March 8, 2008 in Business

WaMu suffers another S&P ratings hit

Associated Press The Spokesman-Review

Standard & Poor’s Ratings Services lowered its rating on a Washington Mutual Bank-backed bond issue Friday, a day after the agency cut its overall credit rating for the thrift.

The ratings agency also said the mortgage crisis could hit WaMu harder than it had predicted.

Shares of the country’s largest savings and loan plunged more than 15 percent to a 52-week low of $9.91.

S&P lowered its rating to “BBB+” from “A-” for a Washington Mutual Bank letter of credit that supports $21.9 million in debt raised for a real estate development in Forth Worth, Texas. The new rating is still considered investment grade.

The move resulted from S&P’s Thursday decision to cut Washington Mutual Inc.’s long-term credit ratings. The ratings service said the housing slump may last longer than expected, and mortgage defaults and home foreclosures would thus take a bigger bite out of WaMu’s earnings.

Merck & Co. is on the verge of settling most serious personal injury lawsuits over Vioxx, but the Trenton, N.J.-based drugmaker still faces substantial litigation over the one-time blockbuster painkiller it yanked from the market in 2004 because of cardiovascular risks.

More than 44,000 plaintiffs have enrolled in a proposed $4.85 billion settlement for U.S. personal injury cases involving heart attacks, strokes or death, the company said this week.

But Merck still has Vioxx lawsuits coming from all directions – from patients in 18 foreign countries, from health providers and consumers who paid for Vioxx and want their money back, and from stockholders looking to recoup their loses. New lawsuits are still being filed.

Merck has set aside $6.773 billion to pay an army of lawyers handling all that litigation, plus the nearly 20 personal injury cases that went through trials before Merck proposed a deal in November.

However, thousands of former Vioxx users who claim other injuries – dangerous chest pain, abnormal heart rhythms and similar conditions – are excluded from the settlement and many of their cases continue.

Wal-Mart, the world’s largest retailer, jacked up its lobbying budget by 60 percent in 2007, spending $4 million to influence the government on issues ranging from energy efficiency to retail crime.

While its lobbying budget is still pocket change compared with other major trade groups and corporations, Wal-Mart’s increased spending marks a growing recognition that the bottom line in Bentonville, Ark., is subject to the ways of Washington.

In 2006, the company spent about $2.5 million for lobbying, up from $1.6 million in 2005. But less than a decade ago, Wal-Mart barely broke the six-figure mark thanks largely to Sam Walton’s distaste for it. It spent $140,000 in 1999, after establishing a Washington shop about 10 years ago. It spent about $1 million annually for the next several years, before increasing its lobbying representation and funds in 2005 amid increased criticism of labor practices and benefits.

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