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The city of Denver anticipates saving at least $11 million a year because 322 employees accepted a retirement incentive offer, Mayor John Hickenlooper announced Tuesday.

But the city also plans to fill about half of the positions left vacant by the retirements "to avoid interruption of vital services to the community," a statement from the mayor's office said.

Hickenlooper proposed the voluntary retirement incentive program for senior Denver workers in August as a way to cut the cash-strapped city’s payroll costs.

The offer was for workers covered by the Denver Employees Retirement Plan. Eligible employees needed to be either at least 65 years old, or at least 55 years old with their age and years of city service adding up to 75 or more.

Hickenlooper offered those workers $500 a month for 30 months after their retirement.

There were 932 employees eligible for the retirement incentive program, and 322 took the offer.

"The retirement incentive program was a win-win for the city and for employees who chose to accept the offer," Hickenlooper said in the statement. "… We are grateful for the service these employees provided to our community and wish them well in the next chapter of their lives."

The retirements also will help the city reduce the number of workers it intends to lay off to trim the budget, officials said.

When the proposed city budget was released in September, officials anticipated 176 layoffs. Now, they expect fewer than 80 workers to be let go.

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The U.S. services sector, which represents about 80 percent of U.S. economic activity, grew for the second consecutive month in October, while the labor market also showed signs of improvement in data published on Wednesday.

The U.S. Institute for Supply Management’s services index slipped to 50.6 last month from 50.9 in September, below economists’ median forecast for a rise to 51.5, with the dividing line between growth and contraction being 50.

Although the report showed growth in the sector, analysts were disappointed in the employment index, which fell to 41.1 in October from 44.3 in September.

“It’s disappointing that it didn’t hit the consensus number but the good news is that the index stayed above 50,” said John Canally, economist, with LPL Financial in Boston.

“New orders are very strong for two months in a row and inventories are being restocked. The big disappointment is the employment number which dropped as opposed to the manufacturing sector index earlier this week.”

The report was roughly in line with surveys in Europe earlier on Wednesday suggesting service sector activity expanded at its fastest in 22 months in October in the euro zone, and in Britain at its briskest since August 2007, when the global credit crunch struck.

LABOR MARKET HURTS LESS

In other U.S. data on Wednesday, private sector companies reduced jobs in October at the slowest pace in more than a year, shedding 203,000 positions, fewer than a revised 227,000 jobs lost in September, according to the ADP Employer Services LLC report.

The October private job loss was the smallest since July 2008.

“There are still a lot of people out there feeling pain,” said Macroeconomic Advisers’ chairman Joel Prakken. “But we are heading in the right direction.”

The ADP figures are seen by some analysts as a proxy for the government’s closely watched report on non-farm payrolls. The U.S. Labor Department will release its October labor report on Friday at 8:30 a.m. EST.

Analysts polled recently by Reuters projected U.S. payrolls likely shrank by 175,000 in October, compared with a 263,000 decline in September.

Economists do not expect job growth to take place until 2010.

“We did have a month-on-month improvement in ADP but we are still losing jobs, and the 10 percent unemployment barrier has huge psychological significance,” said Michael Woolfolk, senior currency analyst at BNY Mellon in New York.

Still, the pace of private job losses has slowed since the 736,000 drop in March, according to ADP data. 

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Hospital operator Universal Health Services Inc reported higher quarterly net earnings on Thursday as revenue rose slightly, operating margins improved while costs were cut.

Third-quarter net earnings were $51.07 million, or $1.03 per diluted share, in the third quarter, compared with $36.99 million, or 73 cents per diluted share, in the year-ago period.

Analysts had expected earnings of 88 cent per share, on average, according to Thomson Reuters I/B/E/S.

Revenue rose to $1.295 billion in the quarter from $1.244 billion a year ago.

The provision doubtful accounts, or bad debt, rose to $141.09 million in the quarter from $125 million in the year ago period.

In a telephone interview, Chief Financial Officer Steve Filton said he expects bad debt to continue to rise cheap payday advance.

“It’s difficult to predict, but my best guess is that, as long as there’s unemployment, we’ll see a gradual increase,” Filton said.

But even in Las Vegas, Universal Health’s biggest market, where economic weakness is pronounced, the company performed well, as it held the line on spending, he said.

Filton said he has noticed that capital spending among hospitals has started to thaw a bit, although he said he expects hospital CFOs to remain somewhat cautious.

(Reporting by Debra Sherman; editing by Andre Grenon)

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Spain’s unemployment rate, the highest in Europe, held at 17.9 percent in the third quarter as state stimulus projects put people to work, even as the government warned the figure would rise again by year-end.

