Ford adds iTunes tagging option to some models

DETROIT — Starting next year, drivers of some new Ford models who hear a song they like on their high definition radio receiver will be able to tag it by pressing a button and download it later onto their iPhone or iPod.
While the iTunes tagging technology is available on some aftermarket HD Radio receivers, Ford will become the first automaker to offer it as a factory-installed option, said Jeff Jury, chief operating officer for Columbia, Md.-based iBiquity Digital Corp., which is the developer and licenser of HD Radio technology

"It is a great complement to the broader application of Sync," said Jury, whose company also develops the tagging technology.

For Ford, the announcement is the latest in a string of recent advances related to Sync, the voice-controlled telecommunications and entertainment system Ford launched in 2007.

And last week, Ford said the next generation of Sync will allow anyone who plugs an air card into the Sync USB port to turn the car into a mobile, Wi-Fi hotspot.

Ford said iTunes tagging on its next generation of Sync will be able to hold up to 100 songs.

Then, when an iPod is connected to iTunes, the customer can approve the purchase and download the songs.

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Netflix courts studios, tries to cut digital deals

Netflix Inc. Chief Content Officer Ted Sarandos bypassed Hollywood to jump-start the company's online film-rental business last year. Now he has to convince the studios the company is a friend and not a foe.
Chief Executive Officer Reed Hastings is counting on Sarandos to cut deals with studios giving Netflix rights to show more films over the Web.

Sarandos, 45, says he is willing to write big checks and negotiate directly with studios after Los Gatos, Calif.-based Netflix earlier went around Walt Disney Co. and Sony Corp. to gain access to their titles from the Starz cable channel.

"We have to fight against their fear that we'll destroy the ecosystem," said Sarandos, a former video-store clerk. "We're not destroying anything. We're creating a new opportunity."

Related7/4/09: Netflix's Nashville center feeds demand for movies

Sarandos' success is critical to Netflix as viewers move to the Web, endangering the mail-order DVD rental business that helped the company upend brick-and-mortar stores such as Blockbuster. His challenge is to persuade studios to provide content as they explore their own digital options, including offering movies online themselves.

"The challenge for Netflix is what to do when the world migrates to digital distribution and whether it can obtain product from all the studios as that's happening," said Warren Lieberfarb, the former head of Warner Bros.' DVD operations.

Netflix, the largest mail-order film-rental service, offers Web-based movie viewing that's used by 42 percent of its 11.1 million subscribers, the company says. It has an online library of 17,000 films and TV shows.

DVD sales are declining

The studios, coping with a decline in DVD sales, are trying to avoid the fate of music labels, which lost sales when their content went digital and online. Hollywood executives view digital distribution as a threat to the traditional way money is made from movies.

"Everybody views it as a terminal career decision if you get it wrong," said Frank Biondi, who has led Universal Studios, Time Warner Inc.'s HBO cable network and Viacom Inc., owner of Paramount Pictures.

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Kira Florita resigns from Leadership Music post

Kira Florita has submitted her resignation as executive director of Leadership Music, effective Jan. 18.
However, Florita, a 30-year music industry veteran, will act as a consultant for a while to help during the transition to a new management team for the industry program.

Florita has been with the group five years and has overseen such major events as the Leadership Music Digital Summit and the Leadership Music Dale Franklin Award. She was the organization's third executive director.

"My front-row seat has allowed me to see how the relationships and understanding created by the Leadership Music Program facilitate a deeper commitment and passion for music," said Florita, adding that she had been exploring "new opportunities for quite a while."

Pat Collins, president of Leadership Music's board, said the group plans to conduct a national search for a new executive director. "Kira's dedication to Leadership Music will be hard to replicate," Collins said.

She is the chair of the Partnership Council for Arts, Media and Communication for Metro schools High School Small Learning Communities, and she sits on the mayor's Nashville Music Council.

Volunteer activities have included serving on the boards of the Nashville Alliance for Public Education, the Audio Publisher's Association, the Downtown YMCA and the National Folk Music Alliance.

— RANDY MCCLAIN

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Experts fear that U.S. is entering decade of job doldrums

WASHINGTON — Call it the Terrible Teens.
The decade ahead could be a brutal one for America's unemployed — and for employed people hoping for pay raises.

At best, it could take until the middle of the decade for the nation to generate enough jobs to drive down the unemployment rate to a normal 5 percent or 6 percent and keep it there. At worst, that won't happen until much later — perhaps not until the next decade.

The deepest and most enduring recession since the 1930s has battered America's work force.

The unemployed number 15.4 million. The jobless rate is 10 percent. More than 7 million jobs have vanished. People out of work at least six months number a record 5.9 million. And household income, adjusted for inflation, has shrunk in the past decade.

Most economists say it could take at least until 2015 for the unemployment rate to drop to a historically more normal rate. With the job market likely to stay weak, some also foresee another decade of wage stagnation.

Even though the economy probably will keep growing, the pace is expected to be plodding. That will make employers reluctant to hire. Further contributing to high unemployment is the likelihood of more people competing for jobs, baby boomers delaying retirement and interest rates edging higher.

All of this would come after a decade that created relatively few jobs: a net total of just 464,000. By contrast, 21.7 million jobs were generated in 1989-99.

The 'New Abnormal'

Economist David Levy, chairman of the Jerome Levy Forecasting Center, says the U.S. faces a new era of chronically high unemployment, averaging 8 percent or more over the next decade.

The "New Abnormal," he calls it.

Levy thinks the New Abnormal also means average pay will dwindle, along with consumer prices. That would make it harder for households to pay down debt, he warns.

By the Federal Reserve's reckoning, the jobless rate could remain as high as 7.6 percent in 2012. And it would take two or three years after that for the job market to return to normal, the Fed says.

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Real Estate Resolutions 2010Unemployment rate improves in Tennessee

Hollywood puts big money behind productions for the Web

LOS ANGELES — Web sites that buy original video clips often pay so little that a title like The Bannen Way , a flashy crime thriller debuting online, might be expected to be made poorly if it could be made at all.
Yet budding filmmakers Jesse Warren, 31, and Mark Gantt, 40, managed to hire 40-odd staff, including a boom operator, camerapeople — yes, more than one — and even production assistants to offer sunscreen and sandwiches. And the production had actors familiar to some TV and movie audiences, including Michael Ironside, Robert Forster and Vanessa Marcil.

The secret to their success? Treat the Internet run like a TV or movie release, which often loses money on its on-screen debut but can make healthy profits when issued on DVD or Blu-ray and later sold for reruns on cable or overseas.

With that in mind, major movie studios are now getting behind such productions, giving them a lift in budgets and quality — a far cry from the shaky camerawork and dubious special effects prevalent when Web video became a new phenomenon a few years ago.

For Warren and Gantt, who wrapped up shooting in October, a snazzy trailer they produced helped snag Sony Pictures Television as a partner.

"We came up with this idea," Warren said. "There's no limit to how many episodes there can be in a Web series. So why don't we design it as a (feature-length movie) so we can sell it as a DVD feature at the end?"

Sony executives, it turns out, had the same idea.

The studio picked up the project in April and gave it a budget of around $1 million, nowhere near the $30 million-plus budgets of many Hollywood movies, but more than the producers were told they could sell it for. Web sites typically pay up to $5,000 for a short clip of original video; with 16 episodes, other Web sites might have paid around $100,000 for The Bannen Way .

First episodes to be free

One quirk of the Web is that each episode must have a cliffhanger to keep online viewers coming back. In one scene, the audience learns for the first time that Neal Bannen, the title character, had been working for his mob boss uncle. Bannen's father is the chief of police, and viewers realize the son is about to be entangled in a struggle between father and uncle.

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Holiday shoppers spent a little more this season

According to data released Monday, merchants saw a spending bounce for Christmas.
That means retailers managed to avoid a repeat of last year's disastrous holiday shopping results even amid tight credit and double-digit unemployment. Profits should be healthier, too, because stores had a year to plan their inventories to match consumer demand and never needed to resort to fire-sale clearances to clear shelves.

Retail sales rose 3.6 percent from Nov. 1 through Dec. 24, compared with a 2.3 percent drop in the year-ago period, according to figures from MasterCard Advisors' SpendingPulse, which track all forms of payment, including cash.

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Home stagers hasten sales

It sounds like the dream job of the year: house-sit in a luxurious home you couldn't possibly afford, and pay a fraction of the market rent.
Slightly more than a dozen people in the Nashville area have been hired to do just that by Showhomes, a company based here that puts housesitters with nice furniture in vacant homes that are being sold across the country.

"We looked at an apartment, but we would be paying the same for an apartment as this nice big house,'' said Lisa Briley, who moved into a new four-bedroom home in Hendersonville in October that's listed for $437,900.

Briley, her husband and three children pay roughly $1,500 per month for the house.

Showhomes is finding that its unique business model is making money in one of the worst real estate markets in decades. While other real estate-related businesses have watched revenues struggle for more than a year, Nashville-based Showhomes Franchise Corp. has watched royalty revenues more than double in the past three years.

This year, it expects to take in more than $1 million in royalties alone after signing up new franchisees around the nation. Franchise-wide sales probably will amount to more than $7 million this year, according to Thomas Scott, vice president of operations.

The company has 57 franchisees in 22 states, including California, New York, North Carolina and Tennessee. Twenty-seven of those franchisees have been added this year.

"Your house has to win a beauty contest in today's market,'' Scott said. "There's too much inventory. It's a nice solution to a really messy problem."

Here's how it works.

Showhomes works with the owners of vacant residential properties and their real estate agents, providing live-in managers who make the homes more appealing to potential buyers.

The temporary tenants typically bring their own furniture and agree to have the homes ready for showing on 30 minutes' notice. In exchange, they get reduced housing costs — typically one third or more off normal rentals.

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Returns can bedevil retailers

If Aunt Janet doesn't like the watch you bought her this Christmas, it's OK. Just be aware of the return policy on it.
Retailers either tighten or loosen their return policies each year. And this year, like every year, their motivation for making adjustments is the same: to stem the tide of return fraud.

The retail industry is expected to lose an estimated $2.7 billion in return fraud this holiday season and an estimated $9.6 billion this year, according to a National Retail Federation survey.

The survey also said that 6.4 percent of holiday returns are expected to be fraudulent this year, down from 7.5 percent last year.

Also in the study, 69 percent of the 134 retailers interviewed said they have changed their company's return policy to combat fraud. While 16.9 percent of retailers said they will tighten their policies, 3.8 percent said they will relax theirs.

Target Corp. usually allows customers to return items within 90 days of purchase, However, the company will accept returns on purchases made during the holiday season for up to 12 months. Target limits and periodically adjusts the monetary amount of the total purchases returned. This year it stands at items totaling less than $70, but that amount has ranged from $20 to $100 in the past few years.

"The reason we went through so much change in our return policy accommodations is that we continually seek feedback from our guests regarding their service expectations," said Sonja Pothen, a spokeswoman for Target.

Sears has extended its time period slightly for holiday returns, said Tom Aiello, a spokesman for Sears Corporate Holdings.

The store will accept items purchased between Nov. 14 and Dec. 13 for up to 120 days. But home electronics and mattresses will have to be returned within 60 days.

"We want to make it as convenient as possible for the consumers," Aiello said.

Among the retailers who have not changed their return policies is Amazon.com. The online retailer gives customers until Jan. 31 to return items purchased between Nov. 1 and Dec. 31.

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Tower Records clings to life on the Web

SACRAMENTO, Calif. — Tower Records is still out there, on the Internet, under new management that's itching to increase its Web presence.
It makes its headquarters in Wilmington, Del.

Richard Flynn, a Wilmington businessman, said he was hired a month ago as president of Tower.com Inc. The Web site is owned by a European investment group named Cumberland Corporate Services, he said.

Flynn wouldn't disclose Tower's sales numbers but said, "We're still doing pretty good, nowhere near where we're going to be in 12 months.

"My ultimate goal would be to get the same vibe Tower had," he added.

Flynn's appointment is a new twist in the saga of Tower.com, one of the few remaining pieces of the global retail music chain founded in Sacramento, Calif. Also surviving is a chain of Tower-brand music stores in Japan and other overseas markets.

In March 2007, four months after Tower went out of business, the Web site was auctioned for $4.2 million to an e-commerce music merchant called Caiman Holdings, according to documents in U.S. Bankruptcy Court.

A three-employee skeleton crew ran the Web site for a while from an office in West Sacramento. But the employees left and operations moved back East. Caiman's headquarters are in Montreal and Miami.

The story has some complications. Flynn said Caiman never owned Tower.com, despite the court records. Instead, he said, Caiman executives ran the business for the European firm.

Caiman's chief executive, Didier Pilon, recently told Billboard magazine that Tower.com changed owners; he wouldn't elaborate. Pilon's company has filed to liquidate assets in a Florida court proceeding, Billboard reported.

The voice mail greeting at Caiman's Montreal office mentions Caiman and Tower. When a reporter tried to reach Caiman officials, he was referred to Flynn, who said he's the sole employee of Tower.com.

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Toyota faces questions on safety issues

During a routine test on its Sienna minivan in April 2003, Toyota Motor Corp. engineers discovered that a plastic panel could come loose and cause the gas pedal to stick, potentially making the vehicle accelerate out of control.
The automaker redesigned the part and by that June every 2004 model year Sienna off the assembly line came with the new panel. Toyota did not notify tens of thousands of people who had already bought vans with the old panel, however.

It wasn't until U.S. safety officials opened an investigation last year that Toyota acknowledged in a letter to regulators that the part could come loose and "lead to unwanted or sudden acceleration."

In January, nearly six years after discovering the potential hazard, the automaker recalled 26,501 vans made with the old panel.

In a statement to the Los Angeles Times , Toyota said there was no defect in Sienna and that "a safety recall was not deemed necessary" when it discovered the problem in 2003. The company called the replacement part "an additional safety measure."

A peerless reputation for quality and safety helped Toyota become the world's largest automaker. But even as its sales have soared, the company has delayed recalls, kept a tight lid on disclosure of potential problems and attempted to blame human error in cases where owners claimed vehicle defects.

The automaker's handling of safety issues has come under scrutiny in recent months because of allegations of sudden acceleration in Toyota and Lexus vehicles, which has led to some accidents and fatalities.

After Toyota announced its biggest-ever recall this fall to address the sudden acceleration problem, it insisted publicly that no defect existed, drawing a rare public rebuke from the National Highway Traffic Safety Administration, which chastised the automaker for making "inaccurate and misleading statements."

Ex-Toyota lawyer sues

On top of that, a former Toyota lawyer who handled safety litigation has sued the automaker, accusing it of engaging in a "calculated conspiracy to prevent the disclosure of damaging evidence" as part of a scheme to cover up structural shortcomings. As a result, plaintiff attorneys are considering reopening dozens of product liability suits against Toyota.

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Community Health enters deal with medical clinic

Community Health Systems Inc. said that a subsidiary has entered an affiliation agreement with a multi-specialty clinic that has 32 locations in Washington State. The Franklin-based hospital chain said its deal with Rockwood Clinic is subject to normal closing conditions and should be completed within the next few weeks.
Rockwood Clinic employs more than 1,100 people, including doctors. It offers care in more than 30 medical specialties. It would become part of a new, fully integrated health-care delivery system that would have Community Health's Deaconess Medical Center in Spokane, Wash., and Valley Hospital and Medical Center in Spokane Valley as cornerstones.

— GETAHN WARD

Investor Report: REO ListingsCommunity Health buying medical practice in Washington state

Shoppers give stores last-minute surge

NEW YORK — Shoppers appear to have given the nation's stores a needed last-minute sales surge.
Early readings from Toys R Us, Sears Holdings Corp. and several mall operators show packed stores on Christmas Eve following a busy week fueled by shoppers who delayed buying, waiting for bigger discounts that never came or slowed by last weekend's big East Coast snowstorm.

Stores are counting on these stragglers in a season that so far appears slightly better than last year's disaster. The jury is still out, because the week after Christmas accounts for about 15 percent of sales as gift card-toting shoppers return to malls.

"The procrastinators were really out in force," says David Bassuk, managing director in the retail practice of AlixPartners, a global business advisory firm. "But I think retailers needed to be more aggressive to fight for those sales. A lot of people are still willing to hold out until after Christmas because the deals weren't as good."

A Christmas Eve snowstorm in the nation's heartland were slowing some shoppers after snarling roads in the mountain states a day earlier.

At the Mall of America in Bloomington, Minn., shoppers were scarce and those who showed up had entire stores to themselves.

Steve Burns, 42, and his daughter, Amber, 15, of Hastings, Minn., took advantage of the empty stores to browse for shirts and other last-minute gifts. Burns said the snow wasn't a problem and traffic was light because others stayed home. "It doesn't bother me any," he said.

Some shoppers had challenges finding what they wanted as stores had slashed their inventories heading into the season. An Ann Taylor store at Westside Pavilion in West Los Angeles pulled in 33 cartons of January merchandise earlier than planned, according to Rebecca Stenholm, a company spokesman at the mall's operator, Macerich Co.

Joe Roberts, 59, left a RadioShack at a mall in Madison, Wis., with a huge smile and the PlayStation3 his teenage son insisted on for Christmas.

He said he delayed making the $300 purchase because of economic concerns. A self-employed designer of manufacturing equipment, Roberts is getting less business every year and his wife might soon lose her job as an office manager.

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Drugstores will offer deals, stay open later for last-minute Santas

For serious holiday shopping procrastinators, drugstores and convenience stores are offering last-minute deals. Even better for the desperate, many of them will still be open at, say, 3 a.m. Christmas Day.
The last-minute rush tends to make these stores busier than they are the rest of the season.

"Like every Christmas season, our performance is driven by the final days, which makes this a big week," Walgreen Co. CEO Greg Wasson told investors Monday. "It could be more important this year as more consumers delayed the holiday shopping to the last minute."

RelatedEmpty shelves may make post-holiday sales a dud

Most Walgreens locations will be open until midnight today. Nearly 1,600 24-hour locations will be open all night. On Christmas Day, non-24-hour locations will be open 9 a.m. to 6 p.m.

The drugstore has tech gifts like a Kodak Digital Camera for $69.99 and Disney products and games. And batteries. Don't forget the batteries.

Stores in the 7-Eleven chain are open 24 hours, and they have items like prepaid cell phones, including a Verizon Smooth u350 phone for $19.99 that features a camera, Bluetooth and Verizon service; DVDs; wine; and gift cards.

The 7-Eleven chain said gift-card sales already are up in the high double digits, the most popular being the 7-Eleven card, a prepaid Visa card and iTunes gift cards.

For fans of online role-playing games, 7-Eleven also has increased its selection of multiplayer online game gift cards, which let players buy playtime or items in online games, including World of Warcraft and Mafia Wars.

At CVS, more than 5,400 stores will be open Christmas Day.

CVS is offering electronics on sale, including a Prism 7-inch high-definition LCD TV for $79.99 and a Craig mp3 player for $29.99. The drugstore chain is also offering perfume from Mariah Carey, Halle Berry and others for $19.99 and spa sets starting at $14.99.

Cutting it close

For those who don't want to brave the stores, there's still time to order gift cards online and send them electronically, though even those have a cutoff.

Victoria's Secret says you can order a gift certificate online by 3 p.m. on Christmas Day, and it will be delivered via e-mail that day.

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Health bill's potential costs worry some small builders

Coming off a year in which his remodeling and custom home-building company saw two-thirds less business and had to lay off nearly half its employees, David Crane hopes next year brings an economic turnaround.
But Crane worries about how much part of the health reform bill up for a vote in the U.S. Senate today might cost him and other contractors.

It requires construction firms with at least five full-time workers and annual payrolls of more than $250,000 to offer health insurance coverage to employees or face fines up to $750 per employee per year.

Crane Builders employs seven people, and the company had expected to be exempt from the requirement just like many other types of small businesses that only face the requirements if they had at least 50 full-time workers during the previous year.

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But U.S. Sen. Jeff Merkley, D-Oregon, added a lower threshold of five workers for the construction industry. The provision would take effect in 2014. Merkley sees the extra rules as a way to prevent small companies that didn't provide health insurance to workers from undercutting other bidders on construction jobs.

"It's for anyone going to that bidding table — to make sure that the playing field is fair," said Marc Siegel, a spokesman for Merkley. He said some trade groups, such as the National Electrical Contractors Association, support the measure.

But critics say the last-minute measure could boost costs for many small construction firms that are already reeling from losses caused by the recession. In the Nashville area alone, the construction sector lost about 5,000 jobs year over year, according to figures from the Bureau of Labor Statistics in November.

"It's just unfair to single out one industry to not exempt from it when they exempt every other industry in the world from it," said Crane, who pays half of his employees' health insurance costs.

Retailers also on edge

Nationally, a number of other businesses worry about what they see as extra burdens and higher costs from the health bill. Some hope to massage the massive legislation early next year during a final round of negotiations on Capitol Hill.

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Community Health buying medical practice in Washington state

Community Health Systems Inc. said that a subsidiary has entered an affiliation agreement with a multi-specialty clinic that has 32 locations across the Inland Northwest region of Washington state.
The Franklin-based hospital chain said its deal with Rockwood Clinic is subject to normal closing conditions and should be completed within the next few weeks.

Rockwood Clinic employs more than 1,100 people including doctors and offers care in more than 30 medical specialties.

It would become part of a new, fully integrated health care delivery system that would have Community Health’s Deaconess Medical Center in Spokane and Valley Hospital and Medical Center in Spokane Valley as the cornerstone.

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Man faces charges that he sold 1,000 credit card numbers

A Romanian man has been extradited from England to face charges in Nashville federal court that he sold more than 1,000 credit card account numbers that belonged to other people.
Florin Muresan, 27, faces up to 10 years in prison and a $250,000 fine. A federal grand jury here indicted him earlier this year of obtaining more than $1,000 from selling the numbers, but court records only recently were unsealed.

Muresan remains in jail pending trial, which under federal law should come within 70 days of his initial appearance in the local federal court on Monday.

Court documents show Muresan electronically sent credit card data to a Secret Service agent in Middle Tennessee earlier this year after agreeing to provide information related to more than 1,000 accounts in exchange for $1,100.

A preliminary review of the data by MasterCard and Visa found the transmission included data for at least 20 credit card accounts which were not issued to Muresan and he wasn't authorized to use. He was arrested in London in June and was transferred to Nashville last weekend.

Reach Getahn Ward at 615-726-5968 or gward@tennessean.com.

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Tax credit, deals ignite home resales in South

MIAMI — Home resales in the South skyrocketed last month as first-time buyers hurried to grab an expiring federal tax credit while exploiting low prices and mortgage rates.
The South recorded 176,000 home sales in November, the National Association of Realtors said Tuesday, up 48 percent from a year earlier, when the nation was dizzied by the financial market meltdown. The median sales price fell slightly more than 1 percent, to $151,400.

Nationally, existing home sales soared nearly 47 percent compared with last November, without adjusting for seasonal factors. The median sales price dropped 4 percent to $172,600.

Half of the national sales went to first-time home buyers using a tax credit of up to $8,000 that was set to expire last month. Congress extended the credit until next spring and also added a tax credit of up to $6,500 for repeat home buyers.

RelatedThanks to tax credit, home sales surge 7.4 percent

The first-time homebuyer tax credit, along with mortgage rates below 5 percent, lured more buyers than during previous holiday seasons, real estate agents said.

All 19 Southern cities covered by the Associated Press-Re/Max Monthly Housing Report showed sales increases compared with last November. Median sales prices were flat or increased in 11 Southern cities.

The AP-Re/Max report, also released Tuesday, analyzed sales transactions in the metropolitan statistical areas recorded by all real estate agents, regardless of company affiliation.

Here are some highlights:

• Orlando, Fla.: This tourist mecca experienced two extreme swings in November. Sales doubled from last November, the biggest gain among Southern cities in the AP-Re/Max report. (Jackson, Miss., had the smallest sales gain, at 15 percent.)

In Orlando, median sales price dropped by a quarter to $123,250, the steepest price decline among Southern metro areas in the AP-Re/Max report.

Homes priced $200,000 and below sold quickest in November, fueled by first-time buyers and investors, said Les Simmonds, president of L.G. Simmonds Real Estate Corp. in Orlando.

"If you have something in the low price range, your telephone will ring," Simmonds said.

Still, prices could keep sinking because of consistently heavy foreclosure inventories, which have driven down property values in Orlando, Miami and Tampa.

• Miami: This sunny metropolis saw the median sales price decline 23 percent to $152,000, but affordable prices for houses and condos helped spur a 59 percent sales increase from last November, the AP-Re/Max report showed.

