Bizness News 02-19-09
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Senate passes $787 billion stimulus bill
Senate votes to approve the historic legislation aimed at reviving
the economy. Bill is now sent to President Obama for signing.
By Jeanne Sahadi, CNNMoney.com senior writer
February 13, 2009
NEW YORK (CNNMoney.com) -- It's a done deal. Still controversial, but
a done deal.
The Senate on Friday evening passed the $787 billion American
Recovery and Reinvestment Act of 2009, which was drawn up, amended
and negotiated in record time.
The bill got 60 votes -- the minimum it needed to pass. Three
Republicans -- Sens. Susan Collins, R-Me., Arlen Specter, R-Pa., and
Olympia Snowe, R-Me. -- voted for it. Earlier in the day, no
Republicans in the House voted for the legislation, which
nevertheless passed 246 to 183, with just 7 Democrats voting against
President Obama is expected to sign the bill into law soon.
"The goal at the heart of this plan is to create jobs. Not just any
jobs, but jobs doing the work America needs done: repairing our
infrastructure, modernizing our schools and hospitals, and promoting
the clean, alternative energy sources that will help us finally
declare independence from foreign oil," President Obama said Friday
The Obama economic team estimates the stimulus plan will create or
save between 3 million and 4 million jobs.
"We've done something today that's transformational for the nation,"
said House Speaker Nancy Pelosi, D-Calif., in a press conference
after the House vote.
During the House floor debate earlier on Friday, House Appropriations
Committee Chairman David Obey, D-Wisc., characterized the bill
as "the largest change in domestic policy since the 1930s."
The bill's final passage would represent far less than the bipartisan
victory Obama had hoped for weeks ago, a hope he tabled as it became
clear that Republicans and some fiscally conservative Democrats were
adamantly opposed to the size and contents of the bill.
Republican critics believe there are more targeted and effective ways
to create jobs than the measures in the bill, including more spending
on infrastructure and more tax relief.
They frequently cite the tag line to describe what Democrats have
often said makes stimulus measures effective -- that they be timely,
targeted and temporary. "This bill fails on all three points," Senate
Minority Leader Mitch McConnell, R-Ky., said Friday.
In the House, Rep. Mike Pence, R-Ind., blasted the bill as misguided.
"Republicans are not about saying 'No' but about saying 'Yes' to
solutions that put Americans back to work," Pence said. "[This
legislation] will not grow our economy. It will grow our government."
And they frequently cite the burden of such an expensive package on
the country's record high deficit and the burden that will place on
the next generation.
In response to Republican critics, Sen. Dick Durbin, D-Ill., cited
provisions in it that will help families facing job loss, education
expenses and mortgage troubles.
"Consider the impact on the next generation if their parents lose a
job ... if their home is foreclosed upon ... if they're forced out of
college because their parents can't pay the bills," Durbin said.
Democrats have also countered the Republicans' debt argument by
noting that record deficit levels were achieved as a result of
borrowing to pay for the cost of the Iraq war and to finance a series
of tax cuts -- both decisions made during a Republican administration.
The compromise bill was crafted after intensive negotiations in
recent days between the House, Senate and White House, although
Republicans said repeatedly they felt excluded from the process. And
on Friday, several said they did not think it was fair that they were
being asked to vote on a 1,000-page-plus bill that was posted online
only late Thursday night.
How the bill breaks down
The package devotes $308.3 billion -- or 39% -- to appropriations
spending, according to the Congressional Budget Office. That includes
$120 billion on infrastructure and science and more than $30 billion
on energy-related infrastructure projects, according to key
It devotes another $267 billion -- or 34% -- on direct spending,
including increased unemployment benefits and food stamps, CBO said.
And it provides $212 billion -- or 27% -- for tax breaks for
individuals and businesses, although the biggest piece of that is for
individuals. (Here's a quick breakdown of those breaks.)
Depending on how tax measures are categorized, the percentage of the
bill devoted to tax relief is 35%, according to the Joint Committee
Unlike the CBO, the committee counts all portions of tax credits that
are refundable. A refundable credit is one that may be paid to tax
filers even if the credit exceeds a tax filer's liability. In other
words, it is money the government needs to spend. The CBO, by
contrast, treats that money as an outlay.
Republicans have advocated for more tax relief in the bill -- they
wanted at least 40% -- and they often oppose tax credits going to
those who pay less in income tax than they receive in refunds.
Democrats counter that the lowest-income families do pay money into
the system by way of payroll tax for Social Security and through
sales taxes. And they note that it is those low-income families most
likely to quickly spend any tax relief they get, thereby making it
more stimulative for the economy.
