BUSINESS BRIEFS
Countrywide warns of more problems ahead
Associated Press
LOS ANGELES — Countrywide Financial Corp. has seen mortgage defaults rise as the housing market went from boom to bust, but the nation's largest home loan provider says it could have more trouble ahead with a particularly risky slate of loans — pay-option adjustable-rate mortgages.
Pay-option loans give borrowers the option to make a lower payment but can result in the unpaid portion being added to the principal balance. They also have the potential to provide high yields to investors who bought the loans from lenders during the housing boom.
At the end of December, Countrywide had nearly $29 billion in pay-option loans, with about $26 billion of the total having grown beyond their original loan amount.
AUTO SALES FOR FEBRUARY PLUNGE
DETROIT — Automakers got hit where it hurts in February, with U.S. sales of their most profitable vehicles — trucks, sport utilities and large sedans — plunging as consumers reacted to high gas prices and the possible recession. General Motors Corp. and Ford Motor Co. announced second-quarter production cuts in the face of the falling sales.
GM reported a sales decline of almost 13 percent for the month while Ford's sales slumped 7 percent, Chrysler's tumbled 8 percent and Toyota's fell 3 percent.
Honda Motor Co. bucked the trend, posting a 5 percent increase in U.S. sales. Since the first of the year, Honda's sales are up nearly 2 percent.
44,000 SIGN UP FOR VIOXX DEAL
NEW ORLEANS — More than 44,000 people have signed up for shares of a $4.85 billion settlement over the withdrawn painkiller Vioxx, a sign that the deal is on track to go forward, Merck & Co. announced yesterday.
Of roughly 47,000 people who registered for the settlement earlier this year, more than 44,000 have submitted all or some of the paperwork necessary for enrollment in the deal, Merck said in a news release.
Whitehouse Station, N.J.-based Merck has said it will withdraw from the agreement unless at least 85 percent of people in different groups of claimants join in the settlement.
DOLLAR SINKS AFTER MORE BAD NEWS
NEW YORK — The dollar briefly fell to historic levels yesterday on news that construction spending took its biggest nosedive in 14 years, extending a string of record lows for the U.S. currency.
The euro purchased as much as $1.5266 in New York trading, topping the previous intraday record of $1.5238 it hit Friday. The euro gave up some gains and was trading at $1.5192 later in the day.
The British pound fell to $1.9847 from $1.9883, while the dollar slid to 103.18 Japanese yen from 103.96 yen, trading near three-year lows.
U.S. IN RECESSION, BUFFETT BELIEVES
OMAHA, Neb. — Billionaire Warren Buffett said yesterday that the U.S. economy is essentially in a recession even if it hasn't met the technical definition of one yet.
Buffett said in an interview with cable network CNBC the reports he gets from the retail businesses that his holding company owns show a significant slowdown in purchases.
The chairman and CEO of Omaha-based Berkshire Hathaway Inc. said millions of people have also lost equity in their homes because home prices have dropped.
Buffett said it's not clear how far the recession will go because that is difficult to predict.
The technical definition of a recession most economists use is two consecutive quarters of negative growth in the nation's gross domestic product.
On Thursday, the Commerce Department reported that the gross domestic product increased at a low 0.6 percent pace in the quarter that ended Dec. 31.
