Fed Takes One More Swing
Sunday, November 10, 2002; Page H02
Fed Takes One More Swing
Acknowledging that the economy had hit a "soft spot," the Federal Reserve moved aggressively and lowered short-term interest rates by half a percentage point, to their lowest level in more than 40 years. The European Central Bank, however, declined to follow the Fed's lead despite daily evidence of corporate layoffs, rising unemployment and stalled growth. European business and political leaders had called for a rate cut. Economists warned that the tight money policy could tip Europe into recession.
One Misstep Too Many
After months of political missteps, Harvey L. Pitt, the sometimes aggressive, sometimes reluctant corporate reformer, resigned as chairman of the Securities and Exchange Commission. The chief accountant, Robert K. Herdman, also resigned. The two had failed to warn other commissioners and the White House of an accounting blot on the résumé of former CIA and FBI chief William H. Webster before naming him chairman of the new accounting oversight board. Webster hinted he might quit, too.
Turn Out the Lights . . .
Mounting losses from trading activities and falling prices continued to push more energy companies to the brink of bankruptcy. NRG Energy offered to surrender control to creditors, while El Paso announced it would spend between $400 million and $600 million to close out its trading business. And Standard & Poor's warned that Reliant Resources, Calpine, Mirant and Bethesda-based National Energy Group may have trouble restructuring billions of dollars in debt. Enron has already sought bankruptcy court protection.
A Phone Company, Barely
A report prepared by former U.S. attorney general Richard L. Thornburgh last week portrayed WorldCom as a company without a coherent strategy or rudimentary financial controls, whose books were manipulated to meet analysts' expectations and drive up the stock price. Thornburgh calculated that $27 million lent to then-CEO Bernard J. Ebbers to meet margin calls was instead used for personal expenses, including building a house. The board of directors, he found, was nothing more than a rubber stamp.
Monopoly on the March
Fresh from its victory in the antitrust case, Microsoft was on the offensive again last week, launching a laptop computer with a screen that allows you to write on documents the old-fashioned way, with a pen. Microsoft doesn't make the computer -- companies like Hewlett-Packard and Acer do -- but it did spend $400 million developing the necessary software. The down-and-out tech sector hopes this is the toy that finally gets people buying new hardware and software again. Naturally, it runs only on Windows.
© 2002 The Washington Post Company |