Foreign investors and buyers looking for bargain foreclosures boosted sales for Ralph De Martino, owner of Ocean International Realty in Miami Beach. De Martino has presided over six deals since the start of November.

• Houston: With its steady oil- and health-care-based economy and solid employment base, Houston proved to be a strong market in November.

Sales of existing homes jumped 34 percent, while prices rose nearly 9 percent to $150,000, the largest price increase among Southern cities in the AP-Re/Max report.

Thanks to tax credit, home sales surge 7.4 percentReal Estate Outlook: Housing Warmer Than Weather

Thanks to tax credit, home sales surge 7.4 percent

WASHINGTON — Extraordinary government efforts to stabilize the housing market are paying off. What happens when the help runs out is anyone's guess.
Sales of previously occupied homes surged in November to the highest level in nearly three years, spurred by federal subsidies for starter homes and a massive Federal Reserve push to drive down mortgage rates.

The strong figures were driven by a race to take advantage of a tax credit of up to $8,000 for first-time homebuyers. The credit has since been extended to next spring, but the government initially planned to end it Nov. 30.

"It was like the end of the world," said real estate agent Stephanie Somers of Re/Max Access in Philadelphia. "All the first-time buyers converged onto that one month."

RelatedTax credit, deals ignite home resales in South

The pace of home sales is now up 46 percent from its bottom in January and still 10 percent shy of its peak from four years ago, according to data released Tuesday by the National Association of Realtors.

The real estate recovery depends not only on taxpayer dollars but also on the health of the economy at large, which grew at a less robust pace in the third quarter than previously thought.

The economy grew at a 2.2 percent annual pace from July to September, down from an initial reading of 2.8 percent, the government said Tuesday.

Experts think the economy is even stronger now than it was last quarter, but they expect it to ebb again early next year. And that's when the tax credit will wind down and the Fed plans to stop buying mortgage-backed securities, which could raise mortgage rates.

Whether the real estate rebound can continue without the help remains to be seen.

"The housing market recovery can't continue if the overall recovery in the economy doesn't persist," said Michelle Meyer, an economist with Barclays Capital.

2M buyers use credit

While prices for homes in many parts of the country are still falling, analysts said the tax credit clearly helped the volume of sales.

"In the short run, it's an effective stimulus," said John Ryding, chief economist at RDQ Economics. "If you give someone money to spend on something, they will spend it."

With April 30 as the new deadline, experts forecast sales will drop during the winter and pick up again in the spring. Without the looming deadline, "buyers have no sense of urgency now," said Gary DeRosa, an agent with ZipRealty Inc. in Seattle.

About 2 million homebuyers have taken advantage of the credit, the Realtors group said. It expects 2.4 million more to use it by the middle of next year. First-time buyers made up about half of all transactions last month, driving sales up 44 percent above last year's levels, a record.

Overall, sales of existing homes rose 7.4 percent in November to a seasonally adjusted annual rate of 6.54 million, up from 6.09 million in October. That was far stronger than the 6.25 million forecast by economists surveyed by Thomson Reuters.

Nationwide, the median sales price was $172,600 in November, down 4 percent from a year earlier but flat from October.

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Are bonuses back or extinct?

With traditional holiday bonuses reappearing at some workplaces and going the way of the Grinch at others, it's like the economy can't decide if workers have been naughty or nice this year.
Vanderbilt University, for instance, gave an end-of-year bonus to nearly all staffers campus-wide for the first time. And also for the first time, Nashville-based NovaCopy didn't hand out holiday checks.

"Instead of giving out bonuses, we focused on not cutting jobs," said Jason Levkulich, director of marketing at NovaCopy Inc., a copier and document solutions company that usually gives bonuses to its 112 employees in Nashville and two other locations.

At the West End campus, though, after a year of budget cuts and no pay raises, Chancellor Nicholas Zeppos ordered bonuses to thank the Vanderbilt staff.

"The senior management team decided that it had been an extremely challenging year, and the chancellor very much wanted to give a thank-you to those who helped pull together to help weather the storm," said Beth Fortune, vice chancellor for public affairs.

Even national surveys have had trouble deciding if bonuses are staging a comeback or becoming extinct in a year in which various economic indicators, from jobless claims to consumer confidence, also have sent out mixed signals.

Two recent business surveys show that most companies will behave like Scrooge this year.

Just one-fourth of employers are offering holiday bonuses, a record low and a significant drop from 42 percent in 2008, according to Hewitt Associates, a human resources consulting firm.

Among small business owners, a separate American Express survey found that 31 percent are giving holiday bonuses, compared with 44 percent last year.

But a third survey suggests that holiday bonuses are returning, despite companies keeping a close watch on overall costs. That poll found 64 percent of employers will give bonuses, compared with 54 percent last year, said Challenger, Gray & Christmas Inc., a global outplacement firm that did the report.

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Real Estate Outlook: Housing Warmer Than WeatherNashville Business Calendar

Brookdale buys 3 retirement centers

Brookdale Senior Living Inc. has completed a $102 million acquisition of three retirement centers.
Nashville-based Brookdale owns and operates more than 500 senior living centers around the nation. The total purchase price for the three properties was $102 million, plus fees.

Brookdale had previously owned a minority non-financial stake in the centers and collected management fees for work. The company said the three centers have a total of 642 units and had 92 percent occupancy in the third quarter.

The deal was financed with a $75.4 million mortgage loan from Fannie Mae, which carries a fixed interest rate of 6.1 percent, and with cash, officials said.

— ASSOCIATED PRESS

Washington Report: FHA Condo Rules3Q income up for Dollar General

Obama takes softer tone with community banks

WASHINGTON — No fat cats here.
President Barack Obama took his plea for more small-business lending to community bankers Tuesday, but his prodding was far gentler than it was with high finance CEOs last week.

The president offered to help ease regulation that bankers say has restricted lending. He praised the small bankers as pillars of their communities. And he listened sympathetically to their pleas for easier access to capital.

"It's fair to say that most of these community banks were not engaged in some of the hugely risky activities that helped to precipitate the financial crisis," Obama said at the conclusion of the meeting with 12 regional bankers and top administration officials.

That's a different tone than last week when he famously called top bankers "fat cats" in a television interview and then told them in a White House meeting that they had a responsibility to make "an extraordinary commitment" to help rebuild the economy.

No wonder. Small bankers have not aggressively fought central elements of his sweeping financial regulation proposal, they don't make as good a populist target as Wall Street's banking chiefs and they are essential to Obama's goal of spurring small business lending.

"The administration recognizes that, truly, community banks are in a different business than the megafirms and the megabanks," said Mark Schroeder, chairman and CEO of German American Bancorp Inc., of Jasper, Ind., and a participant in the meeting.

The bankers told Obama of their experiences where good loans weren't financed because regulators demanded banks hold more capital and downgrade existing loans. Privately and then later before reporters, Obama acknowledged that the regulators are independent agencies but said his administration is looking at "possibilities to cut some of the red tape."

"In some ways the pendulum may have swung too far in the direction of not lending," he said.

Won't take TARP funds

The meeting came as the administration is trying to forge a program that would give community banks access to about $30 billion in low interest money from the government's $700 billion Troubled Asset Relief Program.

Small bankers have been loath to accept TARP money. They say they fear the reporting requirements that come with the money as well as any restrictions on compensation and lending that would be attached.

"Right now you couldn't make it cheap enough for them to touch it," said Camden Fine, the president and CEO of the Independent Community Bankers of America.

That poses a problem for the White House. Obama advisers see small business expansion as an answer to the high unemployment that has hurt the president politically and is likely to linger well into next year's congressional election season.

Investor Report: REO ListingsBank bailout likely to pay off

TN car insurance rates to increase in 2010

Some of the biggest names in auto insurance have raised rates that drivers in Tennessee must pay next year, in some cases out-distancing the 4 percent average rate hike seen nationally for the industry as a whole in the second half of 2009.
That includes increases of 6.5 percent on average for Allstate Indemnity Co. and GEICO Indemnity Co. The state Department of Commerce and Insurance reviews and approves insurers' requests.

State Farm, the biggest player in auto insurance statewide, meanwhile, has requested a 0.8 percent increase to take effect in February for new policies, and in March for renewals.

Nationwide, rates have gone up about 4 percent over the past six months, said Robert P. Hartwig, president of the Insurance Information Institute. "Costs of premiums could rise simply because costs of the ingredients — all of the inputs into the policy — have risen," Hartwig said.

