The Federal Reserve will charge more for direct loans it extends to banks with short-term funding needs, removing a long-standing subsidy and effectively capping the cost of money in the $500 billion-a-day market for bank reserves. The Fed's Board of Governors agreed to raise the discount rate, the interest rate banks pay for direct Fed loans, for all banks and to require distressed banks that can't obtain funds in the market to pay a premium. The discount rate, at 1.25 percent, is half a percentage point below the overnight bank lending rate, the rate banks pay for loans from other banks. Because the discount rate is below the overnight rate, it provides banks with a subsidy that Fed officials say is objectionable
EU Claims Reynolds Laundered Money
European Union regulators filed a civil lawsuit against R.J. Reynolds Tobacco Holdings, claiming the U.S. cigarette maker helped organized crime launder money. R.J. Reynolds called the accusations "absurd." The suit claims the company failed to prevent organized crime from using cigarette purchases to launder proceeds from narcotics and weapons trafficking.
Ford Motor extended its longest new-vehicle loans to six years, effectively cutting consumers' monthly payments in an attempt to revive slumping car and truck sales. The automaker started offering six-year loans on all of its Ford-brand vehicles earlier this month, including interest rates as low as 1.9 percent on the Ford Windstar minivan, a spokesman said. Interest rates on the six-year loans for other vehicles range mainly from 3.9 to 6.9 percent.
Bristol-Myers Squibb and ImClone Systems plan to begin new late-stage trials on the cancer drug Erbitux, which failed in December to get a review from U.S. regulators and is at the center of insider-trading probes.
Vivendi Universal agreed to sell U.S. publisher Houghton Mifflin to a group of private investors including the Blackstone Group. Vivendi valued the deal at an estimated $1.73 billion including debt, but no further specifics were provided. Vivendi has sought to sell its publishing assets to pay down debt.
Three auditors who worked for Ernst & Young may be charged by the Securities and Exchange Commission in connection with an alleged accounting fraud that cost Cendant $3.2 billion, people familiar with the case said. The agency's enforcement staff has notified the men that it plans to recommend that the commission file charges against the three, who audited books at CUC International, the people said. CUC merged with HFS in 1997 to form Cendant.
Business-software piracy in the United States climbed slightly in 2001, a trade group said. The Business Software Alliance, citing a study conducted by the International Planning & Research, said the U.S. piracy rate in 2001 was 25 percent, up 1 percentage point from 2000. Researchers calculate the rate by comparing estimates of software applications installed with estimates of applications that are legally shipped.
Child car seats will be ranked by a federal agency so parents can know what models are easiest to install and use. The ratings, which are to be available next year, will grade seats on five factors: whether they require assembly, clarity of the labels attached to the seat, clarity of written instructions, ease of installation, and ease of correctly securing a child in the seat.
Aimster, a bankrupt service that lets users exchange files free at its Madster Web site, was ordered by a federal judge to adopt filtering technologies and take other steps to prevent users from swapping copyrighted music. The order follows a Sept. 4 ruling barring Aimster from allowing users to swap copyrighted music.
Shipments of handheld computers worldwide fell in the third quarter rather than rising, research firm Dataquest said, revising its numbers after Hewlett-Packard said it shipped fewer units than expected. Worldwide shipments fell 2.4 percent from a year earlier, to 2.55 million. Dataquest earlier reported that worldwide shipments had risen 0.9 percent.
The Internet Corporation for Assigned Names and Numbers finalized changes that end direct elections to its board of directors. Under the new system, the board is to be picked by a nominating committee and a trio of affiliated organizations representing groups of address holders. Critics say the revisions are aimed at getting rid of dissenting board members who say the group is out of touch with Internet users.
Gemstar-TV Guide International fired accounting firm KPMG after a disagreement over plans to restate financial results for the past 21/2 years. The publisher of TV Guide hired Ernst & Young.
Aetna reported a third-quarter profit of $98.8 million, citing reduced medical costs and improved operating margins. The company lost $54.4 million in the year-earlier quarter. Excluding one-time items, Aetna earned $151.5 million. Revenue fell 23 percent, to $4.8 billion.
ChevronTexaco, the oil company created by Chevron's acquisition of Texaco last year, posted a third-quarter net loss of $904 million as it wrote down the value of its stake in Dynegy, compared with estimated combined earnings of $1.27 billion in the same period a year earlier. Revenue declined 2.4 percent, to $25.4 billion
Primedia, the publisher of more than 250 magazines, including New York and Seventeen, swung to a profit in the third quarter as higher advertising sales in some of its magazines offset declines in trade publications. Net income was $14.4 million, compared with a loss of $277.8 million a year earlier. Sales rose less than 1 percent, to $400 million.
Revlon, the cosmetics maker controlled by financier Ronald Perelman, posted its 16th straight quarterly loss and said it may not meet a bank-loan requirement this quarter. The third-quarter loss narrowed to $22.1 million, from $22.9 million in 2001. Sales rose less than 1 percent, to $323.2 million.
Waste Management reported a third-quarter profit of $231 million, up from $30 million a year earlier. The year-earlier profit was reduced by $389 million before taxes as the company paid $437 million to settle a class-action lawsuit. The largest U.S. trash hauler said revenue in the recent quarter was little changed, at $2.89 billion.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers