Four House members from region vote 'no' on bailout

Four members of the U.S. House from Western Pennsylvania -- three Republicans and a Democrat -- on Monday helped defeat a $700 billion emergency rescue proposal for the nation's financial system.

They called the Emergency Stabilization Act of 2008 a flawed bill that would "leave taxpayers holding the bag."

Two Democrats who voted for the measure said failure to take action could put the national economy in peril of a "deep recession."

"I can tell you it is the first vote I've ever taken and had a queasy feeling in my stomach," said Rep. Bill Shuster, a Republican from Hollidaysburg who opposed the bill. "I do believe we need to act. I do not believe this was the right legislation to move forward on. This was a very difficult vote."

Others voting no included Reps. Jason Altmire, D-McCandless; Phil English, R-Erie; and Tim Murphy, R-Upper St. Clair.

Democratic Reps. Mike Doyle of Forest Hills and John Murtha of Johnstown supported the bill.

"I wasn't prepared to put people I represent at risk -- their pension funds, their ability to get student loans and car loans," Doyle said. "It seemed to me that doing nothing wasn't an option."

The House defeated the bill by a 228-205 vote, despite warnings from the White House and congressional leaders of both parties that failure to act could result in a nosedive on Wall Street. Stocks plummeted 777 points yesterday.

Opponents said they couldn't back the measure as it was written.

Murphy decried the legislation as a proposal that "represented a breathtaking expansion of federal government power, paid for with taxpayer funds."

"Incredibly, this proposal prohibited any congressional or judicial review," Murphy said.

English said the bill's "flaws and unchecked risk to the taxpayer, in my view, outweighed any potential benefits."

"It has been my strong belief that any rescue proposal necessarily include real consequences for bad actors, strong taxpayer protections and accountability and transparency of any tax dollars used," English said.

Altmire said hundreds of his constituents contacted him who "are overwhelmingly opposed to the bailout plan."

"They wonder why Washington is so quick to act to help those on Wall Street, yet nothing is done to help them," Altmire said. "The times ahead are going to require tough decisions -- but we should not start by asking American families and small businesses to pay for the mistakes of Wall Street."

Murtha said he voted for the bill after consulting with "numerous financial and economic experts."

"I came to the conclusion that we simply cannot ignore this crisis, and that Congress has to pass legislation that will free up our credit markets while at the same time protecting the U.S. taxpayers," Murtha said.

Doyle said the House could take up a revised version of the bill later this week or early next week.

"I'm willing to look at a different way to do it," Doyle said. "What I'm not willing to do is do nothing and stand by and watch the economy go into a recession."

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Heinz stops use of Chinese milk in products

The H.J. Heinz Co. on Monday said it no longer is using milk produced in China, hoping to eliminate any perception that its Far East products are in any way contaminated with the chemical melamine.

The Heinz announcement occurred as British candy maker Cadbury announced a recall of 11 types of Chinese-made chocolates found to contain the chemical, and competitors Kraft Foods, the maker of Oreo cookies, and Mars, the maker of M&Ms and Snickers candy, publicly stated their candy is safe.

The Food and Drug Administration last week alerted consumers that seven Mr. Brown instant coffee and milk tea products are being recalled by its Taiwanese manufacturer due to possible melamine contamination. The agency is advising retailers and food service operators to remove the products from sale or service.

An FDA spokeswoman said yesterday that testing has not found any other cases of melamine-contaminated products in the United States.

"In order to reassure consumers about the safety of Heinz products, Heinz has made the strategic decision to switch our milk supply in China and Hong Kong to non-Chinese sources, and we are testing all dairy ingredients for melamine prior to use in our factories," said spokesman Michael Mullen.

Last week Heinz recalled 270 cases of its China-produced Heinz Intelligence Vegetable Cereal in Hong Kong due to trace levels of melamine being found in it.

Melamine, used to make plastics and fertilizer, has been found in certain milk products in China and has been blamed for four infant deaths and more than 53,000 Chinese children getting sick. The chemical makes the protein content in diluted milk appear higher than it is.

"Shipments containing milk-derived ingredients and products from Chinese sources are being stopped at the ports, and are not being released until the FDA tests are complete," said FDA spokeswoman Stephanie Kwisnek. "FDA inspectors are also collecting samples of products from retail markets and are testing them."

The FDA said its New Zealand counterpart, the New Zealand Food Safety Authority, reported finding high levels of melamine in White Rabbit Creamy Candies, imported from China by QFCO Inc. of Burlingame, Calif.

The candy had been distributed in the states of California, Georgia, Hawaii, Illinois, Minnesota, New York, Oregon, Texas, and Washington. As of Friday, the FDA wasn't aware of any illnesses in the United States stemming from consumption of either White Rabbit Creamy Candy or Mr. Brown instant coffee and tea products, the agency said.

A Cadbury spokesman said it was too early to say how much melamine was in the company's chocolates made at its Beijing plant, but added the facility only supplied Australia, Taiwan, Nauru, Hong Kong and Christmas Island.

Hershey said yesterday it has never purchased milk ingredients, including powdered milk, from China, while Mars North America said in a statement that its Chinese operations don't get any ingredients from companies found to be selling melamine-contaminated dairy products.

While the amount of melamine found in the China-manufactured Heinz cereal was a fraction of the amounts found in the Chinese milk, Hong Kong authorities recently set melamine limits for children under 3 years old, with the Heinz trace levels over the limit.

Last week's recall was a precautionary measure performed in cooperation with Hong Kong authorities, Heinz said.

"Heinz is confident this product is safe to consumer," Mullen said. "The levels detected in the product are more than 25 times lower than internationally accepted safety levels."

Mullen said babies on average eat half a 200-gram cereal pack a day. At the levels of melamine found in the product, a baby would have to consume more than 12 packs daily to exceed European Food Safety Authority levels. He added that half of the affected product already has been returned to Heinz. None of the cereal is sold in the United States.

Homeowners need help, area analysts say

If it emerges from the House, the government's proposed $700 billion bailout for the nation's financial industry should keep consumer lending flowing and ease somewhat the nation's mortgage foreclosure crisis, some local experts believe.

But some say the huge package -- which failed Monday to gain approval -- falls far short of what's needed to stem rising mortgage foreclosures and declining home sales.

"We need to get this done, but it doesn't mean we are through the storm yet," said senior economist Robert Dye of PNC Financial Services Group yesterday.

"It was obvious that the intent of the lawmakers was to create conditions that would help distressed homeowners get some relief," Dye said. "The problem has been the tremendous uncertainty to all aspects of the mortgage market."

Maryellen Hayden, head organizer for activist Association of Community Organizations for Reform Now (ACORN) in Western Pennsylvania, said the plan wouldn't do enough to help local homeowners.

Hayden, whose organization works with residents dealing with foreclosure issues, lamented the legislation didn't include a Democratic-backed proposal to give federal bankruptcy judges the authority to alter mortgage terms -- such as interest rates -- for primary residences.