Insurers also are relying more on premiums to cover losses because income from investing in bonds and other instruments on Wall Street has decreased. Some industry experts expect insurance losses from policies to go up even more as the economy brightens, consumers drive more and potentially have more accidents.

In Tennessee, some Allstate Indemnity clients will see rates rise by as much as 11.3 percent on individual policies under its most recent insurance filing. That indemnity company covers a small percentage of Allstate customers here.

About 90 percent of Allstate's clients in Tennessee have policies with Allstate Property & Casualty Insurance Co. and Allstate Insurance Co., said company spokeswoman Allison Hatcher.

Allstate Property & Casualty recently won state approval for a smaller 0.2 percent average increase — although that could mean rate hikes up to 5.2 percent for some customers. Those new rates take effect on Jan. 18 for new policies and Feb. 18 for renewals.

"Like many other insurance companies, we track losses in various territories and across the state," Hatcher said. "Based on the losses, we adjust as needed."

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Washington Report: Higher Costs, Tougher StandardsUnemployment rate improves in Tennessee

Nashville People in Business

Lisa Nix was named Leadership Health Care's 2009 Volunteer of the Year. Nix serves on the Deloitte & Touche Life Sciences & Health Care M&A Transaction Services team.

Tim Huestis is senior vice president and senior credit officer for Pinnacle Financial Partners' Middle Tennessee market. Huestis had been regional credit officer at Synovus Bank.

Washington Report: FHA Condo RulesTake Part: Are you facing credit card blues?

Shoppers, stores make Christmas fit the tough times

For the first time as an adult, Kate James is not buying Christmas gifts. There will be no last-minute shopping sprees, no Christmas cards and no tinsel.
"I've been unemployed for a year and a half," said James, who left her job managing a Franklin alcohol and drug rehab facility in 2007. "I've always spent way more than I could afford, and when you don't have that option you have to be creative about what you can do."

The recession has cut deeply into how many Nashville-area consumers and shop owners will celebrate and sell for Christmas.

Consumers have trimmed some friends and co-workers from their gift lists, while high-end retailers have announced sales at "recession-friendly" prices. Even Hallmark is selling more than 20 recession-related greeting cards. One says, "Due to high costs, Santa had to cut back on his help this year."

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But fewer Christmas cards are likely to be mailed. Between Thanksgiving and Christmas Eve, the U.S. Postal Service expects to handle about 12 percent fewer cards, letters and packages than a year ago.

Rick Austin, 47, said he is trimming his gift list from 20 people to only his four daughters this year. Austin, who was the sole financial provider for his family, lost a job as a customer service manager at global health service company Cigna in September. He hasn't found a new job.

"The mood has been less than optimistic," Austin said.

Christmas gifts for his four daughters will cost less than $500 — half of what Austin spent last year. His 17th wedding anniversary is the day after Christmas, but instead of having a dinner out as he did with his wife last year, Austin said he plans to grill steaks at home and whip up homemade mashed potatoes.

Stores reduce prices

Stores are tweaking marketing messages to recognize the lingering recession; many are also selling items at lower prices to appeal to cost-conscious shoppers. For example, beauty products retailer Kiehl's offered value-oriented Christmas packages for the first time this year. Six lip balms that would normally sell for $49 are now in a holiday package for $32.

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Investor Report: Tax Extender Act3Q income up for Dollar General

Tennessee Commerce Bancorp makes $3.2M in stock sale

Franklin-based Tennessee Commerce Bancorp Inc. made $3.2 million selling 903,394 shares of stock in a stock sale that ended Friday, slightly less than the $3.4 million it had estimated. The price was $3.63 per share.
The banking company said the money will be used for general corporate purposes and will improve the company's liquidity. Chief financial officer Frank Perez said regulators had not asked for the capital raise and the money will not be used to cover operating losses.

The bank, which focuses on business loans, lost $8.4 million during the first nine months of the year but is well capitalized by regulatory standards.

— NAOMI SNYDER

Investor Report: New Treasury ProgramNashville Business Calendar

Beer returns to Walgreens shelves

Starting in mid-January, Walgreens will start selling beer at its Tennessee locations as it moves to become more of a one-stop shop for customers — although single cans and 40-ounce bottles won't be on the shelves or in coolers.
"People realize we are a very responsible retailer," said Robert Elfinger, a Walgreen Co. spokesman. "They trust us to sell alcohol responsibly in Tennessee."

The national drugstore chain has had a mostly no-alcohol policy after it quit selling spirits in the mid-1990s, but customers have told them they want the convenience, Elfinger said. The chain also feels a need to keep up with competitors, Elfinger said.

CVS and Rite Aid drugstores already sell beer in Tennessee.

Nashville customer Nancy McClellan, 34, welcomes the change in Walgreens' policy, a move that's being made nationally.

"I get my film developed here, get my medication, my snacks," said McClellan, a literacy coach who lives in Madison. "If people want to get their beer here, too, that would be a convenience. Plus, it's open 24 hours."

Walgreens President and CEO Greg D. Wasson told analysts in September that he expects beer sales to take a modest amount of total shelf space in a typical store. "We believe it will increase basket size and drive traffic in our stores," Wasson said.

Nashville stores will have two to four refrigerated shelves offering a "small selection" of beer, including domestic and import brands, Elfinger said. Stores also may end up carrying local brews.

Beer will be sold in six- and 12-packs, as well as in cases. Stores will not sell single beers or 40-ounce bottles.

In states where wine sales are permitted, Walgreens is adding wine to its lineup, as well, Elfinger said. Tennessee permits wine to be sold only in liquor stores, but lawmakers are considering whether to permit wine sales in supermarkets and other shops where beer is sold.

Walgreens used to operate full-fledged liquor departments at its stores, selling beer, wine and liquor according to whatever local laws permitted, Elfinger said.

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3Q income up for Dollar GeneralWashington Report: FHA Condo Rules

For Ingram CEO, future of books is promising

Skip Prichard, president and CEO of Ingram Content Group in La Vergne, heads up an array of companies for the Ingram family that have been on the front lines of book manufacturing, distribution, sales and marketing in a fast-changing new media landscape.
With a background in digital content and a law degree, Prichard now finds himself, after 2½ years at Ingram, presiding over a restructured company with an international sales reach.

His challenge is to guide Ingram Content Group — actually a dozen or so corporate entities that dabble in everything from making and delivering physical books to helping publishers reinvent the world as e-readers and other new technology spread in the book trade.

Prichard discussed his love of books, staying a step ahead of changes in the digital world and possible expansion with Tennessean Business Editor Randy McClain.

RelatedWhat is Ingram?

Describe how your career has developed in the information industry.

I'm a lawyer by training. I started at a company called LexisNexis, which really transformed legal publishing from a physical process to a digital process in the late 1960s and early '70s. They were one of the pioneers in terms of the digital space.

Then, I led a company called ProQuest, which was in the educational and library space. We worked (with) libraries and a variety of educational products. We digitized all the historical newspapers of some of the biggest papers in the country — for example, The New York Times , Atlanta Journal-Constitution , et cetera.

My whole career has been about these sorts of transformations. I love change and complexity, where there is no easy answer. The real idea, though, is to transform the book so it becomes an experience, a social community; you add in audio or video. Those things really are just in their infancy.

How is Ingram being transformed as digital book sales, e-readers and other publishing changes occur?

Ingram, going back a few years, was known as the largest trade (book) wholesaler in the U.S. Reviewing that strategy, though, led us to move toward transforming the company. One of our first steps to do that — one of our earliest investments — was to create Lightning Source, our print on-demand manufacturer based in La Vergne. It started about 12 years ago, and prints books — hard cover, soft cover, photo books — as they are ordered. The average print run is 1.8 books per order.

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Creating A Business Model from the Current Distressed Asset Marketplace3Q income up for Dollar General

Heavy data use slams wireless providers

Years of all-you-can-eat plans for mobile data usage are starting to give wireless carriers and consumers a bit of indigestion.
The wireless industry may ditch unlimited plans in favor of data caps and tiered pricing, though such a move is probably years away. In the meantime, service providers are struggling to balance the consumption they encouraged, which is putting new strains on their networks, with the needs of customers who increasingly rely on their smart phones.

