Tax Help: Turn assistance into gift for best tax outcome

Since the middle of 2007 I have been providing financial and other assistance to a loved one struggling with cancer. She doesn't have any kind of health insurance. We are not related, nor are we co-habitants. In the beginning, the assistance was incidental, but over time it has become substantial.
Though it was instrumental in my having to declare bankruptcy, I do not regret at all my decision to help in this regard. However, my questions now are as follows:
Are any of the health care-related payments I make to her or on her behalf deductible? Is there a way to structure this relationship so that such payments could be deductible?

What would be the criteria necessary for me to issue her a 1099 at the end of the year to cover at least those health-care-related expenses I paid to her or on her behalf and for which she would then be able to deduct on her own tax returns?

Is there any way to get some tax relief in such a situation? — William A., Brentwood

You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them.

A person qualifies as your dependent for purposes of the medical expense deduction if they are both 1) a qualifying child and a qualifying relative, and 2) they were a U.S. citizen or national or a resident of the U.S.

A qualifying relative can be any person (other than a spouse) who you lived with all year as a member of your household if your relationship did not violate local law, and whom you provided half of the support for the year. Keep in mind, medical expenses are itemized deductions and you can only deduct the amount of medical expenses that exceed 7.5 percent of your adjusted gross income.

An alternative would be for you to gift the money to her, and she subsequently pays the medical expenses from the gifted funds. She would then be able to claim the medical expenses on her personal return. You, however, may be subject to federal and state gift taxes, or at a minimum, filing annual gift tax returns.

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Taxpayers Seeking Homebuyer Tax Credits, Refunds Must File PaperConsumers cut back, but are marketers mindful?

Pay rates take small step forward

Raises are making a comeback this year, but the increase probably won't be enough to make up for last year's salary freezes.
Franklin-based Clarcor Inc. is typical of this trend. After freezing salaries last year, the company that makes new and replacement filtration systems plans to give merit-based raises this year, Chairman and CEO Norm Johnson said.

The increases, though, will be smaller than usual.

"We expect the economy to certainly be better than it was in 2009, but we don't expect it to be at 2008 levels, and that's the reason they'll be smaller," he said.

RelatedState employees salariesMetro Schools employees salariesMetro Nashville employees salaries

"We recognize that our people went a year without an increase, and we're expecting a better year and will recognize their accomplishments," he said, noting that he and other senior managers will be excluded and will not get merit raises until the economy has markedly improved.

Raise pool is just a puddle

The amount of money companies have budgeted for raises this year is at the lowest level in at least 25 years and will not keep up with inflation, according to The Conference Board, an independent research association.

"Gas prices, food — everything is going up except for my paycheck," said Connie Richards, 52, who works as a cook for a company that subcontracts with the state. The Lebanon woman said she hasn't had a raise in three years, and her boss says not to count on one this year.

"I've been very close to losing my car because I'm behind on payments," she said. "And, I just found out I've lost my insurance."

The turning point on compensation is probably a few years away as high levels of unemployment allow businesses to limit raise demands from existing workers and hire workers from the ranks of the unemployed at lower compensation levels, according to The Conference Board.

Another compensation study shows that 65 percent of companies that froze salary budgets in 2009 will unfreeze them this year.

"Companies are making an effort to gradually return some sense of normalcy to compensation budgets in the coming year," said Ravin Jesuthasan, managing principal at Towers Perrin, a professional services firm.

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Obama pay czar: Public ‘right to be angry’ about exec bonusesEffective Price Versus Value Counseling

Foreclosures can put dream homes in reach

Here's one family who saw an upside from this recession: the Coopers.
Electric cooperative employee Chris Cooper managed to buy a nearly new five-bedroom brick home in Murfreesboro in January for $235,000, about $86,000 less than the previous owners had paid three years prior.

Not all is gloomy in the housing market, particularly if you're a buyer, as the Coopers found out. Several families are discovering they can get houses in neighborhoods they couldn't afford a few years ago. For those with cash on hand and good credit, the recession has its silver lining, a plethora of good deals in excellent neighborhoods as the market corrects for an age of overheated finance and indulgent consumption.

The Coopers stayed on the sidelines through much of the housing boom. Chris Cooper is a purchasing manager with a stay-at-home wife, Rhonda, and four children. They lived in the same three-bedroom house in Murfreesboro that they had bought for $113,000 about a dozen years earlier.

But in recent years, the house was feeling cramped for their rather large family. They looked into adding to its size, but rejected that idea when they found out it would cost $90,000.

They liked a five-bedroom, four-bath with 3,300 square feet about three miles away in Liberty Valley subdivision. After the house had been on the market for nearly eight months, its list price dropped by $100,000. It was listed as a short sale, meaning the seller owed the bank more than the house was worth.

The subdivision has eight short sales or foreclosures on the market out of 211 homes, said Keller Williams affiliate broker Tamara Ludlam, who listed the home.

The Coopers made a slightly lower offer and got the OK from the bank within a month.

Such short sales can take six months or more to get approved. And, unlike some foreclosures, this house was in good shape, with hardly a nail hole in the wall.

"It was the kind of place we would have driven by a few years ago and said, 'Wouldn't it be nice if we could afford something like that?' " Chris Cooper said. "If I stay here a few years, I've probably made a good investment. It's sad, though. It's probably why the banks are in the shape they're in."

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Effective Price Versus Value CounselingYear-end economic spurt shows signs of sputtering

Lawmaker says Toyota withheld crash lawsuit evidence

WASHINGTON — A House lawmaker said Friday that internal Toyota documents show the automaker deliberately withheld key vehicle design and testing evidence in lawsuits filed by Toyota drivers injured in crashes.
In a letter to Toyota's top North American executive, House oversight committee Chairman Edolphus Towns accused Toyota of shielding its testing data on potential problems with Toyota vehicles. Towns wrote that Toyota chose to enter hefty settlements with plaintiffs to avoid disclosing the database, which the lawmaker said was referred to as the "Books of Knowledge."

The Toyota documents "show a systematic disregard for the law and routine violation of court discovery orders in litigation," Towns wrote in the letter to Yoshimi Inaba.

Toyota said in a statement that it is confident it acted appropriately in product liability lawsuits and that it looks forward to addressing Towns' concerns. The automaker said it is not uncommon for companies to object to demands for documents made in lawsuits.

"Consistent with that philosophy, we take appropriate steps to maintain the confidentiality of competitive business information and trade secrets," the statement said.

Inaba and Toyota President Akio Toyoda appeared before the committee on Wednesday, the second of two House hearings this week on Toyota's recall of 8.5 million vehicles over safety concerns. Toyota turned over thousands of internal documents before the hearings. A third Toyota hearing is scheduled for next week in the Senate Committee on Commerce, Science and Transportation.

Lawmakers and federal safety regulators have accused Toyota of concealing safety problems over cases of sudden unintended acceleration caused by gas pedal problems. The company has pledged to be more responsive to customer complaints and safety warnings.

Suit claimed harassment

The oversight committee also subpoenaed records from Dimitrios Biller, the former managing counsel of Toyota's U.S.-based product liability group. Biller, who worked at Toyota from 2003 to 2007, dealt with lawsuits against the company for vehicle rollover crashes.

In a July lawsuit filed in Los Angeles, Biller accused Toyota of conspiring to withhold evidence in the rollover cases and forcing him to resign when he told the company it had a legal duty to release evidence to plaintiffs' attorneys.

The lawsuit says Biller was harassed by Toyota and suffered a "complete mental and physical breakdown." He made a wrongful discharge claim and agreed to resign in exchange for $3.7 million.

According to memos Biller provided to the committee, the database covers design problems and "countermeasures" that Toyota developed to resolve the problems. It could be searched by vehicle or component part, and was kept by Toyota's technical center. Biller said he discovered the database while working on a case and warned that it should be released during litigation.

Taxpayers Seeking Homebuyer Tax Credits, Refunds Must File PaperNissan, Suzuki, Daihatsu announce recalls in Japan

Year-end economic spurt shows signs of sputtering

WASHINGTON — The recovery is losing steam.
The economy is now probably expanding at just half the brisk 5.9 percent pace at which the government on Friday estimated it grew last quarter. Business spending will make up for some of a slowdown in consumer spending — but probably not enough to reduce the jobless rate much.

All that adds up to a long slog ahead for an economy trying to get back on firm footing after the worst recession since the 1930s. The economy continues to grow. But it won't feel like much of a recovery this year amid high unemployment, record-high home foreclosures and tight credit.

Stuart Hoffman, chief economist at PNC Financial Services Group, called the year-end growth spurt "a one-hit wonder."

