Bernanke says he didn't bully BofA to buy Merrill
WASHINGTON (AP) -- Federal
Reserve Chairman Ben Bernanke faced an unusual political trial Thursday and
disputed accusations that he pressured Bank of America to acquire Merrill Lynch
in a deal that cost taxpayers $20 billion.
Bernanke denied to a House
committee investigating the matter that he threatened action against Bank of
America's CEO Kenneth Lewis or the bank's board members if they abandoned the
takeover.
It marked Bernanke's first
public comments since the House committee launched an investigation this year
into whether he or other government officials bullied Bank of America to stick
with its plan to combine the two financial powers after Lewis learned of
Merrill's financial woes.
Jobless claims rise; GDP
dips at lower pace in 1Q
WASHINGTON (AP) -- The
Labor Department said Thursday that new jobless claims jumped unexpectedly last
week. And the number of people continuing to receive unemployment aid rose more
than expected.
The figures indicate that
jobs remain scarce even as the economy shows some signs of recovering from the
longest recession since World War II.
A revised reading on gross
domestic product -- the broadest measure of the nation's output -- said the
economy posted a 5.5 percent annualized decline from January through March.
That was slightly better than the 5.7 percent estimate made a month ago.
Economists generally think the economy is shrinking at a slower pace -- about 2
percent -- in the current quarter.
Stocks jump, led by
homebuilders, retailers
NEW YORK (AP) -- Investors
rushed back into stocks as profits at a handful of companies indicated the
economy might be gaining strength.
Gains in homebuilders,
retailers and other consumer discretionary stocks led the market sharply higher
Thursday. The Dow Jones industrial average surged 173 points to 8,472.40 after
four days of losses. Government bond prices jumped after an auction drew strong
demand.
Traders focused on several
better-than-expected earnings reports and welcomed news that the Federal
Reserve took the first step toward removing the numerous emergency lending
programs it launched last fall at the height of the financial crisis.
Prosecutor: Stanford should
wait for trial in jail
HOUSTON (AP) -- Texas
billionaire R. Allen Stanford pleaded not guilty Thursday to charges he
swindled investors out of $7 billion as part of a massive investment scam.
Stanford entered his plea
during his arraignment in federal court. The financier was indicted on charges
that his international banking empire was really just a colossal Ponzi scheme.
Laura Pendergest-Holt,
Gilberto Lopez and Mark Kuhrt, three executives with the now defunct Houston-based
Stanford Financial Group who were indicted along with their former boss, also
entered not guilty pleas.
AP source: GM to build
small car in Michigan
DETROIT (AP) -- Michigan
has won the high-stakes competition with two other states to build General Motors
Corp.'s next-generation subcompact car, a person briefed on the decision said
Thursday.
The announcement that the
car will be built at a retooled midsize car factory in Orion Township near
Pontiac will come Friday, said the person, who spoke on condition of anonymity
because the plan has not been made public. It will save about 1,200 jobs at the
factory, which had been slated to shut down later this year.
GM spokeswoman Sherrie
Childers Arb declined to comment on whether GM had made a decision.
Fed scales back emergency
lending programs
WASHINGTON (AP) -- The
Federal Reserve took the first step Thursday toward winding down the numerous
emergency lending programs it launched last fall at the height of the financial
crisis.
The Fed will allow one
program intended to support money market mutual funds to lapse by Oct. 31, and
is reducing the amount it will lend to banks under two others.
The Fed also is extending
through Feb. 1, 2010, five other programs scheduled to expire Oct. 31. That
includes swap lines with 14 central banks that enable them to provide dollars
to their financial systems in exchange for giving the Fed foreign currencies.
Lennar posts slightly
larger 2nd-quarter loss
UNDATED (AP) -- Stuart
Miller, CEO of Lennar Corp., tried to temper enthusiasm about a housing market
recovery, but investors zeroed in on one number: a 63 percent spike in new home
orders between the builder's first and second quarters.
While Lennar still posted a
slightly wider quarterly loss, its stock jumped more than 16 percent and led
the entire sector in a rally Thursday.
The federal tax credit for
first-time buyers, extra price discounts and low interest rates combined to
spur sales in the three-month period that ended May 31. The average sale price
was $251,000, down 8 percent from year-ago levels. Incentives totaled $52,600
per home versus $48,700 a year earlier.
Kimberly-Clark to cut 1,600
jobs
CHICAGO (AP) --
Household-products maker Kimberly-Clark Corp. said Thursday it plans to cut
1,600 jobs, or 3 percent of its global work force, as it slims down in the
tough economy.
The maker of Kleenex
tissues, Huggies diapers and scores of other household items employs 53,000
people around the world. It plans to make the cuts primarily among salaried and
non-production workers and executives said the company doesn't plan to close
any plants.
Profits at Kimberly-Clark
have fallen for the past 18 months, as shoppers cut back on spending because of
the recession, high unemployment and the housing downturn. Meanwhile revenue,
which had been steadily rising, began to fall late last year.
AIG moves to spin off 2
units, reduce gov't debt
NEW YORK (AP) -- American
International Group Inc. said Thursday it will reduce outstanding federal loans
by $25 billion by giving the government a preferred stake in two units that
will be spun off from the insurance giant.
AIG is placing two life
insurance subsidiaries -- American International Assurance Co. and American
Life Insurance Co. -- into special purpose vehicles ahead of planned initial
public offerings. SPVs are entities sometimes set up ahead of the spinoff or
sale of a unit to separate its operations from the parent company.
As part of the plan, the
Federal Reserve Bank of New York will receive preferred interests in the SPVs
which will eventually be independent companies once a public offering is
completed.
Oil rises above $70 on
Commerce Department report
NEW YORK (AP) -- Oil prices
jumped above $70 a barrel Thursday after the government said that the economy
may be faring better than previously thought.
In a revised reading on
gross domestic product in the first quarter, the Commerce Department reported a
5.5 percent annualized decline from January to March, rather than the 5.7
percent it reported a month ago.
The slowing economy has
slashed demand for energy as factories shut down and fewer people drive to work
or take leisure trips by car or plane. But it's thought to be shirking at a
slower pace this quarter, and refinery closures combined with ongoing political
turmoil in oil producers Iran and Nigeria helped boost crude prices throughout
the day.
By The Associated Press
The Dow rose 172.54, or 2.1
percent, to 8,472.40, after falling 40 points in the early going.
The broader Standard &
Poor's 500 index rose 19.32, or 2.1 percent, to 920.26, and the Nasdaq
composite index rose 37.20, or 2.1 percent, to 1,829.54.
Benchmark crude for August
delivery added $1.56 to settle at $70.23 a barrel on the New York Mercantile
Exchange.
In London, Brent prices
increased $1.87 to $70.20 a barrel on the ICE Futures exchange.
In other Nymex trading,
gasoline for July delivery rose 5.58 cents to settle at $1.8983 a gallon and
heating oil gained 3.82 cents to settle at $1.7763 a gallon. Natural gas for
July delivery advanced 4.1 cents to $3.802 per 1,000 cubic feet.