"If we had the bankruptcy provision in there, a bankruptcy judge could allow a loan to be fixed and affordable, and that would be the best thing we could do for homeowners," said Hayden.

Home foreclosures are on a record-setting pace in the Pittsburgh region, which consists of Allegheny, Beaver, Butler, Washington and Westmoreland counties, according to RealStats, a South Side-based real estate information company.

From January through July, there were 2,491 home foreclosures. That's the highest number for the first seven months of the year since 1987, the company said. The previous record was 2,452 foreclosures in the first seven months of 2006.

Irresponsible home buyers as well as slipshod lending practices have been blamed for driving up foreclosure rates this year, so some experts say a revision of loan terms isn't necessarily the cure for the housing market.

Even when lenders may be willing to revise loan terms, it may not be that easy. The nation's complicated mortgage lending system had lenders selling loans to organizations like Fannie Mae and Freddie Mac, which packaged the loans and sold them to investors, said Mark Steele, president of Howard Hanna Financial Services.

"I disagree that lenders aren't willing to work with homeowners," said Steele. "But whether they can do that (alter the mortgage) I don't know the answer if those mortgages have been sold as securities. Those who bought the securities may have to determine that."

Some help for homeowners is expected from a separate bailout for troubled homeowners that is scheduled to take effect Wednesday.

The new "Hope for Homeowners" program would open refinancing opportunities to people whose home value is now too low to pay off the old loan.

It would permit borrowers to qualify for a 30-year, fixed-rate mortgage insured by the Federal Home Administration, but only after their current lender agrees to forgive enough debt so that the homeowner would have at least 10 percent equity in the property.

Lender participation is voluntary. Some lenders have said they said would be reluctant to write off the principal of their loans because of opposition from investors who bought mortgage-backed bonds.

"Some people are nervous about seeing the government jump into the mortgage market," said Tom Hosack, president of Northwood Realty Services, one of the region's large residential real estate companies.

"The real issue is when the plan develops a working model, how will the money be given," he said.

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Area residents express concerns over bailout

As they set up folding chairs, tossed footballs and waited for charcoal to reach grilling temperature, Steelers fans showed concern over the failed financial bailout plan and Monday's stock market drop.

"I'm afraid to even look at it," John Littell of Ohio Township said about his 401(k) retirement account, considering recent market drops. Still, an individual investor can do little at this point and, "Being 40-some years old, I'm in it for the long run anyway." He thinks government leaders need to figure out how to better regulate the financial system, "so they are not just buying out multimillion dollar CEOs, and they start worrying about people like you and me."

"From what I gather, the House Republicans were holding it up because it was going to be too expensive," said Matthew Kengersky of Punxsutawney. "As long as they are looking out for the taxpayers long term, I think having an intermediate timeline for the solution would be fine. I'd rather do this right than rush it and do it wrong. ... My retirement accounts are down, but market cycles over the past 70 years have been positive and I am planning for the long term."

Terri Gumro of Smithfield in Fayette County said the plan should hold accountable "top guys, the CEOS, the ones who created it in the first place." Her concerns: "The future, that's pretty much it, and how can you afford anything," given rising prices and a sour economy. "It's bad. ... I had an investment in stocks about seven years ago, and I took it out because I was starting to lose money. Now, I would lose big time."

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PPG Creighton plant workers to vote on 3-year pact

Union workers at PPG Industries Inc.'s Creighton automotive glass plant are scheduled to vote on a three-year contract today, days before PPG wants to turn over ownership of the plant to a joint venture.

The workers will meet in Tarentum today to hear details of the proposed contract before voting on the deal, said James Watt, staff representative for the United Steelworkers Local 12-G, which represents about 180 workers. The settlement, if approved, would take effect immediately, Watt said, even though the union's current pact does not expire until March.

Watt declined to reveal any details of the tentative settlement. Karla Grant, president of USW Local 112-G, could not be reached for comment.

PPG spokesman Jeremy Neuhart declined to comment on the tentative agreement.

The Creighton plant, in East Deer, makes automobile windshields. It is part of PPG's automotive glass business that is to be sold for $330 million to Kohlberg & Co. LLC, a private equity firm in Mt. Kisco, N.Y.

PPG, which will retain a 40 percent interest in the business, has said it expects to close on the sale in the third quarter, which ends Tuesday. The timing to close the deal has not changed, Neuhart said.

The new company will be named Pittsburgh Glass Works and will establish a headquarters separate from PPG.

In addition to the Creighton plant, PPG will sell automotive glass plants in Tipton, Blair County, and Meadville, Crawford County, to the joint venture. PPG has nine automotive glass manufacturing plants, which make original equipment as well as replacement windows, plus nine satellite assembly plants and service centers. The company has about 4,400 workers in that business segment.

PPG has not said what impact, if any, the sale of its automotive glass business will have on its research and development laboratory at Harmar. Whether some of those employees will work for Pittsburgh Glass Works has not been disclosed.

PPG had intended to sell its automotive glass business and services centers for $500 million last year to another private equity firm, Platinum Equity of Beverly Hills, Calif., but that deal fell through in December. The dispute between the two companies over the collapse of the sale resulted in a lawsuit filed in federal court in New York.

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Economic downturn especially rough on retirees

Retiree Leda Gismondi is a savvy investor who has belonged to an investment club for more than two decades.

Gismondi, 85, who quit working in the early 1990s after a marketing career at the former First National Bank in Uniontown, pays attention to the stock market, reads financial news and studies company profiles before making investment decisions. Still, the Uniontown woman is reeling from heavy losses to her portfolio in recent months.

"In my lifetime, this is the worst my financial picture has ever been. When you are younger, you have time to recoup your losses over time. There are a lot of buying opportunities now for young people," said Gismondi, who draws retirement income from a pension and investments.

"At my age, there's no time to recover."

Older retirees who rely on investments could suffer more than any segment of the population in coming years as the turmoil on Wall Street rolls onto Main Street, retirement and financial experts predict.

At a time when many companies have switched from traditional fixed pensions to defined contribution plans, such as 401(k) accounts, many retirees are more vulnerable than ever, experts say. They have saved less, can expect to live longer and will face greater financial risks than any retirees since World War II, according to a survey by the Employee Benefit Research Institute, a nonprofit research organization based in Washington, D.C.

The volatile market conditions, coupled with a credit crisis and housing slump, are creating economic uncertainty for many, particularly retirees who planned to rely on the equity in their homes as a safety net for their golden years.

"People thought they were fixed for retirement, contemplating travel and comfortable lifestyles," said John Laitner, director of the Michigan Retirement Research Center. "Now, they're finding they are not so well off as they thought, so they're contemplating going back to work, and those who are still working are thinking of extending their work."

In recent weeks, retired high school principal John Barbero, 63, of Roscoe in Washington County, watched his investment portfolio take a steep nosedive.

