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The Honolulu Advertiser
Posted on: Saturday, January 5, 2008

BUSINESS BRIEFS
Fed boosts funds available to banks

Associated Press

WASHINGTON — The Federal Reserve announced yesterday that it is increasing the amount of money available to banks through the new auction process it created to ease the nation's severe credit squeeze. The Fed again pledged to continue the auctions "for as long as necessary."

The Fed said that it will increase the amount offered at each of the next two auctions from $20 billion to $30 billion, a 50 percent jump. Those two auctions will be Jan. 14 and Jan. 28.


SALLIE MAE STOCK OFF OVER CUTBACKS

WASHINGTON — Shares of Sallie Mae tumbled 13 percent yesterday, hitting a 52-week low, as investors reacted to the company's disclosure that it would cut back on its core business of making student loans.

Sallie Mae, the nation's largest student lender, has suffered in recent months from higher borrowing costs and the collapse of a $25 billion buyout. It has slashed its earnings forecast for the year and held a special sale of stock to raise $2.9 billion in cash.

Sallie Mae, formally known as SLM Corp., said in a regulatory filing Thursday that it planned to "be more selective" in making student loans, both those backed by the federal government and the higher-rate private loans.


VIOXX SETTLEMENT PART CHALLENGED

NEW ORLEANS — Lawyers for hundreds of people who sued Merck & Co. over its withdrawn painkiller Vioxx are challenging a key provision of a proposed $4.85 billion settlement that requires lawyers to advise all or none of their clients to accept the deal.

Plaintiffs lawyers who negotiated the settlement said yesterday they expect the challenge will be withdrawn, as a similar one filed last month was.

In court papers filed Thursday, lawyers for about 2,600 plaintiffs asked a U.S. District Court judge in New Orleans to rule that portions of the settlement can't be enforced in all states because it prevents lawyers from giving clients their "independent professional advice."


AIRFARE PRICES RISING WITH OIL

NEW YORK — Airlines are responding to oil's latest surge by pushing ticket prices even higher.

Roundtrip domestic fares began rising $10 to $20 or more late Thursday, as crude futures crossed the once-unthinkable $100-a-barrel mark. Several major carriers increased prices, with each citing higher fuel costs as the reason.

The widespread increases follow nearly two dozen attempted systemwide fare hikes in 2007, or about double the number during the previous year, according to data compiled by www.FareCompare.com, which tracks airfare changes.


OIL PRICE RETREATS TO $97.91 A BARREL

NEW YORK — Oil futures retreated further from their record levels above $100 a barrel to $97.91 yesterday after the government reported lower-than-expected job growth in December, adding to fears of a recession that could crimp demand for oil.

Gas prices, meanwhile, rose 2.2 cents a gallon overnight, following crude's recent rally.


TALBOTS TO CLOSE 78 APPAREL STORES

BOSTON — Talbots Inc. will close its 78 children's and men's apparel stores to focus on its core middle-aged female customer, a retrenchment that follows disappointing sales at Talbots as well as other specialty women's apparel retailers amid tough economic conditions.

Yesterday's announcement of the closures, affecting 800 employees, came as Talbots also warned that fiscal fourth-quarter sales have so far fallen below expectations at its 1,157 Talbots stores, and the 271 J. Jill locations it bought in a 2006 acquisition.

The warning, following two consecutive quarterly losses, spooked investors, who sent the stock to its lowest level in nearly a decade.