Westinghouse Electric Co. will open a new office in Charlotte, N.C. in February.
Employees at the office will focus on engineering, reactor instrumentation and control-system development for nuclear power plants.
“The southeastern U.S. is growing rapidly and is particularly attractive to us since it enables us to establish a presence close to our customers and partners,” says Tony Greco, senior vice president of human resources and corporate relations. “Our addition of staff in Charlotte demonstrates our continuing commitment to provide needed expertise in the nuclear market to meet the future as well as emergent customer needs for both operating plants and new build one hour cash advance loan.”
A company spokesman was unavailable to say whether the company would hire locally to staff the office.
Westinghouse is a division of Toshiba Corp., and is based in Monroeville, east of Pittsburgh. The company is a supplier of nuclear-plant technologies to utilities throughout the world.
In December, Westinghouse bought Carolina Energy Solutions of Rock Hill, N.C. for an undisclosed price. CES is a supplier of welding, machining and heat-treating services to the nuclear, fossil power, petrochemical and process industries.
The Federal Reserve is widely expected to cut interest rates again next week. But could the Fed soon go where it has never gone before and bring them below 1%?
The Fed lowered its federal funds rate, the benchmark overnight lending rate at which banks lend to one another, by a half-percentage point to 1.5% in an emergency announcement Oct. 8.
Many investors believe the central bank will cut rates by at least another half-percentage point following the end of a two-day meeting on Oct. 29.
In fact, the fed funds futures on the Chicago Board of Trade are now pricing in a 26% chance that the Fed will cut rates by three-quarters of a percentage point to 0.75% by that meeting.
Fed Chairman Ben Bernanke has said in recent weeks that economic weakness is likely to continue into next year, despite rate cuts and other recent moves taken by the Fed and Treasury Department to try and fix the credit crisis.
On Monday, Bernanke pushed Congress to consider a new stimulus plan to spur the economy.
"Everyone at the Fed has pretty much told you they’re going to cut," said Rich Yamarone, director of economic research at Argus Research. "They’re in a kitchen sink mode right now. Rate cuts, fiscal stimulus, bailouts - they’re throwing everything they can at this right now."
Still, would the Fed really consider lowering interest rates below 1%? The last time rates were at 1% was between June 2003 and June 2004.
Rate cuts have been a key tool the central bank has used in the past to boost a weak economy. A variety of lending rates, including credit cards and home equity lines, as well as the prime rate used to set many business loan rates, are pegged to the fed funds rate.
So lower rates usually lead to cheaper credit, thus spurring businesses and consumers to spend money more freely.
But in the current credit crisis, with banks afraid to make loans due to worries about their firms’ own need for cash in the near term, already relatively low short-term rates have done little to get credit flowing. (The Fed cut rates seven times between September 2007 and April before holding them at 2% for several months.)
Some economists argue that another rate cut may be the least important step the Fed can take in its effort to solve the crisis internet payday loans.
"It’s window dressing, only a psychological weapon," said Sung Won Sohn, economics professor at Cal State University Channel Islands. "Right now, the problem isn’t the cost of the Fed’s money, it’s that the existing money supply is not circulating. The pipelines are clogged."
Even Fed Vice Chairman Donald Kohn seemed to acknowledge that rate cuts aren’t as important as they once were. In an Oct. 15 speech, Kohn said the coordinated global cut the previous week had already been "overwhelmed …by the further erosion in confidence."
Still, many economists say that fear and uncertainty in the markets is so great right now that the Fed can’t risk leaving rates unchanged. And they say anything that can be done to spur lending is a positive.
"It’s not irrelevant, even if it’s not as important as usual," said David Wyss, chief economist with Standard & Poor’s.
Wyss said that if the U.S. credit and financial markets remain in crisis, a cut below 1% could come later this year or early next year.
To be sure, some have pointed to rates being at 1% for as long as they were as a factor in the housing bubble earlier this decade. It was the plunge from those inflated home values that sparked the credit crisis now dogging markets.
Low rates can also feed inflation. But that might be a sacrifice the Fed has to make.
"Inflating our way out of this mess is the Fed’s only option at this point," said Peter Boockvar, market analyst of Miller Tabak, in a note Friday morning.
