Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Mon, Aug 17 1992 Date: Mon, 17 Aug 92 04:19:44 EDT Message-ID: 08-17 0000 DECISIONLINE: Banking & Economy USA TODAY Update Aug. 17, 1992 Source: USA TODAY:Gannett National Information Network CITICORP UNDER WATCH: Citicorp says it cut its previously reported second-quarter earnings by $28 million after the New York Federal Reserve Bank and comptroller of the currency reviewed its books. The USA's largest bank says regulators put a lower value on its mortgage portfolio because of the trend toward refinancing at lower interest rates. Net income was revised to $143 million from $171 million. BANK HURT BY LOANS: Citicorp disclosed that it has been under close supervision by regulators since January and has an agreement to provide regulators with information on its problem loans and efforts to rebuild its balance sheet. Chairman John Reed says such an agreement isn't unusual for a bank that is seen as having a troubled portfolio or low capital. Citicorp has been hurt by bad real-estate loans. RECOVERY CAN THANK LOW RATES: While the economy is stumbling through the slowest recovery since World War II, it is growing if only slowly. That's due in large part to the boost lower mortgage rates are giving to home sales and home-construction starts. Another plus: Lower rates are tempting many homeowners to refinance existing loans. That's putting money back into their pockets, giving the economy a kick. (For more, see special Rates package below.) MANUFACTURING WEAK: Production by mines, utilities and factories rose 0.4% in July, erasing June's 0.4% drop, but the gain masked weakness in key manufacturing areas, the Federal Reserve says. July's rise was attributed to higher output from mines and utilities while manufacturing production was unchanged in July after falling 0.2% in June. Blamed: A cutback in auto production. SECOND-QUARTER STOCKPILING OVER: Businesses boosted inventories by 0.6% in June, the government said, but analysts said the stockpiling that supported much of the second quarter economic growth has ended. The Commerce Department said inventories totaled a seasonally adjusted $833.4 billion, the highest level since February 1991's $838.5 billion. The total compared to May's $828.0 billion. CONSUMERS LESS CONFIDENT: Concern about unemployment and the weak economy weighed down consumer confidence in early August. The University of Michigan's consumer-sentiment index fell to 75.3 in early August from 76.6 in July. Economist Carl Palash says the slide shows "we're above recession levels but only barely." DOLLAR MIXED: The dollar was mixed Friday as traders waited to see if U.S. interest rates would fall and whether German rates might rise. The dollar closed at 126.00 Japanese yen, down from 126.50. The British pound fell to $1.9210 from $1.9340. Other late rates included: 1.4650 German marks, up from 1.4555; 1.3205 Swiss francs, up from 1.3075; 4.9675 French francs, up from 4.9375; 1,113.50. OIL LOWER ON PROFIT-TAKING: Oil prices fell slightly Friday. With many traders on vacation this month, volume has been slight. Light sweet crude for September delivery slipped .06 cent to $21.28 a barrel; September heating oil rose .17 cent to 58.90 cents a gallon; September unleaded gasoline fell .30 cent to 60.80 cents a gallon; September natural gas fell 2.1 cents to $1.832 per 1,000 cubic feet. DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Monday at 3328.94 after closing up 15.67 points Friday. The New York Stock Exchange composite opens at 231.06, up 1.11. The American Stock Exchange market value opens at 386.82, up 0.09. The NASDAQ OTC composite opens at 573.18, up 2.19. SPECIAL PACKAGE ON RATES: HOUSING CAN FUEL RECOVERY: In past slumps, the housing industry played the role of locomotive, pulling the rest of the economy up the hill. The driver: Low interest rates. Home buyers and builders usually were the first to respond when rates fell. Rising home starts and sales stimulated the demand for other goods and services, clearing the tracks for recovery. MORE HOMES BUILT, SOLD: Falling rates are certainly doing their part now. Over the past year, the average rate on a 30-year fixed-rate mortgage has fallen from more than 9 1:2% to less than 8%. That's the lowest rate in almost 20 years. The result: Home-construction starts surged earlier this year and are still running 24% ahead of 1991's anemic pace. Existing-home sales are expected to beat last year's total. CONSTRUCTION MEANS MORE JOBS: On average, a 1-percentage-point drop in mortgage rates can spur the construction of up to 58,000 new single-family homes, says David Seiders, chief economist for the National Association of Homebuilders. That translates into almost 100,000 jobs and nearly $2.6 billion in wages for construction crews, loggers, appliance assemblers and other workers. REALTORS CAN BENEFIT FROM SALES: Existing home sales also push a lot of money through the economy. According to the National Association of Realtors, the typical home sale generates more than $8,000 in fees and other expenses. Realtors alone collect nearly $23 billion a year in commissions. Closing costs - points, origination fees, appraisals and such - total another $7.6 billion, the NAR estimates. (End of package.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Banking & Economy editor: Michele Coleman. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM