Business & Finance
Home-mortgage leader Fannie Mae revealed a $1.1 billion accounting error that caused it to understate stockholder equity. While the restatement doesn't affect net income, Fannie Mae said, it follows financial troubles at smaller rival Freddie Mac and at the Federal Home Loan Banks in New York, Atlanta, and Pittsburgh, fueling demands by critics for increased oversight of the government-sponsored enterprises.
Morgan Stanley, the US securities giant, bought a 6.6 percent stake in Enel SpA, the largest electric utility in Italy, for a reported $3.6 billion and already has resold many of the shares, according to the Bloomberg.com financial news service. Italy's government unloaded the Enel shares as part of a pledge to cut its public debt, the largest of any European Union member.
Nissan Motor Co. announced the largest recall in Japanese automotive history, due to an engine defect in 20 of its own models and two it builds under contract to others in the industry. The recall affects 2.56 million cars, almost one-third of them sold in the US. The problem is caused by a sensor that can cause stalling, the company said. It said it had no reports of injuries or accidents linked to the flaw. Honda and Mitsubishi tied for the previous recall record among Japanese automakers: 2.5 million each.
Midway Airlines was ordered to liquidate assets by a federal bankruptcy court, after failing to secure long-sought contract concessions by its 85 pilots. The carrier is a feeder for US Airways, whose spokesman told the Raleigh (N.C) News & Observer that Midway cancelled its 30 daily round-trip flights out of Raleigh-Durham International Airport pending the outcome of the hearing. Midway filed for bankruptcy in 2001.
Another 2,500 layoffs were announced by Electronic Data Systems Corp. The Plano, Texas, computer-services company has been struggling to find new customers as it deals with an investigation into its business practices by the Securities and Exchange Commission, reports said. EDS announced in June it would cut 2,700 jobs by the end of next year.