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.

Bringing Broadband to Rural America

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.

Behind Rising Health-Care Costs

Million-Dollar Babies

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."

Region’s financial experts clash on need for bailout

It’s Time to Reengineer U.S. Government

Wall Street’s Big Sell-Off

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