BUSINESS BRIEFS
Bank failures may cost more than $40 billion
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WASHINGTON — Federal regulators now believe U.S. bank failures will cost the deposit insurance fund more than $40 billion over the next four years as the economy weakens, a government official said yesterday.
Federal Deposit Insurance Corp. Chief Operating Officer John Bovenzi said the agency's estimate last fall of $40 billion in losses through 2013 probably will be surpassed. He also said in testimony for a House hearing that Congress should more than triple the agency's line of credit with the Treasury Department to $100 billion from the current $30 billion.
The FDIC has never drawn on that long-term credit line, but such an increase would ensure "that the public has no confusion or doubt about the government's commitment to insured depositors," Bovenzi said.
Twenty-five U.S. banks failed last year, far more than the previous five years combined. Six federally insured institutions have collapsed so far this year and it's expected that many more will succumb amid the pressures of tumbling home prices, rising mortgage foreclosures and tighter credit.
MOTOROLA POSTS $3.6 BILLION LOSS
NEW YORK — Motorola, North America's largest maker of telecommunications equipment, posted a massive fourth-quarter loss yesterday as it recorded charges to reflect the shrinking value of its cell phone business. It also suspended its dividend, said its chief financial officer had left and gave a disappointing forecast for the current quarter.Its stock closed down 11 percent.
Motorola Inc. lost $3.6 billion, or $1.57 per share, in the fourth quarter.
In the same quarter of 2007, Motorola earned $100 million, or 5 cents per share. Motorola's sales in the fourth quarter were $7.14 billion, down 26 percent from the year-ago period.
LAYOFFS CONTINUE TO BATTER COUNTRY
WASHINGTON — Layoffs are spiking as the recession rips through the country, with retailers, banks, factories and others cutting costs ever deeper this week. It's inflicting a painful toll on workers, and there's little relief in sight.The latest round of pink slips and cost-cutting measures came yesterday on the heels of tens of thousands of layoffs last week alone.
PNC Financial Services Group said it plans to cut 5,800 jobs. Airplane maker Hawker Beechcraft Corp. said 2,300 employees will lose their jobs before the end of the year and warned more layoffs may be coming. Liz Claiborne Inc., will eliminate 725 jobs, or 8 percent of its workforce, one day after Macy's Inc. said it was axing 7,000 jobs, or 4 percent of its workforce. King Pharmaceuticals Inc. will get rid of 520 jobs.
"Businesses are slashing jobs in order to survive in the deepening economic downturn," said Mark Zandi, chief economist at Moody's Economy.com.
WELLS FARGO PUNTS LAS VEGAS JUNKET
WASHINGTON — Wells Fargo & Co. abruptly canceled a pricey Las Vegas casino junket for employees after a torrent of criticism that it was misusing $25 billion in taxpayer bailout money.The company initially defended the trip after The Associated Press reported it had booked 12 nights beginning Friday at the Wynn Las Vegas and the Encore Las Vegas. But within hours, investigators and lawmakers on Capitol Hill had scorned the bank, and the company canceled.
The conference is a Wells Fargo tradition. Previous all-expense-paid trips have included helicopter rides, wine tasting, horseback riding in Puerto Rico and a private Jimmy Buffett concert in the Bahamas for more than 1,000 of the company's top employees and guests.
"In light of the current environment, we have now decided to cancel this event as well," the company said yesterday in a news release.