With the global economy slowing down, there are few economists talking about the threat of inflation. And the continued decline in home prices has negated most fears of low rates leading to another housing bubble.
So even a cut to nearly 0%, a rate where the Bank of Japan left rates for much of the 1990’s, is not out of the question, given the unprecedented nature of credit problems.
"There’s a hesitation to do it because it looks like desperation. But they’re getting desperate," said Wyss.
Asian and European Union leaders called for an overhaul of global financial regulation, lending support to French President Nicolas Sarkozy as he presses the U.S. to join the initiative amid the credit crisis.
The heads of more than 40 Asian and European governments “pledged to undertake effective and comprehensive reform of the international monetary and financial systems,'' according to a statement released at a two-day meeting in Beijing. Chinese President Hu Jintao, Japanese Prime Minister Taro Aso, German Chancellor Angela Merkel and Sarkozy are among the participants.
The summit, which ends today, is the first gathering of Asian and EU leaders since bank failures, sinking stock prices and weakening currencies stoked fears that the world is headed for a prolonged economic decline.
Sarkozy is leading the 27-nation EU's push to respond by revamping a financial system established after World War II. Leaders from around the globe will meet Nov. 15 in Washington to assess the turmoil at the urging of the EU, which has floated ideas including more bank supervision, stricter regulation of hedge funds, new rules for credit-rating companies and changes at the International Monetary Fund.
The “IMF should play a critical role in assisting countries seriously affected by the crisis, upon their request,'' the Asian and EU leaders said in their statement.
`Unanimous Consensus'
The Washington-based IMF is considering an emergency program to prevent a collapse of emerging markets by almost doubling borrowing limits for members and waiving its standard demands for economic austerity measures. Investors are pulling money out of Asia, Latin America and Eastern Europe on fears vulnerable countries may also default on debt.
“There is a unanimous consensus to push forward reform,'' Kazuo Kodama, a press secretary at Japan's Ministry of Foreign Affairs, said in an interview today. No agreement has been reached on the details of that reform, he said how to get a free credit report.
Sarkozy's campaign for an overhaul threatens to expose differences with the U.S. over global financial governance. That may provoke tensions and bog down talks while individual countries continue to act on their own to limit the fallout.
South Korea stressed the importance of EU-U.S. unity in taking any actions. “If Europe and the U.S. become united, it would enhance whatever countermeasures are taken,'' South Korean President Lee Myung Bak said today, according to his spokesman, Lee Dong Kwan.
Stocks Slide
The credit crisis is choking off money to companies and people, undermining business and consumer sentiment. Economists at Deutsche Bank AG expect the Group of Seven economies to contract 1.1 percent next year, the worst since the Great Depression, and global growth to be the weakest since the 1980s.
Stock markets around the world have tumbled this year amid growing concern that governments, central banks and finance ministers are powerless to counter eroding corporate earnings and job losses.
More than $10 trillion have been erased from the market value of equities so far this month, accounting for about one- third of the total value wiped off stocks this year. MSCI's index of developed and emerging stock markets plunged 48 percent in 2008 and is heading for its worst year on record as credit- related losses topped $660 billion.
The Standard & Poor's 500 index is down more than 40 percent this year, poised for its worst annual retreat since 1931. The S&P 500 has lost 26 percent since U.S. investment bank Lehman Brothers Holdings Inc. declared bankruptcy on Sept. 15, while the U.K.'s FTSE 100 has fallen 25 percent, Japan's Nikkei 225 has tumbled 37 percent and Germany's DAX has dropped 29 percent.
Goodrich Corp. reports an increase in third-quarter net income to $168 million, or $1.33 per diluted share, from earnings of $127 million, or 99 cents per diluted share, a year ago.
Sales grew to $1.77 billion from $1.60 billion in the third quarter of last year.
During the third quarter of 2007, Goodrich recorded an after-tax loss from discontinued operations of $13 million and a one-time gain of $22 million from a settlement. There were no similar losses or settlements in the latest quarter.
The company reported an effective tax rate of 36 percent in the latest quarter, up from 28 percent in the third quarter of 2007.
Income from continuing operations was $168 million in the latest quarter, a 20 percent increase over income from continuing operations of $140 million a year ago.
