Archive for April, 2009

U.S. House acts to protect credit card users (Reuters)

Thursday, April 30th, 2009 | Finance News

WASHINGTON (Reuters) –
The U.S. House of Representatives overwhelmingly voted on Thursday in favor of legislation to protect credit card users from hidden fees, sudden interest rate hikes and questionable billing practices.

The chamber voted 357 to 70 in support of the Credit Cardholders' Bill of Rights, sponsored by New York Democrat Carolyn Maloney. This year, 107 Republicans voted in favor of the bill, compared with 84 Republicans voting for a similar bill last year.

"Today, the House sent a message to the American public that responsible regulation is part of the new era of financial responsibility," Maloney said.

Banks, which opposed legislation, have warned it could reduce the amount of credit available and make it more costly to use a credit card.

The American Bankers Association, which represents the big issuers, said it has "serious concerns" with the House bill.

Lawmakers "should strive to achieve the right balance between enhancing consumer protection and ensuring that credit remains available to consumers and small businesses at a reasonable cost," ABA President Edward Yingling said. "We continue to believe that more work needs to be done to achieve that balance."

President Barack Obama, who backs congressional efforts to overhaul the industry, issued a statement praising the bill for "paving the way toward real, meaningful credit card reform."

He said he would work with Congress to get a final measure requiring credit card companies to "set rules that are fair and transparent." He is expected to sign a bill into law by late May once the Senate considers its own version next week.

Democrats, who control Congress, added about a dozen amendments to the bill, including one that would require card issuers to maintain low introductory rates for at least six months, and to warn card holders if they are about to exceed their credit limits, allowing them to avoid a penalty fee.

It also includes a provision that would require federal banking agencies to submit information each year to Congress about their supervisory and enforcement activities related to credit card issuers' compliance with consumer protection laws.

It also seeks to make disclosures easier to read and bans issuers from charging card holders who pay their bills by phone or online.

The bill allows issuers one year or until July 2010 to implement new rules after a final bill is enacted into law, or which ever comes first. Lawmakers and consumer groups who want changes sooner have criticized the timeline.

"The longer we wait to ban these practices the more our constituents will suffer," U.S. Representative Barbara Lee, a California Democrat, said during the House debate.


In 2007, Americans used an estimated 694.4 million credit cards with Visa Inc, MasterCard Inc, American Express Co and Discover Financial Services logos, according to industry data.

Citigroup Inc, Bank of America Corp, JPMorgan Chase & Co and Capital One Financial Corp had almost 77 percent of the credit card market at the end of 2007.

With the House vote concluded, focus turned to the Senate where that chamber's credit card bill, co-sponsored by Democrats Christopher Dodd and Carl Levin, is expected to be considered next week.

Momentum is gaining for passage of a bill in the Senate where Democrats gained a big boost with the switch by Senator Arlen Specter of Pennsylvania from the Republican Party, adding to the Democratic numbers.

Several Republicans could end up supporting the bill.

"Now we hope that President Barack Obama's support for reform will help Senator Dodd break the logjam preventing his even stronger bill from getting to the floor," said Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group.

The Federal Reserve and other banking regulators last year approved rules against what Fed Chairman Ben Bernanke called unfair and deceptive credit card practices but gave the industry until July 2010 to comply.

Lawmakers want to codify those rules into law and go even further, frustrated with surprising rate hikes and fees and charges from issuers -- many of which have received billions of dollars in taxpayer bailout funds aimed at boosting lending.

Congress has seized on the public outrage against credit card companies, which was highlighted during a White House meeting last week between Obama and about a dozen credit card executives, who were urged to change their practices.

Senate Democrats recently complained to regulators that banks were raising rates on existing balances ahead of the Fed deadline.

House Financial Services Committee Chairman Barney Frank said that after the Senate acts the implementation date could be moved up if banks are still trying to squeeze money from consumers.

(Additional reporting by Thomas Ferraro, Richard Cowan, Kevin Drawbaugh, Jeremy Pelofsky and David Alexander; Editing by Tim Dobbyn, Bernard Orr and Steve Orlofsky)


How the major stock indexes fared Thursday (AP)

Thursday, April 30th, 2009 | Finance News

Chrysler's bankruptcy put only a small dent in Wall Street's rally. The Dow Jones industrial average gave up early gains and ended only moderately lower on Thursday after President Barack Obama confirmed that Chrysler LLC will be going through a bankruptcy reorganization. The announcement was not surprising to investors, though, and the Dow still capped the month of April with a robust gain of 7.4 percent.

