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Pakistan’s central bank aims to resume cutting interest rates when inflation eases, Governor Salim Raza said.

Inflation will slow as the effects of higher energy costs wear off, Raza said in an interview in Singapore today, without saying when. Consumer prices may rise between 11 percent and 11.5 percent in the six months through June, a percentage point more than the previous half-year, he said.

Pakistan’s goal stands in contrast to other countries across Asia, where policy makers are preparing to boost borrowing costs as inflation accelerates amid a global recovery. Lower interest rates may benefit companies including MCB Bank Ltd. and support an economy hurt by the government’s war against Taliban guerillas in the country’s northwest.

“Interest rates, barring liquidity constraints, should follow the trend of inflation” in coming down, Raza said after meeting with investors. “If we are comfortable inflation has stabilized at single-digit levels, then certainly we do want to ease the pressure on our businesses and industries and we’d like to bring interest rates down.”

The State Bank of Pakistan kept its benchmark interest rate unchanged at 12.5 percent on Jan. 30 after reducing it by 2.5 percentage points last year, as inflation accelerated and the government raised power tariffs and gas prices to contain its budget deficit.

Liquidity in Pakistan’s banking system, strained by government borrowing to finance its widening deficit, may improve as foreign aid and other funds flow in, Raza said.

Bond Sale

Pakistan may sell as much as $1 billion of bonds in the coming months, Finance Minister Shaukat Tarin said in an interview in Singapore yesterday.

“Pakistan as an emerging market, with its attractive yield differentials, would be a well-priced bond,” Raza said today. “We think the present yield discounts a lot of the improvement; it’s still backward looking. If you move forward, the prospects would justify better pricing than that.”

Credit-default swaps protecting the debt of Pakistan rose 27.5 basis points to 950 basis points as of 9:48 a.m. in Singapore, according to prices from Royal Bank of Scotland Group Plc. The cost of protecting the country’s debt has fallen from 3,084.3 basis points on Jan. 1, 2009, to 870.5 yesterday, according to prices from CMA DataVision in New York.

The International Monetary Fund on Aug. 8 agreed to increase a loan to Pakistan by $3.2 billion, after the nation was forced to turn to the Washington-based lender for a $7.6 billion bailout in November 2008. Pakistan is expecting $2.2 billion of aid and loans from the U.S. and Japan before June 30, Tarin said last week.

Friends of Pakistan

The Friends of Democratic Pakistan, an aid group that includes the U.S., U.K., Japan and Saudi Arabia, may provide $1.4 billion to $1.8 billion to the South Asian nation in the current fiscal year ending June 30, Tarin said yesterday.

Pakistan’s growth in the 12 months ended June 30, 2009, cooled to 2 percent, the slowest pace in eight years. The government expects the $168 billion economy to expand 3.4 percent this fiscal year, Tarin said.

The economy may expand at a faster pace in the coming years as lower interest rates spur demand, Raza said. Manufacturing is improving and there is “huge agricultural potential,” he said, adding that a growth rate of 5 percent to 6 percent “in the short term is very viable.”

The central bank will let the market decide the level of the rupee and will intervene only to smoothen volatility, Raza said, adding that he sees no reason for the currency to weaken from current levels.

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Regulators shuttered six banks on Friday, notching up 15 failed banks in the first month of in 2010.

The biggest to fall was First Regional Bank in Los Angeles, which had deposits of $1.87 billion. The others were Community Bank and Trust in Cornelia, Ga.; Florida Community Bank in Immokalee, Fla.; First National Bank of Georgia in Carrollton, Ga.; Marshall Bank in Hallock, Minn.; and American Marine Bank in Bainbridge Island, Wash.

Customers of all six banks are protected, however. The Federal Deposit Insurance Corp. covers accounts up to $250,000.

First-Citizens Bank & Trust in Raleigh, N.C, acquired nearly all the assets of the day’s biggest failure: First Regional. The bank’s eight branches will reopen Monday under their new ownership.

SCBT in Orangeburg, S.C., will assume Community Bank and Trust’s $1.1 billion in deposits and will purchase "essentially all" of the failed bank’s $1.2 billion in assets. SCBT entered into a loss-share agreement with the FDIC on $827.7 million of Community Bank and Trust’s assets.

