Business and Finance

Federal regulators on Wednesday imposed new curbs on the practice of short-selling, hoping to prevent spiraling sales sprees in a stock that can stoke market turmoil.

The Securities and Exchange Commission, divided along party lines, voted 3-2 at a public meeting to adopt a new rule. Investors and lawmakers have clamored for the agency to put such brakes on trading moves they say worsened the market’s downturn in the fall of 2008.

The rule puts in a so-called circuit breaker for stock prices, restricting short-selling of a stock that has dropped 10 percent or more for the rest of a trading session and the next one. The new curbs will take effect in about 60 days, but stock exchanges have six months after that to implement them guaranteed approval cash loans.

Short-sellers bet against a stock, in a practice that is legal and widely used on Wall Street. They borrow a company’s shares, sell them and then buy them when the stock falls and return them to the lender — pocketing the difference in price.

The SEC move followed months of wrestling with the controversial issue. The SEC asked for public comment last April on several alternative approaches to restraining short-selling, and a bipartisan group of senators have pushed the agency to act or face legislation. The agency got more than 4,300 comments on the issue.

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After days of speculation, Houston oil service companies Schlumberger Ltd. and Smith International Inc. jointly announced today plans to merger in a stock transaction valued at about $11 billion.

Smith shareholders will receive 0.6966 shares of Schlumberger in exchange for each Smith share. Based on the closing stock prices for both companies on Feb. 18, the agreement places a value of $45.84 per Smith share – 37.5 percent higher than Smith’s Feb. 18 closing price of $33.35.

Upon closing, Smith stockholders collectively will own approximately 12.8 percent of Schlumberger's outstanding shares of common stock.

Andrew Gould, Schlumberger’s chairman and chief executive officer, said that Smith’s drilling technologies, other products and expertise complement those of Schlumberger.

Smith CEO John Yearwood predicts accelerated technology development for the combined company’s customers.

Said Yearwood: “Schlumberger offers Smith's various segments enhanced engineering and design capability to place our products and expertise at the center of the total drilling system of the future.”

The deal, which is subject to regulatory and Smith stockholder approvals, is expected to close in the latter part of the year. It will create an industry giant with revenues double that of rival Halliburton Co. (NYSE: HAL).

For 2009, Schlumberger (NYSE: SLB) and Smith (NYSE: SII) reported revenue of $22.7 billion and $8.2 billion, respectively.

Meanwhile, Halliburton posted 2009 revenue of $14.7 billion.

Schlumberger expects to realize incremental pretax synergies — after integration costs –of approximately $160 million in 2011 and approximately $320 million in 2012. Schlumberger expects the combination to be accretive to earnings per share in 2012.

On Feb. 19, Smith’s stock shot up by more than 14 percent to a new 52-week-high of $38.16 in heavy trading after The Wall Street Journal reported that the company was in advanced talks to be acquired by Schlumberger.

There was no word yet as to how many jobs might be impacted by the transaction.

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If you haven’t heard, big changes are soon coming for the credit card business.

The CARD Act, which was signed into law last May, will finally go into effect Monday, meaning big changes for the millions of card-carrying Americans across the country.

Among other things, it will eliminate some of the more egregious practices of the past like so-called "double-cycle billing", arbitrary rate increases and hefty fees for exceeding your credit limit.

But while the new law also promises consumers more transparency about their credit card bill, cardholders still need to watch out for a whole new series of traps and tricks.

Higher fees: For starters, consumers could suddenly find themselves socked with a variety of new fees and charges.

Banks and other card issuers have already been aggressively implementing new fees or raising existing ones to help make up for any potential revenue lost as a result of the CARD Act.

Last May, for example, Discover Financial Services (DFS, Fortune 500) announced it would start charging a 2% fee on all purchases made outside the United States.

And whereas 3% was once the standard charge for rolling over a balance from one credit card to another, issuers like JPMorgan Chase (JPM, Fortune 500) are now assessing customers a 5% fee, according to Bill Hardekopf, CEO of the card rating site LowCards.com.

But with the new law setting no restrictions on the types of fees issuers can implement, consumers should pay particularly close attention to the "Terms and Conditions" section of their statement so they know exactly what they are being charged for, warn experts.

"Fees are the one source of revenue that will become more and more important," said Hardekopf.

Tougher to get a card: As Congress moved closer to passing the law last spring, banking industry advocates cautioned that shaking up the status quo would mean that credit would be more difficult to come by for consumers.

So far, that seems to be playing out as predicted.

The amount of credit made available to consumers by credit card companies plunged by $252 billion, or 7%, between March and September of last year, according to IRA Bank Monitor.

