Morning Business Memo
Pain at the pump is back. The national average retail price of regular gasoline surged nearly 14 cents a gallon to $3.64 a gallon. The Energy Information Administration says average prices are at their highest since May. The rise was the biggest one-week increase in prices since the week ended May 11, 2009. The steep jump might have been the result of a series of refinery and pipeline issues that affected the gasoline market last week, particularly in the Midwest, said Brian Milne, refined fuels editor at brokerage Telvent DTN. Midwest prices saw the biggest increase, rising 25.7 cents to $3.772 a gallon, their highest since April 23. Oil analyst Tom Kloza says gas prices will probably come down next month. "There's a big difference between the kind of gas we use in the summer and other seasons and that accentuates the highs and accentuates the lows," Kloza says.
With interest rates at record lows, the number of consumers who are refinancing their mortgages has reached a three-year high. The Federal Housing Administration says refinance applications for government insured loans soared nearly 200 percent from May to June. If you qualify, it might be a good idea to get the lowest loan rate possible. But upfront costs are high. "Closing costs can vary widely, not only between different parts of the country but among quotes you get from different lenders," Greg McBride of bankrate.com says. His advice to consumers: Shop around for the best deal. "You want to apply with up to three different lenders ideally on the same day." Compare the good faith estimate of closing costs from each lender, McBride says. "Don't get tunnel vision and focus just on the interest rate," he adds. If you plan to stay in your home for at least two years, a refinanced mortgage at a lower interest rate could save you a lot of money.
Another scandal involving a big bank. Shares in London-based Standard Chartered are down more than 20 percent this morning. Investors are reacting to U.S. accusations that the bank laundered money for Iran. New York state's top banking regulator alleges that Standard Chartered schemed with the Iranian government to launder $250 million in the years after 2001, leaving the U.S. financial system vulnerable to terrorists. New York's Department of Financial Services has threatened to strip the bank of its license to do business in the state. HSBC bank recently apologized for ignoring U.S. sanctions and allowing Iranian corporations and banks to move money illegally. Standard Chartered said it "strongly rejects" the allegations. Its statement said "well over 99.9 percent" of the questioned transactions with Iran complied with all regulations, and the exceptions amounted to $14 million.
The trading firm Knight Capital secured a $400 million lifeline after last week's huge loss, caused by a computer malfunction. Knight's new investors will get more than a 70 percent share in the firm. That means big losses for current shareholders.
Is everybody happy? Federal Reserve Chairman Ben Bernanke wants to know. Bernanke says gauging happiness can be as important for measuring economic progress as determining whether inflation is low or unemployment high. Bernanke says that in addition to money and benefits, economics is also about understanding and promoting "the enhancement of well-being."