What it can - and can't do
For months, economists -- both liberal and conservative -- have urged
lawmakers to act quickly to help stem the economic downturn. They
argue that while tax cuts can be put out more quickly than
infrastructure spending, they may not be as stimulative as spending
because tax filers are likely to save at least a portion of what they
There also has been debate over how large the total package should
be. Many economists think it should be larger -- to help combat what
is expected to be a $2 trillion shortfall in the country's output
this year and next. But at this point, though they're not enamored
with every provision in the bill -- they say it's necessary to do
Proponents of the bill aren't promising the economic recovery package
will be a panacea for the economy. "No one thinks this is the
answer," said House Majority Whip Steny Hoyer, D-Md.
But, they say, it's needed to stem the downturn and ease the
financial strains hurting Americans. Indeed, Obama's economic team
last month said they expect that the unemployment rate likely will go
up in the near term but having a stimulus package could bring it down
to around 7% by the end of 2010. That's slightly below the rate of
- CNN's Ted Barrett and CNNMoney.com's David Goldman contributed to
Obama planning ambitious road ahead
White House aides say they're planning an ambitious agenda for the
rest of February
Big messes to address are the crises in housing and banking
Administration wants to lay groundwork for health care and
Nominations for either commerce and HHS secretary are unlikely next
By Ed Henry
CNN Senior White House Correspondent
WASHINGTON (CNN) -- Fresh off victory on President Obama's signature
$787 billion economic recovery plan, several top White House aides
say they're planning an ambitious agenda for the rest of February.
The Senate had waited for the return of Democrat Sherrod Brown, who
was returning from his mother's wake in his home state of Ohio, to
close the voting late Friday.
For the rest of the month, the White House agenda will focus on
addressing the housing crisis, cleaning up the banking mess and
laying the groundwork for reform of the health care system and
entitlement programs like Medicare.
Obama's economic stimulus plan, which top aides say will be signed
into law as early as Monday at the White House, received no
Republican votes in the House and just three in the Senate despite
his heavy emphasis on drawing bipartisan support. There have also
been several Cabinet miscues in the early days, but top White House
aides are confident the president has gotten off to a strong start.
"Does the road to change have some bumps? Sure," said one senior
White House aide. "But we're feeling good."
Several White House aides noted that in addition to the stimulus win,
the president has signed into law an equal pay act and legislation
expanding a children's' health insurance program for an extra 4
"There's an enormity to what's happened so far," said one of the
White House aides. "It's hard work, but it's worth it. We're
Aides say they plan to pick up the pace next week with a stimulus
signing ceremony as early as Monday, though it could slide to Tuesday
morning depending on how quickly Congressional leaders wrap up the
Then Obama starts his first trip out West as president because White
House aides say they believe Obama himself is their best salesman on
the big agenda items coming. He will hold an economic event in
Denver, Colorado, on Tuesday followed by the long-awaited unveiling,
in Phoenix, Arizona, of his plan to deal with the foreclosure crisis
White House aides are holding back on details of the housing plan as
top officials continue to weigh the best approach. Top Democrats like
House Financial Services Chairman Barney Frank have been pressing the
White House for details, but White House Press Secretary Robert Gibbs
said Friday the goal is to get it right rather than rush it out.
"It's not intended to be measured by one day's market scorekeeping,
but instead to ensure that the 10,000 Americans each day that have
their homes foreclosed on, and the millions more that are barely
getting by, are protected," Gibbs said.
Several White House aides say it is unlikely the president will
reveal his choice for either commerce secretary or health and human
services secretary next week. As for which pick will be unveiled
first, one aide said it depends on "whenever the next cake is baked" -
- meaning the White House is so eager to get both nominations behind
them that they will move forward on either one when the president
makes up his mind on the picks.
The following week, the president will host what the White House is
billing as a "fiscal responsibility" summit on February 23. The goal
of the summit is to begin weighing the impact of massive federal
programs like Social Security and Medicare just days before the
president plans to unveil his first annual budget to Congressional
Then on February 24, the president will deliver his first speech to a
joint session of Congress. Top aides say that while other topics like
foreign policy could be addressed briefly, the speech will be heavily
focused on the economy and the domestic agenda.
The president is expected to start taking on a role in selling the
administration's plans for fixing the financial regulatory system
during the speech and in his travels, according to top aides.
Treasury Secretary Timothy Geithner began rolling out a plan to bail
out more banks and bring more accountability to the existing
government bailout program known as TARP, but that unveiling received
harsh reviews on Capitol Hill and on Wall Street.
Barack Obama Medicare Social Security Administration Health
Banks Agree To Foreclosure Moratoriums
February 13, 2009
By Meena Thiruvengadam
WASHINGTON -(Dow Jones)- JPMorgan Chase & Co. (JPM), Citigroup Inc.