Credit is poised to tighten even further. As part of the CARD Act, credit card companies will be severely restricted in how they market cards to college students, potentially shrinking an important part of their business.

But issuers are also expected to implement much more severe underwriting practices. Some may demand, for example, details on an applicant’s income or proof of other savings.

Consumers with poor or even a mediocre credit history, as a result, may find it much more difficult to get a card or have their credit limit extended after the new law takes effect on Feb. 22, said Joseph Ridout of the advocacy group Consumer Action.

"I think it is fair to assume that credit card companies are going to scrutinize their potential customers a lot more closely than they did in the past," he said.

Fewer rewards: Consumers may also be increasingly unable to enjoy the fruits of their spending as a result of the new law.

It wasn’t that long ago where a cardholder could easily earn credit towards a free airline ticket or cash back for every dollar spent. But issuers are now quietly becoming more stingy with their rewards in an effort to save money.

American Express (AXP, Fortune 500), for example, recently told its co-branded card customers they would not be able to accrue reward points on their purchases if they were late with a payment. Only by paying a $29 fee could they recoup those points.

To avoid missing out, experts suggest that consumers carefully read any notices they get from their credit card company about changes to their loyalty or rewards program.

"Rewards can be another way of penalizing people too," notes Nick Bourke, manager of the Pew Safe Credit Cards Project.

Rising rates: One of the biggest victories for consumers in the new law are a series of limits on how and when credit card companies can set interest rates.

Whereas in the past, banks could raise your annual percentage rate just for missing a payment on your cell phone bill or without giving a consumer much advance notice, such practices will soon be outlawed. Issuers now have to alert you at least 45 days in advance before raising your rate under the CARD Act.

The new law won’t shield consumers from rate hikes altogether, though.

In recent months, banks have moved consumers over to so-called variable rate cards, whose rates fluctuate based on the direction of the prime rate. And with that rate at historic lows, experts said consumers should be prepared for at least a moderate increase in their APR at some point.

The new law also does not include any sort of interest rate cap banks and issuers can charge customers that are late on their payment by two months or more.

Credit card companies may remain reluctant to impose any usurious rates ahead of a review of penalty rates and fees by the Federal Reserve scheduled for later this year and given the public discontent for banks these days.

But that doesn’t mean the days of big rate hikes are gone for good, Bourke said — especially for consumers who are overwhelmed by debt. So experts suggest consumers should take extra care to stay current on their bills.

"The [CARD] Act doesn’t absolve anyone from having to pay back their bills or take people out of harm’s way if they run into trouble," said Bourke.

Talkback: Are you college student or under 21 and concerned or pleased about the tougher standards that will make it more difficult for some young adults to get a credit card? E-mail your story to jennifer.liberto@turner.com and you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here. 

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Crammed into a small Detroit office filled with pipe fittings, hydraulic tubing, and a device that looks like a gas pump combined with a supercomputer, Dave Shaw sums up how his life has changed.

Tipping back in a cheap office chair, the former auto executive points beneath the folding table that is his desk. "We had a ton of people working for us," Shaw says, crossing his stocky arms over his chest. "Now you have to do it all yourself. See that trash can? If I want it emptied, I empty it myself."

Two of Shaw’s colleagues at Clean Emission Fluids grin knowingly. All three once worked for auto companies or their suppliers. Today, as Shaw says, they are wearing many more hats than they ever did working for the Big Three: They are engineering, assembling, and marketing a highly sophisticated biodiesel blending machine that they hope will propel their three-year-old startup to huge success.

The machine makes any biofuel easily available in whatever mixture of traditional diesel and alternative fuel a trucker or fleet might choose. The result is cleaner-burning engines. "We aren’t waiting for the auto industry to come save us," says Clean Emission CEO Oliver Baer, a ThyssenKrupp alumnus. "We’re going to save ourselves."

Clean Emission is one of 160 startups that are part of a nonprofit incubator in central Detroit called TechTown. Founded by Wayne State University in 2000, the research park set out to make technology and entrepreneurship an engine of economic growth in a city that depended too much on, well, engines. With the U.S. auto industry in a shambles, TechTown’s mission seems more critical than ever.

Detroit isn’t known today for its entrepreneurism — or its tech prowess. But TechTown’s neighborhood is surrounded by reminders of Detroit’s innovative, ambitious past: There are ornate buildings, many of them vacant, that formerly housed the headquarters of GM, its Cadillac division, and its suppliers. According to local lore, the third floor of TechTown was where GM engineers conceived and designed the iconic Chevy Corvette.

