Business news in brief

Won't rule out broker aid, Yellen says

Federal Reserve Chairman Janet Yellen said Wednesday that she wouldn't rule out expanding access to the central bank's discount window to broker-dealers and other nonbanks under certain circumstances during a financial crisis.

"It depends what the circumstances are," Yellen said in response to questions from the House Financial Services Committee during her semiannual testimony. "A broad-based scheme in a situation of systemic risk is a possibility, but it is something that would have to be very serious to consider."

Responding to U.S. Rep. Scott Garrett, a New Jersey Republican sponsoring a bill to require the Financial Stability Oversight Council to hold open meetings, Yellen said the circumstances would have to be "unusual and exigent," citing the terms used in Section 13.3 of the Federal Reserve Act.

"Under the terms of the Dodd-Frank Act, the Federal Reserve is barred from extending discount window lending to an individual firm, and we are confined to broad-based facilities," Yellen said.

Lending to broker-dealers might be possible "if there were a general financial disruption, and we were in a situation of systemic risk similar to what we saw during the financial crisis where we have a general panic," she said.

-- Bloomberg News

5 nations hammer out new bank's details

Leaders of five emerging nations agreed Wednesday on the structure of a $50 billion development bank by granting China its headquarters and India its first rotating presidency. Brazil, Russia and South Africa were given posts or units in the new bank.

The leaders also formalized the creation of a $100 billion currency exchange reserve, which member states can tap in case of balance of payment crises, according to a statement issued at a summit in Fortaleza, Brazil.

Both initiatives, which require legislative approval, are designed to provide an alternative to financing from the International Monetary Fund and the World Bank, where the countries have been seeking more say. The measures coincide with a slowing of economic growth in the five countries to about 5.4 percent this year from 10.7 percent in 2007, according to economists surveyed by Bloomberg.

"The BRICS are gaining political weight and demonstrating their role in the international arena," Brazilian President Dilma Rousseff said after a signing ceremony, referring to the five nations.

Until the eve of the summit, India and South Africa had vied with China to host the headquarters of the bank, dubbed the New Development Bank, whose membership may eventually be extended to other countries.

-- Bloomberg News

Texas city rejects partial fracking ban

DENTON, Texas -- The council governing a north Texas city that sits atop a large natural-gas reserve rejected a bid early Wednesday that would have made it the first city in the state to ban further permitting of hydraulic fracturing in the community.

Denton City Council members voted down the petition 5-2 after eight hours of public testimony, sending the proposal to a public ballot in November.

Fracking involves blasting a mix of water, sand and chemicals deep into underground rock formations to release trapped oil and gas. While the method has long stirred concerns about its effects on the environment and human health, industry proponents argue that fracking can be done safely and is cleaner than other forms of energy extraction.

Industry groups and state regulators warned such a ban could be followed by litigation and a severe hit to Denton's economy.

Barry Smitherman, chairman of the Railroad Commission -- the Texas oil and gas regulator -- said in a letter addressed to Denton's mayor and City Council last week that a fracking ban in Denton would "increase America's dependence" on foreign oil and natural gas.

City leaders introduced a temporary ban on new fracking permits in May after fracking-ban proponents delivered a petition containing about 2,000 signatures. The temporary ban expires in September.

-- The Associated Press

In California, EPA airs refinery-rule plan

LOS ANGELES -- The Environmental Protection Agency went to one of the nation's largest petroleum-producing areas to hold public hearings on a proposal aimed at reducing toxic air pollution from California to Texas through new controls on oil refineries.

Wednesday's day-long hearing was at a community center in Wilmington, a blue-collar section of Los Angeles that is dotted by more than 6,000 oil-pumping rigs and is home to three of California's major oil refineries.

The 9-square-mile area with 53,000 residents also includes the third-largest oil field in the contiguous United States.

To be discussed was an 870-page proposal that would order the petroleum industry to adopt new technology to better monitor benzene emissions, upgrade storage tank emission controls and ensure waste gases are properly destroyed.

Operators also would have to make the results of their monitoring publicly available.

EPA officials say the requirements will reduce toxic air emissions from refineries by an estimated 5,600 tons a year. Environmentalists say the restrictions are needed to safeguard public health. Industry officials counter that the measures are unnecessary.

The proposal came from the resolution of a lawsuit filed in 2012 by environmental groups on behalf of people affected by emissions from refineries in Louisiana, Texas and California.

-- The Associated Press

VW task force to seek speedier rollouts

Volkswagen AG, Europe's largest carmaker, plans to mimic the fast-paced rollouts of products made by such firms as Apple Inc. to adapt more quicly to changing customer demands for technology in its cars.

To accelerate vehicle development, Volkswagen is forming a task force of 40 to 60 top managers in the coming months, according to internal documents from the Wolfsburg, Germany-based company that were obtained by Bloomberg News. The group will identify the steps needed to change from the industry's traditional approach of revamping models every seven years as technology developments including in-car connectivity and electric motors call for speedier reaction times.

"How can we shorten today's model cycles and make them significantly more flexible?," Chief Executive Martin Winterkorn said in a transcript of a speech to managers dated Monday. "Consumer electronics with ever-new technologies and products set the pace."

The task force is connected to VW's effort to cut costs and improve productivity by $6.8 billion at its namesake brand by 2017 after efficiency gains failed to keep pace with rising labor costs.

-- Bloomberg News

Business on 07/17/2014

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