BUSINESS BRIEFS
Fed, Treasury seek new rules
Associated Press
WASHINGTON — The nation's top economic officials urged Congress yesterday to give them new regulatory tools to better protect the country from economic and financial havoc if a major Wall Street firm were to fail.
Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson made the recommendations in a joint appearance before the House Financial Services Committee as fresh worries gripped investors about the financial shape of mortgage giants Fannie Mae and Freddie Mac as well as investment bank Lehman Brothers Holdings Inc.
Both Bernanke and Paulson endorsed creating new procedures by which the government can guide an orderly liquidation of a failing investment bank in an effort to minimize any fallout that might be inflicted on the broader financial system and the overall economy. Such procedures, which are in place for commercial banks, might have made the dissolution of investment firm Bear Stearns more orderly.
Although Bernanke defended the Fed's controversial decision to financially back JP Morgan Chase's takeover of the Bear Stearns, the Fed chief said, "This is not something I want to do again" were other investment firms to falter.
TOYOTA ADJUSTS TO ITS NEW REALITY
DETROIT — Toyota Motor Corp., the seemingly unstoppable juggernaut that saw its U.S. sales double in the past decade, has come back down to earth.
Stung by rare double-digit sales declines and burdened by a growing inventory of slow-selling pickups, Toyota said yesterday it will start producing the Prius hybrid in the U.S. and will shut down truck and SUV production to meet changing consumer demands.
Toyota was the latest automaker to announce major production changes in response to lagging U.S. auto sales. Industrywide, sales have dropped 10 percent in the first six months of this year and are moving at their slowest pace in more than a decade. High gas prices have accelerated the drop in pickup and sport utility vehicle sales faster than automakers had predicted, and they're scrambling to keep up with demand for smaller, more fuel-efficient cars.
Toyota said the moves will not affect any full-time workers, who will get training and do other projects during the shutdown. But the company is laying off around 700 temporary workers at the affected plants.
OIL PRICES RISE ON NEW IRAN LAUNCH
NEW YORK — Oil prices rebounded by more than $5 a barrel yesterday, as another missile launch by Iran stoked worries that escalating political tensions in the Middle East could cut off supplies out of the region.
A day after Iran tested a missile capable of reaching Israel, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies. Iran then responded with another missile launch.
The mounting hostilities drew buyers back into the jittery energy markets, said John Kilduff, senior vice president of risk management at MF Global LLC.
OPEC's secretary general said yesterday that the oil-producing group will not be able to replace any shortfalls if Iran is attacked and takes its crude supplies off the market. The fear is that Iran could block the Strait of Hormuz, a passageway that handles about 40 percent of the world's tanker traffic.
FEWER SIGN UP FOR JOBLESS BENEFITS
WASHINGTON — Fewer people signed up for unemployment benefits last week, but the dip was not enough to overcome continuing weakness in the country's labor market.
The Labor Department reported yesterday that new applications filed for unemployment insurance fell by a seasonally adjusted 58,000 to 346,000 for the week ending July 5. A year ago, the figure was lower, at 304,000, showing a deterioration in employment conditions.
A government analyst cautioned that last week's drop did not suggest a sudden improvement in the country's overall economic health. The decline was exaggerated because of adjustment problems related to temporary shutdowns at auto plants for retooling new assembly lines. The unadjusted, or actual raw figures, showed an increase of 30,000 claims for last week.
Employers have been chafing under high energy prices and fallout from the housing and credit crises. As they try to cope with those problems and squeezed profits, they have cut back on hiring and other types of investments.