"It's been ugly," he said.

Barbero, who works part time as the public address announcer for the Pittsburgh Penguins, said he's fortunate to have enough invested in a well-balanced plan to absorb the hit. However, he said some of his friends might be considering a return to the work force.

A survey by the Transamerica Center for Retirement Studies found that some older workers are putting off retirement dates, cutting back on payroll deductions to retirement accounts and borrowing from retirement savings to offset higher living expenses for food, energy, credit cards and mortgages. The survey found that 60 percent of the full-time workers questioned said they believe they can work until they are 65 and still not have saved enough to retire.

"In past years, our annual retirement study has found that people often face competing financial priorities that prevent them from saving more for retirement, but the economic climate this year is noticeably worse," Catherine Collinson, the center's market and trend expert, said when announcing the findings.

Experts say some retirees save enough but put their money in the wrong places.

Laitner said the most common mistake among retirees is failure to diversify financial holdings, putting their money and their future at greater risk. Perhaps the biggest mistakes are committed by people who invest their savings with their employer, he said.

Although they feel comfortable with their employer, investing in company stock leaves no safety net if the company fails, he said.

"They are vulnerable," Laitner said. "They can take a huge loss at a time like this."

Rick Lofstead, 60, of Richeyville in Washington County, retired in 2005 after a teaching career in the Central Greene School District. In retirement, he and his wife, Pam, are relying on pensions and other investments tied to financial markets.

They take frequent camping trips and other vacations. However, he logs onto the Internet regularly for news about the country's financial picture because he worries about the effect it will have on his retirement accounts.

"If the stock market would calm down, I'd be a whole lot happier. I've been keeping my eye on it," Lofstead said. "I have no idea whether it will affect my monthly check down the road."

Although some investors are taking the bear market in stride, not everyone feels safe these days, experts say.

Steve Kutlenios, a certified financial planner and chartered financial analyst who is a vice president with Allegheny Financial Group in Pittsburgh, said how investors cope with bleak financial news often depends upon an individual client's temperament.

"We try to calm their fears by telling them to look at history," Kutlenios said. "It is bad, I know, because I've been doing this for 28 years and have been through it before. But our economy has recovered."

Kutlenios said he recommends that clients who are in the withdrawal stage of their retirement plan take out money conservatively, at a rate of 4 to 6 percent a year, to preserve the principal of their holdings. He said those clients should maintain about five years' income in bonds, rather than stocks, so that they could recoup losses if there is a protracted downturn in the market.

More than anything, diversifying to minimize risk and developing a sound investment strategy with a financial planner are critical, he said.

"You have to be able to sleep at night," he said. "It's a very individual thing. You have to determine how much volatility you can take."

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G&R Acquisitions buys Damon's restaurant chain

Locally based G&R Acquisitions is expanding its restaurant holdings again with the purchase of the Damon's Grill chain of 65 sports-themed restaurants in 15 states.

Pittsburgh entrepreneur Gary Reinert Sr.'s company announced Friday that it bought the Columbus, Ohio-based brand for an undisclosed price from Alliance Development Holdings of Charlotte, N.C.

G&R, with offices on the North Side, said it will operate Damon's and the Max & Erma's chain it acquired in July separately, though some management and functions such as purchasing and payroll will be combined.

"As early entries in the casual dining field, both these brands have great heritages and histories," Reinert said in the announcement, adding the chains have potential to re-emerge as leaders in the industry. He couldn't be reached for further comment.

G&R said it named veteran Pittsburgh restaurant operator David L. Brown as CEO of Damon's, which is noted for its ribs and has three Pittsburgh area locations -- in Collier, Monroeville and West Homestead.

Brown was general manager and chief operating officer at Chartiers Country Club in Crafton before joining Damon's, and several years ago he helped to start the Peppi's Old Tyme Sandwich Shoppe chain in the Pittsburgh area, Damon's spokesman Brad Ritter said.

The company said it will sell an as yet undetermined number of Damon's and Max & Erma's to franchisees, giving current franchisees and company managers the first opportunity to buy them. New franchisees also will be sought.

Both businesses will remain headquartered in Columbus.

Max & Erma's has 108 company-owned and franchised locations in 13 states, including 10 Pittsburgh-area restaurants. G&R bought it for $10.2 million, shifting the money-losing chain from public to private ownership.

Spokesman Robin Yocum said the new owner plans to restart a renovation plan for most of the restaurants late this year. The Cranberry location has the new, brighter look, as will all new Max & Erma's, he said.

Equitable Gas employees to vote on 3-year deal Sunday

Around 200 local Equitable Gas workers are scheduled to vote Sunday on a new three-year contract with the company, four days after their old agreement expired.

United Steelworkers Local 12050 represents the local workers who install meters and lines and respond to customers' calls for the gas utility, part of North Shore-based Equitable Resources Inc.

USW spokesman Patrick Young said Friday the tentative pact reached Tuesday increases wages and clarifies contract language on retiree health care and disability issues, though details were unavailable.

The union said it wants to bring Equitable workers into line, pay-wise, with other local natural gas workers. "At Columbia and Dominion, they're making $2 or $3 an hour more," he said.

Meanwhile, Equitable also is facing a dispute with the USW in Kentucky. A federal judge there has upheld an arbitrator's award ordering Equitable to honor its contract with 54 members of USW Local 8-512, the union said yesterday.

Equitable merged its Kentucky West Virginia Gas into two other business segments and contends this invalidates the union contract and bargaining relationship, the USW said, adding Equitable plans an appeal.

Equitable spokesman Wayne Desbrow said yesterday the USW contract in any event would run only through Oct. 15. The company's position is that the union could work to organize employees in the merged operations, or otherwise seek to be certified, he said.

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Pittsburgh-area home improvement firms sued

Lawsuits have been filed against two Pittsburgh-area home improvement businesses and their owners by state Attorney General Tom Corbett claiming they charged customers for work that was not performed.

Named in the lawsuits are William and Karen Livorio of 226 Gatehouse Drive, Coraopolis, and their business, Revitalization & Funding Inc., and Wayne Scholar, 222 Stockton Ridge Drive, Cranberry, doing business as Western Pennsylvania Housing Alliance.

The Livorios are accused of taking at least $286,000 from consumers for home improvement work that was never started. The charge evolved from an investigation by the Attorney General's Bureau of Consumer Protection of at least 33 transactions involving customers from Allegheny, Beaver, Butler, Clearfield, Lawrence, Mercer and Westmoreland counties.

Corbett said his agency was granted a special injunction prohibiting the Livorios and their company from advertising or selling any home improvement or financing services in Pennsylvania. The lawsuit, filed Tuesday in Allegheny County Court of Common Pleas, will have a hearing at 1:30 p.m. Monday before County Court of Common Pleas Judge Robert P. Horgos.

Scholar and his company are accused of taking at least $156,000 from consumers in Beaver and Butler counties for home improvement work that was not started or was performed in an "unprofessional" manner.

Corbett said Scholar is accused of falsely representing his company as a government-sponsored or government-related business that was able to provide "special funding" to consumers.

Scholar is accused also of operating as a mortgage broker without the required state license, failing to include the state-required three-day right to cancel in his consumer contracts and failing to register a fictitious business name with the Pennsylvania Department of State.

The lawsuit was filed Tuesday in Beaver County Court of Common Pleas.

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Allegheny General Hospital CEO resigns

West Penn Allegheny Health System said Thursday that Connie Cibrone, the CEO of flagship Allegheny General Hospital for 10-plus years, has resigned, a move that will allow the health system's new CEO to hire his own leader for the hospital.

Cibrone, 53, will remain on the job full-time through the end of the year, said West Penn Allegheny spokesman Tom Chakurda. A national search for a replacement has begun.

"Connie Cibrone has served our system and AGH with unflagging dedication and distinction during the past 22 years," Christopher T. Olivia, CEO of parent West Penn Allegheny, said in a statement. "Throughout her career with the organization, and particularly during times of adversity, she displayed a keen intellect, unlimited energy and a constancy of purpose that earned her the respect and admiration of staff and colleagues alike."

Cibrone's resignation allows Olivia, 45, who joined the health system in March, to pick his own executive to run Allegheny General.

In April, he installed Dawn Gideon as CEO at the combined Western Pennsylvania Hospital in Bloomfield and West Penn Hospital-Forbes Regional Campus in Monroeville.

Gideon began her health care career as a planning and marketing associate with the former Monroeville-based Forbes Health System, eventually becoming its chief operating officer. She joined West Penn in May following three years with Huron Consulting Group, where she had been a managing director and interim management group practice leader.

Cibrone said in a statement that she was blessed to spend 22 years at Allegheny General. "I feel extremely blessed to have spent so much of my career at AGH, and I am most appreciative of the exceptionally talented and dedicated health care professionals who have inspired my leadership and have helped make this institution such an outstanding, patient-focused provider of care."

Hiring a new Allegheny General CEO is a minor bump for Olivia compared to the health system's other recent problems.

Olivia replaced Jerry Fedele, who resigned in July 2007 as a result of clashes with doctors and administrators at West Penn and AGH over combining services and making investments.

Within days of Fedele's announcement, his hand-picked selection as West Penn's CEO, Mark Palmer, resigned eight months into the job.

Since Olivia's arrival, he's had to contend with the discovery in July that payments from patients and vendors were overstated by about $73 million.

In a related matter, the Securities and Exchange Commission in August sent West Penn Allegheny a letter stating it is conducting an informal inquiry into the system's finances.

Last month, Olivia said his plan to return West Penn Allegheny to financial health -- it lost $15.6 million during the first nine months of the fiscal year that ended June 30 -- involves shrinking the system's 13,000-person work force by 400 to 500, primarily through eliminating unfilled positions. Significant losses are expected for the entire fiscal year.

Olivia has hired some 60 consultants to examine every aspect of the health care system, looking for ways to cut costs. Chicago-based Wellspring Partners has identified about $66 million in operational cuts. The work force reduction is projected to save some $12 million, or about 20 percent of those cuts.

The West Penn Allegheny executive also emphasized there are no plans to close any of the system's six hospitals, which include Allegheny General, West Penn, the West Penn-Forbes Regional Campus, the AGH Suburban Campus, Canonsburg General Hospital and Alle-Kiski Medical Center.

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Money's influence called villain of our times

Money and its influence -- on politicians and on corporate executives -- are the prime reasons for the nation's financial crisis and the pain and suffering of the American public, says anti-corruption crusader Lawrence Lessig.

That doesn't mean capitalism is the problem, but it does mean political leaders can't let business interests control their decision-making via campaign contributions and pressure from lobbyists, the Stanford University professor said in a talk Thursday at the University of Pittsburgh.

"We have a Congress that fewer than 10 percent of the people believe is doing a decent job. There were more people who had faith in the British Crown before the Revolution than that," said Lessig, who also is a noted expert in copyright law.

He has been making stops throughout the country pushing for a "Declaration for Independence" -- a campaign to eliminate the chances that political candidates and government leaders can be swayed by "improper influences."

Public financing for elections is the best way to do that. A close second would be radical reform of earmarks doled out by politicians for constituents, Lessig said.

"I believe in capitalism, but what we need is a little more critical thinking," he said in an interview. "It's not about what the citizens want. It's what they (politicians) have to do to continue to raise money to stay in office."

The banking crisis is a great example of that, he said. Lobbyists for financial institutions contributed millions of dollars to politicians, with the result being eased regulations.

"When you look at the financial crisis, when you look at Enron, Fannie Mae and Freddie Mac and the crash on Wall Street, the one thing that links these all together is the extraordinary deregulation that has happened in the last eight years," he said.

"My message is that we've lost trust in basic institutions, and one of the reasons we've lost trust is that those institutions have become dependent on an improper influence. And the improper influence on Congress is money during the campaign process.

"That makes it impossible for us to have faith in what they do," Lessig said.

Although the public must create pressure for the government to change, that won't be easy or quick, he said. True reform might take more than a decade.

In the meantime, the government's recent moves to commit billions of dollars to bail out Wall Street must leave out the executives who caused the problem, he said.

"Pittsburgh is a great place to think about this," said Lessig, drawing a comparison to the demise of the steel industry in the late 1970s and early 1980s.

"There are a whole bunch of people in Pittsburgh who suffered enormously because of economic changes they didn't cause. They lost their jobs, and ... they lost their pensions.

"The idea -- that these guys who gamble in this way for enormous profit and then come in and say the government is going to bail us out; and, oh by the way, we shouldn't have to give up our million-dollar salaries -- is outrageous," he said.

"They should suffer for this failure that they partly caused as much as the steelworkers suffered for the failure of the steel industry."

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Region's financial experts clash on need for bailout

As the Bush administration presses Congress to authorize a $700 billion rescue of Wall Street, local experts disagree on what the final bailout should look like -- or even the need for one.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson are requesting a bundle from taxpayers.

"They haven't made a good case that this is going to solve our economic problems. Paulson at one point said they might need to go higher," said Allan Meltzer, professor of political economy and public policy at Carnegie Mellon University and a leading authority on the Federal Reserve.

Meltzer said that after a TV news interview in which he opposed the bailout, he received 70 e-mails -- all agreeing with him.

"The public doesn't like this, and Paulson and Bernanke haven't sold the public on this idea," Meltzer said. "Bernanke has been predicting a crisis since January, and it hasn't happened. ... It's not the best way to run a democratic process, to rush this through Congress."

