Lower Rates

So the mortgage crisis comes to this: Columbia's Fieldstone Mortgage enters bankruptcy proceedings, stiffing Wall Street's biggest names, and it's only a local story. Mr. Bernanke, here's another indicator you're losing control. If a major subprime lender leaves Morgan Stanley, Household International, Bear Stearns and others holding a $100 million bag and the national news media ignore it, maybe the problem is a heck of a lot bigger than most of us dreamed. Lower the short-term interest rates.

A state attempt to "reinvent" the way it sets hospital rates will delay efforts by CareFirst BlueCross Blue- Shield to negotiate lower rates on its own, House Speaker Casper R. Taylor Jr. said yesterday.The Health Services Cost Review Commission (HSCRC), which decides what the state's hospitals are permitted to charge, began the reinvention effort in March in response to several years in which the cost of an average case in Maryland increased faster than the national average.CareFirst, the state's largest health insurer, began its effort to drive down rates in June, when it said it wanted to negotiate a new rate system with the hospitals.

The state's hospital rate-setting board approved yesterday a 4.8 percent boost in rates for Johns Hopkins Hospital, at a time when most hospitals' rates have been cut by 1 percent.Hopkins, which was seeking a 9.2 percent rate increase, argued that it needed an extra $15 million a year to operate its new cancer center, which is scheduled to open in September. It also sought to set aside $25 million a year to help pay for a new children's center and a critical-care tower, projects expected to cost $120 million each.

Howard County is refinancing one-quarter of its debt -- a move that officials say will save $3.43 million by locking in lower interest rates for the next several years.The refinancing of $132.7 million worth of bonds takes advantage of current low interest rates in the bond market and Howard's new triple-A bond rating -- the highest possible -- that also qualifies the county for lower rates.Dale Neubert, the county finance director, equates the move with refinancing a home mortgage. "We've just refinanced our house," she said.

THE STOCK MARKET shot up a record 380 points Tuesday on the strength of comments from Federal Reserve Chairman Alan Greenspan that the Fed was just as likely to lower interest rates as it was to raise them. What are the chances the Fed will really lower the benchmark federal fund rate -- the rate banks charge each other -- at its next meeting on Sept. 29? Should the rate be lowered? What would it mean to the average person?Jim GlassmanSenior U.S. economist, Chase Securities, New YorkI do think they will lower rates.

Johns Hopkins Medicine said yesterday that it will try to replicate the success of its Green Spring Station outpatient facility with a $6 million location in White Marsh.The planned two-story, 50,000-square-foot building, scheduled to open in September 1999, will offer primary and specialty care with between 20 and 30 Hopkins- affiliated physicians.Gill Wylie, vice president for ambulatory services development, said the new location will allow many physicians who are spread out in small offices in the area to come together in one prominent site.

Geico Direct said yesterday that it will lower auto insurance rates for its Maryland policy holders by as much as 7.9 percent, a move that could force other insurers to slash rates.Geico's decision to lower rates comes as it is targeting the Baltimore metropolitan area for growth, expanding on its stronghold in Washington, where the insurer is based.The company said the rate decreases stem from mild weather, safer cars and safer drivers that have caused fewer and less severe accidents.Wall Street's continued bull run has also sent rates down, because increased investment returns allow insurers to cut auto rates without affecting profits.

Even with long-term bond yields near multiyear lows, Maryland companies are taking a wait-and-see stance toward the corporate debt market.Yields on the benchmark 30-year Treasury bond have touched historic lows in recent weeks, leading the rates on long-term corporate bonds lower. That's prompting many U.S. companies to refinance higher-interest bonds, or to issue debt outright at the lower rates."Companies are taking advantage of the opportunity," said Diane Vazza, head of fixed-income research for Standard & Poor's Inc. in New York City.

The largest study ever undertaken of the causes of crime and delinquency has found that there are lower rates of violence in urban neighborhoods with a strong sense of community and values, where most adults discipline children for missing school or scrawling graffiti.In an article published last week in the journal Science, three leaders of the study team concluded, "By far the largest predictor of the violent crime rate was collective efficacy," a term they use to mean a sense of trust, common values and cohesion in neighborhoods.

FACED WITH new evidence of sluggish economic growth across the country, the Federal Reserve last week cut short-term interest rates. It lowered the federal funds rate, which banks charge each other for overnight loans, from 5.5 percent to 5.25 percent. It also cut the more-symbolic discount rate, charged to banks borrowing directly from the Fed, from 5.25 percent to 5.0 percent.Many analysts expect more reductions, but they caution that the quality of recent economic data may have been hurt by the federal government's shutdown.

