Business Blog Posts

Reports from thousands of homeowners in their congressional districts show an "apparent pattern" of practices that led to foreclosures that could have been avoided, the lawmakers wrote in an October 4 letter to Attorney General Eric Holder, Federal Reserve Chairman Ben Bernanke and the Treasury Department.

The letter was signed by House Speaker Nancy Pelosi and 30 California lawmakers.

"The excuses we have heard from financial institutions are simply not credible three years into this crisis. People in our districts are hurting," the letter said. "It is time that banks are held accountable for their practices that have left too many homeowners without real help."

The lawmakers said thousands of people have reported that despite efforts to seek loan modifications or other relief many financial institutions "routinely fail to respond in a timely manner, misplace requested documents, and send mixed signals" about what is required to avoid foreclosures.

At least six states are investigating the foreclosure procedures at Ally Financial Inc or JPMorgan Chase or both.

Ally, formerly known as GMAC, revealed last month that officials had signed thousands of affidavits supporting foreclosure proceedings without having personal knowledge of the borrowers' situations.

A seventh state, Texas, on Tuesday halted all foreclosures, sales of foreclosed properties and evictions from foreclosed properties until foreclosure practices are reviewed.

(Editing by Eric Beech)

Gold hit yet another record high above $1,340 an ounce, while copper rose to its highest since July 2008 and oil rose to a five-month high as the dollar, driven by investor concern over the outlook for global growth, weakened further.

Risk assets soared on encouraging U.S. services sector data, the BOJ's rate cut and the Reserve Bank of Australia's decision not to raise rates, raising investor hopes that cheap money will flood global economies. The Federal Reserve has suggested it may engage in further quantitative easing unless the U.S. economic outlook improves.

"The thinking today is that the printing of money is going to take place," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

"The short-term impact of that is to drive asset prices higher. We've seen it almost across the board in commodities."

The BOJ's measures -- cutting its overnight rate target to virtually zero and pledging to buy 5 trillion yen ($60 billion) worth of assets -- pushed the Nikkei average .N225 to close 1.5 percent higher. The December futures contract for the Nikkei 225 stock index trading in Chicago rose 280 points to 9,630.

Tokyo's action came after Fed Chairman Ben Bernanke said on Monday that more asset purchases could further ease financial conditions and help the economy.

The euro jumped to its highest since February against the dollar on concerns that further U.S. quantitative easing could undermine dollar strength.

A U.S. equities rally was fueled further by data showing the pace of growth in the U.S. services sector, which accounts for 80 percent of U.S. jobs, accelerated last month more quickly than economists had expected, while hiring also picked up.

The Dow Jones industrial average .DJI closed up 193.45 points, or 1.80 percent, at 10,944.72. The Standard & Poor's 500 Index .SPX rose 23.72 points, or 2.09 percent, to 1,160.75, the highest level since mid-May. The Nasdaq Composite Index .IXIC gained 55.31 points, or 2.36 percent, to 2,399.83.

"Given unemployment and the state of the housing market, central banks didn't have a choice but to take steps like this, and it's what the market wanted to see," said Uri Landesman, president of New York-based Platinum Partners. "This could be a sign of things to come."

The pan-European FTSEurofirst 300 .FTEU3 index of top European shares closed up 1.4 percent at 1,066.12.

World stocks measured by the MSCI All-Country World Index .MIWD00000PUS rose 1.82 percent, its highest level since the end of April, while the Thomson Reuters global equity index .TRXFLDGLPU rose 0.23 percent.

DOLLAR'S LOSS

In currencies, the dollar index .DXY was down against major currencies, falling 0.77 percent to 77.834. The euro was up 1.10 percent at $1.3832 after climbing as high as 1.3860, an eight-month high. Against the Japanese yen, the dollar was down 0.17 percent at 83.20 after dipping as low as 82.96 yen on electronic trading platform EBS.

Still, discounters are likely to be among the most popular shops because consumers remain cautious, experts said.

The National Retail Federation forecast on Wednesday a 2.3 percent increase in sales in November and December, which would be the best performance since 2006. But even that increase would leave holiday sales below the $452.79 billion posted in 2007, before the housing bubble burst and the stock market tumbled.

Consumers are still selective about what they buy and continue to focus on price, the NRF said. High unemployment a tepid economic recovery have held back spending, even though the recession officially ended in 2009.

"While there might be some economists who have concluded the recession is over, it's clear that most consumers don't feel that the recession is over," NRF president Matthew Shay said during an interview.

The forecast of a 2.3 percent increase compares with a 0.4 percent increase in 2009 and the 3.9 percent decline in 2008.

"What retailers are hoping to get this holiday season is some indication that we have reached a sustained economic recovery and the back-to-school numbers gave us some indication that we are heading in that direction, though in a modest way," Shay said.

Back-to-school sales in August and September were better than expected, many analysts said, and that has helped lift retail stocks since the end of August. The Standard & Poor's retail index is up about 16.7 percent, compared with a 10.5 percent increase in the Standard & Poor's 500.

Retailers have also focused more on paring inventories to avoid deep, margin-sapping discounts, Shay said.

The NRF forecast is not the most bullish for the holiday season. On Tuesday, the International Council of Shopping Centers forecast an increase of 3 percent to 3.5 percent compared with 2.3 percent last year.

Among other recent forecasts, consulting firm Deloitte forecast a 2 percent increase in the November through January holiday period, better than 1 percent a year ago.

The holiday season traditionally begins on "Black Friday," the day after Thanksgiving. But retail industry executives say consumers have begun shopping for the holidays earlier in recent years to spread out their spending and take advantage of sales when they see them.

Also, a survey by consulting firm Accenture reinforced the view consumers are still frugal. Most consumers are not moved to purchase without a discount of 20 percent or more and more than one quarter require a discount of 50 percent or more. In fact, 81 percent of consumers said they would shop at discount stores for the holidays.

On the whole, 83 percent of those surveyed expect to spend the same or less on holiday gifts this year than last year, Accenture added.

(Reporting by Brad Dorfman; editing by Andre Grenon)

Additional fiscal stimulus --and not fiscal discipline-- is the way out of the crisis for both Europe and the United States, Soros said in a speech at Columbia University on Tuesday.

"Deficit reduction by a creditor country such as Germany is in direct contradiction of the lessons learnt from the Great Depression of the 1930s. It is liable to push Europe into a period of prolonged stagnation or worse," Soros said.

Germany is unlikely to change its ways, however, because its economy is doing well and because the difficulties of other countries can be blamed on structural rigidities, Soros said.

German Chancellor Angela Merkel also gained the upper hand in a recent G20 meeting where she joined forces with Canada and newly elected Conservative British Prime Minister David Cameron to put pressure on other countries to adopt austerity measures, Soros noted.

As a result, President Barack Obama yielded to the majority and agreed to cut the U.S. budget deficit by half by 2013.

"This may be the right policy but it comes at the wrong time," Soros said.

Soros doesn't think Obama should extend the tax cuts pushed

by his predecessor George W. Bush. Instead, he says, the government should direct the extra money coming from higher taxes into fiscal measures to stimulate investment, not consumption.

(Editing by Kenneth Barry)