The bailout plan -- whose outlines administration and congressional leaders endorsed Thursday, but which lawmakers have yet to vote on -- would have the government spend $700 billion to buy troubled securities from Wall Street firms and other banks. That would leave the institutions in better financial shape and, presumably, more willing to loan money to businesses and consumers.

What would happen to the stock market and the economy if the bailout plan failed to pass Congress, which has pressed for details all week? Many experts are pessimistic.

"The cost of not doing anything would be incalculable," said economist Norman Robertson, economic adviser to Smithfield Trust, Downtown. "The flow of credit could come to a halt, and the risk would be a painful and lengthy recession."

An inability of most consumers and companies to obtain credit would produce a severe economic contraction that could push the unemployment rate up to 7 percent or higher, said Robertson.

"If the deal falls apart over the weekend, I think you'd see a slide of 400 to 500 or 600 points -- or almost 6 percent -- in the Dow," said Malcolm Polley, chief investment officer at S&T Wealth Management in Indiana, Pa.

Financial analyst John Browne thinks that not passing a bailout would risk a "total disaster in America," which would spread globally on a scale "worse than the 1930s Depression."

"America is facing a financial meltdown" without a bailout within days, said Browne, a former member of the British Parliament and a columnist for the Tribune-Review. He is based in West Palm Beach, Fla.

He believes the $700 billion might not be enough to stabilize the financial markets because it seems to address only mortgage-related securities, not other questionable securities.

U.S. home mortgages total about $12.2 trillion, said Browne. Then, there are about $3 trillion in commercial mortgages, $2.5 trillion in municipal debt, and more than $20 trillion in corporate and consumer debt, such as credit cards.

How much of that nearly $38 trillion in debt is shaky?

"If you assume 5 percent of that debt would fail -- which is very conservative -- that's nearly $2 trillion," not the $700 billion being sought, said Browne. He worries that if a steep recession unfolds, the rescue could cost taxpayers much more than $2 trillion.

Meltzer sharply disagrees that a trillion-dollar bailout is justified and that the U.S. financial system is in "a crisis." He cites the confidence signified by billionaire Warren Buffett's decision to invest $5 billion in banking firm Goldman Sachs.

Rather than bailing out securities owners, Meltzer favors the Fed expanding direct lending to "anyone with good collateral," as it did in 1987 to stem widening effects of a stock market crash. That's largely how Japan climbed out of its bank crisis and deflationary slump of the 1990s.

Meltzer, who advised Japan at the time, said its central bank finally agreed to expand the money supply, which stimulated lending and pulled up real estate prices.

"I told them you should open the spigots as much as you can and announce that you will until (deflation) gets to zero," he said.

The experts do agree on this: The biggest problem with U.S. mortgage securities is that investors don't really know what's behind them.

"The problem is with the New York financial markets because no one knows the value of the properties underneath these securities," said Meltzer. "And they won't know until mortgages are valued and housing prices reach bottom."

Wall Street’s Big Sell-Off

PPG to shutter 3 plants in streamlining move

Responding to weakness in housing and automotive markets, PPG Industries Inc. said Wednesday it will close three coatings and glass plants as part of a restructuring plan that will eliminate several hundred jobs and save $100 million annually.

"The actions we are taking will streamline our worldwide manufacturing footprint and staffing levels following our recent acquisitions, the most notable of which is SigmaKalon," PPG Chief Executive Charles E. Bunch said in a statement.

PPG also said its third-quarter earnings will be reduced between $35 million and $40 million, or 20 cents to 25 cents a share, because of production shutdowns and damages from hurricanes Ike and Gustav, and a further decline in the automotive market. The company also has been hurt by a strike at Boeing Co. that delayed orders for coatings and transparencies.

The company's automotive coatings plant in Springdale will remain open, but two plants in Canada and Netherlands will close, eliminating 260 jobs. One glass production line at an Illinois plant, where 275 people work, will be idled, PPG said. Other reductions in the work force will result in an undisclosed number of workers in North America and Europe losing their jobs, spokesman Jeremy Neuhart said. Details of where those job cuts will occur were not released.

PPG is reducing costs in its automotive coatings business because of fundamental shifts in the industry, chief financial officer William Hernandez said.

Because of the decline in the residential construction market, PPG said it will close its glass plant in plant in Ontario next year, cutting 170 workers, and will idle one float glass production line at its Mt. Zion, Ill., facility, where 225 people work, Neuhart said. It also plans to write off idle production facilities in its fiber glass and chemicals businesses.

The restructuring will cost the company about $160 million, or 65 cents a share, which will be recorded in third-quarter results. It also will cost about $25 million to integrate SigmaKalon businesses into PPG. Another $15 million in restructuring charges will be taken in the second half of next year, PPG said.

Bunch said PPG is continuing to evaluate ways to strengthen its businesses, which may result in additional restructuring actions and related cost savings in 2009.

PPG is in the process of selling a 60 percent ownership stake in its automotive glass businesses to a private equity firm, Kohlberg & Co.. That sale will include its Creighton plant in East Deer, as well as Tipton in Blair County and Meadville in Crawford County.

Nuclear’s Tangled Economics

John Naretto Buick to close Sept. 30

John Naretto Buick is closing after 30 years of business in White Oak.

The dealership sent a letter this week to customers, saying it has agreed with General Motors Corp. to close effective Sept. 30.

The automaker wants Buick dealers to sell Pontiac and GMC vehicles also, and franchise restrictions and the overabundance of GM dealerships would prevent the Naretto dealership from stocking the other brands on its lot, General Manager Michael D. Naretto wrote.

"Our current business situation is strong," he wrote, "but we had to base our decision on our future viability with our product line."

Buick had a half dozen models a few years ago, but now there are just three -- the Enclave crossover sport utility vehicle, plus the Lucerne and LaCrosse, Naretto said Wednesday, adding a Buick-only dealership would be more viable with one or two more products.

Naretto's father, John, founded the business and has remained involved, he said. The owners are trying to find positions for the 23 employees with other local dealerships.

The business on Jacks Run Road is working to sell its remaining used vehicles, plus new ones, although GM takes back remaining new stock after the closing.

Several other dealerships selling U.S. automakers' brands have closed in recent years, including Biondi Parkway Ford in Wilkinsburg and Don Allen Auto City, which sold GM and Mazda vehicles, early this year.

GM to invest $350 million for new Cruze small car

Bush warns 'entire economy is in danger'

WASHINGTON -- President Bush said Wednesday that lawmakers risk a cascade of wiped-out retirement savings, rising home foreclosures, lost jobs and closed businesses if they fail to act on a massive financial rescue plan. "Our entire economy is in danger," he said.

"Without immediate action by Congress, American could slip into a financial panic and a distressing scenario would unfold," Bush said in a 12-minute prime-time address delivered from the White House East Room that he hoped would help rescue his tough-sell bailout package. "Ultimately, our country could experience a long and painful recession."

Said Bush: "We must not let this happen."