“Our strong positions on the newer, more fuel-efficient commercial airplanes have enabled us to grow our commercial aftermarket sales at rates consistently faster than the overall capacity in the global airline system, a trend which we expect to sustain going forward,” says Marshall Larsen, chief executive direct payday loan cash advance.
Goodrich is raising its earnings outlook for 2008 to between $4.90 and $5 per diluted share, up from its previous forecast of $4.80 to $4.95 per diluted share.
In 2007, Goodrich earned $3.79 per diluted share.
The Charlotte-based company (NYSE:GR) says it expects sales growth of between eight and 10 percent next year. Goodrich also forecasts that income from continuing operations will increase by as much as 10 percent in 2009.
Goodrich is a global supplier of systems and services to the aerospace and defense industries.
Virginia Commerce Bancorp Inc.'s profits fell 60 percent in the third quarter, and management said it was considering a capital infusion from the Treasury Department.
Arlington-based Virginia Commerce, the parent company of Virginia Commerce Bank, reported Tuesday that third-quarter earnings fell to $2.7 million, or 10 cents per diluted share, from 2007 third-quarter earnings of $6.8 million, or 25 cents per diluted share. Total non-performing assets and loans past due 90 or more days rose to 3.2 percent of all assets, and net charge-offs totaled $1.8 million for the quarter.
“Clearly, construction and, more specifically, land development loans, continue to represent our greatest challenge in this market, contributing to significant increases in loan loss provisioning and non-performing loans," said Peter Converse, chief executive officer. "On the other hand, other major segments of our loan portfolio continue to hold up well despite market uncertainties payday advance lenders."
Converse also noted, "we remain well-capitalized and are in the process of following up our $25 million capital raise in September with at least another $25 million this quarter. Although our last capital communication indicated strong consideration of a private offering of equity instruments, we are now seriously evaluating the Treasury’s recently announced Capital Purchase Program as a potentially attractive alternative and/or enhancement.”
Shares of Virginia Commerce (NASDAQ: VCBI) fell 9 cents, or 2 percent, to $4.16 in Tuesday trading, They have lost 61 percent of their value this year.
American International Group, which tapped another $12 billion in emergency government funding in the past week, agreed Thursday to curb millions of dollars of spending on junkets, perks and executive compensation.
The troubled insurer has come under fire in recent weeks from lawmakers and regulators for planning to spend big on corporate trips and events even as the government had lent it more than $120 billion.
AIG agreed Thursday to curb certain expenditures after criticism from Congress and New York State Attorney General Andrew Cuomo. The company canceled 160 conferences and events - some that carried price tags of as much as $750,000.
"We know that the attorney general shares our commitment to rebuilding AIG’s business and paying back the U.S. taxpayer, and we will address the attorney general’s concerns expeditiously," said Edward Liddy, AIG’s chairman and chief executive.
Liddy was installed last month to replace the company’s previous management after the Federal Reserve extended an $85 billion loan as AIG (AIG, Fortune 500) was on the verge of collapse. In return, the government took a 79.9% stake in the company.
Fed officials said that an abrupt collapse of AIG could have had dire consequences for the already strained financial markets.
On Oct. 8, the Federal Reserve Bank of New York said it would lend AIG another $37.8 billion. In exchange, AIG said it would give the Fed investment-grade, fixed-income securities as collateral.
So far, AIG has borrowed a total of $82.9 billion, according to data released by the Federal Reserve on Thursday. Taken together, the two loans $122.8 billion.
The $85 billion government loan, which has a two-year term, comes with a steep interest rate. AIG has said it plans to hold onto its property-and-casualty insurance businesses, while selling off much of the rest of the company to pay off the massive debt cash advance loan no fax.
"We have many remarkable businesses and a flexible plan that will allow us to repay the Federal Reserve loan as quickly as possible under our current arrangement," the company said in a statement. "All AIG insurance companies remain financially healthy."
In a letter to AIG directors on Wednesday, Cuomo criticized the company for "unwarranted and outrageous expenditures." The taxpayer support "makes such expenditures even more irresponsible and damaging," Cuomo wrote.
On Thursday, the company and Cuomo said in a joint statement that AIG has agreed to give Cuomo records related to executive compensation and will work with state officials to recoup "any illegal expenditures."
