News and Finance

The Senate on Wednesday passed a two-year, $109 billion transportation bill to rebuild roads, bridges and rail systems after rejecting numerous attempts to load the measure with provisions ranging from the Keystone XL oil pipeline to waivers from Obama administration health insurance policies.

The measure, approved 74-22, moves to the House of Representatives, which has failed to gain enough votes for its own more expensive transport bill with controversial funding reforms. House Speaker John Boehner said last week he planned to take up the Senate version in the absence of such support.

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Retail sales in the U.S. probably rose in February by the most in five months, spurred by the strongest demand for automobiles since 2008, economists said before reports this week.

The 1.1 percent rise would follow a 0.4 percent gain in January, according to the median forecast of 67 economists surveyed by Bloomberg News ahead of Commerce Department figures due March 13. Industrial production picked up in February, while inflation excluding food and energy remained in check.

Sales at retailers like Gap Inc. (GPS) and Target Corp. (TGT) last month beat analysts

European Central Bank President Mario Draghi signaled he

The Bank of Montreal has fired another shot across the bow of its housing market rivals by renewing its record-low 2.99 per cent rate on five-year mortgages.

The bank also said Wednesday it will offer a rate of 3.99 per cent on 10-year mortgages.

Both products come with a 25-year amortization period.

The offer takes effect Thursday for the five-year mortgage and Sunday for the 10-year. Both will be available until March 28, said Frank Techar, head of Canadian personal and commercial banking at the Bank of Montreal.

The special offers

Stocks suffered their biggest losses of the year Tuesday as a sell-off spread west from Europe ahead of a critical deadline in the Greek debt crisis. The Dow Jones industrial average fell more than 200 points.

The Dow has not closed down more than 100 points this year, and its biggest one-day decline had been 159 points, on Jan. 13. It fell sharply from the opening bell Tuesday and was down as much as 208.

At around 12:20 p.m. CST, the Dow was down 208 points, or 1.6 percent, at 12,755. The Standard & Poor’s 500 index was down 22 points at 1,342, and the Nasdaq composite index was down 44 points at 2,906.

Stocks fell more than 3 percent in Germany, Spain and France, and 1.9 percent in Britain. Thursday is the deadline for private investors to sign up to swap their Greek government bonds for replacements with a lower face value and interest rate.

Major banks and investment funds have signed on for the swap, but it remains unclear whether hedge funds, which had already bought the bonds at a steep discount and may profit from bond insurance payouts if Greece defaults, will agree.

The swap is vital for Greece to cut its debt and get a bailout of €130 billion, or $172 billion, from other countries and the International Monetary Fund. Without the bailout, Greece could default on its debt later this month and rattle markets around the world.

In the U.S., worries about Greece come on top of concerns about a recession in Europe and slowing economic growth in China. Some investors also believe the rally in U.S. stocks this year — the Standard & Poor’s 500 is up almost 7 percent — has come too far too fast.

The Dow has not closed down 100 points in 45 straight trading sessions, the longest streak since 2006. On Tuesday, all but one of the 30 stocks that make up the average, Kraft Foods, declined as the Dow appeared ready to break the streak.

Caterpillar, which makes heavy equipment and depends heavily on China for profits, fell 4.2 percent, the worst of the Dow 30. All 10 industry groups in the S&P 500 were lower, with materials stocks and banks leading the decline no fax payday advances.

Bill Stone, chief investment strategist for PNC Wealth Management, called Tuesday’s decline “fairly rational,” considering how much the market has climbed and the economic worries in Greece and the rest of Europe.

“You need the pullback to give people opportunities to want to get involved again,” Stone said.

Oil prices slipped $1.71 to $105.01 per barrel on the New York Mercantile Exchange. New York crude has risen from $96 last month amid fears of a disruption in global oil supplies driven by the potential for military conflict with Iran.

The price of gold fell $36 per ounce, or 2.1 percent, to $1,668 per ounce. Silver, platinum and copper all fell more than 2 percent, because of concerns about Europe and weaker economic demand in China.

“Global growth fears now are hitting home, and we’re seeing selling across the board,” said Matt Zeman, a market analyst for Kingsview Financial.

Yields on U.S. government debt also fell as investors moved their money into what they perceive to be a safer asset. The yield on the benchmark 10-year Treasury note fell to 1.94 percent from 2.01 percent late Monday. Bond yields fall when their prices rise.

Among stocks making big moves:

— Weight loss company Nutrisystem Inc. fell 11 percent after it reported a bigger-than-expected fourth-quarter loss and a disappointing outlook.

