AP
Business Highlights
Friday March 20, 6:00 pm ET

Senate Republicans brake rush to tax AIG bonuses

WASHINGTON (AP) -- Senate Republicans are drawing out a flap that has made the Obama administration squirm, applying the brakes to Democratic attempts to quickly tax away most of the bonuses at troubled insurance giant AIG and other bailed-out companies.

Sen. Jon Kyl, the Republicans' vote counter, blocked Democratic efforts Thursday evening to bring up the Senate version of the tax bill to recoup most of the $165 million paid out by AIG last weekend and other bonuses in 2009. The House had swiftly approved its version of the bill earlier in the day.

Stocks fall, but still log second week of gains

NEW YORK (AP) -- Wall Street's mid-March rally is on hold, but the Dow Jones industrial average still managed its first two-week gain in close to a year.

After starting Friday mixed, stocks veered lower in the afternoon as financial shares fell and investors collected profits from the advance that saw the Dow rise 14 percent over seven trading days. One reason for the market's pause after such a big surge: It ran out of upbeat economic and corporate news the past two days.

The Dow fell 122.42, or 1.7 percent, to 7,278.38.

Bernanke says exec compensation must be monitored

PHOENIX (AP) -- Federal Reserve Chairman Ben Bernanke on Friday called for banking supervisors to pay "close attention" to compensation practices as they examine the soundness of financial institutions.

Banking regulators have observed that "poorly designed compensation policies can create perverse incentives that can ultimately jeopardize the health of the banking organization," Bernanke told a meeting of smaller "community" banks.

The Fed chief's remarks come amid public and congressional outrage over millions of dollars in bonuses paid to employees of American International Group Inc., which has been bailed out by the government four times. The situation has created a public relations headache for President Barack Obama and unleashed fresh congressional furor over the handling of AIG's bailout by the Treasury Department and the Fed.

Appeals court: Madoff stays in prison

NEW YORK (AP) -- Disgraced financier Bernard Madoff will remain in prison until he is sentenced in one of the largest financial frauds in history.

The 2nd U.S. Circuit Court of Appeals on Friday backed a lower court ruling a day after hearing arguments from a lawyer for the 70-year-old former Nasdaq chairman who sought Madoff's release from jail. The government argued against freeing him.

The appeals court said U.S. District Judge Denny Chin was correct when he sent Madoff to prison last week immediately after Madoff confessed that he had defrauded thousands of investors of billions of dollars for at least two decades. Investors who had trusted him were outraged that until then, Madoff had been confined to his penthouse apartment since his December arrest.

Fannie Mae CEO defends retention bonuses

WASHINGTON (AP) -- Mortgage giant Fannie Mae's chief executive warned Friday that canceling bonuses for workers at institutions receiving federal bailout money could undermine efforts to stabilize the U.S. housing market.

Herbert Allison, who was installed by government regulators as CEO of the Washington-based company last fall, sent a companywide e-mail Friday defending Fannie Mae's bonus program.

"I am deeply concerned that eliminating our retention plan would jeopardize our ability to fulfill the mission the government has given us to address the housing crisis," he wrote, citing President Barack Obama's plan to prevent up to 9 million foreclosures.

Citigroup CFO to become Citi Holdings chairman

NEW YORK (AP) -- Citigroup's chief financial officer, Gary Crittenden, is leaving his post and becoming chairman of Citi Holdings, the unit created to sell off the bank's riskier assets.

A person familiar with the decision said Crittenden decided to change jobs due to an illness in his family. The person spoke on condition of anonymity because of the sensitivity of the matter.

The chairman role created for Crittenden will be a part-time responsibility overseeing the long-term strategy of Citi Holdings, the person said. Citi Holdings has an interim chief executive, Mike Corbat, who is in charge of day-to-day responsibilities.

Chrysler reverses claim that Fiat would take debt

DETROIT (AP) -- A public tiff between Italian automaker Fiat SpA and Chrysler LLC apparently ended Friday when Chrysler rescinded a statement on its Web site that Fiat would be responsible for part of Chrysler's debt if the two companies join forces.

Chrysler, in a Web video on Thursday explaining why an alliance for the two companies would be good for Chrysler and the country, said Fiat would be responsible for 35 percent of what Chrysler owed to the U.S. government.

But Fiat on Friday denied that it would be responsible for any of Chrysler's debt.

White House: Agenda on track despite worsening deficits

WASHINGTON (AP) -- President Barack Obama's budget would generate unsustainably large deficits averaging almost $1 trillion a year over the next decade, according to new estimates released Friday.

The new Congressional Budget Office figures predict Obama's budget will produce $9.3 trillion worth of red ink over 2010-2019. That's $2.3 trillion worse than the administration predicted in its budget just last month.

Worst of all, CBO says the deficit under Obama's policies would never go below 4 percent of the size of the economy, figures that economists agree are unsustainable. By the end of the decade, the deficit would exceed 5 percent of gross domestic product, a dangerously high level.

AP source: Apollo to take equity stake in Charter

NEW YORK (AP) -- Financially strapped cable company Charter Communications Inc. is in talks to give a large ownership stake to one of its biggest debt holders, Apollo Management, The Associated Press has learned.

Apollo, a private-equity firm, would have minority voting rights but would leave Charter Chairman Paul Allen with control of the company, a person knowledgeable about the situation said Friday, confirming earlier published reports. This person spoke on condition of anonymity because the discussions have yet to be officially disclosed.

Charter spokeswoman Anita Lamont did not confirm the talks, but noted that previous regulatory filings have said Allen will keep a 35 percent voting interest in the St. Louis-based company after it files for a prearranged Chapter 11 bankruptcy by April 1.

Xerox cuts 1Q view nearly 80 percent, stock falls

NORWALK, Conn. (AP) -- Two ratings agencies cut their outlook for the debt of printer and copier maker Xerox Corp. after it slashed its first-quarter profit forecast Friday nearly 80 percent on restructuring costs and slowing technology spending.

Xerox, which also sells printer ink, said Friday it now expects earnings per share in a range of 3 cents to 5 cents, down from its earlier forecast of 16 cents to 20 cents.

Analysts were expecting, on average, 18 cents per share, according to Thomson Reuters.

By The Associated Press

The Dow fell 122.42, or 1.7 percent, to 7,278.38.

Broader stock indicators also lost ground. The S&P 500 index fell 15.50, or 2 percent, to 768.54, and the Nasdaq composite index fell 26.21, or 1.8 percent, to 1,457.27.

The Russell 2000 index of smaller companies fell 13.15, or 3.2 percent, to 400.11.

Benchmark crude for April delivery fell 55 cents to settle at $51.06 a barrel in light trading on the New York Mercantile Exchange.

In other Nymex trading, gasoline for April delivery rose almost 2 cents to settle at $1.457 a gallon. Heating oil also rose 2.7 cents to settle at 1.3834 a gallon. Natural gas for April delivery rose 5.3 cents to settle at$4.227 per 1,000 cubic feet.

In London, Brent prices rose 55 cents to settle at $51.22 on the ICE Futures exchange.