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NEW YORK (AP) — General Electric posted a slight gain in net income in the second quarter and said its U.S. operations are picking up steam.

GE said Friday that it earned $3.13 billion, up from $3.11 billion a year earlier. On a per share basis, the company earned 30 cents, up from 29 cents. Revenue fell 4 percent, to $35.12 billion from $36.5 billion.

Adjusted to reflect earnings from continuing operations, GE earned 36 cents per share. That's 2 cents less than adjusted earnings last year, but one cent better than analysts polled by FactSet had expected. GE shares rose 40 cents, or 1.7 percent, to $24.03 in trading before the market opened.

GE, based in Fairfield, Conn., has a broad view of the global economy because it sells a wide variety of industrial equipment and appliances around the world, including jet engines, medical diagnostic equipment, locomotives, washing machines, natural gas-fired turbines, and oil and gas drilling equipment.

CEO Jeff Immelt said orders in the U.S. showed "strong growth," an improvement from recent quarters when he expressed caution about the U.S. market. Immelt said emerging markets remained strong and that Europe has stabilized, but remained weak.

The company's orders for new business rose $7 billion last quarter to a record $223 billion. Immelt said he expects profits to grow in the second half of the year.

GE is in the midst of transforming itself in to a company more focused on industrial businesses. It's been shedding media and other non-industrial divisions and shrinking its banking division. Infrastructure orders rose 4 percent and profit margins for industrial segments rose 0.5 percent. GE Capital earnings fell 9 percent.

Christian Mayes, an analyst at Edward Jones, called the quarter "ho-hum" but noticed some encouraging signs for GE. Revenue slipped at the company's power and water division, which sells and services gas-fired turbines, wind turbines, and water treatment equipment, but the division's profits returned to more normal levels after a terrible first quarter.

He was also encouraged by the improved outlook for the U.S., echoing recent comments by other industrial companies, and by GE's push to further improve profit margins later this year.

"The back half of the year should be better for GE," he said.

____ Follow Jonathan Fahey on Twitter at http://twitter.com/JonathanFahey .
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WASHINGTON (AP) — As Congress scrambles to pull back a messy student loan increase, it raises the question: Why did Uncle Sam get into the college loan business, anyway?

The short answer: Because the Russians launched Sputnik.

A look at the 55-year history of federal student loans:

___

Americans got a shock from the sky in October 1957.

The first artificial satellite was passing overhead. And it wasn't just man-made, it was Soviet-made.

Beach ball-sized Sputnik touched off a space race and stoked big fears that American students might not be up to the challenges of the Cold War.

Calls to improve science and technical education led to creation of a low-interest college loan program in the National Defense Education Act of 1958. The loan dollars came directly from the government.

___ Then came Lyndon Johnson's "war on poverty."

Student loans got a boost in 1965 as part of the president's "Great Society" initiatives. The Higher Education Act expanded loans as well as grants to help needy students. It also changed the way the federal loan program was financed. Instead of using government money, the loans would be made by bankers. But the government guaranteed that if students defaulted, the U.S. would cover the tab.

Lawmakers liked that approach because outstanding loans wouldn't show up on the government's books as red ink.

___ And that led to the birth of Sallie Mae.

In 1972, President Richard Nixon spearheaded creation of the Student Loan Marketing Association — known by the nickname Sallie Mae — to help get more money to college students.

Sallie Mae was a government-sponsored entity that used Treasury funds to buy up banks' student loans, freeing up the private lenders' money and encouraging them to make more loans.

Sallie Mae was fully privatized in 2004 and is now a corporate giant of the private student loan and college savings businesses.

___ Taxpayers took the risk; bankers got the rewards.

Using private companies to handle government-backed loans proved to be more complicated and expensive for taxpayers than direct federal loans. So President Bill Clinton sought a switch back to a direct loan system more like the Sputnik days.

But many Republicans opposed direct loans as a government takeover. And private lenders didn't want the feds moving in on their lucrative market. Congress compromised by phasing in some direct federal loans while keeping guarantees in place for the bank loans.