In a fresh reading on the nation's economic standing, the Commerce Department bumped up its growth estimate for the final quarter of 2009, from a 5.7 percent growth rate estimated a month ago. It was the strongest showing in six years.

Roughly two-thirds of the growth came from a burst of manufacturing — but not because consumer demand was especially strong. In fact, consumer spending weakened at the end of the year, even more than the government first thought.

Instead, factories were churning out goods for businesses that had let their stockpiles dwindle to save cash. If consumer spending remains lackluster as expected, that burst of manufacturing — and its contribution to economic activity — will fade.

Consumers are in no mood to spend

The signs aren't hopeful. Consumer confidence took an unexpected dive in February, and unemployment stands at 9.7 percent.

After losing his job in October, Kevin Young, 44, has been cutting back on spending.

Two weeks ago, he disconnected his cable service. Before that, he cut his cell phone plan and car insurance to the minimum.

"I don't go out at all," said Young, who's attending Washington University in St. Louis in the evenings to earn his certification in project management.

Not only is the late 2009 growth spurt fading, but the wobbly housing market is showing fresh signs of weakness.

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Jobless claims reflect weak recoveryConstruction Industry Continues to Lose Jobs as all States Report Decreases in 2009

Obama pay czar: Public 'right to be angry' about exec bonuses

The Obama administration's chief point person on executive pay, Kenneth Feinberg, is getting a lesson on public anger after dealing with national grief. He used to be special master for the September 11th Victim Compensation Fund.
Nowadays, he's regulating pay for a handful of bailed-out companies such as AIG and General Motors and dealing with public frustration over Wall Street pay packages.

"I would say you're right to be angry, you're right to be frustrated,'' Feinberg said at a media briefing before a speech at Vanderbilt University Law School on Friday.

"But these companies should thrive, and that will benefit the American people. It's a tough balance."

Feinberg was the keynote speaker at Vanderbilt for a conference on executive compensation, where he laid out his prescription for sound pay practices.

He hopes his measures will have a greater impact on more companies than just the few bailed-out ones he actually regulates: AIG, General Motors, GMAC, Chrysler and Chrysler Financial.

Citigroup and Bank of America have paid back the U.S. Treasury for their TARP money, so Feinberg no longer regulates pay packages at those companies.

Margaret Blair, a Vanderbilt economist who attended the conference, said she believes Feinberg is influencing pay packages nationwide.

"I think he's having an impact on the culture of compensation,'' she said. "The culture of pay is hard to change, and I don't know if it will change much after the recession."

At the conference, Feinberg continued to defend his decision, revealed earlier this month, to allow $100 million bonuses to AIG executives in the company's failed financial products division.

Although the law allows him to invalidate contracts the company made with employees, he said that would be "a bad idea." Government regulators advised him those bonus contracts were legally valid.

Instead, he said he has renegotiated some contracts with executives of bailed-out companies so they get paid in stock instead of cash, meaning they will be rewarded if the company does well in the future.

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Construction Industry Continues to Lose Jobs as all States Report Decreases in 2009Former exec Press praises Toyoda’s ‘customer-first’ focus

Jobless claims reflect weak recovery

WASHINGTON — Layoffs are no longer dropping as they were in the final months of last year, reinforcing fears that the jobs crisis will weigh down consumer spending and the economic rebound.
Severe weather contributed to a rise in jobless claims last week, but other economic data add to evidence that the recovery remains weak and uneven.

An example is orders for big-ticket manufactured goods, excluding airplanes and other transportation equipment. Those orders dropped 0.6 percent in January, the government said Thursday.

Earlier in the week, new-home sales fell in January to their lowest pace on record, and consumer confidence plunged in February.

Mark Vitner, senior economist at Wells Fargo, said the weak reports point to an economy struggling to wean itself from government stimulus programs such as homebuyer tax credits and other supports.

"Going forward, growth is going to be much more dependent on the private sector," Vitner said. "And consumer demand hasn't picked up that much yet."

The economy's growth rate likely will slow from above 3 percent in the current quarter, Wells Fargo estimates, to less than 2 percent by the middle of the year.

In its report Thursday on jobless claims, the Labor Department said first-time claims for unemployment benefits rose 22,000 to a seasonally adjusted 496,000. Wall Street analysts polled by Thomson Reuters had expected a drop to 455,000.

The rise occurred mostly because state agencies last week processed a backlog of claims caused by snowstorms the previous week. The storms also increased temporary layoffs in the weather-sensitive construction and transportation industries.

Still, the four-week average of jobless claims, which smooths out volatility, rose 6,000 to 473,750. The average had fallen sharply over the summer and fall from its peak last spring of about 650,000.

'Recovery on thin ice'

This year, the improvement has stalled. The four-week average has risen about 30,000 in the past month. It's now well above the 425,000 level that many economists say would signal net hiring.

Economists closely watch initial claims as a gauge of the pace of layoffs and a sign of companies' willingness to hire. More layoffs means consumers will have less money to spend, hindering the economic recovery.

"The fact that these snowstorms — as bad as they were — could have such an impact is more testimony to the fragility of the recovery," Diane Swonk, chief economist at Mesirow Financial, wrote in a note to clients.

"The recovery is still on thin ice and lost momentum in the first quarter."

AP writers Martin Crutsinger and Jeannine Aversa contributed.

Construction Industry Continues to Lose Jobs as all States Report Decreases in 2009Price drop means low interest rates

Nissan, Suzuki, Daihatsu announce recalls in Japan

TOKYO — Japanese carmakers Suzuki, Nissan and Daihatsu have recalled hundreds of thousands of vehicles in Japan over separate defects, the Transport Ministry said Thursday.
Suzuki Motor Co. recalled 432,366 vans belonging to two models — the Every and Scrum — produced from August 2005 to October 2009 over a design flaw in air conditioning parts that could cause a fire. Suzuki found two cases of partial fire damage. No deaths or injuries were reported, the ministry said.

Nissan Motor Co., meanwhile, recalled 76,415 vehicles from 10 models, including the Tida, Note and March, over defective wiring in the engine that could stall the car. Those vehicles were produced between October 2007 and May 2008.

Daihatsu Motor Co., a Toyota subsidiary, plans to recall 60,774 vehicles from four models manufactured between December 1998 and April 2000 over faulty wiring that could accidentally launch their air bags.

RelatedToyota's crisis puts focus on electronics

Carmakers routinely issue recalls. For Nissan, Thursday's recalls were the third this month. However, the announcements come at a sensitive time as Toyota Motor Corp. is under intense scrutiny for its massive recent recalls.

Toyota had recalled 8.5 million vehicles around the world for accelerator, braking and floor-mat problems. It was the biggest recall in the company's seven-decade history. The world's largest automaker is accused of responding too slowly to customer complaints, undermining its reputation for quality and safety.

Last year, more than 5 million domestic-made and imported vehicles were recalled in Japan, according to the Transport Ministry.

Former exec Press praises Toyoda’s ‘customer-first’ focus

Nashville Business People

Kinika Young was elected to the board of Napier-Looby Bar Foundation. Young is an associate at Bass, Berry & Sims law firm.
Cathy Anderson is vice president of business development for BrandCentrik, a branding and promotional products company. Anderson had been an account executive at Halo/Leewayne Corp.

E-mail people@tennessean.com with news of hirings, awards and promotions. Include previous title and last place of employment. Sending a photo? We use JPG files with a resolution of 200 dpi sized 3 by 5 inches.

Nashville gas prices drop, but decline is not expected to last longConstruction Industry Continues to Lose Jobs as all States Report Decreases in 2009

Genesco CEO to become chairman as well

Nashville-based shoe and hat retailer Genesco Inc. announced on Thursday its President and CEO Robert J. Dennis will add chairman to his title in April.
The move implements the last step in the retailer's transition plan. Longtime Genesco executive and current chairman Hal N. Pennington will retire from Genesco's board of directors in June.

Pennington, who has worked for Genesco for more than 48 years, will remain as a consultant to the CEO and board of directors until March 31, 2011, the company said.

"I am honored to follow (Pennington) as chairman of a company for whose current strength he deserves so much credit, and I look forward to continuing to draw on his experience and insight in the year ahead," Dennis said.

Former exec Press praises Toyoda’s ‘customer-first’ focus

Senate passes jobs bill

WASHINGTON — Senate Democrats Wednesday delivered the first of several promised election-year jobs bills, passing a measure blending tax breaks for companies that hire unemployed workers with highway funding eagerly sought by the states.
The bipartisan 70-28 vote to pass the bill sends it to the House, where many Democrats say it is too puny. But they may pass it anyway to score a badly needed win for President Barack Obama and a Democratic Party that's dropped badly in opinion polls and faces major losses in midterm elections.