These days TechTown is bustling. Over the summer nearly 1,000 people registered to attend a series of classes aimed at educating would-be entrepreneurs Business Card Holders. Almost a quarter came directly out of GM, Ford (F, Fortune 500), and Chrysler, and almost half were between the ages of 35 and 55. TechTown hopes to create jobs by helping give birth to 400 new companies in the next three years, says Randal Charlton, executive director of the incubator.

Will they all succeed? Clearly not, but don’t dismiss Detroit just because it isn’t Silicon Valley. The area is rich in skilled electrical, mechanical, and software engineers, and Detroiters have deep expertise in some industries with growth potential, such as alternative energy (hello, electric cars), health-care technology (until 2008, Pfizer (PFE, Fortune 500) had one of its largest R&D centers in the region), and logistics and supply-chain management, thanks to its manufacturing roots.

Detroit’s would-be entrepreneurs also have something that many of their counterparts in California’s Mountain View and Sunnyvale lack: community spirit.

Don’t laugh. A lot of hotshot engineers and executives tend to be mercenary, readily relocating to the company — and region — that offers the best salary or the most stock options.

Not Greg Auner. "I was born and raised in Detroit," says Auner, a Wayne State professor and founding partner of Visca, a TechTown company that makes a handheld sensing device. Visca could be headquartered anywhere, but Auner is committed to staying in his hometown. "I am dedicated to this region and bringing about a rebirth here."

Civic pride also motivates Leah Robinson and Ashara Shepard, Ph.D. candidates and former schoolteachers who launched COOL School Technologies, a sort of educational Facebook. The women wanted to create a tool to help inspire and motivate students in Detroit, who don’t have the same auto industry job opportunities that their parents and grandparents had.

Then again, if Shepard and Robinson — and others in TechTown — are successful, Detroit’s next generation won’t miss those auto jobs; they’ll all be working for tech firms. 

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Confidence in the world economy dropped in February on concern worsening government finances in some European nations will derail the global recovery, according to a Bloomberg survey of users on six continents.

The Bloomberg Professional Global Confidence Index dropped to 54.9 from 66.6 in January, when the reading was at the highest level since the series began two years ago. The index exceeded 50 for a seventh month, which means there were more optimists than pessimists. The survey was conducted last week, before Germany and other European Union nations signaled they may help support Greece’s government finances.

Greece, Spain and Portugal are among European nations struggling to control widening budget deficits, prompting investors to dump the countries’ assets and question the sustainability of the recovery in the global economy. More than $4.5 trillion has been wiped from stocks worldwide since Jan. 14, while credit-default swaps have risen as investors seek protection against deteriorating European government finances.

“The situation in Greece and other European economies shows us that the global deleveraging process is not over and governments cannot continue the pace of stimulus they’ve been undertaking,” said Venkatraman Anantha-Nageswaran, global chief investment officer at Julius Baer & Co., which manages about $142 billion in assets. “We see global confidence fluctuating from month to month as growth disappoints.”

Group of Seven

The survey of 2,486 Bloomberg users was done between Feb. 1 and Feb. 5. Since the previous survey, China unexpectedly raised reserve requirement ratios for lenders, the Group of Seven finance ministers pledged to continue economic stimulus measures and a report showed the U.S. economy expanded at the fastest pace in six years last quarter.

“People aren’t concerned about the exit strategies from countries, they’re concerned about the total debt level,” said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York who participated in this month’s survey. “The global economy is a little bit more unsteady than it was a month ago.”

The fallout from the budget crisis in Greece has led investors to become the most bullish on the U.S. dollar since November 2008. The dollar confidence index rose to 55.7 from 53.1 in January. Most survey respondents in Europe turned more pessimistic on the outlook for the euro, expecting it to weaken against its U.S. counterpart over the next six months.

‘Downside Risk’

“If people start worrying about a big developed economy as they did Greece, that could start to affect the global growth outlook,” said Nick Kounis, chief European economist at Fortis Bank Nederland NV in Amsterdam, and a regular survey participant ay day loans. “Credit concerns have remained well-contained for the big countries. That suggests so far the global economic outlook is not seriously affected by this, although there are big problems about public finances and it remains a downside risk.”

The confidence gauge for Western Europe fell to 49.8 from 55.5 last month, dropping below 50 for the first time since November. Greek Finance Minister George Papaconstantinou has struggled to convince investors that the government can push its deficit below the European Union’s ceiling of 3 percent of gross domestic product.