AIG also said it will establish a committee to give the company’s board more oversight of salaries, bonuses, stock options, severance payments, gratuities, benefits, junkets and perks.
At a congressional hearing last week, lawmakers attacked company leadership for throwing a one-week retreat at the St. Regis Resort in Monarch Beach near San Diego, Calif., just days after the bailout, at a cost of $440,000. It included visits to the spa and golf course, with $10,000 in so-called leisure dining.
Additionally, AIG will not make payments under an employment agreement with outgoing CFO Steven Bensinger. According to company filings with the SEC, Bensinger was entitled to receive nearly $10 million in severance, among other payments.
An AIG spokesman declined to comment on the issue of Bensinger’s severance.
Bensinger has left AIG, the company announced Thursday. AIG announced that the new CFO would be David Herzog, who has been with AIG since 2001 and served as comptroller since 2005.
The current economic slump will likely lead to an increase in lawsuits, according to a new litigation trends survey released Tuesday by law firm Fulbright & Jaworski LLP. The blame game will prompt many of these suits.
Of the U.S.-based companies participating in this year’s survey, 34 percent expect to see what the study calls a “run-up” in litigation involving their firms over the next 12 months.
By comparison, 22 percent of respondents to the 2007 survey expected to see an increase in litigation.
“This year’s survey appears to mark an inflection point for American business — between the end of a prolonged period of prosperity and the start of a period of economic challenge that is likely to fuel litigation over who is to blame and who should pay for the consequences,” says Stephen C. Dillard, chair of Fulbright’s global litigation practice.
The latest litigation trends report is based on responses from 358 participating companies — including company officials who serve as general or deputy-general counsels for their firms. Of that pool, 251 respondents were U.S.-based firms.
The survey was performed from May 22 through July 18 of this year — during what Dillard calls “the cusp of that transition” from economic prosperity to the current economic slump. The report covers litigation practices over the prior 12-month period.
Houston business research firm Greenwood Associates conducted the survey on behalf of Fulbright & Jaworski.
The litigation trends report provides businesses with a snapshot of the current legal landscape, notes John W. Weber Jr., who is a partner in the litigation practice of the San Antonio office of Houston-based Fulbright & Jaworski.
Given the timeframe in which the survey was conducted, Dillard says that the 2008 report highlights “both the evident calm before the storm, as well as the sense that disputes are on the rise.”
The calm: The overall pace of activity in the U.S. declined during the 2007-2008 survey period — with 21 percent of U.S. companies stating that no new lawsuits had been filed against them. By comparison, 17 percent of the firms surveyed claimed there was no pending litigation against them during the 2006-2007 survey period approved payday advance in seconds.
But this period is not expected to last for long — especially as the country sees a rise in lawsuits tied to the collapse of the subprime mortgage market.
Such concerns have companies ramping up their legal arsenal. Of the U.S. companies responding to the 2008 litigation trends survey, 45 percent reported spending at least $1 million annually on litigation. In line with that finding, 19 percent of the U.S.-based firms stated that they were more likely to increase their in-house litigation staff.
Over the last 12 months, 12 percent of the insurance companies surveyed had already engaged outside counsel regarding subprime lawsuits or investigations. Eleven percent of the financial services firms surveyed had done this over the past year.
Looking ahead to the next 12 months, 15 percent of the insurance firms, and 22 percent of the financial services respondents are, as the report states, “bracing themselves for a subprime action or investigation.”
As part of this year’s survey, Fulbright & Jaworski also broke down which industries are most vulnerable to litigation.
Insurance companies were the prime target — with at least 66 percent of these firms facing six or more new lawsuits. Next was the retail industry, with 55 percent of this sector facing at least six new lawsuits. These top targets were followed by manufacturing, with 54 percent of the companies facing six or more new lawsuits; and health care providers, with 52 percent of its businesses facing at least six new lawsuits.
As for the areas most ripe for lawsuits, the top three were labor and employment matters, contract disputes and personal injury cases. These areas also took the top three spots in the 2006-07 and the 2005-06 surveys, Weber says.
Product liability, intellectual property/patents, insurance, environmental-toxic tort, regulatory, class actions and professional services rounded out the top 10 categories of lawsuits.
French President Nicolas Sarkozy and German Chancellor Angela Merkel paved the way on Saturday for European measures to tackle the global financial crisis but revealed little about their plans.
