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NATIONAL BRIEFING

Friday, February 27, 2009

LEGISLATION

Bankruptcy Provision Stalled

The House delayed a vote on legislation to allow bankruptcy judges to modify the mortgages of troubled homeowners after the measure faced unexpected opposition from some Democrats.

Under the provision, a bankruptcy judge would be able to cut the principal on a homeowner's mortgage, lower the interest rate and extend the terms, provisions known as "cramdowns."

The measure is fiercely opposed by Republicans and the financial services industry. They complain that it would drive up their losses and force mortgage rate increases. But the latest questions came from moderate Democrats who say that modifications should be negotiated between lenders and borrowers rather than imposed in bankruptcy court, congressional aides said.

A vote could be rescheduled for next week.

CONTRACTING

Decision on F-22s Postponed

The Pentagon said that it won't decide for at least another month whether to buy more of Lockheed Martin's F-22 fighter jets, leaving it unclear whether the production lines in Georgia and Texas will remain open long term.

The Obama administration was expected to decide by March 1 if it was going to buy more of the fighter jets beyond the 183 it already has under contract. But Pentagon officials said that decision will not be made final until the fiscal 2010 defense budget is released to Congress in mid-April.

Defense Secretary Robert Gates and Air Force officials have disagreed on whether more planes are needed. Lockheed Martin has been lobbying congressional leaders not to cut the program, which it says creates about 25,000 jobs in Marietta, Ga.

EXECUTIVES

Yahoo Finance Chief Is Leaving

Yahoo's chief financial officer is leaving the troubled Internet pioneer in a management shake-up that signals the company's new chief executive is preparing to roll out her turnaround strategy. Blake Jorgensen, who had been Yahoo's finance chief since June 2007, will relinquish his duties as soon as his replacement is found, the company said.

Yahoo's other management changes in the overhaul weren't immediately disclosed, but new chief executive Carol Bartz promised the new pecking order would speed decision-making in the company and make it easier to fulfill her vision.

Jorgensen was a close ally with former Yahoo president Susan Decker, who resigned last month after she didn't get the chief executive job.

BANKING

Subpoenas Issued Over Bonuses

The New York attorney general's office has subpoenaed Bank of America seeking the names of Merrill Lynch executives who received $3.6 billion in year-end bonuses, after chief executive Ken Lewis failed to provide those details during a lengthy deposition last night.

Lewis, who traveled to New York on the company's corporate jet, said that he "answered the questions that were asked to the best of my knowledge."

Lewis' deposition was part of an ongoing investigation by New York Attorney General Andrew Cuomo into the timing of Merrill Lynch's bonuses and whether proper disclosure was made to shareholders about the size of the bonuses.

The bonuses were granted just before Bank of America's acquisition of Merrill closed, and as that bank was seeking additional government aid on top of $25 billion it had already received.

EARNINGS

Sears Holdings said its fourth-quarter profit dropped by more than half as charges for store closings, valuation declines and severance dragged down results. The owner of Kmart and Sears earned $190 million in the period ended Jan. 31, down from $426 million a year earlier. Revenue declined 12 percent, to $13.28 billion. Sears' domestic same-store sales dropped 11 percent, and Kmart's slipped 5 percent.

For the full year, the company earned $53 million, down from $826 million. Revenue fell 8 percent, to $46.77 billion.

Limited Brands said its fourth-quarter profit plunged 96 percent, to $16.1 million from $388.6 million in the comparable period a year earlier. Revenue fell nearly 9 percent, to $2.99 billion. For the full year, the earnings fell 69 percent, to $220 million from $718 million in 2007. Revenue fell 11 percent, to $9.04 billion.

The owner of Victoria's Secret and Bath and Body Works said it expects to lose money in the current quarter and is cutting expenses and jobs.

Dell said its fourth-quarter profit dove 48 percent, to $351 million from $679 million in the comparable period a year earlier, as the recession induced consumers and businesses to spend less on technology. Sales dropped 16 percent, to $13.4 billion, missing Wall Street's expectations.

The computer maker also said it expects to make further cuts to its workforce but did not provide details on the timing or extent of those cuts.

Safeway said that cost-cutting and an extra week in the quarter helped its profit grow 12 percent in the fourth quarter, to $338 million from $301.1 million in the comparable period a year earlier. The supermarket operator's revenue rose 3 percent, to $13.82 billion. For the year, earnings rose 9 percent, to $965.3 million from $888.4 million, while revenue increased 4 percent, to $44.1 billion.

Compiled from reports by Washington Post staff writers, the Associated Press and Bloomberg News.

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