You can add the Federal Deposit Insurance Corp. to the list of entities that may be in line for a Treasury Department bailout, the Wall Street Journal reports, following an interview with the agency’s chairwoman. The FDIC is a bit cash-strapped these days as it props up failing banks across the country. It announced on Tuesday that 117 ailing banks are now under its care and that the FDIC holds an astounding $78 billion in distressed bank assets, the Guardian points out. And, the New York Times says, the FDIC sees the banking crisis going from bad to worse.
All this turmoil and further pain explains why the FDIC may need a loaner from the Treasury “to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank,” the WSJ says, after scoring an interview with the FDIC’s Sheila Bair. The agency has gone cap in hand to the Treasury before—in the early 1990s, after the savings-and-loan debacle forced thousands of banks out of business. The FDIC’s Bair reassures the WSJ that a loan would cover short-term operating costs—not losses, she asserts—”for liquidity purposes.”
With inflation running too high for its liking, the Federal Reserve is hinting it will raise the benchmark interest rate, the NYT reports. The paperhas decoded the minutes from the most recent Fed meeting in August and concluded: “Expect Fed policy makers to eventually raise their benchmark interest rate in an effort to slow inflation, but they have not agreed to a timetable for the move.” Fed watchers on Wall Street believe “the central bank is carefully watching the trend of rising prices, and is more likely to raise rates than lower them by the beginning of next year,” according to the paper.
The WSJ code-crackers concur an interest-rate hike is coming, but they disagree on the timing. Members of the rate-setting Federal Open Market Committee are “suggesting little inclination to raise interest rates in the coming months,” the paper says. Instead, the Fed will take its cue from the markets and the larger economic picture.
One such cue is home prices. And the picture remains bleak. U.S. home prices fell at a record pace in the second quarter of 2008, plunging 15.4 percent, the San Francisco Chronicle reports. It cites the latest statistics from the closely watched Standard & Poor’s/Case-Shiller U.S. National Home Price Index, released on Tuesday. But as bad as the numbers sound, there is a glimmer of hope. “While the markets haven’t reached bottom, we’re getting closer to there,” Terrin Griffiths, economist and industry analyst with the California and Nevada Credit Union League, tells the Chronicle.
The NYT points out that some promising trends emerged from the frightening Case-Shiller findings. In June, for example, “nine cities recorded an increase in home values from the month before, with prices in Boston, Denver, and Minneapolis all up at least 1 percent. That compared with increases in seven cities in May,” the NYT says. Nonetheless, it’s a buyer’s market, the newspaper concludes.
Is wind energy the solution to America’s energy crisis? The NYT leads off its business section with a profile on wind power, the alternative energy source that is attracting hundreds of millions of dollars from eco-friendly investors. But “the dirty secret of clean energy is that while generating it is getting easier, moving it to market is not,” the paper points out. It illustrates this with the sputtering $320 million Maple Ridge Wind Farm in upstate New York, a power generator that isn’t entirely compatible with the region’s creaking electric grid. What will it take to get wind-generated power to homes and businesses? “We need an interstate transmission superhighway system,” Suedeen G. Kelly of the Federal Energy Regulatory Commission suggests. No word on how much that will cost.
The Associated Press points out another nagging drawback of wind power: “How do you turn on the lights when the wind isn’t blowing?” Enter energy expert and inventor Michael Nakhamkin. Nakhamkin announced a $20 million partnership Tuesday with New Jersey’s largest electric utility, PSE&G, “to develop devices that compress air to store power, unlocking potential electricity production from wind turbines and solar cells,” Bloomberg reports. The effect is to store energy underground in the form of pressurized air during low-peak hours, Bloomberg explains. “When electricity demand rises, the trapped air is released to turn a power turbine.”
Don’t mess with Barbie. Mattel, maker of the iconic plastic blonde, on Tuesday won a bruising, four-year-long copyright-infringement case against rival doll maker MGA for its Bratz line, the Guardian reports. According to the newspaper, it was a victory for “the wholesome Barbie doll against the urban Bratz range.” Mattel was awarded $100 million by a California judge—”a way low” sum, says the WSJ’s law blog—which comes in $1.9 billion below what Mattel was initially seeking. And what was the decisive piece of evidence? Ken’s boots.
