Credit Crunch

WASHINGTON -- The economy added a modest 94,000 jobs last month, the government said yesterday in a mixed employment report that only slightly eased fears of a recession. The national unemployment rate remained steady at 4.7 percent despite job losses in the construction, financial services and factory sectors. Private job creation was tepid at 60,000 as federal, state and local governments increased payrolls by 34,000. Many economists said the report was reassuring in light of strong bearish sentiment expressed by many in the financial markets.

Local lender in Chapter 11 Fieldstone Mortgage Co., the Columbia subprime lender that largely shut down in the midst of the nationwide credit crunch, has filed for bankruptcy protection. The company had more than $100 million in liabilities and less than that in assets, according to its Chapter 11 filing with the U.S. Bankruptcy Court in Baltimore. Cordish takes a partner Baltimore developer Cordish Co. is teaming up with Dennis Gomes, a prominent gaming industry executive, to run gaming projects in the United States and internationally.

According to Wall Street folklore, investors can expect results for September to turn out like the first trading day of the month. It is not clear if that will happen this time. But if you'd like it to be true, you had better hope it applies only to the first trading day. Tuesday - the first trading session of the month - was a pleasant day as the Dow Jones industrial average climbed just over 91 points and investors held onto the courage they mustered just before Labor Day, when they began imagining the Federal Reserve would soon wave a magic wand and sprinkle the economy with the life-giving power of lower interest rates.

The days of easy money for many consumers with bad credit may be about to end.In a sign that an emerging global credit crunch may soon affect more U.S. consumers, companies that specialize in so-called "sub-prime" lending to people with blotched credit records -- often via high-interest home equity loans -- are quickly running out of money as banks and investors cut off their funds.The result is that many of the consumers who rely on such loans, frequently as a way to consolidate other debts, may be forced to pay even higher interest rates -- if they can get the money at all.While that could be a hardship for individual consumers, many financial counselors would cheer a trend away from the aggressive marketing of loans they say ultimately will get too many borrowers in trouble.

WASHINGTON -- Federal Reserve policy-makers are likely to cut borrowing costs today for the first time in 32 months in an attempt to forestall a global credit crunch that could push the U.S. economy into recession, analysts said yesterday.Economies showed stress the world over in recent weeks.Russia devalued its currency and defaulted on its debt; concern arose that Brazil might devalue; and Japan is mired in recession.In the United States, the near-collapse of hedge fund Long-Term Capital Management LP -- which resulted in a Fed-brokered $3.5 billion rescue by its lenders -- raised doubts about the health of the financial system.

THE DOW JONES industrial average closed Friday at 6,526.07. That's a 3.2 percent haircut for the week and 7.9 percent below the Dow's all-time high of 7,085.16, reached March 11.The Dow's dive can be traced pretty much to one thing: inflation fears. Stock investors are afraid that the strong U.S. economy will spark higher consumer prices, which will prompt the Federal Reserve and the bond markets to drive interest rates higherHigher rates can hurt stock prices by boosting corporate costs, by depressing demand for products and by making bonds more attractive as investments.

WASHINGTON -- Maryland businessman Richard Tworek has a profitable company with a steady cash flow and a good credit record, but he can't get a new line of credit from the bank he has used for seven years.He is a victim of a credit crunch that has been hampering small business expansion across the nation for the past three years, undermining vital job creation in a period of dramatically increasing unemployment.Today, President Clinton will try to do something about it. Eager to foster economic growth in general and small business activity in particular, he will ease federal bank lending regulations that he and the industry claim have been restricting the flow of credit.

WASHINGTON -- President Bill Clinton put another piece of his economic jigsaw puzzle in place yesterday, easing bank lending regulations to spur the flow of credit to small and medium-sized businesses, the main source of new jobs."

2 venture capitalists work to ease creditAlmost a decade ago, venture capitalists Harvey Branch and Bill Gust went out and raised $19 million for what they called Chesapeake Ventures. Now that Chesapeake is winding down, the partners are looking around for something new. They believe they've found an opportunity in the credit crunch for small, low-tech businesses.Last year, Mr. Branch and Mr. Gust tried to raise about $40 million from some public pension funds. Their plan: to invest the money in conservative securities and use the nest egg to provide credit guaranties for small businesses to borrow money from banks.

WASHINGTON -- In a strong sign that the credit crunch might be easing, banks have become noticeably more willing to lend to businesses, including small companies, the Federal Reserve reported yesterday.Bank executives surveyed by the Fed said they had relaxed their terms and requirements for a wide variety of loans. Even as standards for commercial real estate loans stayed restrictive, the bank executives reported what the Fed called a "fairly significant net easing" of standards and terms for commercial loans.

