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Housing slump puts big strain on economy

By TIMES WIRES
Published December 22, 2006

The economy felt the strain of the housing bust and lost momentum in the late summer, with more sluggish performances expected in the months ahead. Economic growth slowed to a 2 percent pace in the July-to-September quarter, the Commerce Department reported Thursday. The message was loud and clear: The deepening housing slump is crimping growth. Investment in home building declined at a 18.7 percent rate - even more than previously estimated - and was the largest cut in 15 years. That shaved 1.2 percentage points off third-quarter growth, the most in nearly 25 years.

Allstate cuts more East Coast policies

Wary of the rising risk of hurricanes, Allstate Corp. has added coastal regions of North and South Carolina, Alabama, Maryland and Virginia to the growing list of areas where it is cutting back homeowners insurance coverage. The latest move adds to concerns by consumer advocates that less competition in those areas will cause rates to jump. Allstate has cut back sharply on homeowners policies in Florida over the past two years. Those decisions continue the company's strategy of minimizing risk after Katrina and other hurricanes devastated the Gulf Coast and caused it to lose a record $1.55-billion in the third quarter of 2005.

Italian firm buys most of realty giant

A holding company for Italy's Agnelli family, which controls automaker Fiat SpA, said it is paying $563-million for a 67.5 percent stake in New York-based real estate firm Cushman & Wakefield, which is prominent in the Tampa Bay area. Cushman's current parent, Rockefeller Group International Inc., a subsidiary of Mitsubishi Estate Co. of Tokyo, is best known for the development of the iconic Rockefeller Center in midtown Manhattan.

Two hedge funds interested in Delphi

Delphi Corp. has caught the eye of two hedge funds that, flush with year-end cash, may be seeing a way to make a buck from the nation's largest auto parts supplier as it emerges from bankruptcy. Highland Capital Management LP on Thursday proposed up to $4.7-billion in refinancing in a letter to Delphi's board of directors. It said it opposed a plan the company accepted Monday from an investor group led by Appaloosa Management LP and Cerberus Capital Management LP to spend up to $3.4-billion to help the company out of bankruptcy protection.

Sony to pay 39 states in CD case

Sony BMG Music Entertainment will pay $4.25-million as part of a settlement with 39 states to resolve investigations into problems caused by music CDs loaded with hidden antipiracy software. Under terms of Thursday's agreement, the record company will reimburse consumers whose computers were damaged while trying to uninstall the anti-piracy software. Sony BMG also said it will no longer distribute any compact discs loaded with copy-protection software that hinders computer users from easily locating it or removing it from their PCs.

[Last modified December 21, 2006, 23:12:51]