UPI NewsTrack Business

Regulators close two U.S. banks

RENO, Nev., July 26 (UPI) -- Federal regulators have closed two banks in the U.S. West, saying they were undercapitalized due to the poor performance of home mortgage loans.

The U.S. Office of the Comptroller of the Currency, a branch of the U.S. Treasury Department, Friday revoked the charters of First National Bank of Nevada, of Reno, Nev., and First Heritage Bank of Newport Beach, Calif., the Wall Street Journal reported.

The Journal said the Federal Deposit Insurance Corp. was appointed receiver of both banks, and that the FDIC protected customer deposits by arranging their sale to Mutual of Omaha Bank.

First National Bank of Nevada had merged with First National Bank of Arizona, and records show the latter bank made mortgage loans throughout much of the United States during housing boom, continuing the practice even as the housing market was weakening, the newspaper reported.

First National Bank of Nevada had $3.4 billion in assets and $3 billion of deposits, while First Heritage posted a first-quarter net loss of $1.9 million.

NYC anticipates big drop in Wall St. pay

NEW YORK, July 26 (UPI) -- New York officials are waiting for what could be the largest drop in Wall Street compensation from one year to the next and with it a huge drop in tax revenues.

The final picture will not be clear until the end of the year, when Wall Street executives get their bonuses, The New York Times reports. New York City officials anticipate a drop of $10 billion, topping the $6.5 billion in 2001 following the Sept. 11, 2001, attacks hit Manhattan.

For many in investment banking and securities trading, bonuses can be as much as 75 percent of annual compensation.

In addition to the loss in taxes, the city will also lose money that will not be pumped into the economy in the form of spending on apartments, restaurant meals and other amenities. Many business owners catering to Wall Street say they already see signs that lifestyles are being downsized.

Vincent Nastri, who owns the Barclay-Rex tobacconist near the Stock Exchange, said sales are down. His top-of-the-line cigars go for $35 each.

"As long as I've been in the business, I think this is the worst," he told the Times.

Chrysler suspends new car leases

DETROIT, July 26 (UPI) -- Plummeting prices for used trucks and SUVs has led U.S. automaker Chrysler Corp. to suspend issuing leases for its new vehicles, auto industry analysts say.

Leased vehicles usually end up being put on the auction block by manufacturers after the lease period is over, but since demand for fuel-guzzling trucks and sport utility vehicles is at a historic low due to high gas prices, leasing has become problematic, the Detroit Free Press reported Saturday.

"We've really reached a point today in this environment where the advantages of leasing, the economic advantages, have really disappeared," Jim Press, a Chrysler president and vice chairman, told the Free Press. "From a standpoint of trying to continue to make leases available, we're taking resources that really should better be used for retail financing."

Chrysler's move to suspend leasing and instead concentrate more resources into financing new car sales came as a surprise to dealers, the newspaper said. They're worried the move will translate into less business for them because in the current tight credit climate. Only those with near-perfect records will be able to obtain financing for an outright purchase.

American Axle plans 2,500 lay-offs

DETROIT, July 26 (UPI) -- American Axle & Manufacturing Inc. says it plans to lay off 2,500 employees and eliminate 70 percent of its U.S. manufacturing capacity.

The company announced the moves Friday as it tries to cope with a $644 million second-quarter loss and the effects of a three-month strike by the United Auto Workers union, the Detroit Free Press reported Saturday.

Many of the lay-offs will come from workers who went on strike. More than 2,000 UAW-represented workers accepted buyouts or retirements as part of the package negotiated to settle the work stoppage.

The strike came just as the kinds of trucks and sports utility vehicles American Axle's parts are used for have become unpopular. Its main customers, Chrysler LLC and General Motors Corp., have seen sales of large vehicles fall by 51 percent while the credit crunch is making it harder for consumers to obtain financing for new vehicles, the Free Press reported.