Posted on April - 22 - 2010
Briefly: Fed bailout cost dramatically cut, administration says
WASHINGTON — Treasury Secretary Timothy Geithner is telling Congress that the administration believes the final cost of the government’s heavily criticized financial bailout effort could be as low as $87 billion.
Geithner made the new estimate in a letter Friday to congressional leaders.
A year ago, officials were estimating the bailout could cost as much as $500 billion.
The new estimate said the biggest losses will occur from the government’s support of mortgage companies Fannie Mae and Freddie Mac.
That loss was put at $85 billion followed by a loss of $49 billion from providing help to homeowners facing the threat of losing their homes through foreclosures.
The biggest offset to that and other losses will be earnings of $115 billion that the administration expects the Federal Reserve to realize from the extraordinary assistance it has given to provide liquidity to the financial system.
The new estimates are part of the administration’s campaign to get Congress to pass sweeping financial overhaul legislation.
GM fires Chevy’s advertising firm
DETROIT — General Motors has replaced the advertising agency that brought you such memorable campaigns as “See the USA in Your Chevrolet” and “Like a Rock” after more than 90 years of work.
Campbell-Ewald, headquartered in the Detroit suburb of Warren, will be phased out of the Chevrolet account during the next few months, replaced by Publicis Worldwide, which is part of French advertising company Publicis Groupe SA.
GM spokeswoman Cristianna Vazquez would not give a reason for the move, but GM executives in recent months have stated publicly that they were unhappy with the company’s advertising and marketing.
The agency, which has had Chevrolet business since 1919 and at times has had all of GM’s advertising, also did Chevrolet’s “Heartbeat of America” campaign.
Mattel avoids U.S. safety rule
WASHINGTON — The nation’s biggest toy maker, Mattel Inc., is getting another exemption on federal safety rules even as smaller companies struggle with testing costs imposed after a rash of Mattel toy recalls in 2007.
Under the law passed after the recalls, the makers of children’s products must perform independent third-party tests for lead, lead paint and other potential dangers.
On Friday, however, the Consumer Product Safety Commission voted unanimously to approve Mattel’s request to use two more of its own company laboratories for the third-party checks on its toys.
CPSC said Mattel was able to show that its in-house testing would provide equal or greater consumer safety protection than an outside lab.
U.S. shuts seven banks in Illinois
NEW YORK — Regulators on Friday shut down seven banks in Illinois, putting the number of U.S. bank failures this year at 57.
The Federal Deposit Insurance Corp. took over four banks in Chicago: New Century Bank, with $485.6 million in assets; Citizens Bank&Trust Company, with $77.3 million in assets; Broadway Bank, with $1.2 billion in assets; and Lincoln Park Savings Bank, with $199.9 million in assets.
The FDIC also took over Amcore Bank of Rockford, which had $3.8 billion in assets; Peotone Bank and Trust Company in Peotone, with $130.2 million in assets; and Wheatland Bank of Naperville, with $437.2 million in assets.
The failure of Broadway Bank is expected to cost the FDIC’s deposit insurance fund $394.3 million.
Broadway Bank was owned by the family of Illinois Treasurer Alexi Giannoulias, a Democrat who is running for President Barack Obama’s old Senate seat.
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