AP
Business Highlights
Monday September 8, 7:24 pm ET

Mortgage rates drop after Fannie, Freddie takeover

WASHINGTON (AP) -- Mortgage rates fell sharply Monday, as investors reacted to the government's takeover of Fannie Mae and Freddie Mac.

The government's takeover of Fannie Mae and Freddie Mac -- mortgage titans that own or guarantee about half of all U.S. mortgages -- will help borrowers who had been nervously waiting for the best time to get out of the adjustable-rate mortgages they took out during the housing boom.

But it will do little to stem the dramatic rise in foreclosures. And so far, the government's other programs to assist distressed borrowers in refinancing have had minimal impact.

Stocks rally on plan for mortgage giants

NEW YORK (AP) -- Stocks rallied Monday as investors placed bets that a recovery in the financial and housing sectors is more likely to occur following the U.S. government's move to bail out mortgage giants Fannie Mae and Freddie Mac.

The Dow Jones industrials gained nearly 300 points.

The announcement Sunday that the Treasury Department was seizing control of the companies, which own or back about half the nation's mortgage debt, brushed aside investors' long-simmering worries that the pair would be felled by a spike in bad mortgage debt.

Investors were hoping that the plan to inject up to $100 billion in each of the government-chartered mortgage financiers could not only help lower mortgage rates but perhaps help buoy the overall economy.

Washington Mutual removes CEO Kerry Killinger

NEW YORK (AP) -- Washington Mutual Inc., ravaged by losses from sour mortgages, removed Kerry Killinger as chief executive of the nation's largest savings and loan on Monday, adding him to the growing list of banking bosses ousted by their boards.

Killinger, 59, is being replaced by Alan H. Fishman, the former president and chief operating officer of Sovereign Bank and president and CEO of Independence Community Bank.

Also Monday, WaMu said that it has entered into a memorandum of understanding with the Office of Thrift Supervision concerning aspects of its operations.

Consumer borrowing slows to weakest in 7 months

WASHINGTON (AP) -- Borrowing by consumers slipped in July to the weakest pace in seven months, reflecting a big slowdown in demand for car loans.

The Federal Reserve reported Monday that consumer borrowing grew at an annual rate of just 2.1 percent in July, the slowest pace since a 1.9 percent rise last December.

The slowdown reflects a tiny 0.5 percent rate of growth in the category that includes auto loans, down from a 6.1 percent surge in this category in June. Automakers reported that demand for cars fell in July to the lowest level in 16 years.

Altria aims to be No. 1 in smokeless tobacco with UST deal

NEW YORK (AP) -- Altria, the owner of the nation's biggest cigarette seller, said Monday that it will buy UST, the maker of Skoal and Copenhagen, in a $10.4 billion deal that is part of the wider consolidation of the global tobacco industry.

Observers say Lorillard, which was spun off from Loews Corp. in June, could be next on the list of potential targets.

Altria owns the Marlboro brand and the nation's biggest cigarette maker, Philip Morris USA. Its acquisition of UST will give it a strong position in smokeless tobacco, a segment of the U.S. market that is growing as cigarettes decline.

Judge rejects plea deal for Broadcom's Samueli

SANTA ANA, Calif. (AP) -- A federal judge Monday rejected a plea deal that had called for Broadcom Corp. co-founder Henry Samueli to get probation rather than prison for his role in a stock options backdating case that led to the largest corporate writedown of its kind.

U.S. District Court Judge Cormac J. Carney wrote that the deal calling for five years probation and $12 million in payments by Samueli would erode the public's trust in the judicial system.

Kuwait says no need for OPEC to cut production

VIENNA, Austria (AP) -- Kuwait's oil minister said Monday that there is no need for OPEC to cut production, despite crude prices that have fallen nearly 30 percent since July.

Mohammed Abdullah Al-Aleem is part of an OPEC committee whose recommendations could play in OPEC's final decision on what to do about output.

He spoke on the eve of a meeting of oil ministers from the Organization of Oil Exporting Countries who will decide whether to reduce production or keep it at current levels.

Oil edges higher with Ike still aiming for Gulf

NEW YORK (AP) -- Crude oil prices finished modestly higher Monday, but only after seesawing wildly as nervous traders watched Hurricane Ike approach the Gulf's oil and gas facilities.

Ike, after scouring the Bahamas and Haiti, made landfall on Cuba as a Category 3 storm. The hurricane was downgraded, but still packed sustained winds close to 100 mph. It is expected to regain its strength and enter the Gulf of Mexico later this week.

SKorea regulator urges caution over Lehman stake

SEOUL, South Korea (AP) -- South Korea's financial regulator urged state-owned Korea Development Bank on Monday to be cautious over any investment in Lehman Brothers.

Jun Kwang-woo's comments came amid weeks of intense speculation that Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, could try and reach a deal for a capital injection.

Analysts project that Lehman, considered vulnerable to the credit crisis, could post losses of up to $4 billion when it reports third-quarter results this month and may announce a deal to raise fresh capital to help offset the losses.

China to review Coca-Cola bid for juice maker

BEIJING (AP) -- Coca-Cola Co. will have to submit its bid to buy a Chinese juice producer for review under China's new anti-monopoly law, state television reported, setting up the first major test of the legislation.

Coca-Cola's $2.5 billion offer last week for China Huiyuan Juice Group Ltd. already has stirred nationalist opposition. Comments posted on Chinese Web sites criticized the sale as the loss of a leading company to foreign owners.

The anti-monopoly law, which took effect Aug. 1, was welcomed by foreign business groups as a step toward clarifying commercial conditions in China. But Beijing has released no details of what companies must do to comply.

By The Associated Press

The Dow Jones industrial average rose 289.78, or 2.58 percent, to 11,510.74 after being up nearly 350 points in the early going.

Broader stock indicators were also higher. The Standard & Poor's 500 index advanced 25.48, or 2.05 percent, to 1,267.79, and the Nasdaq composite index added 13.88, or 0.62 percent, to 2,269.76.

Light, sweet crude for October delivery rose 11 cents to settle at $106.34 a barrel on the New York Mercantile Exchange, after rising as high as $109.89 a barrel and falling as low as $104.70.

In other Nymex trading Monday, gasoline futures rose 6.42 cents to settle at $2.7503 a gallon; heating oil futures rose 3.03 cents to settle at $3.0131 a gallon; and natural gas gained 7.8 cents to settle at $7.527 per 1,000 cubic feet.

On London's ICE Futures exchange, October Brent crude finished lower, dropping 65 cents to settle at $103.44 a barrel.