Germany is considering assistance for Greece after the country’s deficit threatened the stability of financial markets, two lawmakers from Chancellor Angela Merkel’s governing coalition said Feb. 9. The European Union is scheduled to hold a summit in Brussels today.

Greek Tragedy

“The officials need to give a clear indication that it’s not just about fire-fighting Greece but also putting forward a wider European bailout mechanism that is applicable to other countries that get into trouble,” said Fortis’s Kounis. “That could stem the confidence crisis and boost credibility.”

A measure of U.S. participants’ confidence in the economy fell to 41.3 this month from 54.4 in January. More Americans unexpectedly filed first-time claims for unemployment insurance even as the jobless rate dropped in January, while Federal Reserve policy makers are attempting to gauge whether the economy is strong enough for them to withdraw unprecedented stimulus.

“It’s a jobless recovery,” said Jonathan Basile, an economist at Credit Suisse Group AG in New York and a regular survey participant. “The U.S. economy is still going to expand, it’s just not going to expand as quickly as the fourth quarter. We’re a long way from acceptable levels of unemployment” of about 5 percent that the Fed is comfortable with, he said.

Asia’s index fell to 70.8 in February from 79.8, while the confidence gauge for Japan dropped to 40.6 from 44.1. Japan’s government must heed the warning on soaring debt loads stemming from the turmoil in Greece and concerns about the credit quality of some European countries shouldn’t be regarded as “a burning house on the other side of the river,” Bank of Japan board member Seiji Nakamura said Feb. 4.

Most Bloomberg users were less optimistic on the outlook for their equity markets in the next six months, with respondents in the U.S., the U.K. and Spain turning bearish. Survey participants in the U.S. and Europe remained confident short-term interest rates will rise in the next six months, the survey showed.

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Robert Rogalski has been named CEO at Excela Health, a position he has held on an interim basis for three months, the Greensburg-based hospital network announced on Monday.

Rogalski, a former senior counsel and health care practice group leader at Thorp Reed & Armstrong LLP, joined Excela as a hospital trustee six months ago. He brings to the job more than 17 years of experience advising health care systems on a variety of strategic and legal matters, including corporate governance and acquisitions.

“While a number of candidates emerged during the deliberations, we found the opportunity to observe Bob’s strengths firsthand in day-to-day operations a considerable advantage,” Excela board Chairman Paul Mongell said in a prepared statement. “The positive results and substantive work he has performed during the transition period demonstrate the key attributes we seek in moving Excela Health forward.”

Before Thorp Reed, Rogalski was in-house counsel for health systems in western Pennsylvania and upper Midwest. Most recently he served as vice president and general counsel and compliance officer at MedCenter One Health Systems in Bismarck N.D. He has also worked as in-house counsel at the University of Pittsburgh Medical Center and West Penn Allegheny Health System, the first and second largest hospital networks in the region.

Rogalski is a graduate of St. Vincent College. He received his law degree from the University of Pittsburgh.

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Bank of America spent $4.4 billion last year on its Wall Street bankers , according to a person familiar with the matter.

The nation’s largest bank used 19% of the $23 billion in revenues it generated in 2009 within its markets and investment banking businesses to pay workers’ salaries benefits as well as year-end bonuses.

That works out to an average of about $440,000 per employee. The bank has roughly 10,000 workers in its markets and investment banking units.

Bob Stickler, a spokesman for Bank of America (BAC, Fortune 500), would not confirm the figures, although he said that the company tried to walk a fine line when it structured worker pay this year.

"We are trying to balance the need to pay competitively and to respond to concerns about the level of compensation on Wall Street," said Stickler.

Faced with a public backlash over outsized bonuses, many of the nation’s largest financial firms have incrementally lowered pay levels for traders and investment bankers.

Many institutions have offered workers less cash and more stock, in an effort to tie workers’ performance with the firm’s fortunes and the interest of shareholders.

The use of so-called "clawback" provisions, which would reclaim pay from workers whose actions may damage the firm’s long-term financial health, have also gained momentum recently.

The issue of compensation has haunted Bank of America for much of the past year after it was revealed that the firm paid $3.6 billion in year-end bonuses to Merrill Lynch workers for fiscal year 2008. The firm is currently facing two legal actions by the Securities and Exchange Commission over the matter.

Compared to some of its peers, the amount Bank of America spent on its Wall Street employees appeared to fall in the middle of the pack.

Last month, JPMorgan Chase (JPM, Fortune 500) said it spent $9.33 billion to compensate workers in its investment banking division. Divided among the nearly 25,000 individuals in this business, the average annual compensation per employee was nearly $380,000.

