AP

AP
Business Highlights
Monday July 14, 6:50 pm ET

Fannie-Freddie lifeline puts taxpayers on the hook

WASHINGTON (AP) -- Now that the federal government has thrown a lifeline to mortgage giants Fannie Mae and Freddie Mac, taxpayers could be on the hook for billions more if the crisis of confidence spreads.

There were encouraging signs Monday for the rescue plan, but also signs of concern -- notably on Wall Street, where shares of the two companies slumped further -- that the plan won't be enough.

Other banks are already teetering: National City Corp. shares fell nearly 15 percent on rumors of financial trouble, even though it said it was experiencing no unusual depositor or creditor activity. And Washington Mutual Inc.'s shares fell 35 percent, to a paltry $3.23 amid worries about whether it had enough cash to handle the mortgage market downturn. WaMu said that it did.

And worried customers lined up Monday to pull cash out of their accounts at IndyMac Bank, seized on Friday by the federal government.

Stocks decline as worries about financials persist

NEW YORK (AP) -- Wall Street extended its slump into yet another week Monday as investors worried that even a safety net set up for mortgage financiers Fannie Mae and Freddie Mac won't head off further troubles in the financial markets.

Investors' latest unease about the banking sector comes in a week when many financial companies are to issue quarterly reports -- many of which will likely include sizable write-downs of souring mortgage debt.

The Treasury and the Federal Reserve said Sunday they would aid Fannie Mae and Freddie Mac if needed. Wall Street has been on edge about the well-being of the government-chartered companies because they together hold or back $5.3 trillion of mortgage debt, about half the outstanding mortgages in the United States. Washington's efforts to shore up confidence in Fannie Mae and Freddie Mac at times helped those shares Monday but troubles arose in other corners of the financial sector.

Investors worried about a run on IndyMac Bancorp Inc. that led to the bank's takeover by the government Friday. IndyMac is the largest regulated thrift to fail.

Oil again settles above $145 a barrel

NEW YORK (AP) -- Oil settled above $145 a barrel for the third time this month, close to where it began on Monday, after a back-and-forth trading session that mimicked last week's wild swings.

Light, sweet crude for August delivery gained 10 cents to settle at $145.18 a barrel on the New York Mercantile Exchange -- just over a dime short of the all-time settlement high. Earlier, the contract dipped as low as $142.49 and rose as high as $146.37.

"There's a bit of a tug of war going on," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn. "You've got some people in here trying to buy the dips a little bit ... but we're kind of stuck trading inside of Friday's range," when prices gyrated by nearly $6 and set a new trading record of $147.27.

At the gas pump, prices hit a new U.S. record just a tenth of a penny shy of $4.11 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. Retail diesel prices are also at an all-time high, of $4.824 a gallon.

Fed adopts plan to curb shady mortgage practices

WASHINGTON (AP) -- For Roxanna Evans, the Fed's new rules to crack down on abusive lending practices, approved Monday, came too late.

Evans is facing foreclosure on a home she bought in Ohio several years ago but moved out after finding it was in a neighborhood where drugs and prostitution were rampant.

In retrospect she contends that her mortgage lender, appraiser and real-estate agent were all working together to inflate the value of the home at her expense.

The Fed's new plan will curb shady lending practices that have figured prominently in the housing crisis and propelled foreclosures like Evans' to record highs.

Lax lending standards during the heady days of the housing boom ended up burning the riskiest "subprime" borrowers -- people with tarnished credit or low incomes -- because they got loans they couldn't afford or didn't understand.

For risky borrowers, the new rules will bar lenders from making loans without proof of a borrower's income. The rules will require lenders to make sure risky borrowers set aside money to pay for taxes and insurance.

National City plunges amid broad bank fears

CLEVELAND (AP) -- Shares of National City Corp. plunged Monday amid broad fears about the health of the nation's regional banks, and the company was forced to issue a statement reassuring investors of its soundness.