The number of unemployed fell by 14,100 from the previous three months to 4.12 million people, the Madrid-based National Statistics Institute said today in an e-mailed statement. From a year earlier, 1.52 million people joined the unemployment lines. The rate was expected to rise to 18.7 percent, according to a Bloomberg News survey of eight economists.

Spain’s government has implemented one of the largest stimulus plans in Europe, putting more than 400,000 people to work widening sidewalks and building cycle tracks in cities. The International Monetary Fund forecasts unemployment will exceed 20 percent next year, and joblessness among young people is almost twice that level, sapping support for Prime Minister Jose Luis Rodriguez Zapatero.

Spain’s opposition People’s Party extended its lead over the ruling Socialists to five percentage points, the most since Zapatero was first elected in 2004, according to an Oct. 12 poll in newspaper Publico. Zapatero’s Socialists would win 38 percent of the vote compared with 43 percent for the PP if elections were held now, said the poll prepared by Publiscopio. Unemployment is Spaniards’ main concern, according to the state- run Center for Sociological Research.

Construction Boom

Finance Minister Elena Salgado said yesterday that the fourth quarter could bring worse jobless data as the third quarter was traditionally more favorable for employment.

Once the motor of job-creation in the euro region, Spain is now suffering from the end of a decade-long construction boom that has left a glut of 1 million new, unsold homes and produced the deepest recession in more than half a century. The IMF expects the Spanish economy to contract 0.7 percent in 2010, while the euro area, U.S., and U.K. post full-year growth.

Rising joblessness is swelling the budget deficit as the government has extended jobless benefits for the long-term unemployed and is implementing stimulus measures worth 2.3 percent of gross domestic product. The shortfall will swell to 9.5 percent of GDP this year, one of the largest in the euro region, before narrowing to 8.1 percent in 2010.

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Despite all the finger-pointing over who’s to blame for the worst financial crisis since the Great Depression, just two prominent players face criminal charges.

But even though the case against them is compelling, and the government wants to make an example of them, legal experts say it will be hard to nail down anyone else.

Ralph Cioffi and Matthew Tannin, both former hedge fund managers at Bear Stearns, are accused of painting a rosy picture of their portfolios, even though "the defendants believed that the funds were in grave condition and at risk of collapse," according to the prosecution.

Prosecutors blamed Cioffi and Tannin for causing Bear Stearns investors to lose more than $1 billion, alleging that their fraudulent behavior led to the collapse of their hedge funds and, subsequently, Bear Stearns. They have both pleaded not guilty and are out on bail: $4 million for Cioffi and $1.5 million for Tannin.

The trial is scheduled to begin Oct. 13 in U.S. District Court in Brooklyn, New York. Cioffi and Tannin could each face 20 years if convicted of securities fraud.

Cioffi could face an additional 20 years on charges of insider trading for moving $2 million of his own money out of a poorly-performing Bear Stearns fund and into a separate fund "for which he had supervisory responsibilities," according to prosecutors.

A spokesman for Tannin’s legal defense declined to comment. Lawyers for Cioffi did not return messages.

Making an example

"I don’t know whether it’s a test case, but [it] certainly will test the government theory of going after Wall Street defendants who, according to the government, were less than forthright about the future prospects of their fund," said Robert Mintz, a former federal prosecutor who leads white collar defense at the law firm McCarter & English.

Ken Springer, a former FBI agent, certified fraud examiner and president of the consultant firm Corporate Resolutions, was more succinct: "I think this a line in the sand that the government is drawing and I think they’re going to make an example."

Springer described this as a "pivotal case for the government to show that this kind of behavior is not acceptable" and he said the prosecution’s evidence is "compelling."

The two defendants presented their hedge funds, which totaled some $1.4 billion in 2006, as "low risk" investments in AAA-rated pieces of collateralized debt obligations, backed by pools of securities such as mortgages, according to government lawyers.

By the spring of 2007, they allege the two men were having private conversations about the declining prospects of their funds and the impending meltdown. Tannin told Cioffi that the "subprime market looks pretty damn ugly" and he suggested that they "close the funds now," according to prosecutors.

"Notwithstanding their views to the contrary, the defendants led investors and creditors to believe that, despite the challenges presented in the market, the funds would continue to generate an increasing net asset value," wrote prosecutors, in a press release at the time of their June 19, 2008 indictment faxless pay day loans.

And on Sept. 22, prosecutors accused Cioffi, a New Jersey resident, of flying to Florida to try to retrieve documents from the Fort Myers-based Busey Bank, where he had attempted to obtain a $4.25 million line of credit. His lawyers deny that he was trying to snag the documents ahead of a federal subpoena, as the prosecutors allege.