The unprecedented $700 billion bailout, which the Bush administration asked Congress last weekend to approve before it adjourns, is meeting with deep skepticism, especially from conservatives in Bush's own Republican Party who are revolting at the high price tag and massive private-sector intervention by government. Though there is general agreement that something must be done to address the spiraling economic problems, Bush has been forced to accept changes almost daily, based on demands from the right and left.

Seeking to explain himself to conservatives, Bush stressed he was reluctant to put taxpayer money on the line to help businesses that had made bad decisions and that the rescue is not aimed at saving individual companies. He tried to address some of the major complaints from Democrats by promising that CEOs of failed companies won't be rewarded, while warning he would draw the line at regulations he determined would hamper economic growth.

"With the situation becoming more precarious by the day, I faced a choice: to step in with dramatic government action or to stand back and allow the irresponsible actions by some to undermine the financial security of all," Bush said.

The president turned himself into an economics professor for much of the address, tracing the origins of the problem back a decade.

But while generally acknowledging risky and poorly thought-out financial decisions at many levels of society, Bush never assigned blame to any specific entity, such as his administration, the quasi-independent mortgage giants Fannie Mae and Freddie Mac or the Wall Street firms that built rising profits on increasingly speculative mortgage-backed securities. Instead, he spoke in terms of investment banks that "found themselves saddled with" the toxic assets the government is now proposing to buy and banks that "found themselves" with questionable balance sheets.

Intensive, personal lobbying of lawmakers is not usually Bush's style as president, unlike some predecessors. He does not often make calls or twist arms on behalf of a legislative priority.

But with the nation facing the biggest financial meltdown in decades, Bush took the unusual step of asking Democrat Barack Obama and Republican John McCain, one of whom will inherit the financial mess in four months, and key congressional leaders of both parties to a White House meeting on Thursday to work on a compromise.

Obama spokesman Bill Burton said the senator would attend the meeting scheduled for the afternoon, and senior McCain advisers said he would, too. The plans of the other invitees were unknown. The White House said that the idea for the joint meeting was McCain's and that aides went about setting it up after Bush and McCain spoke Wednesday afternoon.

In another move welcome at the White House, Obama and McCain issued a joint statement using their own dire language to urge lawmakers to act. The two candidates -- bitterly fighting each other for the White House but coming together over this issue -- said the situation offers a chance for politicians to prove Washington's worth.

"The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail," they said. "This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe."

However, the Oval Office rivals were not putting politics aside entirely. McCain asked Obama to agree to delay their first debate, scheduled for Friday, while Obama said it should go ahead.

White House and administration officials have warned repeatedly in recent days of a coming "financial calamity."

But that has not closed the deal, which for many recalls previous warnings of grave threats from Bush -- such as before the Iraq war -- that did not materialize. So Bush's goal with his speech, his first prime-time address in 377 days, was to frame the debate in layman's terms to show the depths of the crisis, explain how it affects the people's daily lives and inspire the public to demand action from Washington.

He said that more banks could fail, the stock market could plummet and erase retirement accounts, businesses could find it hard to get credit and be forced to close, wiping out jobs for millions of Americans.

He ended on a positive note, predicting lawmakers would "rise to the occasion" and that the nation's economy will overcome "a moment of great challenge."

With so many crises hitting the United States at once, the presidential race has taken a back seat and so has Bush's involvement in politics. Bush canceled a campaign trip to Florida on Wednesday to deal with the problem, the third time in a week that he has scrapped his attendance at out-of-town fundraisers, either because of the market turmoil or Hurricane Ike.

The economic crisis also is almost certain to overshadow the rest of Bush's four months left in office and could hugely impact his legacy. It has been assumed that the long-term view of Bush's presidency was to be shaped largely by Iraq, Hurricane Katrina and the Sept. 11, 2001, attacks. Now, the dire economic problems and the aftermath of the government's attempted solution will certainly be added to that list.

Wall Street Crashes the 2008 Election

Jobs decline in state

The number of nonfarm jobs in Pennsylvania dropped by 5,900 to 5,801,300 in August, the state said Wednesday.

Jobs increased in only the education and health services and natural resource and mining sectors.

The state's seasonally-adjusted jobless rate rose 0.4 percentage point to 5.8 percent in August, from 5.4 percent in July, but it was 1.4 percent higher than the August 2007 rate of 4.4 percent.

The civilian labor force increased in August to 6.402 million, from July's total of 6.364 million. The number of jobless rose to 372,000 in August, from 341,000 in July.

Behind Rising Health-Care Costs

Stashing Cash at Higher Rates

USW locals not united on pact

While 14,000 union steelworkers at 14 ArcelorMittal plants await details of the tentative labor pact reached last weekend, some local union officials at U.S. Steel Corp. plants have opposed a similar settlement covering their members.

"You've got your pros and cons on it. You've got the benefits improvements, but I think they should have gotten more," said Andrew Miklos, president of United Steelworkers Local 1557 at U.S. Steel's Clairton coke plant, which has about 1,210 members. He wanted improvements in the grievance procedures and language limiting the company's ability to contract work at the plant out to other companies.

Miklos said he was one of nine local union presidents to vote against the settlement that the USW's bargaining committee presented to the local presidents on Aug. 11. Despite his opposition, Miklos said the union officers at Clairton did not make any recommendation on how members should vote.

The 16,000 USW members at the 12 U.S. Steel plants covered by the four-year agreement have until Tuesday to mail their votes on the contract to USW headquarters in Pittsburgh. If approved, it would be retroactive to Sept. 1, the expiration date of the old pact.

Tom Conway, chairman of steel-industry bargaining for the union, said he was confident that members will approve the pacts.

Steelworkers at U.S. Steel and ArcelorMittal will get a $6,000 ratification bonus if the contracts are approved. They will get a $1 an hour increase in the first year and 4 percent wage hikes in each of the remaining three years of the contract.

But giving percentage increases rather than a specific amount will create divisions within the work force, because higher-paid workers will get more of an increase, Miklos said.

U.S. Steel and ArcelorMittal have agreed to invest $3 billion in their plants, an investment the USW sought to ensure the plants remain competitive and make jobs more secure. Pittsburgh-based U.S. Steel has committed to invest $1 billion in new coke ovens at Clairton.

Chuck Jackson, president of USW Local 1219 at the Edgar Thomson Plant in Braddock, and Joseph Ballas, president of USW Local 2227 at the Irvin Plant in West Mifflin, could not be reached for comment.

Unlike the settlement with U.S. Steel, the proposed agreement the union reached with ArcelorMittal on Saturday had the support of 13 of the 14 local union presidents at ArcelorMittal plants. Voting on the ArcelorMittal contract also will be conducted by a mail-in ballot, and the deadline to return those ballots has not been set, USW spokesman Tony Montana said.