The Dow Jones industrial average fell 17.61, or 0.2 percent, to 8,168.12.

The Standard & Poor's 500 index fell 0.83, or 0.1 percent, to 872.81.

The Nasdaq composite index rose 5.36, or 0.3 percent, to 1,717.30.

For the week:

The Dow is up 91.83, or 1.1 percent.

The S&P is up 6.58, or 0.8 percent.

The Nasdaq is up 23.01, or 1.4 percent.

For the year:

The Dow is down 608.27, or 6.9 percent.

The S&P is down 30.44, or 3.4 percent.

The Nasdaq is up 140.27, or 8.9 percent.


Dow, S&P dip on Chrysler bankruptcy, MetLife off late (Reuters)

Thursday, April 30th, 2009 | Finance News

NEW YORK (Reuters) –
The Dow and S&P 500 fell on Thursday after Chrysler's bankruptcy filing undercut optimism about upbeat corporate profits and reassuring job market data.

Even so, the S&P 500 closed out its best month in nine years despite the big U.S. automaker's bankruptcy after talks to restructure its debt broke down.

Uneasiness about Chrysler's bankruptcy wiped out earlier gains of more than 1 percent in both the Dow industrials and the S&P 500.

"We've got some fairly heavy-handed government intervention here, and the market is concerned about that," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

Exxon Mobil Corp (XOM.N) was the top drag on the Dow, down 2.6 percent at $66.67, after the world's largest publicly traded company posted a 58 percent drop in quarterly profit that missed Wall Street's estimates.

The Dow Jones industrial average (.DJI) dropped 17.61 points, or 0.22 percent, to 8,168.12. The Standard & Poor's 500 Index (.SPX) dipped just 0.83 of a point, or 0.09 percent, to 872.81.

But the Nasdaq Composite Index (.IXIC) gained 5.36 points, or 0.31 percent, to 1,717.30.


For the month of April, the Dow rose 7.4 percent, the S&P 500 gained 9.4 percent and the Nasdaq jumped 12.4 percent.

The gains for the broad S&P were the largest since March 2000, while the Nasdaq scored its biggest percentage rise since October 2002.

The best-performing sectors in the S&P 500 for the month were financials, up 22 percent, and consumer discretionary stocks, up 18.5 percent.

Although worrisome for the overall economy, Chrysler's Chapter 11 filing lifted its rivals' shares. General Motors rose 6.1 percent to $1.92, while Ford Motor Co (F.N) advanced 9.7 percent to $5.98.

After the closing bell, MetLife Inc (MET.N) posted a first-quarter loss as its investment income dropped, driving shares of the largest U.S. life insurer down 3.9 percent to $28.60 in extended trade.

Shares of Alcoa (AA.N) fell slightly to $9.06 in after-hours trade after the aluminum producer said it agreed to sell its wire harness and electrical distribution business to California-based private equity group Platinum Equity for an undisclosed amount.

The S&P 500 is up 29 percent from the bear-market closing low set on March 9. Stocks have been bolstered in part by optimism over the state of the banking sector and hopes the recession is easing.

The broad S&P received substantial support from profit reports from companies like Dow Chemical Co (DOW.N), up 18.4 percent at $16 as its earnings handily beat estimates.

However, shares of Motorola (MOT.N) fell 7.2 percent to $5.53 despite posting a narrower-than-expected loss as the cellphone maker also announced its cash position fell about $1 billion in the last three months.


Shares of big-cap technology companies lifted the Nasdaq, along with green module manufacturer First Solar Inc (FSLR.O), which jumped 23.5 percent to $187.29 after the company posted better-than-expected results.

Of the 280 companies in the S&P 500 that have reported earnings to date, 65 percent topped analysts' estimates, according to data compiled by Thomson Reuters.

However, many of the analysts' estimates had been reduced to reflect the current economic slump.

The latest government data showed the number of workers filing new claims for unemployment benefits unexpectedly fell last week, even as the number of people staying on those benefits rose to a fresh record high.

Trading was active on the New York Stock Exchange, with about 1.74 billion shares changing hands, above last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.86 billion shares traded, above last year's daily average of 2.28 billion.

Advancing stocks outnumbered declining ones on the NYSE by 1,672 to 1,373 while on the Nasdaq, the trend was reversed: decliners beat advancers on the Nasdaq by 1,360 to 1,335.

(Reporting by Chuck Mikolajczak; additional reporting by Edward Krudy; Editing by Jan Paschal)