Fed acknowledges economy is growing more slowly
WASHINGTON (AP) _ The Federal Reserve acknowledged Wednesday that the economy is growing more slowly than it expected. But it said it will complete its $600 billion Treasury bond buying program by June 30 as planned and announced no further efforts to boost the economy.
Ending a two-day meeting, the Fed repeated a pledge to keep interest rates at record lows near zero for "an extended period," a promise it's made for more than two years.
Fed officials said in a statement that they think the main causes of the economy's slowdown, such as high gas prices and supply disruptions from Japan's disasters, are temporary. Once those problems subside, Fed officials said the economy should rebound.
But at a news conference after the statement was released, Federal Reserve Chairman Ben Bernanke acknowledged that some of the problems slowing the economy could persist into next year.
Stocks sink as Bernanke voices caution on economy
NEW YORK (AP) _ Stocks faded to a weak close Wednesday after Federal Reserve Chairman Ben Bernanke said the drags on the U.S. economy may be worse than previously thought.
Major indexes had been mixed for much of the day but turned lower in midafternoon trading as Bernanke spoke at a news conference.
Responding to a reporter's question, Bernanke said that some of the problems plaguing the economy, such as weakness in the financial industry and the housing market, "may be stronger and more persistent than we thought."
FDA: Breast implant problems grow with time
WASHINGTON (AP) _ Don't expect breast implants to last for life, the government warned Wednesday: About 1 in 5 women who receive them for cosmetic reasons will have them removed within 10 years, and those odds are even higher for cancer survivors.
It's not the first time the Food and Drug Administration has issued such a warning. But the agency repeated it Wednesday after reviewing new data on silicone-gel breast implants five years after they returned to the market following a health scare.
The agency concluded the implants are basically safe as long as women understand they come with complications. Those include painful scar tissue and ruptured implants.
AP-GfK poll: Slow recovery weakens Obama
WASHINGTON (AP) _ Mired in economic worry, Americans are growing gloomier about where the country is headed and how President Barack Obama is leading it. Opinions of the economy are at the lowest of the year as high gas prices, anemic hiring and financial turmoil abroad shake a nation's confidence.
Obama has hit new highs he'd like to avoid _ in public disapproval over his handling of the economy in general and unemployment in particular _ according to a new Associated Press-GfK poll. In addition, more disapprove of his handling of health care and the federal budget deficit than in the past.
The poll shows that four out of five people now believe the economy is in poor shape.
FedEx 4Q net income rises 33 percent
NEW YORK (AP) _ FedEx Corp. expects the global economy to hit a higher gear later this year as fuel prices retreat from three-year highs and the Japanese economy recovers. While much of the growth will be driven by China and other developing nations, FedEx said the U.S. economy will improve as well.
The world's second-largest package delivery company issued the economic outlook Wednesday as it reported a 33 percent increase in earnings for the quarter ended May 31.
FedEx expects the U.S. economy to grow 2.5 percent this year and 3 percent in 2012. The company expects growth to accelerate in the second half of the year. The economy grew at an annual rate of only 1.8 percent in the first three months of the year and isn't expected to grow much faster in the current quarter.
CBO: Debt crisis looms absent major policy changes
WASHINGTON (AP) _ A new report says that the national debt is on pace to equal the annual size of the economy within a decade, levels that could provoke a European-style debt crisis unless policymakers in Washington can slam the brakes on spiraling deficits.
The Congressional Budget Office study released Wednesday offers a fresh reminder of what's at stake in ongoing talks led by Vice President Joe Biden that are aimed at slashing more than $2 trillion from the federal deficit over the coming decade as the price for permitting the government to take on more debt to pay current obligations.
CBO, the nonpartisan agency that calculates the cost and economic impact of legislation and government policy, says the nation's rapidly growing debt burden increases the probability of a fiscal crisis in which investors lose faith in U.S. bonds and force policymakers to make drastic spending cuts or tax increases.
Hedge funds come under new government oversight
WASHINGTON (AP) _ Hedge funds will face closer scrutiny under rules approved Wednesday that seek to protect investors from excessive risks and prevent another financial crisis.
The rules were mandated under the financial overhaul law passed last year. They require hedge funds and private equity funds to open their books to periodic inspections by the Securities and Exchange Commission. They also force the funds to disclose information about their operations, finances and investors.
Hedge funds are lightly regulated investment pools that collect money from pension funds, endowments and wealthy individuals. They use complex trades to seek big returns. Private equity funds focus on buying and reselling companies.
The funds will be required to register by March 30, 2012.
Merkel warns against Greek debt restructuring
BERLIN (AP) _ A full-scale restructuring of Greek debt would have "completely uncontrollable" effects on financial markets and could threaten other countries' stability, German Chancellor Angela Merkel warned on Wednesday.
Imposing a so-called haircut on Greek debt _ reducing the amount to be repaid _ would endanger not only banks and other creditors who hold Greek bonds, but also institutions that sold insurance policies against a default, Merkel said.
Those credit default swaps have a "significantly higher" face value than the debt itself, and the consequences of them being called on can't be foreseen, she said.
Morgan Keegan paying $200M to settle fraud charges
WASHINGTON (AP) _ Investment firm Morgan Keegan & Co. is paying $200 million to settle civil fraud charges that it overstated the value of mortgage investments just as the housing market was collapsing in 2007 and lured buyers of its funds with false sales materials.
Morgan Keegan's parent company, Regions Financial Corp., also announced Wednesday that it hired investment bank Goldman Sachs & Co. to explore a sale of the investment firm.
Federal and state regulators said the actions of Morgan Keegan, based in Memphis, Tenn., caused investors in five funds to lose an estimated $1.5 billion. Morgan Keegan failed to use "reasonable" procedures to calculate the value of securities in the funds backed by high-risk mortgages, the regulators said. The firm misrepresented the value of the funds and the risk involved to entice people to invest, they said.
Half of the money will go toward compensating investors.
Transocean: BP decisions led to Gulf disaster
ATLANTA (AP) _ The owner of the rig that exploded in the Gulf of Mexico last year largely blames oil giant BP for the disaster in an internal investigation report released Wednesday that bolsters the Swiss firm's arguments in the face of lawsuits and expected government fines.
The report from Transocean Ltd. said the April 20, 2010, Deepwater Horizon explosion and resulting oil spill was sparked by a succession of well design, construction, and temporary abandonment decisions that compromised the integrity of the well and compounded the risk of its failure. Transocean said many of the decisions were made by well owner BP in the two weeks before the incident.
The 854-page report doesn't say Transocean holds no blame for what caused the disaster, but it comes pretty close.
By The Associated Press
The Dow closed down 80.34 points, or 0.7 percent, at 12,109.67. The S&P 500 index fell 8.38 points, or 0.7 percent, to close at 1,287.14. The Nasdaq fell 18.07 points, or 0.7 percent, to 2,669.19.
Benchmark oil for August delivery gained $1.24 to settle at $95.41 a barrel on the New York Mercantile Exchange. By late afternoon, after Bernanke spoke at a news conference, the price had fallen to $94.66 a barrel.
In other Nymex trading, heating oil rose 6.49 cents to settle at $2.9549 per gallon, gasoline futures rose 9.07 cents to settle at $2.9733 per gallon and natural gas fell 7.1 cents to settle at $4.317 per 1,000 cubic feet.
In London, Brent crude gained $3.26, almost 3 percent, at $114.21 per barrel on the ICE Futures exchange.