It's the first major bill to pass the Senate since the Christmas Eve passage of a deeply controversial health-care bill and the subsequent election of Massachusetts Republican Scott Brown, which rocked Democrats by demonstrating their falling standing even among voters who tend to vote Democratic.

Democrats promise additional measures to create jobs, promising help for small businesses having trouble getting loans, aid for cash-strapped state governments and subsidies for people who make their homes more energy efficient. But budget deficits are a worry, and future measures are going to be more difficult to pass — especially since a top Senate Democrat has blocked unused authority from the Wall Street bailout program from being used to "pay for" jobs initiatives.

The bill contains two major provisions. First, it would exempt businesses hiring the unemployed from the 6.2 percent Social Security payroll tax through December and give them an additional $1,000 credit if new workers stay on the job a full year. The Social Security trust funds would be reimbursed for the lost revenue.

Second, the bill would extend highway and mass transit programs through the end of the year and pump $20 billion into them in time for the spring construction season. The money would make up for lower-than-expected gasoline tax revenues.

The Senate's $35 billion proposal — blending $15 billion in tax cuts and subsidies for infrastructure bonds issued by local governments with the $20 billion in transportation money — is a far smaller measure than the $862 billion economic stimulus bill enacted a year ago.

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Construction Industry Continues to Lose Jobs as all States Report Decreases in 2009Bill would allow guns on bow-hunting trips

Former exec Press praises Toyoda's 'customer-first' focus

Jim Press, the former Chrysler executive, who was the first American member of Toyota's board of directors, said Wednesday that Toyota Chief Executive Akio Toyoda was the right executive to save his company from "financially oriented pirates."
"The root cause of their problems is that the company was hijacked, some years ago, by anti-family, financially oriented pirates," Press said in a rare statement.

"They didn't have the character necessary to maintain a customer-first focus. Akio does."

The comments are the first Press has made about the company where he spent 36 years before joining Chrysler in 2007.

RelatedLawmakers scold Toyota president

Toyoda, the grandson of the automaker's founder, "is very capable, and he embodies the virtues and character that built this great company," Press said.

— DETROIT FREE PRESS

Washington Report: Anti-Foreclosure ProgramHealth insurers’ outlook uncertain

List of problem banks grows

WASHINGTON — The number of U.S. banks considered troubled jumped to more than 700 last quarter even as the industry squeezed out a small profit in a recovering economy.
Loan losses and bank failures are likely to continue to haunt the industry as regional banks succumb to soured commercial real estate loans.

The snapshot for October-December 2009 issued Tuesday by the Federal Deposit Insurance Corp. offered a tale of two banking sectors. On the one hand, big banks have been gradually recovering, many of them with help from federal bailout money. On the other, small and mid-size institutions continue to suffer distress that likely will persist for years.

Regional banks are especially vulnerable to losses on loans for commercial real estate, such as stores and office complexes. These loans make up a disproportionate share of their business. Losses are growing as buildings sit vacant and builders default on their loans.

Such defaults could escalate the wave of bank failures that numbered 45 in the fourth quarter and totaled 140 last year, the highest annual total since 1992, at the peak of the savings-and-loan crisis. This year, 20 banks have failed, and FDIC Chairman Sheila Bair said that pace likely will pick up.

Banks face up to $300 billion in losses on loans made for commercial property and development, according to a report by the Congressional Oversight Panel, which monitors the government’s efforts to stabilize the financial system.

The report also said that on nearly half of all commercial real estate loans, the borrowers owe more than the property is worth, and the biggest loan losses are expected for 2011 and beyond.

The FDIC said banks essentially broke even in the fourth quarter. They earned $914 million, compared with a $37.8 billion loss in the fourth quarter of 2008, at the height of the financial crisis. Still, nearly one in every three banks reported a net loss for the latest quarter.

Signs of improvement

Most of the improvement in earnings was because of the largest banks. Yet for the first time in three years, more than half of the 8,000 or so federally insured banks and thrifts reported higher income, compared with the year-earlier quarter.

“Consistent with a recovering economy, we saw signs of improvement in industry performance” in the fourth quarter, FDIC Chairman Sheila Bair said at a news conference. She noted, though, that a recovery in the banking industry usually lags behind an economic rebound.

“It’s not that this was a strong quarter,” Bair said. “It’s simply that everything was so bad a year ago.”

The increase in the number of banks on the FDIC’s confidential “problem” list, from 552 in the third quarter to 702 last quarter, “points to a likely rise in the number of failures,” Bair said. The combined assets of the 702 banks were $402.8 billion, up from $345.9 billion for problem banks in the third quarter.

Loan charge-offs, the debt that banks don’t expect to be repaid, vaulted to $53 billion from $38.6 billion in the fourth quarter of 2008.

Investor Report: REITsBank failures accelerate

Hillsboro Road Kroger has grand re-opening today

FRANKLIN — Kroger is celebrating the grand re-opening of its Hillsboro Road store today.
The 61,000-square-foot store has undergone a significant remodel over the last several months, said Melissa Eads, the Nashville spokeswoman for Kroger.

"The customers have been very patient during this remodel process, and I hope they will be excited with what we now have to offer them," Michael Berry, store manager, said in a press release.

The store will have a ribbon-cutting ceremony at 7:45 a.m. today.

The celebration will continue for a couple of weeks. Beginning at 8 a.m. today through Saturday, the first 300 customers will receive a free item. Today's freebie is a frozen Honeysuckle turkey breast.

There also will be prize giveaways throughout the celebration, including a 55-inch LG widescreen TV, an HP laptop computer, $25 Kroger gift cards and whole boneless rib-eyes. Customers are automatically entered to win these prizes when they use their Kroger Plus Card.

Get your Kroger gas discount at Shell stations starting MondayProperty Managers A ‘Value Add’ to Owners, Investors in the Real Estate Market

TN 911 districts to get $25 million

The Tennessee Emergency Communications Board has voted to distribute $25 million to local emergency communications districts this year.
The funds will allow the local districts to buy equipment for the Next Generation 911 project.

The funding plan will provide each district with $120,000 plus an additional amount determined by the district’s population.

The state is moving ahead with plans to convert 911 to a digital system and expects to begin deployment of NG 911 by early 2011.

The board is part of the Department of Commerce and Insurance.

— ASSOCIATED PRESS

Sen. Corker compliments Chattanooga efforts for VW plantWashington Report: FHA Tightening Standards

Business briefs: Kraft Asset Management joins Bright Sky Group

Nashville-based Kraft Asset Management joined Bright Sky Group, an alliance of 21 independent, fee-only investment advisers who agree to independent compliance reviews and a code of ethics supported with ongoing training and education.
The group's Web site says advisers may use Dimensional Fund Advisors, a mutual fund company emphasizing tax-efficient, structured portfolio funds managed to minimize transaction costs.

Kraft Asset Management is an affiliate of KraftCPAs in Nashville.

— NAOMI SNYDER

Regions reports officer changes

Birmingham, Ala.-based Regions Financial Corp., Nashville's largest bank, said Monday its chief financial officer, Irene Esteves, has resigned to pursue other interests and has been replaced with David Turner, previously head of internal audit for the bank.

The bank also said human resources director David Edmonds has been named chief administrative officer.

Regions previously announced the retirement of chairman and CEO Dowd Ritter, whom Gray son Hall will replace as president and chief executive officer effective April 1.

The bank has suffered losses four of the last five quarters, most recently recording a $606 million loss in the fourth quarter, mostly on beefing up its loan loss provision.

Separately, the bank also reported Monday that retiring CEO Ritter will be paid $475,000 in his first year as a consultant to Regions starting April 1, for performing no more than 75 days of work. His paycheck gradually reduces until the fifth and final year, when he will be paid $100,000.

— NAOMI SNYDER

Regions loses $606 million, says loan problems are easingShort Sale Transaction a Tall Order

Housing trust fund is an idea whose time has come

It's listed on page 45, under "Focus Area 5," as one of several action steps: "Implement Housing Trust Fund."
Four basic little words, supporting an it's-about-time program that will potentially change thousands of lives. Working, lower-middle-class people trying to buy their first home. Single mothers sleeping in their cars. Folks who bed down in Tent City.

"Shelter is one of the basic needs," said Chris McCarthy, president and CEO of Nashville Area Habitat for Humanity, and the chairwoman of a committee proposing a housing trust fund.

"If tonight I've got to worry about where I'm going to sleep and what I'm going to eat, that's all I'm going to focus on."

RelatedNashville releases plan to reduce poverty

The housing trust fund is part of a 76-page report unveiled yesterday by Mayor Karl Dean, called the Nashville Poverty Reduction Initiative Plan. It's one of those mammoth documents that have a lot of "well, duh" action steps to hit an ambitious goal: reduce poverty in this city by 50 percent in a decade.