Sarkozy, whose country holds the rotating six-month presidency of the European Union, has called an emergency meeting on Sunday of the 15 countries that have the euro as their currency, with a view to taking steps to stop the rot.
“We have prepared a certain number of decisions that we will submit to our partners in the presence of the president of the European Commission and the governor of the (European) central bank. You understand that it is not appropriate for us to talk about it,” Sarkozy told a joint news conference with Merkel.
While the leaders would not provide details, they vowed to act in a coordinated manner, but ruled out an EU-wide bank rescue fund, an idea which EU officials say France originally floated but has since been scrapped in the face of opposition from Germany and others.
“We know where we want to get to and how we want to get there, but first we want to coordinate between the euro zone countries and then all of Europe,” Sarkozy said, adding that he would meet British Prime Minister Gordon Brown before the Eurogroup meeting on Sunday afternoon.
A source close to the French presidency said the euro zone leaders would discuss the possible creation of a bank rescue package which will take Britain’s initiative as a reference.
“There are two competing models. The American model, which no one wishes to draw inspiration from, and the British model. This is what everyone is talking about,” the source said, on condition of anonymity.
Britain’s rescue plan, launched last week, involved injecting 50 billion pounds ($86 billion) of taxpayers’ money into its banks and, crucially, to underwrite interbank lending which has all but frozen around the globe.
The International Monetary Fund will use a “rapid-fire'' emergency-loan program to lend hundreds of billions of dollars to emerging markets as the credit squeeze threatens to hobble nations that until this year were weaning themselves off the fund's aid.
Dominique Strauss-Kahn, the IMF's managing director, said yesterday he has activated the program, which could distribute a record amount of cash. The move comes as the cost of protecting bonds issued by a number of developing countries has climbed sharply, and nations such as Brazil, Mexico and Peru have sold dollars to shore up their currencies.
The financial turmoil may restore the Washington-based lender to a central role in the global economy. Demand for IMF assistance has collapsed in the past few years as buoyant capital markets and rising commodity prices allowed many developing nations to raise funds on their own and build up currency reserves. Now central banks around the world are drawing on those reserves as the credit crisis spreads.
“The IMF had been written off as increasingly irrelevant,'' said Claudio Loser, a scholar at Inter-American Dialogue, a policy-analysis center in Washington, and former director of the IMF's Western Hemisphere department. “Now we could see a renaissance at the fund. Countries that had hoped never to need the fund again may be forced to ask for help as the normal sources of finance dry up.''
Less Burdensome
Strauss-Kahn, 59, announced the plan on the eve of the fund's annual meeting this weekend in Washington. The program will allow the fund's 184 member nations to get loans in 10 days or less, rather than the usual several weeks it takes to process requests. Conditions the fund typically requires, such as cutting government spending, will also be less burdensome.
The IMF had $110.2 billion in outstanding loans at its peak as of Dec. 31, 2003. That had fallen to $17 billion as of September 30.
“The fund did not lend a lot during the last five or six years,'' Strauss-Kahn said. “We have hundreds of billions of dollars which are likely to be used in one year, and even more if we go over this period.''
Iceland's Prime Minister Geir Haarde said Oct. 8 an IMF loan is “definitely an option,'' and a mission from the fund was on the island yesterday. The government has taken control of the country's three biggest banks after they collapsed under the weight of debt.
At Risk
Win Thin, a senior currency strategist at Brown Brothers Harriman & Co. in New York, said in an Oct. 7 report that Eastern European nations are among the most at risk, because of large current-account deficits and high levels of external debt.
Estonia's current-account deficit — the broadest measure of trade because it includes transfer payments and investment income — is equal to 16 percent of the country's $28 faxless payday loans.6 billion gross domestic product. Its short-term debt is $10 billion, more than twice its $4 billion in foreign-exchange reserves, according to data compiled by Brown Brothers Harriman.
The data show Bulgaria's $14 billion in short-term debt equals three-quarters of foreign-exchange reserves, and its $12 billion current-account deficit is 25 percent of GDP.
Brazil sold dollars this week for the first time in five years, and Mexico sold $2.5 billion in the spot market Oct. 8 and 9, helping their currencies pare losses. Last month, Peru's central bank was forced to pour record sums into the foreign- exchange market to support its ailing currency.
