The Federal Reserve surprised no one last week by boosting its benchmark interest rate by a quarter of a percentage point to 1.75 percent, for its third rate increase since June. The central bank has been trying to stave off inflation without stanching economic growth. In a statement, the policy-setting panel noted signs of recent economic improvement and said it would continue to take a "measured" approach to raising rates in the future. Translation: More interest rate hikes are coming, but just a little bit at a time.
Another Mortgage Mess
Fannie Mae's regulator told the mortgage giant that it suspects the firm's management manipulated earnings. The Office of Federal Housing Enterprise Oversight also told Fannie's board that it doubted that the company's management could correct the problems, which were uncovered in an eight-month probe of Fannie's accounting and internal controls. Fannie also said the Securities and Exchange Commission is conducting an "informal inquiry" regarding the issues raised by the regulator.
Halliburton Co. said it may sell its troubled Kellogg Brown & Root subsidiary, the largest government contractor in Iraq, because of lagging profits. Halliburton said it would first restructure the engineering and construction unit to boost efficiency and financial results. The news comes amid investigations into whether KBR overcharged the government for work in Iraq, and into its activities in the Balkans, Nigeria and Iran. A company spokeswoman said the actions have nothing to do with recent controversies.
Bad News Bared
CBS was reeling after its news division had to apologize for botching a story on President Bush's National Guard service and the Federal Communications Commission proposed fining 20 of its stations for violating indecency rules. The network conceded it had based the Bush story on documents it could not authenticate. Then the FCC proposed the maximum fine for airing Janet Jackson's right breast during January's Super Bowl halftime show. It seemed a far cry from Walter Cronkite and "Playhouse 90."
Opening the Tap
The White House agreed to release crude oil from the nation's emergency stockpiles because of supply disruptions caused by Hurricane Ivan. Officials said the action, coming less than six weeks before the presidential election, was consistent with the Bush administration's policy of releasing oil from the Strategic Petroleum Reserve in response to emergencies, not to influence prices. Traders responded to the decision by pushing the U.S. benchmark crude price up to a record $48.88 a barrel.