Katrina hit personal spending
WASHINGTON (AP) -- Hurricane Katrina caused $100 billion in uninsured losses in August while consumer spending plunged by the largest amount since the September 2001 terrorist attacks, the government reported today.
Because of the devastation along the Gulf Coast, personal incomes fell by 0.1 percent in August, the Commerce Department reported. Incomes would have risen by 0.2 percent had it not been for the hurricane.
In another worrisome sign for the economy, consumer spending, after adjusting for inflation, plunged by 1 percent in August, the biggest decline since September 2001, as consumers pinched by soaring gasoline prices cut back in spending in other areas.
Analysts said the toll from Katrina and Hurricane Rita, which struck in September, is likely to depress economic activity for several months.
Ford to pare down suppliers in attempt to cut costs
DETROIT (AP) -- In an effort to cut costs and improve its strained relationship with suppliers, Ford Motor Co. said Thursday it plans to pare down the number of suppliers it uses and give the remaining ones bigger, longer-term contracts and more involvement in the design process.
Tony Brown, Ford's senior vice president for global purchasing, said Ford will identify strategic suppliers, involve them at the beginning of a vehicle's design process and give them money up front for engineering and development. Contracts will be longer, so suppliers can invest more without worrying that Ford will switch to another supplier. In return, suppliers will commit to producing parts competitively and will give Ford access to new technology.
Mortgage rates head higher
WASHINGTON (AP) -- Rates on 30-year mortgages jumped this week to the highest level in five months, reflecting financial market anxieties about inflation.
Mortgage giant Freddie Mac reported Thursday that the nationwide average for 30-year, fixed-rate mortgages rose this week to 5.91 percent, up from 5.80 percent last week. It was the third consecutive weekly increase and pushed the 30-year rate to its highest level since mid-April, when it was also 5.91 percent.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.48 percent this week, up from 5.37 percent last week.
One-year adjustable rate mortgages rose to 4.68 percent, the highest level in more than three years, up from 4.48 percent last week.
Hedge-fund execs plead guilty
WHITE PLAINS, N.Y. (AP) -- Two top officers of the scandal-ridden Bayou hedge fund suddenly emerged from hiding Thursday and admitted engaging in a fraud that totaled hundreds of millions of dollars.
Samuel Israel III, who founded Bayou and was its chief executive, pleaded guilty in federal court to conspiracy, investment adviser fraud and mail fraud. His chief financial officer, Daniel Marino, pleaded guilty to those charges and wire fraud.
Neither Israel nor Marino had been charged before Thursday. Within a few hours, they surrendered at the courthouse, waived their right to have a grand jury consider their cases, heard the charges and pleaded guilty. The men, both 46, had disappeared this summer as fears of fraud mounted.
The executives admitted telling existing and prospective customers -- in weekly, monthly, quarterly and annual reports -- that Stamford, Conn.-based Bayou was generating significant profits when the fund was actually sustaining losses.
Spitzer seeks records
ALBANY (AP) -- New York Attorney General Eliot Spitzer wants records and testimony from J. & W. Seligman & Co., claiming the mutual fund company owes investors $80 million in compensation for improper market timing trades.
Spitzer says top executives approved at least a dozen secret mutual fund timing arrangements and the company's president approved at least one of the trades.