The Cleveland-based regional bank said it has experienced no unusual depositor or creditor activity and has more than $12 billion in excess short-term liquidity.

Investors have been worried about the solvency of some banks amid the sharp downturn in the mortgage market. Late Friday the government seized IndyMac Bancorp, marking the second-largest failure of a financial institution in U.S. history.

National City has been among those hit hardest by rising mortgage defaults. It recently raised $7 billion in cash to shore up its capital base. The bank said the recent cash infusion has helped it to maintain a strong capital ratio.

Shares of National City tumbled 65 cents or 14.7 percent to $3.77 late Monday. They had reached as low as $2.99 during the day, their lowest level in decades.

InBev snags Anheuser-Busch and its marketing clout

ST. LOUIS (AP) -- The King of Beers, the folks who spent lavishly to bring you the Bud Bowl, the Talking Frogs, the Whassup Guys and the Clydesdales, is being swallowed by a Belgian brewer known for its frugality.

But InBev SA has an ambitious plan behind its $52 billion acquisition of Anheuser-Busch, hoping to tap into the U.S. company's massive marketing power and make the Budweiser and Bud Light brands into globally recognized products akin to Coca-Cola or Pepsi.

Leaving marketing untouched, though, will mean cuts elsewhere. InBev expects to wring out $1.5 billion in annual savings, most of which will come from better managing the supply chain. InBev keeps a sharp eye on costs, forcing managers to justify every cent spent.

Anheuser-Busch Cos. agreed to the sweetened $70 per share bid late Sunday to create the world's largest brewer and head off what was shaping up as an acrimonious fight.

Waste Management offers to buy Republic Services

Waste Management on Monday made an unsolicited offer to buy disposal company Republic Services Inc. for $6.19 billion in cash, aiming to block its biggest rivals from teaming up against the nation's largest garbage hauler.

The moved countered a deal announced in June in which the third-largest waste hauler, Republic, said it would buy Allied Waste Industries, the second-largest, in a stock combination worth $6.07 billion at the time.

But that deal's worth had declined along with Republic's share price and was valued at about $5.43 billion, $12.56 a share, as of Friday's close.

Waste Management's per share offer represented a 22 percent premium to Fort Lauderdale, Fla.-based Republic Services closing stock price of $27.90 on Friday. On Monday, shares of Republic closed up nearly 14 percent at $31.76.

Republic said its board of directors will review the $34 per share offer from Waste Management and respond "in due course."

eBay beats Tiffany in court case over trademarks

NEW YORK (AP) -- EBay Inc. scored an important victory in court Monday, as a federal judge said companies such as jeweler Tiffany & Co. are responsible for policing their trademarks online, not auction platforms like eBay.

Tiffany had sued eBay in 2004, arguing that most items listed for sale as genuine Tiffany products on eBay's sites were fakes.

But U.S. District Judge Richard J. Sullivan in New York ruled that eBay can't be held liable for trademark infringement "based solely on their generalized knowledge that trademark infringement might be occurring on their Web sites."

The judge said that when Tiffany notified eBay of suspected counterfeit goods, eBay "immediately removed those listings." Although the online auction company refused to go further, by preemptively taking down suspicious listings for Tiffany jewelry, the judge said eBay didn't have to make such a move.

By The Associated Press

The Dow Jones industrial average fell 45.35, or 0.41 percent, to 11,055.19 after spiking nearly 140 points in early trading.

Broader stock indicators also dropped Monday. The Standard & Poor's 500 index fell 11.19, or 0.90 percent, to 1,228.30, and the Nasdaq composite index fell 26.21, or 1.17 percent, to 2,212.87.

In other Nymex trade, heating oil futures fell 1.17 cent to settle at $4.0649 a gallon while gasoline futures rose by 0.55 cent to settle at $3.5577 a gallon. Natural gas futures rose 5.5 cents to settle at $11.959 per 1,000 cubic feet.

In London, August Brent crude fell 57 cents to settle at $143.92 a barrel on the ICE Futures exchange.