The 36 branches of Community Bank and Trust will reopen as branches of SCBT.

Premier American Bank in Miami will assume Florida Community Bank’s $796 million in deposits, and will purchase $499 million of the failed bank’s $876 million in assets. Premier American Bank entered into a loss-share agreement with the FDIC on $305.4 million of the failed bank’s assets.

The 11 branches of Florida Community Bank will reopen as branches of Premier American Bank.

Community & Southern Bank in Carrollton, Ga., will assume First National Bank of Georgia’s $757.9 million in deposits and "essentially all" of the failed bank’s $832.6 million in assets, according to the FDIC.

Community & Southern Bank entered into a loss-share agreement with the FDIC on $607.4 million of the failed bank’s assets.

The 11 branches of First National Bank of Georgia will reopen as branches of Community & Southern Bank.

United Valley Bank in Cavalier, N.D., will assume Marshall Bank’s $55 million in deposits and will purchase "essentially all" of the failed bank’s $60 million in assets, according to the FDIC. United Valley Bank entered into a share-loss agreement with the FDIC on $24 million of failed bank’s assets.

The three branches of Marshall Bank will reopen as branches of United Valley Bank.

Columbia State Bank in Tacoma, Wash., will assume American Marine Bank’s $309 million in total deposits. American Marine Bank’s 11 branches will reopen on Saturday as branches of Columbia State Bank.

Friday’s closures will cost the FDIC approximately $1.9 billion.

Customers of the failed banks can access their money over the weekend by writing checks or using ATMs or debit cards. Checks will continue to be processed, and borrowers should make mortgage and loan payments as usual.

The FDIC also said customers should continue to use their existing branch until they receive notice that the takeover has been completed.

A total of 140 banks failed in 2009, the highest since 1992, when 181 banks failed. But that count is far from 1989’s record high of 534 closures which took place during the savings and loan crisis.

Last year’s spike has raised concerns about the federal deposit insurance fund, which has slipped into the red for the first time since 1991.

The fund was $8.2 billion in the hole as of the end of September. But that includes $21.7 billion the agency has earmarked for future bank failures. 

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Pushed by growing anger among Americans over the slow economic recovery, "jobs" has become the buzzword of the political season.

President Barack Obama mentioned it almost 20 times during his first State of the Union speech. Republican and Democrat leaders vow that job creation will drive their agendas as they push toward the midterm elections this year.

Good luck, say the experts.

Yes, job creation works great in a recovering economy, but making that happen in the legislative arena is problematic, said Steven S. Smith, director of the Weidenbaum Center on the Economy, Government and Public Policy at Washington University.

Ultimately, Smith points out, government is at the mercy of the fundamental forces that dictate the cycles of the economy. "It is very difficult for the typical legislator to have any impact on factory job production. All that is due to consumer demand."

This year, the stakes are high, not just for the economy, but for numerous political candidates promising to fix it. In November, 36 U.S. Senate seats (one each in Missouri and Illinois) are in play, as well as the 435 seats in the U.S. House of Representatives and 36 governors’ posts, including Illinois. The winning candidates likely will be those who are able to win over voters like Festus resident Gary Cole.

Laid off in May after 25 years building Chrysler minivans and pickups in Fenton, Cole has little interest in health care reform, global warming or the other policies that dominated the conversation during Obama’s first year in office.

His interest, in fact, is embedded in a single issue — getting a job.

"They have to figure something out because there is no work out here," Cole said.

Politicians might have embraced the jobs issue sooner had they made regular visits to unemployment offices. The career center in Arnold, where Cole is a regular visitor, assisted more than 7,400 displaced workers in December alone.

"There are lots of frustrated people," said Diana Voelker, the state Department of Economic Development regional manager overseeing the Arnold center.

Smith said that even if new jobs are hard to come by, the shrewd candidate will acknowledge that frustration with empathy during the upcoming campaigns. Beyond that, there isn’t much national politicians can do to help the unemployed get back to work, said David Webber, an associate professor of political science at the University of Missouri-Columbia and a specialist in legislative policy.