Ken Rubinstein, an asset protection lawyer with the New York firm Rubinstein & Rubinstein, also believes that prosecutors have a strong case against Cioffi and Tannin, but that it’s a unique situation.

"These are the only two that have come out because these are the only two where the facts are clear enough in the government’s favor," he said.

Fraudulent - or just stupid?

Even though Cioffi and Tannin are the only fund managers charged with the fraudulent behavior that fueled the collapse, no one is alleging that they alone brought down Wall Street.

"I think it’s clear that there’s been a lot of fraud in the system," said Dick Bove, banking analyst for Rochdale Securities. "It’s a multi-layered system, and at every layer people chose not to do the proper due diligence, which is criminal. Everywhere along the line there were excesses, and perhaps the biggest excesses [were from] the government itself, because it had an obligation [to prevent fraud.]"

Despite the rampant wrongdoing by white collars leading up to the market meltdown of 2007, Bove said that pinpointing fraudulent acts and perpetrators is complex and difficult.

"There would have to be some intensive investigating to ferret out the people who were doing these things and I don’t know what the risk-reward will be," he said. "It’s going to take a lot of work to figure out who they are."

Even when investigators find a couple of suspects, like Cioffi and Tannin, it can be difficult to prove that they had any intention of deliberately misleading investors, or if they were simply making stupid mistakes.

In this way, hedge fund investors are just as responsible for their demise as the portfolio managers, said David Wyss, chief economist for Standard & Poor’s.

"Nobody held a gun to these people’s heads and told them to buy subprime mortgages," he said. "It’s a combination of stupidity and overconfidence, and unfortunately, both were national epidemics."

But even if most of the pre-crash behavior on Wall Street can be attributed to lack of due diligence rather than deliberate fraud, Bove said that’s hardly an excuse.

"Is it wrong? Goddamn right, it’s wrong," he said. "Is anyone going to do anything about it? I sincerely doubt it."

"I think, in the end, that the defense is going to argue that some of the greatest minds in the economy were unable to predict the recession, so how could these two be held accountable?" said Mintz, the lawyer at McCarter & English. 

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China’s Sichuan Tengzhong Heavy Industrial Machinery is poised to complete its purchase of General Motor Corp’s Hummer division within days, the South China Morning Post reported on Saturday.

The paper said executives were in Detroit this weekend putting the finishing touches on the deal no teletrack payday loan.

A Tengzhong spokesman was not immediately available for comment.

(Reporting by Michael Flaherty; Editing by Sanjeev Miglani)

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Swedish luxury car maker Koenigsegg Group could pull out of its planned purchase of Saab Automobile from General Motors unless steps to secure loans are in place by Wednesday, a part owner told a newspaper on Saturday.

Norwegian businessman Bard Eker, who owns part of Koenigsegg through his holding company, told Dagens Industri that progress was needed on the billions of crowns of loans from the European Investment Bank (EIB) that Koenigsegg needs to finalize the Saab deal.

“If everything is not in place before Wednesday we are out. We give up,” Eker was quoted as saying by the Swedish business daily.

“The milestones that need to be achieved on Wednesday pertain to the EIB, the Swedish Debt Office and we at Koenigsegg Group moving at the same pace.”

A Koenigsegg spokeswoman said she had no immediate comment on the report cash advance no faxing.

The Swedish government has not yet said if it will pledge the state guarantees needed in order for the EIB to approve loans to Saab Automobile. The debt office is handling the negotiations on the guarantees on behalf of the government.

Koenigsegg, backed by U.S. and Norwegian investors, struck a deal this year to buy GM’s loss-making Saab Automobile business, but its ability to finance the purchase had remained in question.

This month, Koenigsegg said state-run Beijing Automotive Industry Holdings would take a minority stake in the luxury carmaker as part of its planned purchase of Saab, potentially solving some of the financing issues.

(Reporting by Niklas Pollard; editing by Sue Thomas)

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Health insurers accused the U.S. Medicare agency on Tuesday of political interference in a battle over whether the industry can lobby its customers directly over healthcare legislation.

The Centers for Medicare & Medicaid Services (CMS), which oversees the Medicare program for the elderly and disabled as well as privately run Medicare alternatives, said on Monday it was investigating a letter Humana Inc sent enrollees about efforts to overhaul the nation’s healthcare system.

Humana’s letter, sent in an envelope citing important plan information, told customers the Democrats’ bills could hurt “millions of seniors and disabled individuals could lose many of the important benefits and services that make Medicare Advantage health plans so valuable,” according to CMS.

The agency also warned other insurers against sending potentially misleading health reform mailings to customers.