Default Protection
The cost of default protection suggests other developing countries that may need help. Credit-default swaps for Kazakhstan imply a 52 percent chance the country won't meet its debt obligations in the next five years, according to Bloomberg data. Swaps for Pakistan indicate an 86 percent chance of default.
The IMF has been at the center of some of the biggest financial bailouts of the past three decades, helping broker solutions to the Latin American debt crisis in the 1980s and rescues for Mexico, Russia, Brazil and Asia in the 1990s.
The fund established its rapid loan program in the wake of the so-called Mexican peso crisis of December 1994, when the country was forced to abandon its currency peg to avoid depleting its reserves. During the next six weeks the Mexican peso plunged 45 percent, prompting a $17.8 billion loan from the IMF — at the time, the fund's largest.
In 1997 and 1998, the IMF extended credit lines of more than $80 billion to Indonesia, Thailand and South Korea to help them avoid default after a decline in their currencies pushed up the cost of foreign-debt payments.
Financial Losses
Even a modest pickup in loans would help stem financial losses at the IMF that totaled $165 million in 2007. The fund's first shortfall since 1985 led Strauss-Kahn to announce an 11 percent, or $100 million, cut in operating costs that included eliminating at least 380 of the IMF's 2,900 jobs. Even with the cuts, the fund is expected to lose $135 million in 2008.
“If there are no fires, then the fire department does not have much to do, and after a while people start to wonder whether they need a fire department at all,'' said Michael Mussa, the IMF's chief economist from 1991 to 2001. “This has been the position for the fund in recent years, but things have changed in just a few weeks.''
The Bank of England should cut the benchmark interest rate by a half point tomorrow after the economy tumbled into a recession in the third quarter, the National Institute for Economic and Social Research said.
Gross domestic product shrank 0.2 percent in the three months through September, the first contraction for a calendar quarter since 1992, the London-based institute, whose clients include the central bank, said today. The International Monetary Fund expects the economy to contract next year, according to a draft of its revised forecasts obtained by Bloomberg News.
“In view of these figures and of the intensifying banking crisis we take the view that the Bank of England should cut the interest rate by half a percentage point at its next meeting,'' Martin Weale, Niesr's director, said in a statement.
Niesr joined lobby groups including the Confederation of British Industry in calling for the biggest interest-rate cut since the aftermath of the Sept. 11 terrorist attacks in 2001. The Bank of England and central banks around the world pumped more than $480 billion into markets yesterday to stem the global financial crisis.
The IMF expects the U.K. economy to contract 0.1 percent next year after forecasting growth of 1.6 percent six months ago, the Washington-based lender said in a report prepared for the Oct. 10 meeting of finance ministers and central bankers. Consumer confidence fell to its lowest level since at least 2004, a separate report by Nationwide Building Society showed.
Crisis Meeting
The Bank of England will cut its benchmark rate by at least a quarter point from the current 5 percent tomorrow, according to 49 economists of 61 economists in a Bloomberg News survey (paydayloans). Six predict a reduction of half a point, including Citigroup Inc. and JPMorgan Chase & Co. Policy makers have left the key interest rate unchanged since April.
Prime Minister Gordon Brown was scheduled to meet Bank of England Governor Mervyn King and Financial Services Authority Chairman Adair Turner late yesterday to discuss the crisis. Brown's government is looking at “every aspect'' of the market turmoil, his spokesman said yesterday, refusing to rule out any measure to help the economy.
An index of consumer confidence dropped three points to 50, the lowest since the survey started four years ago, while the measure of sentiment about the current economic situation fell seven points to 39, Nationwide said.
A separate survey of job consultancies by KPMG and the Recruitment and Employment Confederation signaled that companies are hiring fewer workers. Demand for temporary staff fell to an 11-year low, the report showed.
“Rising unemployment, falling house prices and the continued turmoil in the financial markets are likely to mean that confidence will take some time to recover,'' Fionnuala Earley, Nationwide's chief economist, said in a statement.
Business confidence is also declining. The British Chambers of Commerce said yesterday that confidence among the 5,100 companies in its quarterly survey plunged to the lowest rate since the data began in 1989. Britain is in a “worsening recession,'' the report said.
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