"The U.S. Congress should focus on financial regulation, trade policy and the big picture of human capital development and leave the nitty-gritty of economic development to state and local governments" said Webber, the father of Missouri state Rep. Stephen Webber, D-Columbia.

State and local officials, in turn, need to target sectors capable of establishing a regional economic identity, David Webber added. As an example, he cited Gov. Jay Nixon’s bid to position Missouri as a go-to state for bio-research and production.

Market economics notwithstanding, candidates can pretty much count on even employed voters — like software analyst Greg Schmidt of Bethalto — to pay attention to jobs initiatives when they pull the levers at the ballot box in November.

Jobs "have to be the No. 1 thing, and anyone who doesn’t see that doesn’t get it," said Schmidt. "When people are working, they feel better about everything. They are keeping a roof over their heads. Their kids are being fed."

Republican U.S. Rep. Roy Blunt and Missouri Secretary of State Robin Carnahan, his expected Democratic opponent in the November election, say they have taken notice of the public discontent with the pace of job recovery. The U.S. unemployment rate is at 10 percent, though it doesn’t factor the underemployed and discouraged workers, those who want to work but have given up looking.

"From the people we talk to around Missouri every day, it’s clear that folks are hurting and job creation must be a priority," said Carnahan spokesman Linden Zakula.

The two candidates agree that paving the way for small businesses to add payroll is key to easing joblessness. But they fundamentally disagree over the value of the Obama administration’s stimulus package.

Zakula said Carnahan is committed to removing the "red tape" that tamps down hiring by choking the resources of small businesses.

In a telephone interview earlier this week, Blunt fixed the blame for the unemployment crisis on the "colossal failure" of the Recovery Act and what he characterizes as the misplaced priorities of the administration and Democratic-controlled Congress.

"I think people are pretty smart about how the process works, and they understand what can happen with a majority party that is big enough to do whatever it wants to do," he said.

Such sentiment is a far cry from the public reaction when the government stepped in to stem the worst job hemorrhage in the nation’s history 75 years ago, said Margaret Garb, a history professor at Washington University, who focuses on job creation during the Great Depression.

The public works projects and other recovery programs introduced by the Roosevelt administration were "wildly popular," said Garb. The beleaguered public welcomed "the hand of the federal government in their lives and their pocketbooks," she added.

Nearly every town and every city saw tangible evidence of FDR’s policies in the construction of post offices and other projects that provided paychecks, Garb said. The backlash against the Obama stimulus package resides, in part, with its failure so far to produce such tangible outcomes.

"The stimulus money isn’t visible," she said. "People don’t see it working yet in their communities."

Part of the challenge for Obama, Garb said, is a 24-hour news cycle that has fueled the public’s desire for a quick fix to complex problems, such as double-digit unemployment. "People expect a quicker response than what is possible," she said.

For Sherry Orrick of Imperial, the clock started ticking a year ago when she lost her job as a police officer. Since then, she has found nothing but frustration in her job search. "Every week is the same: Nobody is hiring, or they say I’m overqualified."

Orrick said she has spent the last year watching the government extend a hand to the banks, the auto companies and Wall Street.

Now, she says, it’s her turn.

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Durham medical device company TransEnterix has named a medical device industry veteran chief financial officer.

David Gill's experience includes work as CFO of several companies, including NxStage Medical (Nasdaq: NXTM), CTI Molecular Imaging, and Novoste Corp. (Nasdaq: NOVT). CTI Molecular Imaging was acquired in 2005 by Siemens Medical Solutions USA Inc. for $1 billion.

Gill has led three initial public offerings and raised more than $500 million in equity capital. In his role at TransEnterix, he has managed the company's $55 million Series B financing, which closed in October. The company is using proceeds from that round to commercialize its SPIDER technology, a surgical system that is less invasive than current methods no fax payday loan. The system allows laproscopic surgery to be performed through a single incision in the abdomen instead of the four or five typically required.

Gill holds a a bachelor’s degree in accounting from Wake Forest University and an MBA from Emory University.

TransEnterix employs more than 30 and plans to scale up to 80 or more by the end of 2010.

