Business digest: Comcast, Time Warner Cable deal examined by lawmakers

April 12, 2014

Lawmakers grilled company executives from Comcast and Time Warner Cable about their proposed $45 billion merger, expressing doubts that the resulting mega-company would improve on its parents’ long history of combining high rates with poor customer service. ¶ “I believe this deal will result in fewer choices, higher prices and even worse service for my constituents,” said Sen. Al Franken (D-Minn.), who urged federal regulators to block the deal. ¶ Comcast executive vice president David Cohen and Time Warner Cable chief financial officer Arthur Minson focused on the benefits of the proposed marriage. ¶ Cohen argued that, together, the firms could better compete against a slew of Internet firms such as Netflix, Apple and Google. And with a national footprint, Cohen said, the merged companies could more quickly deploy faster Internet service.

Business

The eight biggest U.S. banks will have to meet more rigorous measures for holding capital — money that provides a cushion against unexpected losses — under a new rule. Their minimum ratio of capital to loans rises to 5 percent from 3 percent. The banks are Goldman Sachs, Citigroup, Bank of America, JPMorgan Chase, Wells Fargo, Morgan Stanley, Bank of New York Mellon and State Street Bank.

Ally Financial, the auto lender rescued by the U.S. government during the 2008 financial crisis, dropped in its trading debut. The Treasury Department raised $2.38 billion after selling a large chunk of its stock in the IPO; it got $25 each for the 95 million shares it sold. The pricing of the IPO came at the low end of the forecast range of $25 to $28 per share.

● ● Hewlett-Packard will pay the U.S. government $108 million to settle charges that former employees bribed officials in Russia, Mexico and Poland.

Family Dollar will close 370 underperforming locations this year in a move that suggests the end of unemployment benefits and cuts to the nation’s food-stamp program are starting to hit lower-income shoppers.

Deals

H&R Block said it will sell its banking unit to exit Federal Reserve oversight. The deal with BofI Federal Bank will give the biggest U.S. tax preparer up to $250 million in excess capital.

Earnings

JPMorgan Chase said first-quarter profit fell 20 percent, to $4.9 billion, driven by a decline in investment banking and mortgage lending.

Samsung Electronics posted a 4 percent drop in profit, to $8 billion, as stalling demand led to lower prices for Galaxy devices and components.

Wells Fargo, the biggest U.S. mortgage lender, posted a 14 percent gain, to $5.6 billion, as the bank continued to trim its losses on soured loans.

Economy

The International Monetary Fund predicted that the global recovery would strengthen this year and next as output in richer nations picked up, but it warned of rising risks in emerging economies.

Buoyant Greek officials hailed the country’s return to the international debt market after four years, with investors snapping up the five-year bond in a sale that was eight times oversubscribed. The Finance Ministry said it had raised $4.14 billion with a 4.75 percent coupon.

Washington

President Obama is targeting the wage gap between men and women with orders requiring federal contractors to reveal more about their pay.

The Supreme Court turned down a challenge to a ban on corporate political donations.

Thousands of taxpayers expecting refunds this month are instead getting letters informing them that because of a debt they never knew about — often one incurred by their parents — the government has confiscated their check. The Treasury Department has intercepted $1.9 billion in tax refunds already this year — $75 million of that on debts delinquent for more than 10 years.

The cost of drugs administered by doctors accounts for a growing piece of Medicare’s spending and varies widely from region to region in the United States, raising questions about whether some physicians may be misusing the pharmaceuticals. Most of the 4,000 doctors who received at least $1 million from Medicare in 2012 billed mainly for giving patients injections, infusions and other drug treatments, government records show.

Transitions

Kathleen Sebelius,Health and Human Services Secretary, announced her resignation, ending a tumultuous tenure as the public face of the Affordable Care Act. Sebelius entered the Cabinet in 2009, three months into Obama’s presidency, as a well-regarded former governor of conservative Kansas. She leaves after criticism over the botched rollout last fall of the insurance marketplace. In a Rose Garden ceremony, President Obama nominated his budget director Sylvia Mathews Burwell to succeed Sebelius.

The Federal Trade Commission said the operators of Jerk.com harvested personal information from Facebook to create profiles labeling people a “Jerk” or “not a Jerk.” Consumers were then told they could pay $30 to revise their online profile but got nothing in return. The FTC estimates that the site and John Fanning, its operator, created profiles for more than 73 million people.

The FDA issued new guidance that would prevent food companies from adding sugar or other sweeteners to pure honey and still calling it “honey.”

— From news services and staff reports

↓$70,000
Lost to 401(k) fees

The typical 401(k) fees — adding up to a modest-sounding 1 percent a year — would erase $70,000 from an average worker’s account over a four-decade career compared with lower-cost options, a Center for American Progress study showed. To compensate for the higher fees, someone would have to work an extra three years before retiring.

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