America’s Health Insurance Plans, the industry lobby group, called the CMS action a “gag order.”

The group argued that any cuts, including those in various Democratic proposals, would raise costs and reduce benefits for those who want private plans.

“Seniors have a right to know how the current reform proposals will affect the coverage they currently like and rely on,” said AHIP spokesman Robert Zirkelbach.

Republicans seized on the spat. “It looks likes CMS is engaged in government intimidation, pure and simple,” said Representative Dave Camp, the ranking Republican on the U.S. House of Representatives Ways and Means Committee.

Senate Republican Leader Mitch McConnell of Kentucky, where Humana is based, also blasted the CMS “effort to squelch free speech.”

A spokesman for Senate Majority Leader Harry Reid said it was “indefensible for insurance companies to send out propaganda” to scare the elderly.

“It’s clear that we are closer than ever to meaningful reform because defenders of the status quo are ginning up scare tactics to stand in the way of fixing our broken system,” Jim Manley said.

CMS dismissed the criticism, saying it wanted to ensure companies do not violate marketing rules or improperly use protected Medicare mailing lists.

“Our goal is to safeguard beneficiaries’ personal information,” agency spokesman Peter Ashkenaz told Reuters.

BILL AUTHOR WELCOMES CMS ACTION

Democratic Senator Max Baucus had urged CMS to get involved and later welcomed the investigation of what he called “scare tactics” by Humana. 

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Microsoft Corp on Thursday filed five civil lawsuits in Seattle, Washington against alleged “malvertisers.”

Malvertising is the term used to describe harmful online advertising and works by camouflaging malicious code as harmless online advertisements, Microsoft’s associate general counsel Tim Cranton wrote in a blog.

“The lawsuits allege that individuals using the business names “Soft Solutions,” “Direct Ad,” “qiweroqw.com,” “ITmeter Inc” and “ote2008.info” used malvertisements to distribute malicious software or present deceptive websites that peddled scareware to unsuspecting Internet users,” he said guaranteed high risk personal loans.

Cranton added that names of specific individuals behind these activities were not known and the lawsuits were being filed to help uncover the people responsible.

(Reporting by Santosh Nadgir in Bangalore; Editing by Jon Loades-Carter)

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Federal Reserve Vice Chairman Donald Kohn said on Thursday the U.S. central bank was developing tools to move away from its extremely loose monetary policy, but such an exit would not happen any time soon.

“Any combination of these tools, in addition to the payment of interest on reserves, may prove very valuable when the time comes to tighten the stance of monetary policy,” Kohn said in discussing a paper presented at the Brookings Institution.

“As the FOMC has said, that time is not likely to come for an extended period,” he said, referring to the Fed’s monetary policy-setting Federal Open Market Committee.

The paper, on the Fed’s track record since the failure of investment bank Lehman Brothers at this time last year, noted the central bank’s massive expansion of its balance sheet would not lead to inflation due to its ability to pay interest on reserves that are held with it by commercial banks.

“Paying interest on reserve balances also has important benefits and will play a key role in our exit from unusually accommodative policies when the time comes,” Kohn said.

Critics say the doubling in size of the Fed’s balance sheet to around $2 trillion since last September will lead to higher consumer prices when growth picks up and banks begin to lend out these excess reserves, fueling another credit bubble.

But the Fed argues that its ability to pay interest on reserves will break this linkage.

“Raising the interest paid on those balances should provide substantial leverage over other short-term market interest rates because banks generally should not be willing to lend reserves in the federal funds market at rates below what they could earn simply by holding reserve balances,” Kohn said.

This position was supported in the paper by Columbia University economist Ricardo Reis.

However, he did caution that the increase in the balance sheet was not without risks, and warned that if this led to credit losses at the Fed, it could force the Fed to go hat in hand to the U.S. government, compromising its policy independence.

Kohn added this outcome “seems extremely remote,” and he argued that the Fed would continue to earn substantial net profits on its balance sheet for the next few years in all but the most distant scenarios.

“Short-term interest rates would have to rise very high very quickly for interest on reserves to outweigh the interest we are earning on our longer-term asset portfolio. With the global economy quite weak and inflation low, a large and rapid rise seems quite improbable,” Kohn said.

Reis also argued that the Fed could target higher inflation in order to lean against the risk that the severe U.S. recession pushes the country into a Japan-style deflation, where falling prices inflicted a decade of stagnation.

Kohn said this might work in the perfect environment of an economic model, but was a bad idea in the real world.

“A policy of achieving “temporarily” higher inflation over the medium term would run the risk of altering inflation expectations beyond the horizon that is desirable. Were that to happen, the costs of bringing expectations back to their current anchored state might be quite high,” he said. 

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