C4 Sunday, September 25, 2011
SUNDAY BUSINESS
Global leaders struggle to calm recession fears
AP Photo
A man studies stock prices at a brokerage firm in Hong Kong, Friday. Asian stocks faced sharp losses early Friday following a precipitous session of trading on Wall Street sparked by fears that a global recession may already be under way.
WASHINGTON (AP) — The world’s major economic powers are pledging to launch a bold effort to deal with a chronic slowdown in growth and a European debt crisis threatening to push the global economy into another recession. But so far, markets are not buying the new commitments. U.S. stocks were falling in early trading Friday and those losses followed big declines in Asia and Europe. All of the market turmoil was occurring as finance officials from around the world were in Washington for the annual meetings of the 187-nation International Monetary Fund and its sister lending institution, the World Bank. In advance of those talks Friday, finance ministers and central bank presidents of the Group of 20 major economies issued a statement late Thursday pledging
Roswell Daily Record
to do what was necessary to restore financial stability and calm financial markets. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke represented the United States at the discussions. Finance officials on Friday said they were undaunted by the initial adverse market reaction and pledged to push forward with implementation of their commitments, especially in the area of dealing with the European debt crisis, which threatens to engulf the 17 nations that share the euro as a common currency. “The leading lights of the eurozone are aware that time is running out,” British Finance Minister George Osborne told reporters. “There is a far greater sense of urgency than there was three weeks ago about the necessity for the eurozone to address its prob-
Fannie Mae cited for robo-signing
AP Photo
In this Sept. 2 photo, Ford Motor Company CEO Alan Mulally shows his One Ford plan card during an interview with The Associated Press in New York.
Ford CEO: recovery slow but ‘on right track’ NEW YORK (AP) — At his first press conference as CEO of Ford, Alan Mulally was asked how he could run such a complex company with no experience in the car business. The former Boeing executive responded that cars, which have around 10,000 parts, are indeed very sophisticated. Then he smiled and noted that a jumbo jet has 4 million parts — and it flies. If there were doubters when Mulally joined Ford in 2006, there aren’t many now. The year he took over, the company lost $17 billion. Last year, it made $6.6 billion, its biggest profit in 11 years. Within weeks of arriving, Mulally took out a huge loan and began pushing through a restructuring that continued even as the recession sent rivals General Motors and Chrysler into bankruptcy protection. Behind his sunny demeanor and fuzzy red sweater vests, the 66-year -old Kansan had the steel to rein in the bureaucracy and infighting at Ford. He promoted managers who could work together and fired those who couldn’t. He shed money-losing brands like Jaguar, Volvo and Mercury. He closed six U.S. plants, cut thousands of jobs and saved billions in engineering costs by reducing the number of models Ford builds. Instead of making regional versions of a
Focus, for example, Ford now designs one version for the world. Mulally still faces big challenges. Ford is struggling to overhaul Lincoln, which was the nation’s top-selling luxury brand a decade ago but fell victim to underfunding and more stylish rivals. Its sales in China, the world’s biggest car market, are about one-sixth of GM’s. And slow growth in the U.S. is hindering a comeback in car sales. Mulally spoke with The Associated Press about the economy, the car industry and his management style. Excerpts appear below, edited for length and clarity. Q: What are your biggest worries about the economy? A: We’re generally on the right track, but it is going to be a slower recovery than we’ve ever had before. The private sector leading us out of this recession is the most important thing. Q: President Obama called you when he was on Martha’s Vineyard. Did he ask for advice on the economy? A: What he wanted to know, because we interact with so many customers, (was) how consumers (are) feeling about everything. They’re looking for both nearterm action on jobs and the economy, but they’re also looking for longer-term solu-
lems and there is pressure on the eurozone from across the international community.” Britain does not use the euro currency but Germany, the largest economy in Europe, does. German Finance Minister Wolfgang Schaeuble said Friday that a second massive bailout package aimed at keeping heavily indebted Greece from defaulting may have to be re-evaluated because Greece’s debt inspectors found trouble in implementing previous promises. The finance officials of traditional economic powers such as the United States, Japan and Germany and major emerging nations such as China, Brazil and India were seeking to demonstrate strong resolve in the hope that it will calm jitters that had sent financial markets plunging on Thursday.
tions on our debt, on our budget deficits, our trade imbalances. They’re looking for more clarity on where the United States is going, so that they can plan their nearterm actions against the long term. Q: Why aren’t companies using their cash stockpiles to hire more? A: The consumer has pulled back. We’re ready with the products and services that people really do want, but we’re going to match our production of goods and services, cars and trucks, to what the real demand is. We’re very disciplined about that. The worst thing you could do is make more than what the market wants, which our industry has done sometimes in the past. The demand is still very, very low. Q: Is it a permanent trend that people want more fuel-efficient cars? A: I sure think so. Most of us in the United States and around the world know that we are going to pay more for energy going forward. There will be ups and downs but, in general, it is more expensive to find oil and bring it to market than ever before. So fuel efficiency has just continued to move as the number one consideration. It doesn’t make any difference whether it’s a new Ford Fiesta or an F-150 (pickup truck), the customers want the most fuel-efficient vehicle.