(C), Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) have
committed to temporary moratoriums on foreclosures as the government
works on a financial stability plan slated to include billions of
dollars aimed at keeping people in their homes.
"We will not add to the foreclosure process any new owner-occupied
residential loans that are owned and serviced by JPMorgan Chase," the
company's chief executive, Jamie Dimon, said in a letter Thursday to
Rep. Barney Frank, D-Mass., chairman of the House Financial Services
The moratorium on new foreclosure actions will remain in effect
through March 6 and is similar to a 90-day foreclosure freeze
JPMorgan announced Oct. 31.
"We believe three weeks is adequate time for the Treasury to
announce - and for us to implement - a new plan," Dimon said.
Citigroup in a statement issued Friday said it will place a
moratorium on foreclosures for all Citi-owned first mortgage loans
that are on principal residences and on loans for which
understandings with investors have been reached. The moratorium is
scheduled to last until March 12 unless the government finalizes a
loan-modification program before that date.
Bank of America on Friday said it will delay foreclosure sales on
owner- occupied properties whose mortgage loans are owned and
serviced by it or Countrywide Financial Corp. through March 6. Bank
of America acquired Countrywide in July.
"If the program's development is not complete in three weeks, we will
consider a possible extension," a Bank of America spokeswoman said.
Wells Fargo, which recently acquired Wachovia Corp., has imposed a
moratorium on foreclosures for loans it holds, company spokesman
Kevin Waetke said Friday. That moratorium is expected to remain in
place until the government's foreclosure prevention plan is announced.
The majority of Wells Fargo's mortgage loans, however, are serviced
by it and owned by other investors. The company is "working with
these investors and related contractual commitments to determine how
we will support the moratorium request," it said in a statement
Lawmakers in a congressional hearing Wednesday asked the executives
of several of the nation's largest banks to institute a moratorium on
foreclosures until the details of a revamped government bailout
effort are announced. The Office of Thrift Supervision, which
regulates U.S. thrifts, on Wednesday also called for institutions it
oversees to suspend foreclosures for the next few weeks.
U.S. Treasury Secretary Timothy Geithner on Tuesday unveiled the
outlines of the revamped government effort and said details will be
released later. Geithner has been meeting with other members of
President Barack Obama's economic team and the secretary of housing
and urban development to discuss foreclosure prevention.
Obama is scheduled to outline his plan to stem foreclosures next week.
"I am asking you at this time to commit to this committee and to the
people across America that you will do something here ... and that is
to commit to having a moratorium on all foreclosures that each of
your banks and affiliates deal with until the Treasury secretary can
put together this package," Rep. David Scott, D-Ga., said at
Citigroup Chief Executive Vikram Pandit in that hearing first told
lawmakers of his company's intent to institute a foreclosure
moratorium, saying Citigroup "would commit to making sure that people
stay in their houses."
Also in that hearing, Bank of America Chief Executive Ken Lewis
indicated his firm would consider freezing its foreclosure
activity. "If we could put a time frame on it, ... say it's two weeks
or three weeks, we would do that," he told lawmakers.
Some lawmakers have suggested Geithner "strongly encourage" banks
receiving government capital through the controversial $700 billion
Troubled Asset Relief Program, or TARP, to temporarily stop
foreclosures. "TARP-assisted financial institutions should allow
struggling homeowners more time to qualify for any systematic loan
modification plan," Frank and Rep. Doris Matsui, D-Calif., wrote in a
letter to Geithner on Wednesday.
JPMorgan, Citigroup, Bank of America and Wells Fargo each have
received billions of dollars in federal aid through TARP.
-By Meena Thiruvengadam, Dow Jones Newswires; 202-862-6629;
(Henry J. Pulizzi contributed to this article.)
Microsoft to open stores
By John Boudreau
If imitation is flattery, Microsoft once again will flatter Apple,
this time by launching its own retail stores.
The Redmond, Wash.-based software giant said it has hired 25-year Wal-
Mart veteran David Porter as its new vice president of retail stores.
Porter, who most recently headed up worldwide distribution for
DreamWorks Animation, will oversee Microsoft's retail store strategy.
The stores will be designed to help the company "create deeper
engagement with consumers and continue to learn firsthand about what
they want and how they buy," it said in a statement.
Porter's first order of business will be to determine locations and
opening dates, Microsoft said. A company spokeswoman said it had not
been determined whether any stores will be opened in the Bay
Area. "Our target is a small number of high-profile experience stores
in a few major cities around the world," she said in an e-mail.
Thursday's announcement triggered the usual round of verbal elbowing
of Apple's erstwhile nemesis.
"Microsoft has a history of copying Apple," said Shaw Wu, analyst
with Kaufman Brothers. "They copied the whole idea of using icons and
the mouse. Then they built the Zune to replicate the iPod. Maybe
they'll change their logo. If Apple weren't around, I don't know what
they would do."
