaurant on June 2.

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