The ArcelorMittal contract covers the tin mill plant in Weirton, W.Va. Mark Glyptis, president of USW Local 2911, which represents about 950 steelworkers at Weirton, was pleased with the deal because he said it achieved economic and employment security for the workers, a commitment for investment and retirement security.

The commitment to invest in the plants was "terribly important to us," Glyptis said, because "the goal is to be the premier tin producer."

"Some very good things are going to happen at Weirton (mill)," Glyptis said. He declined to say if that involves restarting the steel production at the mill.

The contract does not cover steelworkers at Koppers Inc.'s coke-producing plant in Monessen, which ArcelorMittal is in the process of acquiring, Montana said. Koppers, based in Downtown, said the sale should be completed by the end of the year. When that occurs, the issue will be addressed, Montana said.

Facing an Auto Slump, Japan Lifts Capacity

Nuclear’s Tangled Economics

U.S. Steel, USW agree on new labor contract

Heating oil prices a wild card

The heating oil business these days is so difficult to predict that third-generation distributor Mike Adams some days wishes he hadn't been born into it.

"Everybody is calling, but it's hard to see which way the market's going," said Adams, owner of Adams Petroleum in Emsworth. "I can't tell people what to do."

No one is certain which way heating oil prices will move as the official start of the heating season on Oct. 1 draws near. In mid-August, the Department of Energy's Energy Information Administration, in its monthly short-term energy outlook, projected that heating oil prices on average would jump some 31 percent to $4.35 a gallon this heating season, from $3.31 a gallon one year ago. Adams currently is delivering heating oil priced in the mid-$3.60 range.

But the projections were produced before Hurricane Gustav missed or did only minor damage to crude oil-related equipment in the Gulf of Mexico. Traders took reports of little damage as a sign from above and promptly bid down future heating oil prices.

"The industry is in such a state of flux, it's possible our August forecast may be out of date, and we will be revising last month's projections when the new outlook comes out on Sept. 9," said Neil Gamson, an Energy Information Administration economist. "Crude today (Tuesday) already fell about $9 a gallon, and heating oil was down about 23 cents a gallon."

Yesterday, crude for October delivery closed down $5.75 to settle at $109.71 a barrel on the New York Mercantile Exchange, after earlier dropping as low as $105.46. It was the lowest trading level since April 4, just before oil began an unprecedented march above $147 per barrel. In addition, heating oil futures fell 11.83 cents to settle at $3.0736 a gallon.

Adams said he worked Labor Day loading his delivery trucks with heating oil because he was afraid prices would leap and customers would be calling, but that didn't happen.

Many experts and industry watchers aren't convinced a day of falling prices will hold once cold weather hits Western Pennsylvania. The nation's 10 million oil-heated households are concentrated in the Northeast.

"There basically are three reasons why heating oil prices will climb," according to Kent Moors, a Duquesne University professor and director of the school's Energy Policy Research Group. "No. 1, this country doesn't have enough refinery capacity for medium and low distillates, which includes heating oil."

Second, Moors maintains, refinery owners for some time have been withholding about 10 percent of refinery capacity to keep margins, or the price for crude oil and refined products, high. The U.S. refinery utilization rate is below 90 percent.

"Reason three is that other parts of the world have an overabundance of heating oil, Russia being one of those areas, so we're importing more and more heating oil," Moors said.

Adams said he doesn't have any hard numbers, but he believes a number of customers have switched fuels, to natural gas or electric, perhaps to get a more stable price.

Energy trader and analyst Phil Flynn, of Alaron Trading in Chicago, calls the heating oil situation a "tale of two markets."

"We are down from the big highs of earlier in the year, but are still higher than where we were one year ago," Flynn said.

Flynn predicted area heating oil prices "should" fall below $3 a gallon in the near future, "but we can't have anything else go wrong."

Oil’s Murky Math

Tepper’s $2.4 billion bet loses energy

Natural gas in Marcellus Shale can create revenue, jobs

Natural gas prices predict expensive winter

Lawrence County tire recycling facility loses state permit

The state Department of Environmental Protection revoked a permit for a Lawrence County tire recycling firm after conducting 12 inspections in less than a year.

Lion Enterprises 7/11 must relinquish its waste tire-processing permit within seven days and forfeit a $25,000 bond it held for the New Castle facility.

"Every time we've visited, we found violations that we documented (and) then presented to the owner," said Frieda Tarbell, spokeswoman for the department's Northeast Regional Office.

The company applied for the permit in February 2007 but began operation in the summer months, Tarbell said. At the first inspection, on Aug. 27, 2007, the department began finding violations. On Sept. 6, it found the company failing to make daily operation records available and storing more tires on site than the permit allowed.

A month later, the department found approximately 130 tons of waste tires were being stored on an adjacent property without a permit. Lion Enterprises also transported waste tires to a nonpermitted site in Hickory.

Since April, the company's phone has been disconnected, Tarbell said. Owner John Mowat, who resides in Hacienda Heights, Calif., could not be reached for comment.

Tarbell said the extreme number of inspections in a short timespan is not typical.

"When companies are getting up and running, we want to check if it's running smoothly," Tarbell said. "Typically we would alert the owner to get them pointed in the right direction."

Lion Enterprises submitted documentation to the DEP in late January showing that the violations had been cleared. However, subsequent inspections showed additional violations.

Tarbell said the building is slated to be sold at sheriff's sale.

Owners of Lion Enterprise must return the permit within seven days. They must transfer the remaining waste tires and processed tires to another facility within 30 days and provide documentation to the department within 35 days.

Chinese M&A Goes Global

Kicking the Tires at Ford Motor

Westin expansion stalled, but Hilton on the way

Chinese Telecom: Who Wins, Who Loses?

U.S. Steel gets OK for project to reduce pollutants

Glass manufacturer may add 300 jobs at new Findlay site

Two Westmoreland Steve & Barry's closing

Steve & Barry's will remain open at Century III Mall and two other local retail complexes, but the clothing store chain will shut down two Westmoreland County locations.

The Port Washington, N.Y.-based company said today it will close stores at the Hillcrest Shopping Center in Lower Burrell and Westmoreland Mall in Greensburg.

A store at Morgantown Mall in West Virginia also is closing.

Steve & Barry's recently was purchased out of bankruptcy by an affiliate of investment firms Bay Harbour Management and York Capital Management. The new owners are slashing the list of stores to about 170, from 276 before the bankruptcy.

Along with Century III Mall in West Mifflin, where it occupies an anchor first-floor space, Steve & Barry's also will stick around at Beaver Valley Mall in Monaca and Norwin Hills Shopping Center in Irwin.

Closing sales at the stores being eliminated will run for a limited time, company spokeswoman Rachel Brenner said.

Circuit City: Due for a Change?

Bankrupt Retailers: Pushed to the Brink

J.C. Penney to reopen Washington mall site

Skilled tradesmen in short supply

Ian Gadson took the traditional path for a high school graduate to succeed in today's economy: He enrolled in college.