AT&T is the most prominent example of this dilemma, thanks to the popularity of Apple's iPhone and the App Store, where customers can load their devices with programs that deliver a local weather forecast or stream an Internet radio station. The iPhone has helped AT&T increase its average revenue per user and reduce the rate of customer defection to competitors. But the carrier also is working to bulk up its network in New York City and San Francisco, which have experienced sub-par network performance with the iPhone's proliferation.

"We all knew as an industry that mobile data would grow, and we saw these growth curves that were a 45-degree angle upward," said James Brehm, senior consultant at Frost & Sullivan. "But the true growth of the iPhone, when you chart it, looks more like a hockey stick."

Ralph de la Vega, chief executive of AT&T Mobility and Consumer Markets, caused a stir at an investment bank conference last week when he said the company is seeking ways to curb high usage by data hogs — namely, iPhone users. The executive said 3 percent of iPhone users account for 40 percent of traffic.

"If 3 (percent) are costing 40 percent, then we're going to focus on making sure we give incentives to those small percentages to either reduce or modify their usage, so they don't crowd out the other customers in the same cell sites," de la Vega said. For the longer term, he said, AT&T might consider "some sort of pricing scheme that addresses the usage."

De la Vega said any new pricing would comply with Federal Communications Commission regulations on Internet neutrality, or ensuring that applications and content are treated equally. Internet service providers have faced government scrutiny and consumer ire in previous attempts to limit heavy data usage.

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Credit cards get their licks in now before consumer law takes effectDecember Cybertips

Millions in VW work approved for Chattanooga plant

CHATTANOOGA — The biggest manufacturing project ever in Chattanooga is coming together in an array of pieces as millions of dollars in new contracts are let to build the new Volkswagen plant.
Work is ranging from buying and installing factory equipment to fitting out the training center — the first portion of the massive facility to open when VW employees move in early next year.

"When you think of it, we're really building a great big house for our plant and our new team members," said Don Jackson, VW president of manufacturing for its Chattanooga operations.

Jackson said work on the $1 billion factory is on schedule for an early 2011 production start though it is tight.

"We got a very tight schedule for 2010 so we can build trial vehicles," he said.

Equipment installation is under way in the paint shop, the most complex of the three main buildings at the 2 million-square-foot production facility.

Just this week, the city's Industrial Development Board approved seven contracts or change orders ranging from as little as $18,000 to as much as $2.2 million.

Continue reading: Changes not slowing VW factory schedule

Investor Report: New Treasury ProgramInvestment adviser sees brighter economy in the future

TN unemployment fund may need a loan

The state probably will borrow about $20 million early next year to keep its unemployment trust fund solvent, as it deals simultaneously with a seasonal dip in taxes from employers and Tennessee's still-high rate of joblessness.
The latest projections for the fund show it running out of cash sometime in the first three months of next year, leaving a shortfall that would not be covered until April, despite a tax increase passed last spring.

That means the state probably will need to take out a short-term, tax-free loan from the federal government to maintain benefit payments, Labor and Workforce Development Commissioner James Neeley told the state legislature's Joint Business Tax Committee.

The unemployment trust fund has a balance of $183 million, as 10,530 people filed initial claims for benefits. Last spring, the state legislature passed an increase in annual unemployment taxes of about $110 per worker to keep the fund solvent.

Related5/20/09: Jobless aid set to grow in Tennessee

Gov. Phil Bredesen said in November that high demand for unemployment benefits would require passing another tax increase.

But Bill Fox, an economist from the University of Tennessee who advises the state, said the gap should be closed in April, when the fund's balance typically surges as taxes come due for the first time in a year on many Tennessee workers. This year, the surge is expected to bring about $428 million into the fund.

The state Constitution prohibits borrowing to pay for ongoing government operations. But Fox said that restriction applies only if the government runs a deficit when a fiscal year ends June 30.

"You can't have a negative number across fiscal years," he said. "I don't think that's likely."

Chas Sisk can be reached at 615-259-8283 or csisk@tennessean.com.

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GM's plan to save Saab fails

General Motors Co.'s plans to save Saab by selling it have failed, and the storied Swedish brand will be the latest to hit the scrap pile, the automaker said.
The troubled Detroit automaker said Friday morning that its last-minute negotiations to sell Saab to a Dutch supercar maker, Spyker Cars, fell through because of due diligence issues that could not be resolved.

Those talks followed the breakup of a deal to sell Saab to another supercar maker, Sweden-based Koenigsegg, late last month.

"We regret that we were not able to complete this transaction," said Nick Reilly, president of GM Europe. "We will work closely with the Saab organization to wind down the business in an orderly and responsible manner."

Separate talks with a Chinese automaker have resulted in the sale of some powertrain technology owned by Saab, but will not save the brand, which GM has had a stake in since 1990 and fully owned since 2000.

As a result, the company will initiate activities to shutter Saab completely, a process it has been undergoing with the Pontiac and Saturn brands as well.

GM's restructuring plans included just four of the eight brands in its portfolio: Chevrolet, GMC, Buick and Cadillac. Before filing for Chapter 11 bankruptcy protection this year, GM said it would kill off Pontiac and attempt to sell Saab, Saturn and Hummer, which it had been attempting to sell since at least late 2008.

A deal to sell Saturn to car distributor Penske Automotive ran aground in late September, leaving only Hummer still in play. That sale, to a Chinese heavy manufacturer, Sichuan Tengzhong, is still being finalized.

The wind-down of Saab will commence immediately, the company said. Drivers of the vehicles will still be able to get warranty service, and parts for the vehicles will continue to be made available.

"We expect Saab to satisfy debts including supplier payments, and to wind down production and the distribution channel in an orderly manner while looking after our customers," Reilly said.

Last week, Saab said it had sold powertrain technology associated with the 9-3 and new 9-5 models to Beijing Automotive Industry Holdings Co., known as BAIC. GM said Friday's news would not affect that sale.

BAIC had been thought to be bidding on the entire Saab brand when it approached GM early this fall, but as negotiations progressed, its interests narrowed.

Although the government of Sweden has offered to make loan guarantees to a potential Saab buyer, it has refused to bail out the brand itself. Saab has 3,400 employees worldwide and 1,100 dealers.

Saab was founded in 1937 to make airplanes. It made its first car in 1946. Through the first 11 months of this year, GM sold 7,812 Saab cars and SUVs in the United States, a 61 percent decline compared with a year earlier.

Investor Report: New Treasury ProgramNissan sales improve 21 per cent over year-earlier period

Unemployment rate improves in Tennessee

A decrease in the November unemployment rate to 10.3 percent points to modest employment growth, state labor officials said today.
The state jobless rate dropped from 10.5 percent in October. “As the year ends, we’re seeing evidence the economy is bottoming out and beginning to show some modest employment growth, which is encouraging news,” said Labor Department Commissioner James Neeley.

Unemployment in Tennessee a year ago stood at 7.2 percent. The national unemployment rate for November was 10 percent, down from 10.2 percent.

There were 7,300 jobs added in November in retail trade, 1,800 in professional and business services and 1,300 in health care and social assistance. Job losses continued in manufacturing, construction and arts, entertainment and recreation since October.

Year-over-year, jobs have been added in health care and social assistance, the federal government and among the ranks of teachers. Jobs lost since 2008 have occurred in manufacturing, mining and construction, and in trade, transportation and utilities.

Contact Bonna Johnson at 615-726-5990 or bjohnson@tennessean.com.

Uncertainty in Housing Continues as Affordability Hits Record-High Yet Starts DeclineInvestment adviser sees brighter economy in the future

Briefly: Displaced GM auto workers, suppliers get job help

General Motors' workers displaced by the recent closure at the automaker's Spring Hill assembly plant — as well as suppliers that served the plant — may get job help through new grants totaling $1 million in American Recovery and Reinvestment Act funds, state officials said.
The Recovery Act money will go to the South Central Tennessee Workforce Board, which provides training services together with the Tennessee Career Center of Columbia, Tenn., near the GM plant's location.

Dislocated workers can get training in a variety of areas, including business information technology, solar panel installation/welding, medical coding, practical nursing, health information technology, an accelerated teacher's certification in education, as well as other green jobs and health careers.

Workers must show proof of dislocation from employment to be eligible. Training providers include the Tennessee Technology Center at Hohenwald, the Tennessee Technology Center at Pulaski, and Columbia State Community College. For more information call the Tennessee Career Center in Columbia, Tenn., at 931-490-3800.

