Fed’s regional bank survey finds gains in most areas

Most areas of the country reported slight economic improvement in September and early October, according to a Federal Reserve survey of its 12 bank regions. But several regions said a hazier economic outlook is making businesses more cautious and holding back their spending.

The Fed said Wednesday that consumer spending rose slightly in most districts. Manufacturing also rebounded, particularly in the auto industry, which has been hampered since the March 11 earthquake in Japan.

Still, in some regions, businesses outside the auto industry reported a weaker and more uncertain outlook, which raised caution and weighed on those companies’ spending plans.

Citigroup agrees to settle fraud case for $285 million

Citigroup has agreed to pay $285 million to settle civil fraud charges that it misled buyers of a complex mortgage investment just as the housing market was starting to collapse.

The Securities and Exchange Commission said Wednesday that the big Wall Street bank bet against the investment in 2007 and made $160 million in fees and profits. Investors lost millions.

Citigroup neither admitted nor denied the SEC’s allegations in the settlement.

The penalty is the biggest involving a Wall Street firm accused of misleading investors before the financial crisis since Goldman Sachs & Co. paid $550 million to settle similar charges last year.

Fuel costs trump fare hike as American absorbs loss

Even higher fares couldn’t pull American Airlines out of its financial nose dive.

American’s parent, AMR Corp., lost $162 million in the third quarter, hurt by a 40 percent jump in fuel costs that wiped out higher revenue from increased fares and passenger fees. It was the company’s 14th losing quarter in the last 16.

Even in an industry known for its poor financial track record, American stands out. It has too many gas-guzzling planes and the most expensive work force among major U.S. carriers.

AMR spent $2.3 billion on fuel, which easily topped wages and benefits as its biggest expense and undermined American’s average fare increase of 7 percent in the quarter.

Morgan Stanley reports $2.2 billion quarterly gain

Morgan Stanley emerged from the tumultuous third quarter in better shape than most of its Wall Street rivals.

While other banks reported declines in trading and advisory revenue, Morgan Stanley increased its income from advising companies on deals and trading for its clients. The New York investment bank said Wednesday it earned $2.2 billion in the period, which also included a big accounting gain.

Morgan Stanley’s results were in striking contrast to its chief rival Goldman Sachs, which reported a $428 million net loss Tuesday.

The quarter was marked by heavy turbulence in financial markets, brought on by the debt crisis in Europe and a downgrade of the U.S. government’s credit rating.

 

– From news service reports