WASHINGTON (AP) — Fannie Mae missed chances to catch law firms illegally signing foreclosure documents and its government overseer did not take the right steps to ensure Fannie was doing its job, according to a federal watchdog. The Federal Housing Finance Agency’s inspector general said in a report Friday that Fannie failed to establish an “acceptable and effective” way to monitor foreclosure proceedings between 2006 and early 2011. FHFA then failed to ensure it was complying with demands that it clean up its programs. Mortgage industry employees — including law firms employed by Fannie Mae — signed documents they hadn’t read and used fake signatures on foreclosure cases across the country. The practices, known collectively as “robo-signing,” resulted in a suspension of foreclosures last fall and a probe by all 50 state attorneys general into how corners were cut to keep pace with the crush of foreclosure paperwork. In 2005, Fannie hired outside investigators to look into allegations about faulty foreclosure documents. A year later, Fannie received a report from the investigators that found law firms working for Fannie had filed false documents. Fannie said it was developing a computer system to improve communication and monitor its attorneys but the inspector general said they found no evidence Fannie had made any improvements in overseeing its attorneys. FHFA was created in 2008 to oversee mortgage buyers Fannie Mae and Freddie Mac. To make sure Fannie was doing its job, FHFA has the authority to fire and replace employees; issue cease and desist orders; and impose fines. To date, the agency has not taken any of those actions, the inspector general’s report said. Fannie and Freddie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion. As part of a nationalized system, they account for nearly all new mortgage loans. The Bush administration seized control of the mortgage giants in September 2008, hoping to stabilize the beleaguered housing industry. In a separate report released Friday, the inspector general says the FHFA lacks examiners to monitor Fannie. Just a third of its 120 non-executive examiners are federally accredited, the report found. Other federal regulators, such as the Federal Deposit Insurance Corp., usually require all of their examiners to be accredited.
Land Office Solyndra leaders invoke 5th Amendment at hearing makes $10M in lease sale
SANTA FE (AP) — The State Land Office has earned nearly $10 million for public schools and other beneficiaries during its monthly oil and gas lease sale. All 30 tracts offered for lease Tuesday were sold. All of the tracts were located in Chaves and Lea counties. Six Lea County tracts sold for more than $1 million each, with the highest bid going to Rubicon Oil and Gas for $1.9 million. Land Commissioner Ray Powell says revenue from the lease sales help keep taxpayer bills lower. The bids earned from this month’s sale go directly to trust beneficiaries including public schools, hospitals and universities. Since January, the Land Office has generated more than $82 million through oil and gas lease sales.
WASHINGTON (AP) — Top executives from a bankrupt California solar energy company are to appear before a congressional hearing investigating their government loan, but they’re not expected to say much. Solyndra Inc. CEO Brian Harrison and the company’s chief financial officer, Bill Stover, have notified the House Energy and Commerce Committee they will invoke their Fifth Amendment right to decline to testify to avoid self-incrimination. Silence from the two executives will not stop committee leaders from pursuing their investigation into a $528 million loan Solyndra Inc. received from the Energy Department in 2009.
GOP lawmakers say they will ask questions about Solyndra, regardless of whether they are answered. In a letter to Energy Secretary Steven Chu, GOP lawmakers said they were expanding their inquiry into the Solyndra loan, which has become a rallying point for Republican critics of the Obama administration’s push for so-called green jobs. Lawmakers said they want the administration to turn over all communications between the Energy Department and White House related to Solyndra, as well as all communications between Energy and the Treasury, which lent Solyndra the money. Committee leaders said the Obama administration
may have violated the law when it restructured Solyndra’s loan in February in such a way that private investors moved ahead of taxpayers for repayment in case of default. The economic stimulus law provides for taxpayers to be ahead of other creditors in the event of bankruptcy or default. Deputy Energy Secretary Daniel Poneman said Thursday that the restructuring was “entirely legal,” noting that another aspect of the law requires Chu and other officials to protect the overall interests of taxpayers. He said the restructuring accomplished that because it gave the struggling company a better chance to succeed.
AP Photo
CEO Brian Harrison, left, and Chief Financial Officer Bill Stover, from the bankrupt solar energy company Solyndra, are sworn in as they appear before the House Energy Committee’s Oversight and Investigations Subcommittee which is examining Solyndra’s $528 million loan government loan, on Capitol Hill in Washington, Friday.