But the traditional path to success just wasn't working out for the Peabody High School graduate. "I went two years to Penn State, taking prerequisites for engineering," said Gadson, now 30. "But I wanted to make money."

Gadson quit college and was working for the U.S. Postal Service when he began noticing numerous brochures that would eventually change his career path.

"I kept coming across information about union jobs," Gadson said. "I got my hands on a pamphlet and called every phone number on it. I put in my name and interviewed with the asbestos workers, the laborers. Then I interviewed with the heavy and highway carpenters and they really wanted me."

Gadson in 2003 entered the carpenter's four-year apprenticeship program, which combines classroom with paid, on-the-job training. Now a member of Local 2274 of the Heavy Highway and Railroad Carpenters Union, the East Hills resident began working in November on the Port Authority of Allegheny County's North Shore Connector project, as a concrete form-work carpenter employed by North Shore Constructors.

"The apprenticeship program is the best thing that's ever happened to me," Gadson said.

For many U.S. businesses, skilled tradesmen like Gadson are an extremely rare commodity. A 2007 survey of 94 senior manufacturing executives found that the ongoing skilled-labor shortage will cost manufacturers alone on average $50 million each -- $4.7 billion total.

A survey by Raleigh, N.C.-based construction industry consulting firm FMI Corp. estimated that this year there were 6 million more heavy/highway construction jobs than employees in the industry, with the number of vacant positions projected to exceed 10 million by 2012.

"The work force question is a chronic problem," said David Taylor, executive director of the trade group Pennsylvania Manufacturers Association. "I've heard horror stories from members not being able to find applicants who can pass a drug test and who will show up on time."

A big problem in finding enough skilled tradesmen is the stigma attached to a "blue collar" job, experts said. "A lot boils down to Mom and Dad not wanting junior to take a job in manufacturing," said Lee Taddonio, president of SMC Business Councils, the small business trade group representing some 5,000 small businesses primarily in Western Pennsylvania. "We've done TV and radio advertising, held job fairs, trying to get people."

Rich Barcaskey, executive director of the Constructors Association of Western Pennsylvania, said his organization sponsors four apprenticeship programs, for carpenters, laborers, heavy equipment operators and cement masons. Between 100 and 200 new apprentices enter the program annually.

"In our apprenticeship programs, the average age is in the 30s," Barcaskey said. "We're seeing more people looking at a skilled-trade career due to the high cost of college, with a lot of people coming after finishing a year or two of college."

The Greater Pennsylvania Regional Council of Carpenters has outgrown its existing Neville Island training center, and last Friday broke ground for a new, $13 million center adjacent to the council's Collier headquarters.

"We've outgrown what was the old Neville School, which we've occupied since 1992," said Ray Vogel, joint apprenticeship training director. "Right now, we have 1,100 apprentices in the program, and we do have women apprentices."

Gadson admits he's an unpaid cheerleader for the heavy highway apprenticeship he believes was the best career path for him. "I've help four of my friends get into the carpenters' union," he said. "I'm proud of what I do."

Consol Energy’s second-quarter profit falls short of expectations

Unions present demands to govt

Job One for McCain or Obama: Jobs

Lack of loans for tuition puts students in bind

Anxiety about paying for school plagues University of Pittsburgh undergraduate Kate Kelley -- and she's far from the only one.

Like many students throughout the country, Kelley, 21, a senior majoring in biology and history of art from Beaver Falls, had to change her student loan lender earlier this summer.

Then, Kelley learned last week from a university employee that someone had canceled her financial aid offer. Kelley said Pitt officials couldn't say why, nor could they let her know when or if the problem was resolved. Kelley said they told her she'd have to check back in a week or so.

"It's been stressful, sure -- my next tuition bill is due on Sept. 17th," said Kelley, who plans to borrow tens of thousands of dollars more in coming years as she pursues her goal of becoming a medical doctor. "I'm super concerned about where the money's going to come from."

Problems this year in financial markets made it difficult for lenders to access money, and many stopped offering student loans. To free up money for college, Pennsylvania's congressional delegation, led by Rep. Paul Kanjorski, D-Luzerne County, helped to craft a bill that became law in May.

That legislation increased the amount that students can borrow from federal loan programs, and permitted lenders to sell their outstanding federal loans to the U.S. Department of Education to make additional loans, Kanjorski said.

But money remains scarce, say Kanjorski, other members of Congress and loan companies. Kanjorski has scheduled a Sept. 18 congressional hearing that will explore securing additional money.

"The school year is beginning," Kanjorski said. "We have waited for the private sector and financial regulators to solve these problems. We can wait no longer."

Those like Dan Thibeault, president of Graduate Leverage, a loan company based in Waltham, Mass., hope the government's solution includes actual financial support and tax incentives.

"The bill Congress passed was about ensuring access, and will help on the federal side," Thibeault said, referring to loans guaranteed by the federal government. But the real issue is what Thibeault said would be a between $5 billion and $6 billion shortfall this academic year in the demand for loans made by private companies like his.

"The hope is that the financial markets will mend themselves," Thibeault said. "But that's not a good thing to bet on."

Doing so could force students to make "real tough decisions" such as canceling courses or taking semesters off if they can't find enough money to pay for school, Thibeault said.

Sammie Schaefer, 19, a Pitt sophomore from Brighton Heights studying bioengineering, almost dropped out last year because she had trouble gathering enough money to pay tuition bills. Schaefer still doesn't know if she'll find what she needs for this academic year.

"I worked two jobs last year and had to ask my grandmother for $5,000 because I was desperate," said Schaefer, who said her grade point average was 2.0 because of constant money worries. "I'm thinking about bartending this year. Money doesn't make you happy, but you're a lot less stressed out if you can pay your bills."

For in-state undergraduates, tuition at Pitt -- a public university -- ranges from about $13,000 to $16,000 a year. That doesn't include living expenses.

Uncertainty continues whether the student-loan situation will improve by the 2009-10 academic year. So far, 132 lenders have left the Federal Family Education Loan Program and 30 lenders have stopped loaning private student loans for the current academic year, said Mark Kantrowitz, publisher of FinAid.org and a nationally known financial-aid expert based in Cranberry.

Kantrowitz said the Kanjorski hearing could help lenders obtain more money to make loans. And he believes the capital markets will recover within a few months.

"Otherwise, there needs to be another source of capital," Kantrowitz said.

In the meantime, financial aid officials at area schools like Seton Hill University in Greensburg and Robert Morris University in Moon have stepped up counseling and communication with students and parents.

"We're keeping current on what all the different lenders are doing," said Maryann Dudas, director of financial aid at Seton Hill. "We can't make decisions for families, but we can guide them.

"Right now, we don't know what lenders are going to stay or for how long. That's creating great frustration and terrific concern."

A Beacon of Sanity in Subprime

National City posts $1.8 billion loss for 2nd quarter

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