A plan to use $1 million in federal stimulus money to help build an innovative combined office building-greenhouse on Route 175 in Jessup is faltering because its owner can't get bank financing for the project. Stanley J. Sersen, a 30-year veteran of the energy wars, was forced Wednesday to withdraw his application to Maryland environmental officials for the federal funds, which must be used by year's end. The national credit crunch has stymied his effort to get financing for the project, he said, but he hasn't given up. "As our project is critical to showing how the built environment can stop toxic runoff into the bay, we will continue on our journey to get the project built," he said in a statement.

If your clunker of a car is about to give out, you'll probably be able to get a good deal on a new one because of the miserable economy. The reeling automotive industry is suffering from its worst sales in nearly 20 years. Car dealers are desperate for shoppers. And auto companies from Detroit to Tokyo are offering steep discounts and incentives to combat the slump. But consumers, worried about the turbulent economy, are holding on to their older vehicles longer. And even if they're interested in buying, the recent credit crunch has made it more difficult to secure car loans.

The Brits had the right idea: Pump capital directly into a handful of big banks to get credit flowing. And the Bush administration deserves credit for moving in the same direction, despite complaints that it amounts to a partial government takeover of banks. That worry should be the least of our concerns right now. Infusing cash into troubled banks may be the quickest way to ease the credit crunch, which is threatening to stall the economy. The robust recovery of stock prices yesterday was a welcome sign that investors felt buoyed by the government's new thinking.

With the economy in turmoil, consumers can't count on much these days. Getting loans for cars, houses or anything else is no sure bet. Credit card companies are clamping down on credit limits. The stock market is taking investors on the bumpiest of rides. The equity in your house is getting squeezed as home prices have halted a once-steep climb. And costs keep going up. What better time to start squirreling away some extra cash - above and beyond that cushion of three months' living expenses the experts say you're already supposed to have on hand for emergencies.

Fire incumbents who ignored credit crunch The editorial "Rescue or rebuke?" (Oct. 3) correctly notes that the $700 billion bailout bill is not an end all to our economic crisis. In fact, the statement, "The collective response in some offices in Washington and on Wall Street was, now what?" only amplifies how loosely all our politicians have played with our money and our trust. Every one of the politicians in Congress failed us, and now middle-class taxpayers will have to pay the bill.

Commercial real estate has battled the nationwide credit crunch better than other industries, but that could be coming to an end. Mall owner General Growth Properties announced this week that debt problems could force it to sell assets or even the whole company. Analysts said the decision highlights a growing problem in commercial real estate as Wall Street turmoil seeps into markets across the country. Some commercial property owners are finding themselves in the same situation as many homeowners.

Americans don't have to have a 401(k) to be worried about the havoc on Wall Street. They don't have to be fiscal conservatives to cringe at the billions the federal government has added to its balance sheet to bail out international insurance giant AIG, mortgage lenders Fannie Mae and Freddie Mac, and investment house Bear Stearns. Their anxiety over joblessness, diminished buying power and a depressed housing market have intensified with the wild fluctuations in the stock market and the accompanying credit crunch.

A credit crunch that has choked off mortgage funding for millions of Americans, forced thousands of homeowners into foreclosure and placed hundreds of banks and investment firms in jeopardy appears unlikely to ease until a continuing crisis at Fannie Mae and Freddie Mac is resolved. An early resolution of the crisis is an urgent priority. The two quasi-public corporations holding or insuring roughly half of all the home mortgages in the nation have reported losses in the billions stemming from the subprime mortgage crisis and the subsequent credit crunch and housing slump.

ST. LOUIS - A pending $35,000 loan will determine the fate of Mohammad Abdolrezagh's business plans. If Abdolrezagh - who owns Grand Mediterranean Kabob Cafe in St. Louis with his wife - is approved for a business loan through the International Institute St. Louis, the Iranian refugee will have enough money to buy a Chesterfield restaurant and expand his business. If he's denied, Abdolrezagh said, he'll lose the deal; the current business owner will sell to someone else. For the tiniest of businesses, small loans are critical for starting up, expanding and surviving.

Lehman Brothers Holdings Inc. Shares fell $2.01 to $46.64. An Oppenheimer analyst downgraded the shares, saying the investment bank's geographic diversification is unlikely to help significantly during the credit crunch.