Business in brief: Fed extends loan program
WASHINGTON – With banks limiting the availability of auto, student and other consumer loans, the Federal Reserve said Monday it would extend a program intended to help spur more lending at low rates.
The program, Term Asset-Backed Securities Loan Facility, or TALF, is set up to provide up to $1 trillion in low-cost financing to investors to buy securities backed by consumer and commercial loans. It was set to expire at the end of the year.
The part of the program aimed at boosting consumer and business lending is being extended through March. The part geared toward boosting new commercial real estate lending will run through June, because of the extra time typically needed to complete such deals.
The program has the potential to generate up to $1 trillion in lending, according to the government. But participation has been scant: As of Aug. 12, the value of loans outstanding stood at just $29.6 billion.
Lowe’s earnings drop sharply
NEW YORK – No. 2 home-improvement retailer Lowe’s Cos. on Monday said second-quarter earnings fell 19 percent on weaker-than-expected sales, adding fresh fuel to doubts about the ability and willingness of consumers to lead the U.S. economy out of recession.
Lowe’s results Monday were a stark contrast to the prior quarter, when the company said it saw fresh signs of a consumer resurgence. Monday’s release cited continued consumer weakness.
The weak earnings combined with a narrowed full-year profit outlook to knock shares down $2.36, or 10.3 percent, to close at $20.47. It was the worst-performing stock in the S&P 500 Index in Monday trading.
Lowe’s said profit fell to $759 million, or 51 cents per share, from $938 million, or 64 cents per share, last year.
Revenue fell 5 percent to $13.84 billion from $14.51 billion last year.
Minicar will be built in Mexico
DETROIT – Chrysler Group LLC, now being run by Italian automaker Fiat Group SpA, is planning to build the Fiat 500 minicar at a factory in Mexico, according to a person briefed on the company’s plans.
The automaker also is considering building a compact car in the U.S. that could be larger than the 500, according to the person, who did not want to be identified because the plans have not been made public.
News of the Fiat 500 decision disappointed several members of the United Auto Workers union who had hoped that the minicar would be made at a U.S. factory because of UAW cost-saving concessions and the fact that Chrysler has received $15.5 billion in U.S. government aid.