For more than a decade, the banks appeared to be winning the battle with direct loans. Colleges largely decided which kinds of loans to offer their students, and the aggressively marketed private loans were more popular than the lesser-known government alternative.

___ The 2008 financial crisis changed everything.

With chaos on Wall Street and credit markets in a tailspin, private student loan money started drying up. To keep money flowing to college students, Congress gave the Education Department power to step in and buy private loans from lenders.

Meanwhile, with fewer banks offering loans to students, the number of colleges turning to direct federal loans shot up.

The shine was off private lenders.

___ In 2010, Uncle Sam took over.

Private lenders waged an intense lobbying campaign to hang onto the government-backed student loan market. But in the end, Congress approved President Barack Obama's plan to give commercial banks the boot.

Now, the entire federal student loan program belongs to Washington.

Banks and other private lenders still loan money to students on their own, without a federal guarantee. Some students need the outside help to fill in the gaps as college costs keep climbing.

And many people are still paying off student loans they got through private lenders under the old Federal Family Education Loan program before it ended on July 1, 2010.

___ Under today's system, direct federal loans are considered the best deal for students.

The government loans generally have lower interest rates than bank loans. And the feds offer flexible payment options for people who have trouble with their bills after graduation.

Also, students who qualify for subsidized Stafford loans, based on financial need, don't rack up interest charges while they're in school. Students who go into public service careers such as teaching can have their loans forgiven or discounted. And graduates who work in exceptionally low-paying professions stand to have their loans completely forgiven after 25 years.

Students with federal loans are at the mercy of Congress and its bickering, however.

A messy standoff has temporarily doubled interest rates on new subsidized Stafford student loans this summer. But a bipartisan compromise promises to head off that rate hike before students sign up for loans in the fall.

___ Follow Connie Cass on Twitter: http://www.twitter.com/ConnieCass
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DETROIT (AP) — Detroit on Thursday became the largest city in U.S. history to file for bankruptcy, as the state-appointed emergency manager filed for Chapter 9 protection.

Kevyn Orr, a bankruptcy expert, was hired by the state in March to lead Detroit out of a fiscal free-fall and made the filing Thursday in federal bankruptcy court.

A number of factors — most notably steep population and tax base falls — have been blamed on Detroit's tumble toward insolvency. Detroit lost a quarter-million residents between 2000 and 2010. A population that in the 1950s reached 1.8 million is struggling to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them.

In recent months, the city has relied on state-backed bond money to meet payroll for its approximately 10,000 employees.

Orr was unable to convince a host of creditors, the city's union and pension boards to take pennies on the dollar to help facilitate the city's massive financial restructuring. If the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment.

"Only one feasible path offers a way out," Gov. Rick Snyder said in a letter to Orr and state Treasurer Andy Dillon approving the bankruptcy.

Snyder determined earlier this year that Detroit was in a financial emergency and without a plan to improve things. He made it the largest U.S. city to fall under state oversight when a state loan board hired Orr in March. His letter was attached to Orr's bankruptcy filing.

"The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services," Snyder wrote. "The city's creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep. The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations."

A turnaround specialist, Orr represented automaker Chrysler LLC during its successful restructuring. He issued a warning early on in his 18-month tenure in Detroit that bankruptcy was a road Detroit and its creditors did not want to tread.

He laid out his plans in June meetings with debt holders, in which his team warned there was a 50-50 chance of a bankruptcy filing. Some creditors were asked to take about 10 cents on the dollar of what the city owed them. Underfunded pension claims would have received less than the 10 cents on the dollar under that plan.

Orr's team of financial experts put together said that proposal was Detroit's one shot to permanently fix its fiscal problems. The team said Detroit was defaulting on about $2.5 billion in unsecured debt to "conserve cash" for police, fire and other services.

"Despite Mr. Orr's best efforts, he has been unable to reach a restructuring plan with the city's creditors," the governor wrote. "I therefore agree that the only feasible path to a stable and solid Detroit is to file for bankruptcy protection."

Detroit's budget deficit is believed to be more than $380 million. Orr has said long-term debt was more than $14 billion and could be between $17 billion and $20 billion.

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