Every mayor in Metro Nashville's history has produced these sorts of reports. They require a great deal of meetings and summits and task forces and "community input," and are often designed as little more than campaign window dressing.

This report has a great deal of that. Is it any surprise that the lives of poor Nashvillians would be improved if they had readily available day care? But the housing trust fund idea is solid and doable.

Nashville has a dedicated funding source to pay for public art. So why not follow the lead of 600 other communities and create a fund to help people have an affordable roof and walls?

This would provide real change. Police and business folks who clamor to oust the homeless from the streets should embrace this. Banks would much rather see a young couple pay their mortgage than slip into foreclosure. Renters could become buyers.

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Washington Report: New BudgetBill would let Mayor Karl Dean appoint housing agency director

Bill would allow guns on bow-hunting trips

Handgun permit holders in Tennessee would be able to carry their weapons while big game bowhunting under a measure approved by the House.
The bill sponsored by House Democratic Caucus Chairman Mike Turner of Nashville passed 85-3 on Monday. The companion bill is waiting to be scheduled for a vote on the Senate floor. The measure would let a person carry the weapon "during the archery-only deer season."

Turner said he proposed the legislation after a constituent was robbed in a parking lot after deer hunting.

— ASSOCIATED PRESS

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Nashville gas prices drop, but decline is not expected to last long

Nashville-area drivers enjoyed a 17-cent decline in the price of regular gasoline, at an average of about $2.49 a gallon on Friday compared with a month earlier, but that respite is probably just a temporary blip.
Higher prices are coming this summer, according to AAA Auto Club South.

Consumers such as Terry Warrick, owner of Terry's Flooring Service, welcomed the news of lower prices but would like to get gas cheaper.

"Every little bit helps, but it is still high," Warrick said, as he pumped $2.47- a-gallon regular gas into his Ford club wagon at a Swifty gas station in East Nashville.

Related14 ways to increase gas mileageTennessee Gas Prices

Warrick might be disappointed in the months ahead.

The slight decline in gas prices could be because of the recent strengthening of the U.S. dollar, causing investors to stray from putting money on crude oil, said Jessica Brady, a spokeswoman with AAA Auto Club South. However, on the week ending Feb. 14, crude oil prices began increasing, Brady said.

With refineries soon switching to fuel blends for the summer that are costlier to make, along with other factors, gas prices could peak this summer at $3 a gallon, she added.

Warrick said if gas prices get higher, it will be financially painful to fill up his car, because his business is down 60 percent and he still needs the same amount of gas for work.

Others say they can barely get by paying for gas at its current price. Michael Schoen enberger, who was laid off from his job making cake decorations in September, paid $15 for six gallons of gas in his Saturn to fill the empty tank just enough so he could attend his apprenticeship, get food for his family and buy diapers for his 10-month-old daughter.

"I'm unemployed, so pretty much every cent counts," Schoenenberger said. "You got to watch that gas tank."

Despite increases in gasoline prices this summer, some analysts say they expect U.S. travel to improve because the heavy discounting by hotels, airlines and car rental agencies is likely to entice customers.

U.S. travel spending by domestic and international visitors for leisure and business is expected to increase 6 percent to $748 billion in 2010 compared with last year, according to research firm Mintel. But that's still much lower than the 2008 level of $772 billion.

"Maybe now the package deal will be so low you are going to be willing to spend," said Mark Guarino, a Mintel analyst.

Wendy Lee can be reached at 615-259-8092 or wlee@tennessean.com.

Get your Kroger gas discount at Shell stations starting MondayInvestor Report: REITs

Consumers cut back, but are marketers mindful?

Are there products or services you've stopped buying? Are you cutting back a little bit here and there as you cope with the current economy?
My bet is that you are, and people who want to sell you their products and services should be paying attention.

Rick Newman, chief business correspondent for U.S. News & World Report , compiled a list of things Americans are learning to live without. That prompts me to ask "What's on your list?" (rather than one credit card company's "What's in your wallet?"). Here's part of Newman's list.

• Monthly payments — More people are paying cash and not taking on additional debt. Total credit card debt is 7 percent lower than it was last year.

• Window shopping — Folks are shopping when necessary, not as a regular part of their week.

• The latest computer technology — Consumers are deciding they don't have to own the newest, the fastest or the best. Some are even buying used computers.

• Clutter — The ability to sell your stuff online via eBay has enabled Americans to declutter their homes and make a little money, too.

• Cable television — People are buying fewer fully loaded cable packages. Alternatives such as Hulu and YouTube are factors.

• A home phone — With 1.13 billion mobile phones sold worldwide last year, many people are canceling landline service.

• Privacy — Many children of baby boomers are moving back home (I call them boomerang babies), and more singles have roommates to share expenses.

• Prepared foods — More basic cooking in the home kitchen is cutting grocery sales of higher-margin, pre-made products.

• Dining differently — Not only is the restaurant industry feeding fewer guests, but also diners are paring down their checks by sharing entrees, skipping appetizers or denying themselves desserts, and water is the beverage of choice for the newly frugal.

• Health care — Even folks with jobs and insurance are delaying physician visits and cutting back on medications. Our own survey for the WhyMomsRule.com blog found that more than 50 percent of moms have delayed health-care purchases for themselves and their families.

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Credit card users let upWashington Report: GFE Rules

New chief of product safety jumps into action

WASHINGTON — The new head of consumer product safety in the United States has quickly put American and foreign toymakers, crib manufacturers and producers of other goods on notice that there's a new sheriff in town.
The sheriff is a she.

Folks who have worked with Inez Tenenbaum say that despite her small physical stature and genteel Southern manners, the former South Carolina public schools chief is tough as nails.

"Her daddy always told her that dynamite comes in small packages," Liz Crum, a Columbia, S.C., lawyer and longtime friend of Tenenbaum, said in an interview. "That is absolutely true of Inez. No one should ever underestimate her."

RelatedTracking Tenenbaum

Tenenbaum, who was defeated in a 2004 U.S. Senate race in South Carolina by Republican Sen. Jim DeMint, has started with a bang in her job as chairwoman of the Consumer Product Safety Commission.

In just eight months since President Barack Obama named Tenenbaum, and the Senate confirmed her, for the post, she has haggled with Chinese officials over lead in toys, consoled parents of toddlers who died in defective cribs, and toured Florida houses built with Chinese drywall that is making homeowners sick.

Tenenbaum has parried with lawmakers grandstanding for the cameras at congressional hearings, and she has been a frequent guest on morning talk shows and news programs to publicize product recalls.

Already, Tenenbaum is overseeing the largest crib recall in U.S. history — the repair or return of 2.1 million drop-side baby beds made by Canada-based Stork Craft Manufacturing after four reported deaths of infants who suffocated when the railings pinned their heads.

Tenenbaum, 58, is overseeing the revitalization of the key federal consumer product safety agency after years of neglect and budget cuts under President George W. Bush.

Agency fully staffed

For the first time in a quarter-century, all five commissioners are in place, and the 500-strong staff of scientists, engineers, researchers and other analysts is expanding.

The agency is required to police the production and sale of 15,000 products on a relatively modest annual budget of $118 million — which nevertheless is almost twice the funding level of $63 million Congress provided just four years ago.

The commission's power has been augmented under the Consumer Product Safety Improvement Act, which Congress passed and Bush signed into law in 2008 after a wave of high-profile recalls of mainly Chinese-made toys with high levels of lead.

"When you look at where we have been and where we are headed, you can see why we are an agency on the rise," Tenenbaum told hundreds of delegates last week at the annual convention of the International Consumer Product Health and Safety Organization.

Real Estate Outlook: Positive MovementRutherford wants fees, taxes reinstated

Tax Help: Ex-Kansas couple owes no state taxes

We lived in Kansas the first seven months of the year (January to July), but neither my husband nor I worked in the state. My husband took a job in Texas and lived there by himself and worked three months (June to September). In August, I moved from Kansas to Tennessee and purchased a house here; my husband moved here at the end of September. Our only income was from that three months he worked in Texas. Do I pay taxes to Texas and Kansas or to one or the other? Can I deduct our moving expenses even if the move was not for another job?

— Claudia K., Franklin
Texas does not have a personal income tax, so no filing is required there. Kansas does have a tax on personal income, but based on your facts, you had no earned income in Kansas, so you do not have a filing requirement.

You cannot deduct your moving expenses for federal income tax purposes from Kansas to Tennessee, because the move was not related to the start of work at a new principal place of work.

Who pays tax on interest?

Christmas 2008 I gave my children certificates of deposit as presents. Because they did not bank at my bank and were not with me to set them up, the bank put them in my name, POD their names. Recently I received Form 1099-INT on these CDs. My children had me cash their CDs in December. Do I have to put that interest on my taxes since I received the 1099s or can I pass it along to them?

— Claudia K., Franklin

The interest income from the certificates of deposit will be reported to the Internal Revenue Service based on the Social Security numbers that were used to set them up. If your Social Security number was used, then the interest income will need to be reported on your federal tax return.

Washington ReportRutherford wants fees, taxes reinstated

More people say no to credit

What's in her wallet? Not a single credit card.
Melanie Roberts has resisted the temptation ever since credit card companies began soliciting her in college, and even now, as she and her husband need a new freezer and to get their house rewired, they'd rather save up than put it on plastic.

"We already have our student loan debt, and now we have our mortgage," said the 28-year-old Nashvillian, who has never applied for a credit card. "We don't want to get into that trap of using a card and later getting a huge bill."

Others, like Jeremy Gover, cut their cards up after a period of out-of-control spending.

His first year away from home, at age 18, he racked up some $7,000 in credit card debt, totaling about $10,000 with interest and late fees. He paid the card off after six years, largely through mutual fund shares his dad gave him as a trust fund of sorts.

"Instead of using that money for a down payment on a house or to buy a new car, I had to pay off my card," said the 32-year-old Spring Hill man, who couldn't recall anything memorable he put on his credit card, using it for ordinary expenses like eating out and going to sporting events. "I was young and dumb and thought I had endless money."

Currently, he only uses a prepaid credit card to pay monthly bills.

Although society makes it hard not to have a credit card — ever tried to rent a car or book a flight without a 16-digit card number? — those who have sworn them off may be on to something.

The number of new credit cards issued dropped 45 percent last year, according to Equifax Consumer Credit Trends. A number of factors could have contributed to the decrease, including the recession, pressured securities markets, rising unemployment and changes to credit card regulations, Equifax spokeswoman Jennifer Costello said.

Similarly, there has been a 9.5 percent drop in credit card use from 2008 to 2009, and credit card debt levels have fallen from $988 billion in 2008 to $894 billion in the past year, according to the Federal Reserve.

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Washington Report: FHA Tightening StandardsCredit card users let up

Nashville businesses battle for band honors

There's an old joke in Nashville that asks: How do you get the attention of a singer-songwriter?
The answer: Just yell, "Waiter!"

As it turns out, singer-songwriters are bankers, lawyers and computer geeks, too.

And, at a time of layoffs and salary freezes in the workplace, an unconventional way to boost morale, have fun and get the mailroom clerk singing harmony with the CEO has emerged: Put a company band together.

Do it in Nashville, and be prepared to be blown away by the level of musicianship, said Rod Essig, who books the likes of Tim McGraw, Reba McEntire and other country music elite as lead agent at Creative Artists Agency in Nashville.

For the second year, he'll be one of the judges for the Music City Corporate Band Challenge, which will hold preliminary rounds at Music Row-area bars next week. The winner, to be named during the finals on March 14, will get to perform at the CMA Music Festival this June.

"If somebody stood out, I would pursue them and a record company would pursue them," Essig said. "You're always looking for the next person to be the next big star,
wherever they come from."

Indeed, last year's winner, a band called Transit made up of Metro Transit Authority employees, ended up recording two songs produced by rocker Jack White and released them on his Third Man Records label.

"We are Music City, and we have a higher level of talent here," said Connie Valentine, CEO of the Arts and Business Council of Greater Nashville, which is sponsoring the 2-year-old contest, though she does stress the fun aspect of the band challenge over the competition.

In another corporate band contest last year, this one put on by Fortune magazine, a band from Franklin-based Healthways took top honors at the national level, beating out bands from Iowa, Utah, Mississippi and California, as well as a band from St. Jude's Children's Hospital in Memphis.

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Gibson Guitar faces price-fixing lawsuitsInvestor Report: REITs

LifePoint beats Q4 estimates, forecast higher 2010 earnings

Shares of LifePoint Hospitals Inc. rose 5.1 percent Friday after the company projected higher earnings for this year than analysts had forecast.
The Brentwood-based hospital chain said that it expects to earn $2.50 to $2.80 per share for 2010 on revenues of $3.1 billion to $3.2 billion. On average, analysts polled by Thomson Reuters had forecast earnings of $2.66 a share.

LifePoint also beat analysts’ consensus estimates of its earnings for its recent fourth quarter by 11 cents. It had income from continuing operations of $38.6 million, or 71 cents per share, vs. $30.4 million, or 58 cents per share, last year. On average, analysts forecast 60 cents a share for the recent period. Revenues from continuing operations rose 10.7 percent to $746.9 million.

For all of 2009, income from continuing operations was $139.2 million, or $2.59 a share, vs. $126.7 million, or $2.37 a share, for 2008. LifePoint shares closed trading Friday at $31.95, up $1.55.

Dell sees signs of optimismReal Estate Outlook: National PMI Index

Price drop means low interest rates

WASHINGTON — The Federal Reserve seems likely to keep interest rates at record lows for several more months after news Friday that consumer prices excluding food and energy fell in January.
It was the first time such prices have fallen in any month since 1982.

The tame report on consumer prices sent a positive signal to investors and borrowers. It suggested that short-term rates can remain low to strengthen the economic recovery without triggering inflation.

Some have worried that a Fed rate increase affecting consumers and businesses might be imminent, especially after it just raised the rate banks pay for emergency loans.

Friday's news helped reassure financial markets. The Dow Jones industrial average rose about 9 points, or 0.1 percent. Broader stock averages also gained modestly. Bond prices rose, pushing yields lower.

The Fed has kept a key bank lending rate at a record low near zero since December 2008. The goal is to entice consumers and businesses to spend more.

Many analysts said the consumer-price report reinforced their view that the earliest the Fed will start raising rates is the fall.

Some said the central bank might wait until the end of this year or early next year before raising its target for the federal funds rate. That's the rate banks charge for overnight loans.

Real Estate Outlook: National PMI IndexCredit card users let up

Health insurers' outlook uncertain

LOUISVILLE, Ky. — Despite a struggling economy, the nation's five largest health-insurance companies increased their profits by a combined 56 percent last year, to $12.2 billion, even though they lost nearly 2 million members.
As Congress considers health-care reforms, those profits have intensified criticism of the industry.

"At a time when the economy's in the toilet, and businesses are struggling, these insurance companies have a banner year — the biggest year on record," said Richard Kirsch, national campaign manager for Health Care for America Now.

The coalition of liberal health-care activist groups released a report this month scolding "Big Insurance" — WellPoint, UnitedHealth, Cigna, Aetna and Humana — for its latest profits and for "relentlessly" raising premiums.

UnitedHealth, Cigna, Aetna and Humana are among the biggest health insurers in Tennessee.

BlueCross BlueShield of Tennessee, the state's largest health insurer, is still compiling financial results for 2009, said spokeswoman Mary Thompson. For 2008, it had profits of $59.4 million — a 1.7 percent profit margin. That profit, however, was down from $172.8 million in 2007, reflecting investment losses.

BlueCross Chief Executive Vicky Gregg, meanwhile, saw a 40 percent pay increase for 2008, to more than $2.1 million. Thompson said that the pay increase was based on the insurer's strong performance in the previous year.

The message in the report from Health Care for America Now rings true for middle-class consumers who say they struggle to pay rising premiums while insurance CEOs take home millions of dollars a year.

"I do not understand why a company that is making money wants to drive its customers away by charging more and more. It's got to be greed," said Kenny Sipes, 48, of Flaherty, Ky.

Sipes, who works for a small farm-equipment company, said his Anthem premium just went up 29 percent, to about $223 a month.

"I don't blame anyone for making money; unfortunately for most it's all about money," he said. "Some of these corporations have forgotten who got them where they were when the economy was good."

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Long-term care insurance bill’s prospects diminishReal Estate Outlook: Positive Movement

Business briefs: HCA's revenues in 4th quarter rise

As expected from its previous guidance, hospital chain HCA reported fourth-quarter net income of $216 million, down about 22 percent from $276 million a year earlier.
Revenues rose 4.7 percent to $7.6 billion as Nashville-based HCA had solid inpatient, outpatient and emergency department volumes in the three months through Dec. 31.

For all of 2009, net income was $1.1 billion, up from $673 million in 2008. Revenues rose 6 percent to $30 billion.

— GETAHN WARD

Gallatin senior community is sold

Emeritus Senior Living, a publicly traded Seattle-based operator of senior living communities, acquired local assisted living community The Place at Gallatin.

The Place at Gallatin is now Emeritus at Gallatin.

Emeritus operates 316 residential and assisted living communities in 36 states with about 37,200 residents.