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Little more than a decade ago, Monsanto Co. began selling the corn seed with a novel gene to help farmers ward off a pest known as the European corn borer.

This year, the Creve Coeur-based agricultural biotech giant expects to sell 4 million acres worth of a new line of corn seed called SmartStax, which contains eight genes to help control bugs and weeds.

Robert T. Fraley, Monsanto’s chief technology officer, oversees the company’s crop and seed technology and research around the globe.

Farmers may be familiar with SmartStax. But how do you explain to those who have never set foot on a farm why it is a significant new product for Monsanto?

It’s going to give the farmer the very best options in terms of bug and weed control of any of the products in the corn marketplace. It’s going to help them improve their yields and their profitability.

How do you convince farmers that the incremental cost of SmartStax is a good investment?

It brings with it an opportunity for better bug control, higher yield and it also has the convenience of having a reduced requirement for planting refuge, which gives farmers an opportunity to improve overall yields in their corn acres and simplifies the whole time frame around planting. (Farmers who plant insect-resistant corn are required to plant refuge zones to make sure insects don’t develop resistance to the technology.)

Can you quantify the benefits from SmartStax in terms of the company’s financial goals?

We plan to sell about 4 million acres worth of SmartStax, and eventually we think SmartStax will replace all of our current triple stack (three gene) products and it will grow the market to a higher level fast cash advance.

You’ve described Monsanto as being on the verge of a "technology explosion." What’s the next major product to be commercialized, and what will it do for farmers?

We had a record number of products our pipeline move through to new phases. There’s lots of exciting stuff there.

I think one of the projects that are really exciting are the projects we’re delivering in soybeans for higher nutrition. We’ve actually got two of them there. One that produces a higher quality soybean oil without the trans fats and without the saturates. It’s going to be a healthier soybean oil that I think both the food industry and consumers will like.

The other soybean product is one where we’ve been able to introduce new genes so that the soybean is producing Omega 3 fatty acids.

There’s a lot of interest in that product because of the heart health benefit of Omega 3, and I think that’s going to be a great product for the industry and for consumers.

Finally, there’s a lot of interest in the genes we have for increasing yield and drought tolerance.

What’s the significance of refuge-in-a-bag?

We think that it’s technically feasible to actually blend the refuge in the bag of seed, so the bag would be 95 percent SmartStax and 5 percent without the added bug control.

That means the farmer would ultimately be able to plant the entire field or farm and never have to stop their planter and reset it. That will be one more level of convenience.

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General Motors has suspended production of Hummer vehicles pending Chinese government approval of its deal to sell the unit to Sichuan Tengzhong Heavy Industrial Machinery Co., a GM spokesman said Thursday.

The H3 and H3T, the last two Hummer models still being made, are produced at GM’s Shreveport, La., factory. The factory, which also makes the GMC Canyon and Chevrolet Colorado pick-ups, will stay open. The plant employs 1,120 people and no layoffs are planned.

GM sold 325 Hummers last month and there are about 2,100 of the trucks still in dealer inventories, "enough inventory to get dealers through the point in time when the deal is done," GM spokesman Nick Richards said.

There is still no indication of when, exactly, that might happen, Richards said.

"We’re assuming this happens within the early part of this year," he said.

Sales have suffered, in particular, because of consumer uncertainty about the brand’s fate, said Richards, and the fact that GM has not been advertising it.

GM finalized its deal to sell 80% of the Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery Co. of China in October. The Chinese government still must approve the deal.

The remaing 20% is being sold to a private investor.

GM stopped producing the larger Hummer H2 SUV in 2008. 

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WASHINGTON–U.S. regulators took a first step aimed at clamping down on oil speculation Thursday, proposing new limits on trading in energy futures by Wall Street firms and other market players.

The Commodity Futures Trading Commission voted 4-1 for new trade limits on the New York Mercantile Exchange and the Intercontinental Exchange intended to keep fund managers and other speculative investors from wielding excessive influence in the market.

The proposal is open to public comment for 90 days. It could be formally adopted sometime afterward, possibly with changes.

Several CFTC commissioners voiced concern about the proposal, warning it could drive trading business to unregulated offshore markets.

