Top Business & Political News 09/30/09

GM to shut down saturn after Penske walks away. General Motors says it's shutting down the Saturn brand after an agreement with Penske Automotive Group to acquire the unit fell apart. Penske, citing concerns about whether GM could continue to supply vehicles after a manufacturing contract with the automaker ran out, ended talks with GM Wednesday to acquire the brand. GM CEO Fritz Henderson said in statement that Saturn and its dealership network will be phased out.

Homeowners fall behind even after loan modifications. Lenders are ramping up efforts to avoid home foreclosures, but a report by bank regulators says more than half of borrowers who get help fall behind again. More than 50 percent of homeowners with loans modified in the first half of last year had missed at least two months of payments a year later, the federal Office of the Comptroller of the Currency and the Office of Thrift Supervision said Wednesday.

Revised GDP estimate gives market pleasant surprise. The U.S. economy contracted at slower pace than previously thought in the second quarter as improved consumer and business spending cushioned the impact of a record decline in inventories, according to a government report on Wednesday. The Commerce Department's final estimate showed gross domestic product fell at a 0.7 percent annual rate instead of the 1.0 percent decline reported last month.

Employers cut 254,000 in Sept., larger than expected. U.S. private employers cut a larger than expected 254,000 jobs in September, though this was less than a revised 277,000 jobs lost in August, a report by a private employment service said on Wednesday. The August decline was originally reported at 298,000.

Mortgage demand falls despite lower rates. U.S. mortgage applications fell last week despite the lowest loan rates in four months, the Mortgage Bankers Association said on Wednesday, in another sign that housing will likely recover slowly from its three-year plunge. Home loan applications fell a seasonally adjusted 2.8 percent in the Sept. 25 week, driven down by a 6.2 percent drop in demand for purchase loans and a 0.8 percent decline in refinancing requests. Borrowing costs inched closer to record lows, with average 30-year rates dipping 0.03 percentage point to 4.94 percent. The 30-year rates were the lowest since the week ended May 22, at 4.81 percent, after hitting an all-time low of 4.61 percent in March, according to the industry group.

Midwest business activity slips unexpectedly. Business activity in the U.S. Midwest failed to return to growth in September as expected, but instead contracted on a decline in production and new orders, a report showed on Wednesday. The Institute for Supply Management-Chicago business barometer fell to 46.1 in September from 50.0 in August. Economists had forecast the index at 52.0. A reading above 50 indicates expansion in the regional economy. The employment component of the index inched up to 38.8 in September from 38.7 in August. Prices paid rose to 51.3 from 50.0 and new orders dropped to 46.3 from 52.5. Production dropped to 47.2 from 52.9.

Another $1.5 trillion in bank writedowns coming, according to IMF. The International Monetary Fund on Wednesday lowered its estimate for global writedowns for banks and other financial institutions to $3.4 trillion but warned that loan losses were set to rise as unemployment grew. In April the IMF estimated in its Global Financial Stability Report that global bank losses could reach $4 trillion but said it cut the figure by $600 billion to reflect rising securities values and new methodology for calculating writedowns.