— GETAHN WARD

Obama's pay czar to speak at Vandy

President Barack Obama's pay czar, Ken Feinberg, will be the keynote speaker on Friday, Feb. 26 for a Vanderbilt Law School conference on executive pay.

The noon lecture in the Flynn Auditorium is free and open to the public.

Feinberg's title is special master for executive pay for the Troubled Asset Relief Program, better known as the bank bailout, approving pay structures for financial institutions still participating in the program. He has been at the center of the controversy over bonuses given to AIG employees as the federal government tried to keep the company afloat.

A graduate of New York University Law School, he served as the chief of staff for the late Sen. Edward Kennedy in the 1970s. For more information, go to law.Vanderbilt.edu.

— NAOMI SNYDER

Washington ReportRegions loses $606 million, says loan problems are easing

Ticketmaster to offer Bruce Springsteen ticket refunds

WASHINGTON — Live Nation Entertainment Inc.'s Ticketmaster unit has reached a settlement with federal regulators to refund money to people who bought marked-up tickets to 14 Bruce Springsteen concerts last year.
The settlement, announced Thursday by the Federal Trade Commission, will give customers the difference between the marked-up price and the face value of their tickets. FTC Chairman Jon Leibowitz said the refunds could go to thousands of people and ultimately total more than $1 million.

The FTC launched an investigation into Ticketmaster's practices last year after Springsteen fans who tried to buy tickets for concerts in May and June encountered a "no tickets found" message on Ticketmaster's Web site. The investigation found that even though face-value tickets were still available in many cases, customers were redirected to Ticketmaster's TicketsNow.com resale site to buy tickets that were in some cases two, three or even four times face value.

According to the FTC complaint, which was filed in U.S. District court in Illinois, TicketsNow charged a markup of 2 percent to 8 percent, as well as a 15 percent fee, on the Springsteen tickets.

RelatedBruce Springsteen at the Sommet

The FTC said the company used "deceptive bait-and-switch tactics." It also said the company displayed the same misleading Web page to consumers trying to buy tickets to other events between October 2008 and February 2009.

In addition the agency said that Ticketmaster failed to tell buyers that many of the resale Springsteen tickets advertised on the TicketsNow.com site were not actually "in hand," but rather were simply offers to try to find tickets. As a result, the FTC said, many of those "phantom tickets" never materialized even though Ticketmaster kept the sales proceeds for several months before notifying customers that the tickets did not exist.

The settlement with the FTC will require TicketsNow.com to clearly disclose whether tickets advertised on the site are in hand or merely speculative and to clearly indicate that it is a resale site that offers tickets at resale prices.

The agency also is sending warning letters to other ticket resale companies urging them to review their own Web sites to ensure that they do not make any misleading statements about the status of tickets.

Live Nation Entertainment denies that there were any face-value Springsteen tickets available when customers were redirected to the TicketsNow.com site — even though it said at the time that its systems had a "glitch." The company stressed in a statement that the FTC did not find "any inappropriate transfer or diversion of tickets to TicketsNow or any other resale entity."

The company said it is pleased with the terms of the FTC settlement and looks forward to building a "great company that serves consumers and artists with easy and transparent ticketing solutions." Ticketmaster, the nation's largest ticket-seller, and Live Nation, the world's largest concert promoter, merged last month after a yearlong antitrust review by the Justice Department.

Comcast to offer wireless broadband in Nashville areaWashington Report: GFE Rules

Dell sees signs of optimism

SEATTLE — Dell Inc. said Thursday its net income fell 6 percent in the last quarter despite early signs that businesses may be starting to buy new computers again.
Consumers snapped up low-cost laptops and smaller netbooks over the holidays, pushing Dell's PC shipments up 29 percent. Those products are less lucrative, though, and Dell's revenue and profit in the consumer PC division grew much more slowly. Dell's profit margin was below expectations, and its shares fell more than 4 percent in after-hours trading.

Revenue from businesses, which makes up about half of Dell's total, grew 9 percent from last year. During a conference call, Dell's chief financial officer, Brian Gladden, said many corporations were buying servers, a trend that also appeared in recent reports from Hewlett-Packard Co. and Intel Corp. But he added that companies were also starting to buy new laptops, a sign that corporate spending on technology might be coming out of its recession-induced slump.

Dell did not provide guidance for the current first quarter, but Gladden said the company is cautiously optimistic that corporate demand for its products will continue.

For the three months ended Jan. 29, Dell said earnings slipped to $334 million, or 17 cents per share. That is down from $351 million, or 18 cents per share, a year ago.

The figures include Dell's acquisition of Perot Systems, a technology services company that has many customers in the public sector. Excluding the costs of the acquisition, Dell said it earned 28 cents per share.

Analysts surveyed by Thomson Financial had forecast earnings of 27 cents per share on the same basis.

Dell's revenue increased 11 percent to $14.9 billion. Analysts had been expecting $13.8 billion in revenue.

Real Estate Outlook: Positive MovementRegions loses $606 million, says loan problems are easing

Mortgage aid goes to 12 percent of those who seek it

WASHINGTON — The government's mortgage relief plan has helped only about 12 percent of borrowers who signed up since President Barack Obama announced the program a year ago.
The Treasury Department said Wednesday that as of last month, about 116,000 homeowners had completed the application process and had their loan payments reduced permanently. That compares with more than 1 million homeowners who started the process.

More than 61,000 homeowners have dropped out, either because they failed to make payments or didn't return the necessary paperwork. And hundreds of thousands more are likely to fall out soon, predicts Alan White, a law professor at Valparaiso University.

"I would say it's a complete failure at this point," White said.

Treasury officials, however, say the program is on track. The plan "is doing the job it was designed to do," Phyllis Caldwell, chief of the Treasury's homeownership preservation office said in a statement. "Struggling families are receiving payment relief, and the housing market is showing signs of stabilization."

However, large banks continue to struggle with a huge volume of borrowers needing help. As of last month, Bank of America Corp. had completed modifications for just more than 5 percent of the roughly 240,000 borrowers who started the process. JPMorgan Chase & Co. and Citigroup Inc. were also below 10 percent.

The government "massively overestimated the ability of the (mortgage) industry to roll out a new program with a lot of paperwork," said Thomas Lawler, a housing economist in Virginia.

By contrast, companies that are trying to process tens of thousands — rather than hundreds of thousands — of loans are faring better. Ocwen Financial Corp. had completed modifications for nearly half of the 14,000 borrowers it signed up. GMAC Mortgage completed the process for a third.

There have been growing calls in recent weeks for an overhaul of the program, particularly for the government to do more to encourage banks to cut borrowers' principal balances on their primary loans. Nearly one in every three homeowners with a mortgage owes more to the bank than their property is worth, according to Moody's Economy.com.

But administration officials are wary of subsidizing such reductions with taxpayer money. Such a move could spark a backlash from critics who claim it's unfair to people who are still paying their mortgages on time.

Supporters, however, say the administration should get credit for trying to light a fire under an industry that wasn't accustomed to assisting defaulted borrowers in huge numbers and resisted change. The administration "had a Herculean task," said Sheila Bair, chairman of the Federal Deposit Insurance Corp. "People need to give it time."

Swaths of Middle TN feel mortgage stressWashington Report: New Budget

Walgreen buys Duane Reade

NEW YORK — Walgreen Co. is looking to make itself an instant success in New York City — where the nation's largest drug store chain has until now been just a bit player.
Walgreen announced plans Wednesday to buy privately held Duane Reade in a deal that will more than quadruple the number of stores it has in the metro area and make Walgreen the dominant player in the biggest market in the country. Walgreen, the nation's largest drugstore operator, agreed to pay about $623 million for Duane Reade Holdings Inc.

Duane Reade is the biggest drugstore chain in the city, where it has operated for 50 years. It has 257 stores.

The deal, which requires regulatory approval, is expected to close by the end of August. In addition to the stores, it includes the Duane Reade corporate office and two distribution centers.

Walgreen had 7,162 stores overall as of Jan. 31.

Walgreen to buy NYC drugstore operator Duane ReadeInvestor Report: 20 Percent Limit

Nashville People in Business

Angie Beard, RN, BSN, CCRN, is vice president/chief nursing officer for NorthCrest Medical Center. Beard was director of cardiopulmonary services.
Jackie Slagle is an administrative assistant at Lovell Communications Inc. Slagle graduated from the University of Georgia with a bachelor of arts degree in marketing and a minor in speech communications.

Nashville Business PeopleThree Rs: Rules, Regulations & Resolutions

Gibson Guitar faces price-fixing lawsuits

Gibson Guitar Corp., which laid off about 50 people a year ago, may be subjected to even more financial pain this year, but the blame can't be pinned all on the recession.
The Nashville-based manufacturer is being hammered in a number of class action lawsuits accusing Gibson and other groups of fixing the retail prices on guitars.