The number of speculators – investors who profit by trading oil contracts – has risen on the Nymex in recent years. They mostly bet that oil will get more expensive, leading many to believe their activity in the market jacks up prices.

The restraints would apply to futures trading in natural gas; light, sweet crude oil, known as West Texas Intermediate; and New York Harbor heating oil and gasoline.

CFTC officials said the limits as proposed could require trading cuts by around 10 big firms guaranteed high risk personal loans. The limits would apply to traders’ total positions in futures and options contracts. Exemptions would be available for "bona-fide" hedging transactions.

CFTC Commissioner Michael Dunn warned that imposing new limits on energy trading without the agency having authority to regulate the over-the-counter derivatives market could mean "that we will in fact end up with less transparency in the market than we currently have.”

Federal regulation of the shadowy $600 trillion (U.S.) market for derivatives, the complex instruments blamed for playing a role in the financial crisis, is before Congress. It is included in sweeping legislation to overhaul financial regulation passed by the House last month.

The proposed limits are "not going to have a huge effect, and that’s prudent," said Kenneth Medlock, a Rice University economist who has studied the influence of speculators on oil trading. "The last thing you want is to impose something that will give you consequences that you didn’t foresee.”

Associated Press

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Alcoa Inc. on Monday reported a smaller net loss for the fourth quarter, though revenue shrank without improvement in its aerospace, commercial building and gas turbine businesses.

The company, based in Pittsburgh, reported a net loss of $277 million, or 28 cents per share, compared with a loss of $1.19 billion, or $1.49, a year ago. The most recent quarter included $275 million, or 28 cents a share, in special charges.

Revenue fell to $5.43 billion from $5.68 billion.

Alcoa said free cash flow turned positive for the first time since the second quarter of 2008, a sign the company was able to generate money from operations and not solely through cost-cutting.

The company’s report signals the beginning of the earnings season for S&P 500 companies, and it can be a sign of things to come.

Analysts on Monday were looking for better sales in the company’s aerospace and construction businesses after a year in which major corporations salvaged profits with severe cost cuts.

Alcoa said it achieved a price of about 97.8 cents a pound for aluminum in the quarter, up from 8 cents from the third quarter, but those gains were offset in some segments by a weaker U.S. dollar.

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Timothy Hendron, who is believed to have gone on a homicidal rampage at his workplace Thursday, was suing his employer and Fidelity Management Trust Co., the mutual fund giant. He claimed that he and fellow employees were victimized by excessive fees charged in their 401(k) retirement plan.

Hendron, of Webster Groves, was one of four named plaintiffs in a class-action suit brought against their employer, ABB Inc., and Fidelity. The suit was seeking money for 12,800 employees participating in the company’s retirement plan.

Fidelity, the big Boston-based mutual fund company, administered ABB’s 401(k) plan. Basically, the suit claimed that Fidelity was charging excessive and undisclosed fees to employees’ retirement accounts, and ABB let Fidelity get away with it.

Both Fidelity and ABB deny the allegations.

Hendron’s lawyers, at the St. Louis firm of Schlichter, Bogard & Denton, have filed at least 11 similar suits against various companies across the nation.

The suit involves $1.5 billion in investments held by ABB workers as of 2005. Despite that number, Hendron probably would not have been in for a large windfall if the suit were successful. Fees charged by funds in large 401(k) plans rarely exceed 2 percent a year and are often much lower. The suit involved only a portion of those fees.

"Once divided among the participants, it’s going to be a relatively small recovery," said Peter Wiedenbeck, a professor of law at Washington University and a specialist in employee benefits law. "The big stake benefits the lawyers."

Wiedenbeck noted that the law forbids employers from retaliating against employees who file suits such as this one.

A trial of the suit began Tuesday in federal court in Kansas City. It continued Thursday as if nothing had happened. The St. Louis attack wasn’t mentioned in the courtroom as Judge Nanette K. Laughrey heard technical testimony on financial issues.

During breaks, well-dressed lawyers and observers checked on their cell phones and Blackberries for news of the shooting. The judge is hearing the case without a jury.

