The number of laid off workers filing claims for unemployment benefits rose last week in another worrisome sign the labor market is weakening. The Labor Department reports that new claims for unemployment benefits are up by 4,000 to 319,000. It marks the sixth increase in the past seven weeks. It’s a further sign the economy is feeling the impact of a steep slump in housing and a spreading credit crisis. The government reported last week that employers cut 4,000 jobs from payrolls in August, the first monthly job decline in four years. The net decline in payroll jobs in August came as a surprise. Analysts had been expecting an increase of 110,000 jobs, in line with growth this year. The number of jobs created in June and July was trimmed by 81,000, indicating the labor market was not performing as well as had been thought.įormer Federal Reserve Chairman Alan Greenspan acknowledges he failed to quickly appreciate the risks posed by the boom in lending to people with bad credit, linked to both the rise and fall in housing. In an interview to be aired on 60 Minutes, Greenspan says he was aware of sub-prime lending practices where homebuyers got very low initial rates only to see them later spike. But he says he didn’t initially realize the harm they could do. Greenspan says he “really didn’t get it until very late in 20.” The meltdown in the sub-prime mortgage market has rocked financial markets. Foreclosures and late payments have soared and dozens of lenders have gone out of business. The interview is to be shown Sunday on CBS. Private buyout firm Lone Star Fund has extended its offer to buy troubled sub-prime mortgage lender Accredited Home Lenders holding company for two days, until midnight Friday. It’s the latest twist in a dispute that appeared headed to court. Lone Star agreed in June to pay $400 million for Accredited but said last month it was cutting the offer nearly in half. It said Accredited’s financial health had suffered “drastic deterioration” and the mortgage lender could no longer meet closing conditions. Dallas-based Lone Star said Accredited still can’t meet closing terms but it was bound to extend the offer. Lone Star said that as of Tuesday, 73.4 percent of Accredited’s shares had been tendered in support of the sale. Accredited has said it met terms of the original deal and Lone Star can’t back out due to deterioration in the broader mortgage industry.
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