— General Motors fell 5.5 percent after saying it will pay €304 million, or $402 million, for a 7 percent stake in Peugeot, which will make it the French carmaker’s second-largest shareholder after the Peugeot family.

— VeriFone Systems Inc. rose 5.4 percent after the maker of electronic payment systems predicted a bigger-than-expected 2012 profit.

— Apple fell 1.1 percent one day before the expected release of its iPad 3 tablet computer.

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American International Group Inc. is selling part of its stake in AIA Group Ltd. to raise $6 billion as it continues to repay the $182 billion government bailout that prevented the company’s collapse during the 2008 financial crisis.

New York-based AIG plans to sell a “significant proportion” of its 33 percent stake in AIA, the Hong Kong listed company said Monday. AIG said in a separate statement Sunday the shares will be sold to institutional investors and proceeds will be used to pay off money owed to the U.S. Treasury.

The companies did not disclose details, but two people with knowledge of the terms of the share sale said AIG is selling about 1.7 billion AIA shares at 27.15 to 27.50 Hong Kong dollars each. That would raise HK$46.15 billion to HK$46.75 billion ($5.9 billion-$6 billion). They requested anonymity because they were not authorized to discuss the deal.

The price is expected to be set on Tuesday.

The insurance giant teetered near collapse in 2008. It received $182 billion from the U.S. government _ the biggest of the Wall Street bailout packages _ after suffering massive losses from investments in derivatives.

Most of the rescue money went to pay the firm’s obligations to big banks.

AIG has been steadily paying back its debt and according to a government watchdog, owed U.S. taxpayers $50 billion as of Dec. 31. The government still owns about 76 percent of AIG.

In 2010, AIG spun off AIA in Hong Kong’s biggest ever initial public offering to raise $20 billion _ money that was used to pay bailout debt.

Shares of AIA are suspended from trading in Hong Kong pending the share sale.

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Federal Reserve Bank of San Francisco President John Williams said the Fed should maintain an

Two entrepreneurs who helped resurrect a shuttered steel mill in Alton nearly a decade ago have turned to a green pursuit: recycling paper mills.

Green Investment Group, a privately-held venture founded by Alton attorney Raymond Stillwell and Mark Spizzo of Belleville, acquires shuttered paper mills with the aim of converting the sites into “green centers” for alternative fuel and recycling businesses.

The company owns two former paper mills in Canada, where the Green Investment leases space to companies with green businesses, and hopes to invest in the sites’ tenants.

The firm also plans to redevelop five old mill properties it owns in Alton; Bathurst, New Brunswick; Ohio; Indiana; and Montana.

“What can be better than re-purposing a facility that everyone thought wouldn’t be back in use?” Spizzo said from the company’s Alton headquarters, where topographical maps of each of the properties line the walls and desk tops.

Finding value in something discarded is familiar to Raymond Stillwell. He was among a group of investors who bought the former Laclede Steel Co. mill in Alton out of bankruptcy in 2003 and reopened it as Alton Steel later that same year.

Stillwell sold his stake in Alton Steel in 2005 for an undisclosed amount and used the proceeds to launch Green Investment with Spizzo, who previously was director of employee relations at Alton Steel and worked in economic development in Illinois for two decades.

At one of its former paper mill site in New Richmond, Quebec, a tenant, Fabrication Delta, makes posts for solar wind turbine towers.

On a 2,200-acre Green Investment property in Portage-du-Fort, Quebec, a renewable biomass company called Trebio converts sawdust and wood chips to energy pellets used for heating buildings. The company owns a stake in Trebio.

Each of those Canadian businesses now employ about a hundred people, a fraction of the workforce that existed when the paper mills were running. But Green Investment, which bought both properties in January 2010, contends the potential exists for greater job production as green companies look for industrial space.

Stillwell is convinced former brownfield sites, such as the company’s former paper mills, will be in demand once corporations ramp up green initiatives.

“Everyone is competing with the whole world now,” he said. “You can’t throw away everything when you’re competing with China and they’re not throwing waste away, but are re-using it.”

PICKING UP THE PIECES

Since 2006, Green Investment acquired the seven mills from paperboard and paper-based packaging manufacturer Smurfit-Stone Container Corp., once one of St. Louis’ largest publicly traded companies. Smurfit-Stone closed dozens of mills in the U.S. and Canada after the company was created through the 1998 merger of Ireland’s Jefferson Smurfit Group Plc and Stone Container Corp. of Chicago.

As a result of the merger, the combined company had many mills with aging, inefficient systems, said Chip Dillon, a partner and analyst with Vertical Research Partners in New York.

