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UPI NewsTrack Business

Jan. 9, 2013 at 7:28 PM   |   Comments

U.S. markets close higher

NEW YORK, Jan. 9 (UPI) -- U.S. markets rose Wednesday following a strong fourth-quarter earnings report from corporate bellwether Alcoa.

Alcoa traditionally kicks off each corporate reporting season, as it is the first Dow component to release its figures from the previous quarter. The company report released after markets closed Tuesday showed earnings in line with expectations and revenues ahead of expectations.

By close of trading on Wall Street Wednesday, the Dow Jones industrial average added 61.66 points, or 0.46 percent, to 13,390.51. The Nasdaq composite gained 14 points, or 0.45 percent, to 3,105.81. The Standard and Poor's 500 added 3.87 points, or 0.27 percent, to 1,461.02.

On the New York Stock Exchange, 2,050 stocks advanced and 962 declined on a volume of 3.6 billion shares traded.

The 10-year treasury note rose 2/32 to yield 1.863 percent.

Against the dollar, the euro fell to $1.3058 from Tuesday's $1.3081. The dollar was higher at 88.04 yen from 87.04 yen.

In Tokyo, the Nikkei 225 index added 0.67 percent or 70.51 points to 10,578.57.

In London, the FTSE 100 index gained 0.74 percent, 45.02, to 6.098.65.


AIG says no to joining lawsuit

NEW YORK, Jan. 9 (UPI) -- American International Group said it will not join a lawsuit against the U.S. government over a $182 billion rescue shareholders said was unfair to the company.

AIG board members met Wednesday in New York to hear arguments for and against joining the lawsuit, brought by former Chief Executive Officer Maurice Greenberg, a major shareholder who filed suit in 2011, contending the bailout paid off creditors in full, leaving AIG with a loan with 14 percent interest, which required selling major assets to pay off.

News that the board was considering joining the suit -- as a time when AIG is running an ad campaign with the tag-line "Thank you, America," for the bailout -- touched off protest among the public and some elected officials. AIG board members said they were obliged to hear arguments on behalf of shareholders.

"Don't do it. Don't even think about it," said a letter signed by Democratic Reps. Peter Welch of Vermont, Michael Capuano of Massachusetts and Luis Gutierrez of Illinois, as the AIG board was to hear arguments.

"AIG became the poster company for Wall Street greed, fiscal mismanagement, and executive bonuses -- the taxpayer and economy be damned," the lawmakers' letter to AIG Chairman Robert Miller said. "Now, AIG apparently seeks to become the poster company for corporate ingratitude and chutzpah.

"Taxpayers are still furious that they rescued a company whose own conduct brought it down," the letter said. "Don't rub salt in the wounds with yet another reckless decision that is on par with the reckless decisions that led to the bailout in the first place."

After a meeting that lasted through the morning, the AIG board rejected joining the lawsuit and requested that Greenberg drop the legal action taken in the company name, The New York Times reported.

The lawsuit seeks $25 billion in damages. AIG's ad campaign notes that the government made a $22 billion profit from fees and interest paid for the bailout loan.

The lawsuit argues the bailout terms violated the Fifth Amendment, which protects against abuse of government authority, records cited by the Times and other news organizations indicate.

The alleged constitutional abuse the lawsuit focuses on is depriving shareholders of private property "without just compensation."

AIG fully repaid its $182 billion bailout only weeks ago.


In Calif. short sales surpass foreclosures

LOS ANGELES, Jan. 9 (UPI) -- Home foreclosure sales in California, a staple since the housing bubble collapsed, are now running second to short sales, figures show.

Research firm DataQuick reported about a quarter of home sales in the state are now short sales, the Los Angeles Times reported Wednesday.

Short sales are deals struck with lenders in which the bank allows the home to be sold for less than what is owned on the mortgage. The bank forgives the owner the remainder and, lately, as the housing market has picked up in some regions, sometimes strikes generous deals including offering moving costs to homeowners and paying handsomely for owners to move, the newspaper said.

Bank of America and JPMorgan Chase are paying as much as $30,000 to $35,000 for homeowners who agree to short sales.

For banks, short sales include several advantages. The five major banks that agreed to a $26 billion settlement with the government for shoddy and sometimes fraudulent foreclosure practices can count loan forgiveness and incentives paid out in a short sale as part of the settlement costs. Homeowners also stay in the home until the short sale is completed, meaning the homes are not neglected for months as they often are with a foreclosure. Banks then receive a market value price when they sell the house, rather than a discounted price with a foreclosure sale. There are also far fewer legal expenses.

In addition, there are fewer hard feelings and less of a chance an angry former homeowner of a repossessed property will strike back.

"If you go through a short sale and a homeowner signs off on it, there is no downstream worry of litigation," said Sean O'Toole, founder of ForeclosureRadar.

The critical ingredient, however, is an improving housing market. Banks do not generally see themselves as home developers, real estate agencies or property management companies. As such, with a collapsing housing market, they prefer keeping the onus on the homeowner, who at least on some level is speculating on the housing market.

An improving housing market at least offers banks a chance at breaking even on a deal.

For homeowners, besides loan forgiveness and sometimes generous offers to cover moving costs, credit scores are hurt less with a short sale than a foreclosure and the waiting period for applying for a new loan is shorter -- usually, two years.

"In general, short sales produce less of a loss than if the property goes through foreclosure. In addition, the property is usually conveyed in better condition, which ultimately benefits the neighborhood," Wells Fargo spokesman Gary Kishner said.


Job worries help flu to spread

CHICAGO, Jan. 9 (UPI) -- The chief executive of outplacement firm Challenger, Gray & Christmas in Chicago said job security worries are not helping workers stay healthy this flu season.

"The economy is still on shaky ground and many workers continue to be worried about losing their jobs despite the fact that annual layoffs are at the lowest level since the late 1990s," Chief Executive Officer John Challenger said.

Worries about losing a job are pushing sick workers to go into work, "where the sick worker is not only performing at a reduced capacity but also likely to infect others," Challenger said.

Along with the health consequences, U.S. employers are out an average of $10.4 billion in direct costs during each flu season, the Centers for Disease Control and Prevention has estimated.

That price tag does not include lost productivity, but only direct costs of hospitalizations and other doctor bills.

By the numbers, this flu season -- although it is not over -- has been far more expensive this year than last, as 15,000 cases of the flu have been reported, more than three times the 4,400 cases reported in the last flu season, the outplacement firm reported Wednesday.

For the current season 29 out of 41 states reporting data on the season have described the number of flu cases this year as "severe."

Challenger urged companies to have "an effective leave policy," and he urged employees to take advantage of that if possible.

"While sick employees may think they are doing the right thing by 'toughing it out' and coming into work when ill, the fact is they are only making matters worse," he said.

"Whether it is motivated by job security or a desire to continue making a contribution in an overburdened workplace, presenteeism, as it has come to be called, only spreads illness to more workers and further damages the employers ability to meet demand," he added in a statement.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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