AP Business Highlights

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On Wednesday February 24, 2010, 5:42 pm EST

Toyoda faces lawmakers: 'I'm deeply sorry'

WASHINGTON (AP) -- Toyota CEO Akio Toyoda apologized personally and repeatedly Wednesday to the United States and millions of American Toyota owners for safety lapses that have led to deaths and widespread recalls. Unimpressed lawmakers blistered the world's largest automaker with accusations of greed and insensitivity.

The grandson of the founder of the Japanese auto giant suggested to the House Oversight and Government Reform Committee that his company's "priorities became confused" in a quest for growth over the past decade at the expense of safety concerns.

Toyoda told the panel he was "absolutely confident" there was no problem with the electronics of Toyota vehicles and repeated the company's stance that sudden accelerations were caused by either a sticking gas pedal or a misplaced floor mat. Some outside experts have suggested electronics may be at the root of the problems.

New home sales drop 11 percent in January, new low

WASHINGTON (AP) -- Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.

The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who were expecting a 5 percent increase over December's pace.

While winter storms were partly to blame, home sales have fallen for three straight months despite sweeping government support. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programs are withdrawn.

Bernanke: Record-low rates still needed

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke told Congress on Wednesday that record-low interest rates are still needed to ensure that the economic recovery will last and to help ease the sting of high unemployment.

In his twice-a-year report to the House Financial Services Committee, Bernanke struck a confident tone that the recovery should endure. But he also sought to tamp down expectations.

The moderate economic growth the Fed expects will lead to only a slow decline in the nation's nearly double-digit unemployment rate, he said. He offered no new clues about the timing of an interest rate increase. Most economists think it is months away. Bernanke said rates will need to stay at exceptionally low levels for an extended period "as the expansion matures."

Stocks rebound as Bernanke sees rates staying low

NEW YORK (AP) -- Federal Reserve Chairman Ben Bernanke gave the stock market the tonic it wanted: Interest rates will stay low.

Stocks rallied Wednesday and ended a two-day slide after Bernanke sounded an upbeat note about the economy during his semiannual report to Congress and said he still expects rates will remain low for an extended period. Investors want to see low-cost borrowing continue to help revive the economy.

Financial stocks helped pull the Dow Jones industrial average up 92 points to 10,374.16 after the index slid 101 on Tuesday. JPMorgan Chase & Co. and Bank of America Corp. each rose more than 2 percent. Meanwhile, the technology-dominated Nasdaq composite index rose after software company Autodesk Inc. reported stronger earnings and revenue than expected.

GM to end Hummer after sale to Chinese buyer fails

DETROIT (AP) -- General Motors Co. said Wednesday it will shut down Hummer after its bid to sell the brand to a Chinese company collapsed.

Heavy equipment maker Sichuan Tengzhong Heavy Industrial Machines Co. pulled out of the deal for Hummer, known for its hulking, military-style SUVs, because it was unable to get clearance from Chinese regulators within the proposed deal timeframe, the manufacturer said in a separate statement.

GM said it will continue to honor existing Hummer warranties.

GM has been trying to sell the loss-making brand for the last year and found a suitor in Tengzhong, but resistance from Chinese regulators created difficulties from the start.

Freddie Mac losses mount, warns of foreclosures

WASHINGTON (AP) -- Freddie Mac lost almost $26 billion last year, ominous news for taxpayers who are footing the bill to rescue the mortgage finance company and its sibling Fannie Mae.

Freddie Mac, which has lost a total of almost $80 billion since the housing crisis started in 2007, is bracing for more pain. The McLean, Va.-based company said a record 4 percent of its borrowers are at least three months behind on their payments and facing foreclosure.

Its chief executive, Charles Haldeman, warned Wednesday of a "potential large wave of foreclosures" still to come.

This is a major problem for the federal government, which seized control of Freddie and Fannie in September 2008. The two companies have already siphoned $111 billion from the government to stay afloat. That number is expected to hit $188 billion by fall 2011.

Smaller thrift industry breaks even in 2009

WASHINGTON (AP) -- America's thrifts posted a small profit last year after two years of losses, evidence the industry may be stabilizing amid the economic recovery.

But the industry also saw significant consolidation as several large thrifts were combined with their parent banks. As a result, the amount of new mortgage loans originated by thrifts dropped last year.

The Office of Thrift Supervision said Wednesday that savings and loans earned $29 million in 2009, after reporting net losses of $15.9 billion in 2008 and $649 million in 2007.

That is the industry's first annual profit since 2006, though it pales in comparison to the $15.8 billion profits earned that year.

SEC puts new curbs on short-selling

WASHINGTON (AP) -- Federal regulators on Wednesday imposed new curbs on the practice of short-selling, hoping to prevent spiraling sales sprees in a stock that can stoke market turmoil.

The Securities and Exchange Commission, divided along party lines, voted 3-2 at a public meeting to adopt a new rule. Investors and lawmakers have clamored for the agency to put such brakes on trading moves they say worsened the market's downturn in the fall of 2008.

The rule puts in a so-called circuit breaker for stock prices, restricting short-selling of a stock that has dropped 10 percent or more for the rest of a trading session and the next one. The new curbs take effect in about 60 days but stock exchanges have six months after that to implement them.

FBI raids Toyota supplier Denso in antitrust probe

NEW YORK (AP) -- The FBI raided the U.S. headquarters of three auto parts suppliers as part of an antitrust investigation, the agency said Wednesday.

The FBI's Detroit office said agents raided the offices of Denso Corp., Yazaki North America and Tokai Rika. All the raids took place Tuesday evening.

Justice Department spokeswoman Gina Talamona said the department is conducting an investigation of automotive electronics suppliers. It was unclear if other companies were involved in the investigation.

Denso spokeswoman Julie Kerr says the search of the company's office -- which oversees Denso's operations in North and South America and is located in Southfield, Mich. -- took place on Tuesday.

By The Associated Press

The Dow rose 91.75, or 0.9 percent, to 10,374.16. The advance pared the Dow's loss for the week to 28 points.

The broader Standard & Poor's 500 index rose 10.64 or 1 percent, to 1,105.24, and the Nasdaq composite index rose 22.46, or 1 percent, to 2,235.90.

Benchmark crude for April delivery rose $1.14 to settle at $80 per barrel on the Nymex.

Heating oil prices for March delivery rose 0.98 cent Wednesday to settle at $2.0421 per gallon on the New York Mercantile Exchange. Natural gas prices gained 3.8 cents to settle at $4.816 per 1,000 cubic feet.

In other Nymex trading in March contracts, gasoline added 3.33 cents to settle at $2.0989 a gallon.

In London, Brent crude gained 84 cents to settle at $78.09 on the ICE futures exchange.

 

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