Hendron’s lawyer, Jerome Schlichter, declined to comment when approached at the courthouse by a Kansas City Star reporter. Hendron had been listed as a potential witness in the trial instant payday loans completely online.

401(k) plans typically offer investors a variety of mutual funds to choose from. Like other suits filed by the Schlichter firm, Hendron’s case involved the complex way that mutual fund companies are paid. All funds charge expenses to cover the cost of trading stocks and bonds, administrative costs and compensation for the fund management company. The expenses are deducted from investors’ fund accounts.

Companies with billions in employee retirement funds can negotiate lower fees than those charged to small investors. The suit claims that ABB failed to negotiate a good deal when it brought in Fidelity to help run its employee retirement plan.

ABB "squandered the plan’s enormous buying power" by letting Fidelity offer the same mutual funds available to the public rather than demanding a lower-cost versions of the funds, according to the suit.

The plaintiffs also claim that Fidelity collected fees without adequately disclosing the reason. They claim that Fidelity sent stock trades through its own brokerage operation, which charged the funds too much money. Fidelity also demanded money from non-Fidelity funds that wanted to be included among the options in ABB’s 401(k) plan, the suit charges. The funds then passed on those fees to ABB employees.

The plaintiffs charge that Fidelity provided free services to an investment plan for highly paid ABB executives because it was making so much money on the employees’ retirement plan.

Anne Crowley, spokeswoman for Fidelity, declined to discuss specifics, but she said the firm did nothing wrong. "We believe we provide valuable service for 401(k) clients," she said. "Fees charged and compensation collected are reasonable."

Such suits are becoming more common. "We’ve seen a lot of action on this specific issue in the last couple of years," said Wiedenbeck, the law professor. "The central theme is that, given the amount of investment involved, the charges were unreasonably high."

It’s still unclear how courts will deal with such claims, he said.

The Kansas City Star contributed to this report.

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Paul McKee got his tax credits.

In the final hours of 2009, Missouri officials awarded the developer $19.6 million, a key piece of financing for McKee’s ambitious plan to rebuild a big chunk of north St. Louis.

The funds come in the form of tax credits that pay McKee back for buying hundreds of properties across two square miles of the city’s north side over the last few years. He now plans to sell the credits to investors and use the cash to pay down debt.

McKee has said time and again that the credits are crucial to getting his $8.1 billion NorthSide project off the ground this spring. He pushed St. Louis officials to approve a redevelopment plan in time to submit an application to the state for 2009. In recent weeks, McKee has been scrambling to meet the Department of Economic Development’s requirements.

"Finally we have arrived," the developer said in an e-mail Monday.

"The credits play a huge economic role in the success of the Northside (project)."

McKee actually applied for roughly $25 million for 2009, said department spokesman John Fougere, but the program is capped at $20 million a year. In all, the developer hopes to tap $83.6 million in those credits over the next five years.

They were awarded through the Distressed Areas Land Assemblage Tax Credits program, which Missouri lawmakers created in 2007 to reimburse developers for assembling large tracts of land in poor urban neighborhoods.

McKee is the only developer in Missouri known to have acquired enough land to qualify, and he has been widely seen as the prime beneficiary of the credits since their inception free business cards. McKee’s was the only request the state received under the program in 2009, Fougere said.

The program has drawn legal fire from critics of McKee. Two north St. Louis residents filed a lawsuit in Cole County challenging the distressed areas tax credits, calling them an improper use of state money because they give incentives not for job creation but simply for the assembly of land. That case is set for trial Jan. 27.

In his application, McKee reported that his NorthSide Regeneration LLC has spent $25.1 million buying properties and plans to spend $66 million more. It also projected $1.7 million in interest costs and $415,000 for maintenance annually.

McKee said the $19.6 million he received Thursday will be used to pay down debt — his companies have borrowed $27.6 million from the Bank of Washington, in Washington, Mo., to fund NorthSide so far. That will then make it easier to finance new projects on the land. He is also negotiating nearly $400 million in tax-backed financing with the city of St. Louis, to pay for new roads, sewers and other infrastructure across the project area.

A redevelopment deal signed in November gives him until April 1 to reach the first of those deals with St. Louis aldermen.

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