Economy: Senate may revise Bush stimulus plan
President Bush and the House of Representatives have agreed on a $150 billion package to boost the economy, but the Senate has other ideas, said Marketwatch.com. The House version of the bill would give tax rebates to most U.S. families and give corporations tax breaks designed to encourage hiring. But “some Senate Democrats have come out in favor of adding more provisions to the bill, such as increased aid for housing-related programs, food stamps, and unemployment insurance.” President Bush urged senators to back the House bill, saying that a drawn-out debate could further weaken the economy.
Most economists do not expect the stimulus package to keep recession at bay, said Peter S. Goodman and Louis Uchitelle in The New York Times. Putting money “swiftly into the hands of ordinary consumers” is expected to limit the severity of a recession and perhaps save some jobs. But “given that a lot of Americans are deeply in debt,” the consensus view among economists is that many people will use the money to pay credit card and other bills rather than buy goods and services. So the jolt to the economy may not be as big as many policymakers are hoping.
White-collar crime: Prison term for backdating
Former Brocade Communications CEO Gregory Reyes last week received a 21-month prison sentence for his role in an options-backdating scheme, said Kevin Allison in the Financial Times. Reyes is the first corporate executive to be convicted for backdating, “a potentially fraudulent practice in which the value of a stock option grant is artificially inflated.” Prosecutors had sought a 33-month term, but federal Judge Charles Breyer may have been swayed by the defense’s argument that Reyes did not personally gain from the backdating.
Construction: Caterpillar feels the pinch
Falling machinery and engine sales in the U.S. took a big bite out of Caterpillar’s revenues in 2007’s fourth quarter, said Hal Weitzman and Daniel Pimlott in the Financial Times. Nor does the heavy-equipment maker expect a rebound anytime soon. Caterpillar said last week that North American sales had fallen 11 percent, although strong international revenues allowed the company to meet its revenue projections of $12.1 billion. “The sectors in which Caterpillar operates—trucking and construction—are seen as barometers of U.S. economic health.”
Health care: WellPoint CFO got around
When health insurance giant WellPoint fired chief financial officer David Colby last May, the company said it was for “non-business reasons,” said Tom Murphy in the Associated Press. Now it’s becoming clearer why the company was so vague. In several lawsuits filed by women both before and after Colby was fired, he is depicted “as a corporate Casanova” who romanced at least 30 women around the country simultaneously, “made them extravagant promises, and then went back on his word.” The suits, one of which was filed by an underling, also allege that Colby, 54, gave several women sexually transmitted diseases. Colby has disputed some of the claims in court papers but has declined further comment.
Pharmaceuticals: Vytorin probe expands
Merck and Schering-Plough face at least three separate investigations into allegations that they withheld negative data about their anti-cholesterol drug, Vytorin, said Thestreet.com. The data “suggested Vytorin may be no more effective than Zocor, which is available in a cheap generic version.” New York state Attorney General Andrew Cuomo, the federal Food and Drug Administration, and the House Commerce Committee have all launched investigations. The companies said they would cooperate.