Unemployment Rate Drops Again in October
The nation's unemployment rate dropped to 6% in October as companies added thousands of jobs for the third straight month, new evidence of an improving labor market.
The Labor Department reported that payrolls grew by 126,000 last month, significantly more than the 50,000 net new jobs that economists had predicted. That followed a revised 125,000 net new jobs in September, which initially was reported at 57,000.
U.S. companies also added to payrolls in August, marking three months of hiring gains after a six-month slump. October hiring occurred across a broad swath of the business landscape, including technical services, temporary employment firms, health care, social work, education and retail.
The hard-hit manufacturing sector continued to shed jobs in October, but the pace of job loss has slowed considerably.
NYSE Chief Reveals Proposed Reforms
John S. Reed, brought in to shake up the New York Stock Exchange, unveiled his reform plan but drew fire from critics who said it would not go far enough to make the stock market answerable to investors.
The highlight of Reed's proposal is a slimmed-down board of directors that for the first time would be free of business or regulatory ties to the exchange.
"I do not believe today's reforms are powerful enough medicine to restore the health of the NYSE," California Treasurer Phil Angelides said.
Reed, the interim chairman, defended his proposals as "robust." Under his plan, the board would consist of six to 12 members who would hire the NYSE chairman and chief executive, oversee regulatory functions and set some salaries. Reed nominated eight people; only two would be holdovers from the existing 27-member panel.
Recording Giants Sony, BMG Announce Merger
Sony Corp. and Bertelsmann formally announced plans to merge their recorded-music operations, and rivals Time Warner Inc. and EMI Group moved closer to announcing a similar hook-up -- deals that would put the overwhelming majority of the world's music catalogs into the hands of three players.
The once vibrant, cash-rich music business is drowning in red ink amid widespread piracy and plummeting sales. Joining the industry's No. 2, Sony, with the No. 5, BMG, would generate an estimated $5 billion in annual sales.
Executives have said they believe that the rise of piracy and other shifts in the marketplace make it easier to make the case for a merger before the European Commission, which must approve such consolidations and has cast a harsh eye on music industry tie-ups in recent years.
Prosecutors Plan Second Trial for Quattrone
Prosecutors in New York said they would retry Frank Quattrone, the former Silicon Valley investment banking luminary whose first trial on obstruction-of-justice and witness-tampering charges ended last month with a Manhattan federal jury deadlocked 8 to 3 for conviction.
In a letter to U.S. District Judge Richard Owen, U.S. Atty. James B. Comey said prosecutors had talked with Quattrone's defense about the second trial, "and we will contact the court shortly regarding scheduling."
Comey did not indicate whether the government would bring the same charges against the 48-year-old Quattrone.
The prosecution contended that an e-mail Quattrone sent in December 2000 was proof that he knowingly interfered with investigations into alleged misconduct at his employer at the time, Credit Suisse First Boston.
Quattrone's attorney, John W. Keker, said he and his client "remain confident that the government's evidence is insufficient to prove their case."
State to Broaden Probe to 40 Tenet Hospitals
State officials said they would audit Medi-Cal billing practices at Tenet Healthcare Corp.'s 40 California hospitals after finding the company's Redding Medical Center was overpaid nearly $12 million in taxpayer money.
Diana Ducay, deputy director of audits and investigations at the California Department of Health Services, said the decision to widen the probe was spurred by "the number and severity of discrepancies found at Redding Medical Center."
A Tenet spokesman said the company planned to challenge the state's audit.
The review concluded that Redding received $11.9 million in excess reimbursements for Medi-Cal patients, and for the rural poor treated under the County Medical Services Program, for the two years that ended May 31, 2001.
The Redding hospital has repaid not quite $8.9 million of the money, the state said, and has 60 days to appeal the audit and to repay the $3 million that remains -- due even if an appeal is filed.
Lawmakers Lash Out as Fund Debacle Broadens
Members of Congress and law enforcement officials blasted the $7-trillion mutual fund industry for betraying the public, amid new evidence that many financial firms had engaged in improper trading that siphoned profits from small investors.
The Securities and Exchange Commission told lawmakers that more than one-fourth of major brokerage firms examined by the agency had allowed favored investors to illegally trade funds after the stock market had been closed for the day.
New York Atty. Gen. Eliot Spitzer told lawmakers at a Senate hearing that he would insist that fund companies return any fees they gained through allowing wrongful trading practices.
Also, Putnam Investments' chief executive quit; the fund giant had been charged with securities fraud. And an SEC official in Boston resigned after criticism that his office had failed to listen to a fund whistle-blower.
Testimony by Stephen M. Cutler, the SEC's director of enforcement, suggested that Wall Street brokerage firms might be deeply involved in the mutual fund mess as well.
Strong Capital's Founder Resigns as Chairman
Richard S. Strong resigned as chairman of the mutual fund company he founded nearly 30 years ago. Strong's move came after New York Atty. Gen. Eliot Spitzer said he might bring criminal charges against the 61-year-old executive involving alleged improper trading in shares of funds managed by Strong Capital Management Inc.
The Strong company was one of four firms named by Spitzer in a Sept. 3 court complaint. Spitzer said the companies allowed a favored investor to engage in trading of fund shares that cheated average investors.
A statement from independent directors of the Strong funds said Richard Strong's resignation as chairman of the funds would not affect his role as head of Strong Capital Management, which manages the portfolios under contract with the board.
Strong Capital has said that Richard Strong did not believe his trading was "disruptive."
Garamendi Pushing to Cut Workers' Comp Fees
California Insurance Commissioner John Garamendi turned up the heat on the state's workers' compensation insurers by recommending that carriers slash employers' premiums by an average of 14.9% early next year to reflect the effects of recently passed reforms.
If implemented, such cuts effectively would roll back average workers' comp premiums to July 2002 levels and deliver relief to California employers hurt by skyrocketing costs for the mandatory coverage.
Garamendi's proposed rollback is nearly three times larger than the figure suggested by a rating bureau. Workers' comp carriers said Garamendi was pushing them too far to slash rates based on legislation that many fear may not deliver promised medical cost savings when it takes effect Jan. 1.
Fed Chief Greenspan Sees Better Days Ahead
The U.S. economy is on the upswing, Federal Reserve Chairman Alan Greenspan said, as reports showed worker productivity surging and unemployment claims falling.
Greenspan combined what he called his "relatively optimistic" short-term forecast with a stern warning about the long-term dangers of swelling budget deficits. He urged lawmakers to narrow the gap by cutting spending, not raising taxes.
But in remarks to a securities industry conference in Florida, he said the odds "increasingly favor a revival in job creation" as employers find it more difficult to satisfy rising demand. His comments came before the Labor Department reported October's better-than-expected national unemployment rate.
The economy is accelerating, but there is "scant evidence" that inflationary pressures are building, Greenspan said, adding that the Fed was inclined to keep short-term interest rates at 40-year lows for the time being.
After Furor, CBS Shifts 'The Reagans' to Cable
CBS tried to defuse outrage over "The Reagans" by shifting the two-part drama to pay-cable network Showtime, setting off a chain reaction of arguments.
Conservatives who mobilized against the miniseries called CBS' retreat a victory for ordinary Americans over an elitist network that was about to attack a beloved, dying president in the advanced stages of Alzheimer's disease.
And liberals who have spent decades fending off allegations by conservatives that their opinions shape the entertainment industry bemoaned the network's decision as near-censorship.
"The Reagans," scheduled to air Nov. 16 and 18 during the "sweeps" month, instead will appear on Showtime next year.
CBS and Showtime both are owned by Viacom Inc.
For a preview of this week's business news, please see Monday's Business section.