Under the forces of supply and demand, gasoline prices should be falling, giving a break to households and placing a cushion under the falling U.S. economy. Under the forces of 2008, the nation has more gasoline in the tank than at any time since early 2002 - yet gas is $3.15 a gallon with no peak in sight. Blame speculators, a falling dollar, the federal deficit and continued, breakneck growth by China and India. Spare a thought for Federal Reserve chief Ben S. Bernanke while you're at it. His main tools to forestall a recession are adding to the problem.

So the mortgage crisis comes to this: Columbia's Fieldstone Mortgage enters bankruptcy proceedings, stiffing Wall Street's biggest names, and it's only a local story. Mr. Bernanke, here's another indicator you're losing control. If a major subprime lender leaves Morgan Stanley, Household International, Bear Stearns and others holding a $100 million bag and the national news media ignore it, maybe the problem is a heck of a lot bigger than most of us dreamed. Lower the short-term interest rates.

Re-regulating Maryland's power industry might be politically popular in the face of rising rates, experts say, but would be legally complicated, potentially costly and would not necessarily result in lower energy prices. The idea of re-regulation has gained steam during the past month as the prospect of a 72 percent rate increase this summer by Baltimore Gas and Electric Co. all but consumed the recent session of the Maryland legislature. On Monday, Douglas M. Duncan, the Montgomery County executive and Democratic gubernatorial candidate, called for re-regulating the power industry and imposing rate limits, setting himself apart from the other major candidates in the race, Republican Gov. Robert L. Ehrlich Jr. and Democratic Baltimore Mayor Martin O'Malley.

The day after Christmas, days before her malpractice insurance bill came due and Maryland politicians hammered out a bill in the hope of rescuing doctors such as her, Nancy Brown-Holt - feeling she was between a rock and a hard place - simply quit. "I can't play with my family's livelihood like that, I just can't," Brown-Holt said. She felt she was unable to come up with $30,000 to pay her increased insurance premium and continue as an obstetrician-gynecologist after 11 years. Instead, she chose to "retire completely and permanently" from medicine.

High phone rates - one of the most vexing problems affecting the families of Maryland prison inmates - may soon be coming down. The state Board of Public Works is scheduled to act today on a new prison telephone services contract. If the board approves the contract, rates could decrease by up to 76 percent for certain long-distance calls. The high cost of accepting phone calls from prisoners imposes a heavy burden on family members, said Janeth Welch, whose husband served 17 months in a state prison in Hagerstown.

DEAR MR. Greenspan: Jean von Briesen appreciates all your efforts, but she will not be helping the economy much anytime soon. You keep saying you're cutting interest rates to get people to spend more, but Jean is spending less. Each time rates drop, Jean and the other people who live on bank savings, bonds and other rate-sensitive investments have less financial wherewithal, not more. You thought you were doing the country a big favor by reducing the key Federal Reserve interest rate to 1.25 percent.

Home-purchase mortgages are surging to an expected record high of almost $1 trillion this year as home sales continue to soar amid a slow economy, according to midyear forecasts by the Mortgage Bankers Association of America. The volume of mortgages is growing because of rising home sales and higher prices and mortgages on those homes. About 6.5 million homes are expected to be sold this year, 5 percent more than last year. The total value of home-purchase mortgages is expected to reach $989 billion, up from $873 billion.

Carroll commissioners expect sparse attendance at a public hearing today on the county's revised water and sewer rates, which are billed according to each customer's quarterly usage. The county held several well-attended hearings last spring on the new rate formula, designed to lower rates for those who use less water. On advice of legal counsel, officials decided to hold one more hearing on the rates. "This hearing is a courtesy in case people misunderstood," said Commissioner Julia Walsh Gouge.

NEW YORK -Investors waiting for the Federal Reserve's decision on interest rates today are just as concerned about the policy statement accompanying the rate cut as they are about the size of it. Investors, traders and economists surveyed by Bloomberg News all say the central bank will lower its target for overnight interbank lending, or federal funds, which is 4 percent. While they don't agree on how much the cut will be, what they all want to know is what policy-makers see as risks to the economy for the next eight weeks - until they meet again Aug. 21. Yields on Treasury securities maturing in 10 years or more "will react to the Fed's statement more than the actual rate change," said Mike Sheridan, a director and senior portfolio manager who oversees more than $9 billion in assets for The Reserve Funds.

WITH general interest rates coming down, when can you expect relief on your loans? Variable-rate loans will drop on a schedule written into your lending agreement. Loans with fixed rates normally don't change, but might in some cases. Here's what to expect: On credit cards: Nearly half of all cards currently carry variable rates, says Robert McKinley, president of CardWeb.com.They're often tied to the bank prime lending rate, which dropped again last week. The prime rate currently stands at 7.5 percent.