— RANDY MCCLAIN

Chapman to retire from Baptist trust

Erie Chapman, the founding president and chief executive of The Baptist Healing Trust, will retire from the Nashville-based nonprofit foundation on Feb. 1.

Chapman, 66, plans to focus on a ministry to prisoners and the homeless as well as developing his family's enterprise, The Erie Chapman Foundation. Chapman was ordained a minister nearly two months ago.

The Baptist Healing Trust was formed about eight years ago with proceeds from the sale to Saint Thomas Health Services of the Nashville-based Baptist Hospital System of which Chapman had been president and chief executive officer. St. Louis-based Ascension Health is the parent of Saint Thomas Health Services.

— GETAHN WARD

Synergy's 401(k) subject of lawsuit

The U.S. Department of Labor has filed a federal court suit against Mark Black, Tom Black and their former company, Synergy Holdings Inc., in Nashville for allegedly violating the Employee Retirement Income Security Act (ERISA) by failing to administer the company's 401(k) plan.

The lawsuit alleges that the defendants breached their fiduciary duty when they failed to terminate the company's 401(k) profit-sharing plan and distribute the assets to plan participants after the company stopped operating three years ago. The suit asks that a judge appoint an overseer at the defendants' expense to terminate the pension plan and distribute the assets.

— STAFF REPORTS

Bank of America appoints Moynihan

SAN FRANCISCO — After a trying period that saw an economic meltdown, a controversial acquisition and mounting ire directed at its leader, Bank of America Corp. announced Wednesday that it has named a new chief executive: Brian Moynihan.

Bank of America said in a statement that Moynihan, 50, will replace Ken Lewis, effective at the end of this month. Moynihan is currently president of the bank's consumer and small business banking unit.

— MARKETWATCH

Investment adviser sees brighter economy in the futureInvestor Report: New Treasury Program

Fed holds interest rates

WASHINGTON — The economy is weak enough to keep inflation in check but strong enough to increase the pace of home construction and raise hopes for a sustained recovery.
That was the picture sketched Wednesday by government data showing an economy growing, however slowly.

And it was reinforced by a statement later in the day from the Federal Reserve, which pledged to hold interest rates at a record low to drive down unemployment and sustain the economic recovery.

The Fed noted that the economy is growing, and it pointed to a slowing pace of layoffs nationally.

Still, Fed Chairman Ben Bernanke and his colleagues gave no signal that they're considering raising rates anytime soon, which have been kept at virtually zero for bank-to-bank lending.

They noted that consumer spending remains sluggish, the job market weak, wage growth slight and credit tight. Companies are still wary of hiring, the Fed board said.

Separately, the Fed has helped keep mortgage rates down by spending $1.25 trillion to buy mortgage-backed securities.

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Exxon bets on natural gas

Exxon Mobil, the world's largest publicly traded oil company, is making a $29 billion bet that pressure to curb climate change will mean natural gas — cleaner than coal and suddenly much easier to reach — will become a crucial source of U.S. power.
Exxon agreed to buy XTO Energy in an all-stock deal at a 25 percent premium, showing how eagerly a company that is among the most conservative in a conservative industry is jumping into the market for natural gas.

As negotiators haggled in Copenhagen over a global plan to curb carbon emissions, the deal suggested that Exxon sees change coming for an energy source best known now for heating homes.

The deal announced Monday was also the largest for the U.S. energy sector in at least four years and Exxon's biggest acquisition since it bought Mobil Corp. for $75 billion in 1999.

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The technology to unlock natural gas from tight rock formations has advanced so rapidly that energy experts have raised their estimates of how much fuel is available by 35 percent in just two years.

Carbon policy spurs action

The emergence of massive supplies of natural gas in the U.S. coincides with the nation's focus on cutting emissions.

The newfound supply and looming climate legislation have been cited by utilities this year as they have shuttered old coal-fired power plants and scrapped plans to build new ones.

Climate legislation would put utilities in the crosshairs, and many are aggressively seeking new fuels like natural gas to minimize the economic hit.

"From the outside view, it does look like this move makes much more sense in a world where there's carbon policy because that ensures a growing market for natural gas," said Amy Jaffe, a fellow at the James A. Baker III Institute for Public Policy at Rice University.

Just this month, Progress Energy became the latest utility to announce that it would close coal-fired power plants in favor of natural gas. Exxon Mobil expects global demand for gas to grow 50 percent by 2030.

"Natural gas is really well-suited to meet that growing power generation demand, both from the standpoint of its lower
environmental impact, but also its capital efficiency and its flexibility," Exxon Mobil Chairman and
CEO Rex Tillerson told analysts.

Through August, utilities used gas to generate 23 percent of the nation's electricity, up nearly three percentage points from last year. Coal's share was down about 13 percent.

XTO claims about 45 trillion cubic feet of gas, much of it trapped in tight shale formations.

Technology developed over the past decade has made it much cheaper to pull natural gas from those formations.

Already on Monday, energy experts were laying odds as to which natural gas companies would be sold next, and which major oil companies might follow Exxon's lead by snapping them up.

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2 banks repay bailout loans

NEW YORK — Citigroup Inc. and Wells Fargo & Co. said Monday that they would repay their government bailout loans, freeing them from close regulatory scrutiny and marking the latest step toward recovery for the U.S. financial system.
Citigroup, whose future looked uncertain as recently as the beginning of this year, will repay $20 billion, while Wells Fargo will repay the $25 billion it received. Both banks announced significant capital raises to repay the money, and the government also will sell the one-third stake it holds in Citigroup.

The two are the last major national banks to exit the Troubled Asset Relief Program, which the government put in place at the height of the financial crisis in the fall of 2008.

Most other national banks have exited the program, releasing them from strict compensation limits that banks had said were impeding their ability to attract and retain talent. Just last week Bank of America Corp. said it would repay the $45 billion it owed, just as it's trying to find a new CEO to replace Ken Lewis, who is retiring at the end of the year.

New York-based Citigroup is far larger than Wells Fargo, which is based in San Francisco, and the government took a bigger role in its oversight. Citigroup had taken $45 billion in rescue funds — among the largest bailout packages received by any bank — but the government converted $25 billion of that amount into the 34 percent equity stake, which it is now selling.

'It gets rid of the stigma'

Allowing the banks to repay the funds and exit TARP, as the bailout program is known, signals a vote of confidence from the government in the ability of both banks to stand on their own. It's a far cry from the situation at the beginning of the year, when some analysts were saying Citi could fail and be taken completely over by the government.

Citi will sell $20.5 billion in stock and debt to repay the bailout funds. The capital raise will dilute current shareholders by between 20 percent and 25 percent depending on the sale price of the stock and debt, FBR Capital Markets analyst Paul Miller projected.

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AT&T, union near deal; workers to begin paying health-care premiums

AT&T union workers in Nashville and throughout the Southeast will pay health-care premiums for the first time starting in 2011 — a modest $35 per month for an individual and $75 per month for a family, under a tentative contract reached Monday.
In exchange AT&T will put money into health-care reimbursement accounts for employees and offer a 3 percent annual raise for each of the next two years, and 2.75 percent in the third year. Retirees will get a 2 percent annual pension increase, officials said.

Union members still have to vote on the agreement before it can take effect.

"We didn't get everything we wanted, but in this day and age, with the economy the way it is, I think it's an excellent package,'' said Don LaRotonda, chairman of the negotiating team for the Communications Workers of America.

The national average premium for employer-sponsored coverage is $65 per month for a single person and $293 per month for families, according to the Kaiser Family Foundation, which notes premiums have risen 131 percent in the last decade.

The Communications Workers of America wrapped up nearly nine months of intermittent negotiations with the three-year contract proposal. It would cover 32,000 former BellSouth workers in the Southeast.

About 1,500 of those workers are in the Nashville area. The Southeast has been working without a contract since August.

LaRotonda pointed out that pay raises under the proposed deal are more generous than previous years. Under the former five-year contract, annual raises for employees were 1.5 percent to 2 percent, LaRotonda said.

But it also appears the union will give up a key benefit that members had long enjoyed — namely health insurance without employees paying a share of premiums. In fact BellSouth workers went on strike in 1983 over that identical issue, said Rick Feinstein, president of CWA Local 3808 in Nashville.

Deductibles will be $350 for an individual and $700 for a family under the proposal, officials said.

Contact business reporter Naomi Snyder at 615-259-8284 or nsnyder@tennessean.com.