The litigation comes on the heels of Gibson being investigated by federal authorities on whether it uses wood protected under U.S. law at its manufacturing facility in Nashville.

Gibson has denied wrongdoing in both cases.

Related11/19/09: Gibson Guitar CEO leaves rainforest group after Nashville raid11/18/09: Gibson Guitar plant in Nashville raided by fedsMusicians who play Gibson guitars

"It's a colossal distraction for the entire company, and it's going to hurt the business," said Brian Majeski, editor at trade publication The Music Trades Magazine .

More job losses could be on the horizon in the music manufacturing industry because of a storm of lawsuits and weaker guitar sales, Majeski predicted.

He estimates the industry could spend more than $12 million in defending against the lawsuits, which name several other manufacturers, including Fender Musical Instruments Corp., as well as Guitar Center and NAMM, the industry's trade association.

"People will lose jobs. Companies will be hurt. No one will benefit except lawyers," Majeski said.

The class action lawsuits are brought by guitar buyers who allege that in recent years, selected music manufacturers worked together with Guitar Center to increase the retail prices of guitars. Guitar Center is the nation's largest musical instrument retailer.

Gibson's attorney did not return a call for comment, but the company said in a statement, "The allegation that Gibson participated in any scheme to artificially inflate or fix prices is wholly without merit."

Gibson listed in 30 lawsuits

Gibson said it is a listed party in about 30 lawsuits on the topic. The company has been listed as a defendant in at least nine of the lawsuits since 2009.

Retail sales of guitars have slumped as cost-conscious consumers and retailers cut back on their purchases, according to The Music Trades Magazine . In 2008, sales fell about 7 percent to nearly $1.04 billion.

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Condos propel increase in Nashville-area home salesReal Estate Outlook: Strong Sales Predicted

Walgreen to buy NYC drugstore operator Duane Reade

DEERFIELD, Ill. — Walgreen Co. said Wednesday it has agreed to buy the drugstore operator Duane Reade in a move that will more than quadruple the number of stores it has in the New York City metro area.
Walgreen, the nation's biggest drugstore operator, said it would pay about $623 million for Duane Reade Holdings Inc., which is the biggest drugstore chain in the city. Including $457 million in debt held by Duane Reade, the transaction is valued at $1.08 billion.

Duane Reade, which has been operating in the New York area for 50 years, is owned by a group that includes affiliates of the buyout firm Oak Hill Capital Partners. Walgreen said Duane Reade's sales totaled about $1.8 billion in 2009.

The deal, which requires regulatory approval, would include all 257 Duane Reade stores, along with the corporate office and two distribution centers. Most of those stores are in Manhattan, where Walgreen currently has 13 stores.

Walgreen, based in Deerfield, Ill., operates 70 stores in the New York area and had 7,162 stores overall as of Jan. 31. The company opened a new store in Times Square in 2008, but said it would take many years to match the amount of stores and the quality locations Duane Reade already has.

Walgreen said Duane Reade stores will keep their name after the deal closes, and it will decide over time on how to combine the two brands.

The deal unites two chains that are in transition. Walgreen is trying to improve sales by converting hundreds of stores to a new layout, and Duane Reade has done the same with 30 of its stores. Walgreen suggested it could get new ideas from Duane Reade. It plans to continue renovating Duane Reade stores, and all of them should be converted to the new format in four or five years.

Walgreen also praised Duane Reade's FlexRewards customer loyalty program, its private label products, and its "store within a store" Look Boutique section, where cosmetics and skin care products are sold in an area that looks more like a department store than a drug store.

Some analysts feel Walgreen is struggling to sustain its sales while making changes to its store layouts and its array of products. It plans to convert 3,000 stores by fall 2010.

The company will fund the buyout with existing cash and expects the deal to close by Aug. 31, the end of its current fiscal year.

Walgreen expects the deal to cut its profit by close to 10 cents per share in fiscal 2010 and by about 3 cents per share in fiscal 2011. The buyout will cut costs between $120 million and $130 million by the third year.

Shares of Walgreen rose 25 cents to $34.33 in morning trading.

First Horizon closes down equity researchThe Greatest Salesperson

More moderate lawmakers abandon Congress

WASHINGTON — The moderate middle is disappearing from Congress.
Evan Bayh is just the latest senator to forgo a re-election bid, joining a growing line of pragmatic, find-a-way politicians who are abandoning Washington. Still here: ever-more-polarized colleagues locked in gridlock — exactly what voters say they don't like about politics in the nation's capital.

Politics runs in cycles, and the Senate has seen flights of self-styled centrists before. In 1996, for example, 10 senators who could boast strong bipartisan credentials chose to retire rather than re-up. Many of them complained how lonely a place the middle ground of American politics had become. But to some, the center has become even lonelier.

More than their feelings are at stake. The moderates in the middle are the ones who tend to make deals and sometimes resolve standoffs blocking decisions that affect programs — not to mention taxes — that touch virtually every American.

RelatedFierce battles forecast for House seats in SouthEvan Bayh is latest to flee D.C. hostilityGOP improves its chances for control of SenateIndiana’s Evan Bayh to retire from Senate

Former Sen. William Cohen says what's happening now is a continuation of the "hollowing out of the middle." An article he wrote when he left his Senate seat in 1996, lamenting partisan gridlock, could just as easily be reprinted now, subbing his name for that of Bayh, the Indiana Democrat who announced on Monday he won't run again.

"There is this sort of purging in both parties," Cohen said in an interview. "They insist on moving to the left or moving to the right, and I think you're seeing over the years the moderates have disappeared and continue to disappear."

Price is too high

The few left in the middle can gain outsized power to decide the fate of closely fought issues. But that comes at a price more and more of them say is too high: crushing pressure to conform, shrill media barbs and the increased fight for cash to shape one's own campaign narrative.

"I simply reached a conclusion that I could get more done to help my state and the American people by doing something in the private sector," said Bayh, the two-term senator and former governor, on ABC's Good Morning America on Tuesday. "Real accomplishments in a real way."

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Washington ReportBernanke slammed, but wins 2nd term

TVA ash spill cleanup of Emory River is 70 percent done

The cleanup of coal ash from the Emory River in East Tennessee has been "remarkable" with more than 70 percent removed from the waterway since the spill at TVA's Kingston coal-fired plant, a state environment official told lawmakers Tuesday.
While officials say the river is the critical area where ash needs to be cleared to protect the environment, plenty more of the gray, potentially toxic muck remains on land or is held behind dams to be cleaned out in years to come.

More than 5.4 million cubic yards of damp ash that had gathered over decades broke through a dike Dec. 22, 2008, damaging houses, covering about 300 acres and filling parts of the Emory with dark muck.

One area of the river — no longer filled with chunks of gray ash — had grassy banks and was populated with waterfowl in a photograph shown at Legislative Plaza as part of an update delivered to a joint meeting of state House and Senate environment committees Tuesday.

RelatedCoal ash cleanup flow hits snag in AlabamaAerial photos of TVA coal ash disasterTVA ash spill year laterAn EPA update on the coal ash spill at TVA's Kingston plant

The remaining ash in the waterway should be dredged out by May, according to TVA.

TVA plans to remove the more than 2 million cubic yards that lie just west of the river in a second phase that could take three years. The total cost of the cleanup effort could reach $1.2 billion.

"There are no illusions as to the difficulty of completing the work," said Paul Sloan, assistant commissioner of the Tennessee Department of Environment and Conservation.

Lawmakers listened as officials from the U.S. Environmental Protection Agency and TVA said air and water monitoring shows no threat to humans.

"The air is safe to breath," said Leo Francendese, EPA's on-scene coordinator for the cleanup, adding that it easily met federal standards.

The area's drinking water is safe, too, he said.

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Sen. Corker compliments Chattanooga efforts for VW plant

U.S. Sen. Bob Corker says clearing land ahead of time helped Volkswagen pick Chattanooga for a new plant site.
The Tennessee Republican, former mayor of Chattanooga, visited the plant Monday for the first time.

According to WDEF-TV, Corker said the plant is a testament to the vision of various local and state leaders who stuck with their plan — and cleared trees and brush in a few days before Chattanooga was chosen as the location.

Frank Fischer, chief executive of the plant, said this month that the $1 billion facility plans to start production of a new mid-sized sedan next year. About 2,000 people are projected to work at the plant.

