Obama spells out major financial rules overhaul
WASHINGTON (AP) -- President
Barack Obama proposed sweeping new "rules of the road" for the
nation's financial system Wednesday, casting the changes as a critically
important response to the economic crisis and the greatest regulatory transformation
since the Great Depression.
The Obama plan would give
new powers to the Federal Reserve to oversee the entire financial system and
would also create a new consumer protection agency to guard against credit and
other abuses that played a big role in the current crisis.
The proposal would also
create a new consumer protection agency to guard against the kind of mortgage
and other credit abuses that played a major role in the current crisis.
Consumer prices edge up in
May; inflation in check
WASHINGTON (AP) -- Consumer
prices rose less than expected in May and posted the steepest annual drop in 59
years, according to government data released Wednesday, fresh evidence that the
recession is keeping inflation in check.
Low prices will make it
easier for the Federal Reserve at its meeting next week to keep a key
short-term interest rate near zero, where it has been since December. Bond
yields ticked up earlier this month on concerns that signs of an improving
economy would force the Fed to raise rates later this year.
But most economists consider
a rate increase unlikely until next year. Still, as higher government spending
pushes this year's deficit toward a record of nearly $1.85 trillion, many
economists warn that inflation could be a threat in two to three years.
FedEx posts bigger loss with
a gloomy outlook
NEW YORK (AP) -- FedEx, the
nation's second largest package shipper, lost more money in the last quarter as
consumers and businesses reduced shipments and the company took more than $1
billion in one-time charges.
Memphis, Tenn.-based FedEx
Corp. also said Wednesday that it expects a rough ride for some time.
FedEx lost $876 million, or
$2.82 per share in the three month period ending in May. the company lost $241
million, or 78 cents per share, a year ago. Excluding one-time charges,
earnings were 64 cents per share in the recent quarter.
Standard & Poor's cuts
ratings on 18 banks
NEW YORK (AP) -- Credit
ratings agency Standard & Poor's on Wednesday cut ratings on 18 banks amid
concern about further weakening in the financial sector.
S&P said the changes
reflected its assessment that volatility will remain in the financial sector
and the industry is expected to face tighter regulatory oversight. S&P also
said loan losses, which have plagued the industry for more than a year, are
likely to continue to increase and could grow beyond expectations.
BB&T Corp., Capital One
Financial Corp., Regions Financial Corp. and Wells Fargo & Co. were among
the largest banks that saw their ratings cut by S&P.
Stocks mostly fall on bank
ratings, FedEx warning
NEW YORK (AP) -- A cautious
forecast from FedEx Corp. and a ratings downgrade of 18 banks gave investors
new reasons to worry about the economy.
Stocks mostly fell
Wednesday, though health and technology stocks posted gains after a widespread
slide in stocks earlier in the week.
According to preliminary
calculations, the Dow Jones industrial average fell 7.49, or 0.1 percent, to
8,497.18 after moving in and out of positive territory during the day. The
broader S&P 500 index fell 1.26, or 0.1 percent, to 910.71, and the Nasdaq
composite index rose 11.88, or 0.7 percent, to 1,808.06.
10 large US banks to repay
$68B in TARP funds
WASHINGTON (AP) -- Ten large
U.S. banks will finish repaying about $68 billion in bailout money Wednesday,
the Treasury Department said.
It marks a new phase for the
most visible government effort to relieve the credit crisis. The Treasury said
last week the banks could begin repaying money they received last fall under
the $700 billion financial system bailout known as the Troubled Asset Relief
Program, or TARP. The program was the centerpiece of the government effort to
relieve a global credit crunch and teetering financial markets in October.
Chrysler to restart 7
assembly plants
DETROIT (AP) -- Chrysler
Group LLC plans to restart seven assembly plants at the end of June after
silencing all of its factories during its six-week stay in Chapter 11
bankruptcy protection.
The company on Wednesday
confirmed that factories in Sterling Heights and Warren, Mich.; St. Louis;
Toledo, Ohio; Brampton and Windsor, Ontario; and Toluca, Mexico, would restart
operations June 29. A plant in Detroit that makes the Dodge Viper sports car
restarted Monday.
In addition, parts stamping,
engine and transmission factories that feed those plants also will restart June
29, Chrysler said in a statement.
Gas prices rise for 50th
straight day
NEW YORK (AP) -- Retail gas
prices climbed for the 50th straight day Wednesday, and crude prices that had
slumped all week bounced back.
Historically, filling
station prices tend to rise during the summer as millions of Americans take to
the road. But a surge in crude prices during the past few months and less
production from the refiners that make gasoline has added pressure on prices.
Pump prices added a half
cent overnight to a new national average of $2.679 a gallon, according to auto
club AAA, Wright Express and Oil Price Information Service. A gallon of regular
gas has jumped nearly 37 cents in a month.
Meanwhile, oil rose above
$70 a barrel after a key government report said that crude held in U.S. storage
houses fell for the third straight week.
E-Trade plans stock offer,
debt exchange
NEW YORK (AP) -- E-Trade
Financial Corp. said Wednesday it is raising capital and exchanging debt in an
effort to get out from under mortgage-related loan losses. The news sent shares
of the struggling online brokerage and bank skidding.
E-Trade's plan comes with
the blessing of its largest shareholder, Citadel Investment Group LLC., which
will participate in the capital-raising effort.
The New York-based financial
firm plans to raise $400 million through a common stock offer and then exchange
more than $1 billion in outstanding debt to help strengthen its capital
position, especially at its banking subsidiary that has accounted for the bulk
of the losses.
Boeing gets first Paris Air
Show order, for 2 jets
LE BOURGET, France (AP) --
Boeing Co. finally joined the orders race on the third day of the Paris Air
Show, but its $153 million order Wednesday for two single-aisle planes paled
beside the $6.25 billion already chalked up by European rival Airbus.
Yet even Airbus' numbers
were diminutive compared to sales in past years. Airlines and governments
strapped for cash and credit appeared to have come to the world's biggest air
show as tourists instead of buyers this year, admiring the high-tech hardware
but hiding their checkbooks.
By The Associated Press
The Dow Jones industrial
average fell 7.49, or 0.1 percent, to 8,497.18 after moving in and out of
positive territory during the day. The broader S&P 500 index fell 1.26, or
0.1 percent, to 910.71, and the Nasdaq composite index rose 11.88, or 0.7
percent, to 1,808.06.
Benchmark crude for July
delivery added 56 cents to settle at $71.03 on the New York Mercantile
Exchange. Most of the trading already has switched to the August contract,
which added 54 cents to settle at $71.70 a barrel.
In other Nymex trading,
gasoline for July delivery tumbled 3.85 cents to settle at $2.0326 a gallon and
heating oil added 3.8 cents to settle at $1.863. Natural gas for July delivery
gained 12.4 cents to settle at $4.253 per 1,000 cubic feet.
In London, Brent prices
added 61 cents to settle at $70.85 a barrel on the ICE Futures exchange.