Goldman Sachs (GS, Fortune 500) also revealed during the latest earnings season it spent approximately $498,461 a person, if its compensation pool were divided evenly among the firm’s 32,500 employees. 

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Manufacturing expanded in January at the fastest pace since August 2004, indicating production gains that are spearheading the U.S. recovery may soon encourage companies to hire.

The Institute for Supply Management’s factory index rose to 58.4, exceeding the highest estimate in a Bloomberg News survey of economists, from December’s 54.9, figures from the Tempe, Arizona-based group showed. Readings greater than 50 signal expansion. A measure of factory employment rose to the highest level in almost four years.

“Manufacturing is growing, it’s going to continue to expand,” said Hugh Johnson, who manages more than $1.6 billion as chairman of Albany, New York-based Johnson Illington. His forecast of 58 was the highest in the Bloomberg survey. “Whether or not this continues to unfold will depend very heavily on final demand.”

Stocks rose after the report showed increased production may be laying the groundwork for the spending gains necessary for the expansion to be sustained. The strength in U.S. manufacturing is being accompanied by factory expansion from China to Europe, separate data also showed.

Another report today showed personal spending rose 0.2 percent in December, the third straight gain, according to the Commerce Department in Washington.

Incomes climbed 0.4 percent, exceeding expectations and propelled in part by government payments, the report said. Wages and salaries rose 0.1 percent after a 0.4 percent gain in November, showing job growth is needed to help drive consumer spending in coming months.

Employment Forecast

Employers last month may have added jobs for the second time in the last two years, according to the median estimate of economists surveyed by Bloomberg News. The Labor Department will report the figures on Feb. 5.

President Barack Obama’s $3.8 trillion fiscal 2011 budget, released today, puts an emphasis on job creation with $100 billion in additional stimulus spending, along with higher taxes for the wealthy in an attempt to narrow the deficit.

The factory index exceeded economists’ median forecast of 55.5, according to 67 projections in a Bloomberg survey. Estimates ranged from 53.5 to 58. Manufacturing accounts for about 12 percent of the economy.

The Standard & Poor’s 500 Index gained 0.9 percent to 1,082.96 at 12:12 p.m. in New York. The yield on the 10-year Treasury note rose basis points to 3.65 percent, according to BGCantor Market Data. A basis point is 0.01 percentage point.

European Manufacturing

The pace of global manufacturing is picking up in response to faster economic growth.

A manufacturing gauge for China climbed to a record in January as exports jumped, according to figures from HSBC Holdings Plc and Markit Economics. Growth in the 16-nation euro region’s manufacturing industry accelerated more than estimated in January, according to a separate report from London-based Markit Economics.

The U.S. ISM’s production index rose to 66.2 from 59.7 and the new orders index increased to 65.9, the highest since December 2004, from 64.8.

Manufacturers such as General Electric Co. are beginning to hire and factories are stepping up production after a record reduction in inventories in 2009. The employment index rose to 53.3 in January, the highest since April 2006, from 50.2 a month earlier.

“Manufacturers are now willing to hire,” Norbert Ore, chairman of the ISM survey, said in a conference call from Atlanta. “The more I look at the data, the more this looks like a typical recovery, that is, that we see very strong growth in the front end of it.”

Unfilled Orders

The report also showed more manufacturers reported increased exports and more said they were paying higher prices for raw materials. It took longer for customers to receive their goods, a sign of stronger demand, while orders waiting to be filled also increased. Inventories were being drawn down at a slower pace.

Factories benefited from increased orders after companies pared inventories last year by a record $125 billion.

Corporate spending on new equipment is also beginning to pick up. Texas Instruments Inc., the second-largest U.S. chipmaker, said it will spend almost $1 billion this year to expand three factories and open a fourth to fill orders.

Federal Reserve officials, who left the benchmark lending rate unchanged in a range between zero and 0.25 percent on Jan. 27, noted in their policy statement that “business spending on equipment and software appears to be picking up.”

GE Hiring

GE, whose power-plant equipment generates one-third of the world’s electricity, is hiring workers in energy, health care and rail transportation. It’s bidding to supply new passenger locomotives for Amtrak and in November announced a joint venture in China that would make high-speed rail locomotives that may add 200 U.S. jobs.

“We will create jobs in the United States that could not have been created any other way,” John Rice, chief executive officer of GE Technology Infrastructure, said of the rail programs in a Jan. 28 Bloomberg Television interview.

Construction spending declined in December more than anticipated, capping the worst year on record for the industry, separate Commerce Department figures showed. Outlays dropped 1.2 percent last month as homebuilding and commercial construction dropped.

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