— ASSOCIATED PRESS

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Toyota may make warranties longer

ORLANDO, Fla. — Toyota Motor Corp. may offer incentives or increase the length of its warranties as it tries to recover from an embarrassing string of safety-related recalls.
The company has not decided exactly what it will do after it gets past the recalls — which include more than 8 million vehicles worldwide — for sticky gas pedals, floor mats that can snag the accelerator and a software glitch in the brakes of its Prius gas-electric hybrid, said Group Vice President Bob Carter.

Carter told reporters at the National Automobile Dealers Association Convention in Orlando that it is focused on repairing customer cars and restoring their faith in the brand, which has had a reputation for bulletproof reliability for years.

Toyota already is offering zero percent financing for 60 months in some of its regions, as well as cash to dealers to help sweeten deals, and Carter said the company may do an incentive campaign once it gets through the recalls.

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"We'll be very confident that we will give our dealers a very good competitive program," said Don Esmond, Toyota's senior vice president for automotive operations in the U.S.

Dealers, Carter said, have fixed more than 500,000 of the 2.3 million cars and trucks covered by the sticky gas pedal recall, and they are repairing about 50,000 cars a day.

He also said the company has only 13 reports of sticking pedals in the U.S. and Canada of the 2.3 million cars and trucks involved in the pedal recall.

"This is a very, very, very rare occurrence," he said. "Please help us put some perspective on what's happening. Thirteen is too many; we've got to take care of this."

Dealers are happy now

About 300 dealers met with Carter and Esmond on Monday to talk about their business. Several said afterward that customers have the mistaken impression that the dealers are not selling cars because of publicity about Toyota stopping sales of models in the pedal recall.

Toyota suspended sales of some of the eight U.S.-made models covered by the recall until dealers could fix them.

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Health provider database lacks disciplinary records

NEW YORK — More than two decades ago, Congress set out to stop dangerous or incompetent caregivers from crossing state lines and landing in trouble again.
It ordered a national database allowing hospitals to check for disciplinary actions taken anywhere in the United States against nurses, pharmacists, psychologists and other licensed health professionals.

On March 1 — 22 years later — the federal government finally plans to let hospitals use it. But the long-awaited repository is missing serious disciplinary actions against what are probably thousands of health providers, according to an investigation by the nonprofit news organization ProPublica in collaboration with the Los Angeles Times .

Some of the missing cases involve providers who have harmed patients — a nurse, for instance, whose license was pulled after she injected a patient with painkillers in a drugstore parking lot and improperly prescribed methadone to an addict who later died of an overdose.

The omissions took federal health officials by surprise. Only last month, a spokesman for the agency that oversees the database told reporters that "no data is missing." Another official said the agency had been "constantly" checking its data against state licensing board Web sites.

But Friday, the head of the Health Resources and Services Administration acknowledged that records were missing. She said her agency had launched a "full and complete" review to determine what is wrong and how to fix it.

"We take this very seriously," administrator Mary Wakefield said.

The new information will still go online as planned — but with a warning that it is incomplete, she said.

Help requested

Wakefield and Health and Human Services Secretary Kathleen Sebelius sent a letter Friday to the nation's governors asking for their immediate help fixing gaps in the database. It was a matter of "protecting the safety of patients across this country," they wrote.

This summer, the letter said, the federal government will begin publicly listing any state agencies that do not report properly. Wakefield's agency also plans to hold training sessions for state officials and conduct audits to help ensure compliance.

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Vanderbilt uses DNA to personalize medicine

Take a close look at the future of medicine.
A genetic profile that was done in your 20s is called up on the computer screen of a doctor 30 years later, and she discovers something in your DNA that means a certain cancer drug won't help you at all.

The doctor switches to alternative treatments better suited to your now-55-year-old body's inner design, and your health improves.

At Vanderbilt and other universities around the world, as well as at private industry labs, such futuristic work is under way. Companies such as Medco and CVS/Caremark, both of which deliver drugs to hundreds of thousands of patients under pharmacy benefits contracts for big employers, are dabbling in design and distribution of personalized drug regimens.

Proponents say targeted genetic screening of patients could help uncover in advance which drugs have the best chance of working on particular patients, saving money and lives in the long run.

The science remains in its infancy, and some critics sound the alarm over fears that the improper use of such information could spark genetic discrimination by insurers or others, preventing some people from getting health insurance or even jobs.

But medical researchers insist that the potential benefits far outweigh the imagined harms and that the evolving science could influence how drugs are prescribed and how medical costs are controlled for many decades.

"The real change will come when, at some point in your life, you go to the doctor and get a genetic profile created and put in your record before it's needed," said Dr. Dan Roden, Vanderbilt University's assistant vice chancellor for personalized medicine. "So when you're 50, the computerized medical record knows that you'll need a higher or lower dose of a particular drug."

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Austin Peay adds specialized degree

CLARKSVILLE, Tenn. — Austin Peay State University cleared the final hurdle needed for accreditation of its new chemical engineering technology associate degree.
The Southern Association of Colleges and Schools recently joined the Tennessee Board of Regents and the Tennessee Higher Education Commission in granting approval, The Leaf-Chronicle reported.

The program was developed in the wake of Hemlock Semiconductor's decision to build a $1.2 billion polysilicon production plant in Montgomery County. Polysilicon is a key component in solar cells and semiconductors.

The plant is projected to begin operations in 2012 with a work force of 500-800. Many positions will be highly skilled jobs needing specialized training.

— ASSOCIATED PRESS

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Popularity of wireless devices builds data traffic roadblocks

WASHINGTON — With the exploding popularity of smart phones, wireless laptops and, if Steve Jobs has his way, tablet computers, it's fast becoming a wireless world.
But the breakneck growth of all things wireless is threatening to cause a traffic jam of the airwaves that deliver calls, Web searches and video to those data-hungry devices.

Left unchecked, that could mean more dropped calls, slower service and a lot of frustrated customers. Recent complaints of dropped calls and slow connections by iPhone users on AT&T's networks in San Francisco and New York foreshadow a potentially widespread problem.

Now federal regulators are working to head off what they call a "looming spectrum crisis" — a severe shortage of the wireless frequencies that deliver data and allow smart phones to perform all of the tasks people expect. A proposal from the Federal Communications Commission is expected next month.

The electromagnetic spectrum that carries these transmissions is highly valuable and allocated by the government to businesses that often pay for their slices of it. That complicates any effort to shift it from one use — such as over-the-air TV broadcasts or satellite TV — to wireless providers.

The problem is one of basic supply and demand. More and more Americans are buying smart phones and using them to watch YouTube videos, share pictures, surf the Web and download books, among a litany of other applications on the horizon. But the bandwidth to deliver data for all of those functions is limited.

At the end of 2008, 34 million mobile subscribers in the United States accessed the Internet using their cell phones, according to Forrester Research, a technology market research firm. That number is projected to grow to 106 million by 2014. And Web-enabled smart phones, which are expected to account for the majority of cell phone purchases within a few years, consume 30 times the data of regular cell phones, according to Cisco Systems of San Jose, Calif.

Solutions studied

Currently, wireless companies have 534 megahertz of spectrum allotted to them, with an additional 50 megahertz in the pipeline. The industry says it needs at least 800 megahertz more within six years to accommodate demand.

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TN firms see growth in advertising

To borrow from an old Timex ad campaign, the advertising industry takes a licking and keeps on ticking.
After a year when local ad agencies trimmed staffs, scaled back salaries and cut operating budgets to compensate for sagging revenues, executives expect growth and even some hiring this year.

In the meantime, economic pressures forced many of their clients to make quicker shifts to use of digital marketing and Web site development and social media, in which modest amounts of money can sometimes go a long way.

"The economy forced them to try new things and pushed us to adapt faster," said Tim McMullen, founder and executive creative director at redpepper advertising agency and president of the Nashville chapter of the American Advertising Federation.

His small firm bucked the trend a bit and hired five workers this past year. It ended up farming out less work to outside production companies and undertook more interface programming and designing in-house as staples of traditional ad campaigns made room for more online advertising, McMullen said.

The state's largest advertising agency, The Buntin Group, saw a slight decrease in activity in 2009 but, because of readiness planning the year before, did not lay off workers and even managed to give raises and bonuses and make some hires, President and CEO Jeffrey Buntin Jr. said.

Elsewhere, though, accounts shrank or went dormant, forcing layoffs and other cuts.

"The last 18 months have been enormously difficult for advertising agencies," said David Bohan, chairman and CEO at BOHAN Advertising, noting that heavy ad spenders in hard-hit sectors like finance and automotive pulled vast amounts of money out of the advertising market.

Nearly 70 percent of ad agencies said 2009 revenue dropped, according to a national survey by the American Association of Advertising Agencies. Nearly 30 percent said they would lose money or break even, and one-third said profitability would be in the range of 1 percent to
10 percent.

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