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Nashville People in Business

Eugene Davidson is Tennessee state executive director for the Farm Service Agency at USDA. Davidson is a founding member of Davidson Grain and Equipment.

Claire Rabun has become a staff associate at McNeely Pigott & Fox public relations. Rabun graduated magna cum laude from the honors program at University of Georgia.

Advertising

Dave Smith is an associate creative director/copy chief at Bohan Advertising/Marketing. Smith had been associate creative director at McKee Wallwork Cleveland in Albuquerque, N.M.

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Senators lash out at stimulus for struggling Oak Ridge mall

A federal grant for the Oak Ridge mall is getting some unwelcome scrutiny from a pair of U.S. senators.
This month, Sens. John McCain, R-Ariz., and Tom Coburn, R-Okla., issued a "Stimulus Checkup" which cast a critical eye on 100 projects funded by the American Recovery and Reinvestment Act.

No. 1 on the list? A grant worth up to $5 million for a geothermal technology demonstration project at the Oak Ridge Mall.

The senators' report said that Oak Ridge Mayor Tom Beehan "has supported a local experiment to turn a struggling shopping mall into an economic engine by converting it into one of the greenest malls in the area. Only, the problem is that the mall has few shoppers and fewer stores."

The grant was announced in November, and the senators' report cited news accounts including a recent News Sentinel story that described the mall as almost empty. That story said the goal of the project was to reduce the front-end costs of geothermal heat pump systems.

A representative of the mall's leasing agent said at the time that the heat pumps should trim energy costs by 40 to 60 percent, and that the savings should lure prospective tenants.

Continue reading: Senators rank Oak Ridge mall project as most iffy on stimulus spending list.

Call Josh Flory at 865-342-6994.

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Madoff's deception hurt many charities

NEW YORK — Nancy Falchuk will never forget the phone call. She was in Boston, it was raining and the news was bad. Hadassah, the century-old Jewish charity she had been elected to lead a year earlier, had just lost a big chunk of its endowment in a Ponzi scheme — maybe as much as $90 million.
The man responsible for this disaster, the world would soon know, was Bernard Madoff.

"I don't even say his name anymore," Falchuk said in a phone interview this week.

The leaders of scores of charities around the country, and the world, found themselves living a similar nightmare in the days after Madoff's Dec. 11, 2008, arrest on charges he orchestrated the multibillion-dollar fraud, which affected thousands of investors.

With the global financial crisis in full bloom, 2009 was already shaping up to be a grim year for charities, but few have had such rough going as the philanthropies that learned a year ago Friday that some or all of their finances had been wiped out in the Madoff scandal.

Some, like the $1 billion Picower Foundation, the $240 million Betty and Norman F. Levy Foundation and the $198 million Chais Family Foundation, lost everything and shuttered within days.

Others survived. They have spent the year cutting staff, curtailing grants and hoping, often in vain, that new donors would step in and help replenish what they lost.

"It has been a very difficult year," said Richard Gordon, president of the American Jewish Congress, which saw a $21 million trust left to it by philanthropists Lillian and Martin Steinberg vanish in the fraud.

"Like anything else, you go through anger and outrage, and over the year, I think you work through some of the issues. But there is a tremendous sense of loss of what you could have done."

Damage still being assessed

The damage caused to charities, especially Jewish nonprofits and those that aided Israel, is still being assessed.

Scores of foundations and charitable trusts appear to have lost enough money because of Madoff, who was active in the Jewish community and knew the heads of many of the organizations that invested with him, to hinder or cripple operations. Others lost nothing but suffered anyway.

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Credit cards get their licks in now before consumer law takes effect

Customers such as Dannie Decker, 55, of Lebanon are accustomed to getting good treatment from their credit card company. Decker pays his bill on time each month. He has good credit.
Normally, when JP Morgan Chase raised the interest rate on his credit card in years past, he'd simply complain and the company would back down.

Not this time.

"This time, they said it was non-negotiable,'' Decker said after getting a September letter from Chase saying his interest rate would go from a fixed rate of 7.99 percent to a variable rate of 13.24 percent. "They aren't even going to let you negotiate based on your excellent track record."

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Credit card companies are raising rates for many customers and adding fees, even on customers with solid credit histories, as they get ready for sweeping changes in federal consumer protections set to go into effect in February.

Congress gave the industry nearly a year to comply with most of the provisions of a major new law enacted in May that will outlaw most controversial industry practices, such as raising rates on existing balances. But the credit card companies are using the delay until 2010 to make immediate changes to stem losses caused by existing delinquent customers.

Nashville-area cardholders of major lenders may be surprised to see what is about to arrive in the fine print in the mail. A survey by the Federal Reserve published last month found that 50 percent of banks plan to raise interest rates on prime borrowers, those with the best credit. A number of customers have already received such notices here.

A recent report by the Pew Health Group found the lowest advertised interest rates climbed 23 percent from December to July, to 12.24 percent. But some existing customers with good credit are seeing their rates jump well above the 20 percent mark.

Charles Pugh, 63, a truck driver in Crossville, said he plans to cancel his card after Citibank, Citigroup's credit card division, raised his rate from 15 percent to nearly 24 percent. He said he canceled the card to avoid the higher rate and will take a few months to pay off the $700 balance.

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Middle TN business bankruptcies

Mount Juliet

Assets: $11,100

Liabilities: $232,420

Dan Stern Homes Inc.

Brentwood

Assets: $191,423

Liabilities: $3.7 million

FILED DEC. 8

The Dine-N Corp. (d/b/a Sir Pizzeria)

Murfreesboro

Assets: $30,000

Liabilities: $231,745

FILED DEC. 10

Blount and Associates LLC

Assets: $69,140

Liabilities: $994,413

FILED DEC. 11

At Home Nashville LLC

Nashville

Assets: $0

Liabilities: $481,409

SOURCE: U.S. Bankruptcy Court

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3Q income up for Dollar General

Goodlettsville-based Dollar General Corp. reported net income increased to $75.6 million in the third quarter, boosted by stronger sales and more customers.
Last year, the discount retailer had reported a net loss of $7.3 million, including shareholder litigation settlements and related expenses. Sales for the quarter increased 12.7 percent to $2.93 billion, the company said. Sales at stores open at least a year went up 9.2 percent.

Dollar General said it plans to open about 600 new stores next year and remodel or relocate approximately 500 stores. The retailer operates more than 8,700 stores in 35 states.

The company went public last month and started selling its shares on the New York Stock Exchange. The company said it plans to pay down debt of about $300 million in January. Its stock fell 30 cents in trading on Thursday to close at $23.70 per share.

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U.S. agency backs risky lenders

WASHINGTON — The trouble signs surrounding Lend America had been building for years. A top executive was convicted of mortgage fraud but still helped run the company. Home loans made by its headquarters were defaulting at an extremely high rate. Federal prosecutors alleged in a civil suit that the company falsified loan documents and committed fraud.
Yet despite these red flags, a little-known federal agency continued giving its blessing to Lend America, allowing it to do business in the name of the U.S. government. The Government National Mortgage Association, known as Ginnie Mae, authorized the firm to bundle its mortgages into securities and sell them to investors around the world — all backed by U.S. taxpayer money.

Until last week, federal housing officials said that Lend America met requirements for participating in the program run by Ginnie Mae, an agency in the Department of Housing and Urban Development, and allowed the firm to sell more than $1 billion in mortgages via Ginnie Mae securities.

Lend America is hardly the only lender with a troubled record that Ginnie Mae has endorsed. The agency has provided taxpayer backing to at least 36 other mortgage companies with a history of reckless lending, fines or other sanctions by state and federal regulators or civil lawsuits, according to an analysis of government records, court documents and statistics in a HUD database.

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Ginnie Mae's ongoing relationship with these firms allows them to swap the home loans they've made for new cash so they can make more loans, which can then be traded for even more cash to make even more loans.

Housing experts say this dynamic turbocharges the type of bad mortgage lending that first helped trigger the financial crisis that battered global markets over the past two years. And ultimately, taxpayers are on the hook for the troubled mortgages.

"Ginnie is like an accelerant to a fire," said Anthony Sanders, professor of real estate finance at George Mason University.

More than a dozen lenders with Ginnie's endorsement have made loans that are now delinquent at rates far in excess of what regulators consider acceptable. And some of these lenders have been accused of misleading borrowers and the government about these loans.

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