Cupertino-based Apple has deftly created a retail strategy like few
others. Its modern, minimalist stores attract customers like a
crowded cafe all day long.
In January, Apple reported that its 251 stores in 10 countries drew
nearly 47 million visitors during the quarter ended Dec. 27. Those
stores sold 515,000 Macintosh computers about 21 percent of the
total 2.5 million sold during the period. Almost half of the store-
purchased machines were bought by customers who had never owned a Mac
before, the company said.
Apple's retail stores accounted for about 17 percent of the company's
$10.17 billion in sales for the quarter. It plans to open 25 new
stores this year, about half overseas.
As longtime tech outlets struggle and even shutter stores during this
bleak recession, it makes sense for Microsoft to pursue its own
retail store strategy, Silicon Valley tech analyst Rob Enderle said.
"Why not start dropping stores where Circuit Cities have gone under?"
he said. "They've lost a lot of shelf space due to the closing of
these stores. They've got to bring them back."
Unlike Apple, which moves to its own strategic beat, Microsoft is
sure to avoid setting up outlets near important retail partners, such
as Best Buy, Enderle said.
"Apple puts stores in high-profile, high-traffic areas. It doesn't
care about competition," even though retail giants like Best Buy and
Wal-Mart now sell its products, he said. "Microsoft is not going to
drop a store in an area where a Best Buy is very successful. The goal
is to fix the problem, not create another one."
By hiring an experienced retail hand like Porter, it's clear
Microsoft understands the difficulties of creating successful store
buzz, said Steven Addis, chief executive of Berkeley brand consultant
PC maker Gateway failed miserably in its foray into retail stores,
closing all of its outlets in 2004.
"NordicTrack was a successful mail-order brand and it opened up
retail stores. Not only did that fail, but it took the whole brand
down," Addis said. "There's been more disasters than successes.
"Microsoft is going to be hard-pressed not to be compared to the
Apple experience," he added. "If they try to create an Apple-like
experience, they will fail. They need to create their own brand
identity be Microsoft."
Contact John Boudreau at jboudreau@... or (408) 278-3496.
Published on Friday, February 13, 2009 by The Associated Press
US Security Firm Mired in Iraq Controversy Changes Its Name
Blackwater Worldwide renamed Xe as company tries to salvage its
Blackwater Worldwide is abandoning its tarnished brand name as it
tries to shake a reputation battered by oft-criticised work in Iraq,
renaming its family of two dozen businesses under the name Xe. The
parent company's new name is pronounced like the letter z.
Blackwater Lodge & Training Centre - the subsidiary that conducts
much of the company's overseas operations and domestic training - has
been renamed US Training Centre Inc., the company said today.
The decision comes as part of an ongoing rebranding effort that grew
more urgent following a September 2007 shooting in Iraq that left at
least a dozen civilians dead. Blackwater president Gary Jackson said
in a memo to employees the new name reflects the change in company
focus away from the business of providing private security.
"The volume of changes over the past half-year have taken the company
to an exciting place and we are now ready for two of the final, and
most obvious changes," Jackson said in the note.
In his memo, Jackson indicated the company was not interested in
actively pursuing new private security contracts. Jackson and other
Blackwater executives said last year the company was shifting its
focus away from such work to focus on training and providing
"This company will continue to provide personnel protective services
for high-threat environments when needed by the US government, but
its primary mission will be operating our training facilities around
the world, including the flagship campus in North Carolina," Jackson
The company has operated under the Blackwater name since 1997, when
chief executive Erik Prince and some of his former Navy Seal
colleagues launched it in north-eastern North Carolina, naming their
new endeavour for the area swamp streams that run black with murky
water. But the name change underscores how badly the Moyock-based
company's brand was damaged by its work in Iraq.
In 2004, four of its contractors were killed in an insurgent ambush
in Fallujuah, with their bodies burned, mutilated and strung from a
bridge. The incident triggered a US siege of the restive city.
The September 2007 shooting in Baghdad's Nisoor Square added to the
damage. The incident infuriated politicians both in Baghdad in
Washington, triggering congressional hearings and increasing calls
that the company be banned from operating in Iraq.
Last month, Iraqi leaders said they would not renew Blackwater's
license to operate there, citing the lingering outrage over the
shooting in Nisoor Square, and the US state department said later it
will not renew Blackwater's contract to protect diplomats when it
expires in May.
Blackwater spokeswoman Anne Tyrrell said the company made the name
change largely because of changes in its focus, but acknowledged the
need for the company to shake its past in Iraq.
"It's not a direct result of a loss of contract, but certainly that
is an aspect of our work that we feel we were defined by," Tyrrell