“Smurfit-Stone really spent less money on their mills than other companies had, and by the mid-2000s, oversupply hurt them.”

Smurfit-Stone, which operated from dual headquarters in Creve Coeur and Chicago, eventually fell into bankruptcy in 2009. It emerged from bankruptcy the following year, and then was acquired by a competitor in 2011.

Paper mill closures have had devastating effects on the communities in which their located, which previously supplied hundreds or even thousands of jobs.

“It’s a real blow to those towns,” Steven Chercover, a senior research analyst with D.A. Davidson & Co. “There’s usually a workforce that’s eager for some type of production to resume.”

This economic impact also has made municipalities receptive to working with Green Investment and supplying tenant leads, Spizzo and Stillwell said.

Some of the properties also offer a spate of tax credits and other incentives for development.

Green Investment representatives have toured four former paper mills in the past two months for potential acquisition, Stillwell said.

ALTON DEVELOPMENT

From a massive building in downtown Alton, hundreds of workers once churned out the rippled material in cardboard boxes. But that mill fell silent in December 1998 when Smurfit-Stone closed the facility as part of a restructuring.

The Alton site was Green Investment’s first acquisition, purchased in 2006. Though the company’s earliest site, the property has been the slowest to develop.

Green Investment spent the past few years cleaning up the site. An effort in 2006 to convert the container plant to a waste-recycling facility never materialized. Another project to built an ethanol plant also was shelved.

The company typically keeps the plants intact for re-use, but decided to raze the Alton mill facility. An empty service garage remains on the property.

“I’m not sure why this (site) hasn’t come to fruition,” Monica Bristow, president of the RiverBend Growth Association, an economic development association covering 20 Illinois communities including Alton. “It’s ripe for redevelopment; it’s in a good location, and we have the workforce here.”

The 232-acre Alton property, renamed the America’s Center industrial park, is located in a tax increment financing district and an Enterprise Zone that could offer public incentives.

Industrial development slowed throughout St. Louis region during the economic downturn, but industrial users have resumed touring properties for potential development in the Metro East.

“Since the first of the year, we’ve had three to four users looking,” Bristow said. “We’re seeing some movement.”

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Mortgage giant Fannie Mae said Wednesday that it lost money in its fourth quarter and is asking the federal government for $4.57 billion in aid to cover its deficit.

Washington-based Fannie said it lost $2.41 billion in the October-December quarter, stung by declining home prices. Revenue was $4.53 billion.

The government rescued Fannie and sibling company Freddie Mac in September 2008 to cover their losses on soured mortgage loans. Since then, a federal regulator _ the Federal Housing Finance Agency _ has controlled their financial decisions.

Taxpayers have spent more than $150 billion to prop up Fannie and Freddie, the most expensive bailout of the 2008 financial crisis. The government estimates that figure could top $259 billion to support the companies through 2014 after subtracting dividend payments.

Fannie has received more than $116 billion so far from the Treasury Department, the most expensive bailout of a single company.

Fannie officials say losses have increased in recent quarters for two reasons: Some homeowners are paying less interest after refinancing at historically low mortgage rates; others are defaulting on their mortgages.

When property values drop, homeowners default, either because they are unable to afford the payments or because they owe more than the property is worth. Because of the guarantees, Fannie and Freddie must pay for the losses.

Fannie’s October-December loss takes into account $2.6 billion in dividend payments to the government. That compares with a loss of $2.1 billion in the fourth quarter of 2010.

In November, Freddie requested $6 billion in extra aid _ the largest request since April 2010 _ after it reported losing $6 billion in the third quarter.

Fannie Mae and McLean, Va.-based Freddie Mac own or guarantee about half of all mortgages in the U.S., or nearly 31 million home loans. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past few years.

Fannie and Freddie buy home loans from banks and other lenders, package them with bonds with a guarantee against default and sell them to investors around the world. The companies nearly folded more than three years ago because of big losses on risky mortgages they purchased.

The Obama administration unveiled a plan one year ago to slowly dissolve the two mortgage giants. The aim is to shrink the government’s role in the mortgage system, remaking decades of federal policy aimed at getting Americans to buy homes. It would also probably make home loans more expensive.

The firms’ regulator, the FHFA, submitted a plan to Congress last week that would reduce the companies’ role in the mortgage market. Under the plan, Fannie and Freddie could also increase its prices to guarantee loans and establish agreements with private investors to take on added credit risk.

Exactly how far the government’s role in mortgage lending would be reduced was left to Congress to decide. But all three options the administration presented would create a housing finance system that relies far more on private money.

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