The U.S. Securities and Exchange
Commission plans to propose rules that may diminish the
importance of credit ratings across various markets, the Wall
Street Journal reported on Tuesday.
One proposal, to be unveiled Wednesday, would make it
possible for U.S. money-market funds to invest in short-term
debt without regard to ratings put on those securities by firms
such as Moody's Investors Service and Standard & Poor's, the
Journal reported, citing people familiar with the matter.
Currently, SEC rules generally require that money-market
funds purchase only short-term debt with high investment-grade
ratings, the Journal said.
The SEC also will propose rules that may diminish the
importance of credit ratings in determining the amount of
capital that investment banks are required to hold, the Journal
The renewed effort is part of a push in the United States
and Europe amid the credit crunch that has devastated many
banks and investors, the Journal said, adding that rating
Moody's Corp's (MCO.N) Moody's Investors Service, McGraw-Hill
Cos' (MHP.N) Standard & Poor's and Fimalac SA's (
Ratings have been blamed by some for underestimating the risk
of default on hundreds of billions of dollars of mortgage debt.
(Reporting by Robert MacMillan; Editing by Lincoln Feast)
U.S. Treasury Secretary Henry
Paulson on Monday urged oil-producing nations to boost their
output and warned that soaring energy costs threatened to
prolong a U.S. economic slowdown.
"This is a very, very important issue because the high
price of oil is creating economic issues...and is a heavy
burden for people around the world," Paulson said at a press
conference with Mexican Finance Minister Agustin Carstens ahead
of a conference of Latin American finance chiefs.
"In my judgment, it's got a very real risk of prolonging
this economic slowdown, but this is not a situation that avails
itself to a quick fix," he said, adding that both producers
and consumers of oil needed to work together to cope with
"We call on oil producers everywhere to open up for
investment...and then obviously this is about developing
alternative sources of energy, new technologies," Paulson said.
Paulson, a devout believer in free markets, turned aside a
question about the Mexican government's offering of subsidies
for energy users to offset higher prices, by saying he wouldn't
comment on an individual country's policies.
"But when we in the U.S., back in the 1970s, used price
controls, it didn't work and I do believe the ultimate solution
is to get more production and to do some things longer term
that are going to lead to greater supply," Paulson said.
The U.S. Treasury chief flew in to the Mexican resort city
late on Monday for a day of talks with top finance ministry
officials from 23 countries in the Americas region.
Carstens said the Latin American countries had stable
economies but noted they were facing a "difficult" external
situation because many developed countries were slowing
Also attending the meeting are leaders from the
International Monetary Fund and World Bank, and Carstens said
he hoped they would channel more capital to projects in the
region that could boost growth and help quell inflation.
Mexico raised interest rates on Friday after inflation
surged to its highest in more than three years.
(Reporting by Glenn Somerville and Jason Lange; editing by
United Parcel Service Inc (UPS.N)
warned on Monday that second-quarter earnings would be below
expectations, blaming high fuel prices and a sluggish U.S.
The announcement came less than a week after rival package
delivery company FedEx Corp (FDX.N) issued a weak fiscal 2009
forecast and posted a quarterly loss, also citing rising fuel
prices and an ailing economy.
UPS estimated earnings of 83 cents to 88 cents a share for
the quarter, down from a prior view of 97 cents to $1.04 per
In a statement, UPS said U.S. package volume had been lower
than expected, while demand for higher-priced air delivery
services had seen a particular drop.
It isn't just the package delivery companies that that
warned that results will be hurt by rising energy and other
Earlier on Monday, United Air Lines (UAUA.O) said it was
laying off nearly 1,000 pilots as it takes 100 aircraft out of
service to deal with "record high oil prices and a softening
U.S. economy." It warned its competitors "are facing similar
decisions in response to this unprecedented environment."
In May, farm equipment leader Deere & Co (DE.N) forecast
disappointing full-year earnings, blaming global steel prices
that its chief finance officer said were "racing ahead" of
But given the out-sized role that fuel plays in haulers'
expenses, freight and package haulers are especially feeling
Adding pressure is the slowdown in the U.S. economy, which
has depressed business activity and left too many truckers
chasing too little freight.
That's forced many independent truckers -- and some bigger
outfits -- to file for bankruptcy protection.
Among the victims: Jevic Transportation Inc, a so-called
less-than-truckload shipper, owned an affiliate of private
equity firm Sun Capital, which filed in May.
As a result, truckmakers like Paccar Inc (PCAR.O) are
seeing weak demand for their pricey big rigs this year. That
weakness helped push Caterpillar Inc
(Reporting by James Kelleher; Additional reporting by
Nichola Groom; Editing by Steve Orlofsky)