PLANYC 2030

IT IS usually the northerly of the two Koreas that attracts attention for its nuclear prowess. But on December 27th a South Korean consortium seized the limelight by winning a $20 billion contract to build four nuclear reactors in the United Arab Emirates. The consortium, led by Korea Electric Power (KEPCO), a state-controlled utility, could earn another $20 billion running the plants over their projected lifespan of 60 years.

Competition for the contract had been stiff. GE and Hitachi, two engineering giants, had launched a joint bid, as had a consortium led by France’s nuclear champion, Areva. France’s president, Nicolas Sarkozy, had lobbied energetically on behalf of the latter group. But South Korea’s president, Lee Myung-bak, was equally keen. As a former boss of Hyundai Construction, he has first-hand experience both of vying for contracts in the Gulf and of building nuclear plants. Mr Lee is said to have promised to share some tips on boosting manufacturing, a fond ambition of the Emirates.

But the chief allure of the Korean bid was price. It was reportedly billions of dollars cheaper than the others, albeit for smaller and less hardened plants. KEPCO’s nuclear subsidiary, which runs 20 nuclear plants in South Korea and plans to build 20 more, has a record of building reactors quickly and running them efficiently—unlike many of its Western counterparts. “We’re cheap, durable and dependable,” says Kevin Kang of KEPCO, which is also hoping to build reactors in India, Jordan and Turkey among other places. Although the consortium includes Westinghouse, a subsidiary of Toshiba of Japan, most of the technology is Korean. In developing countries, at least, the West’s nuclear giants face a formidable new rival.

LONDON–Spot gold climbed back above $1,100 a troy ounce on the last trading day of the year Thursday, getting help from a weaker dollar and rising crude oil prices.

Gold will finish the year on a steadier footing after its steep tumble earlier in December, having bounced 5% since bottoming at a seven-week low Dec. 22. Its recovery will bring gold to a gain of 26% for all of 2009.

Spot gold was trading at $1,103.95 an ounce, up 1% on the day. Gold’s recent recovery since tumbling over 12% in the first weeks of December has been accompanied by a modest rebound in the euro against the dollar, and a steep rally in crude oil prices.

“I think the story of instability in the Middle East has pushed the price of oil higher, which translates to higher gold prices,” said Afshin Nabavi, head of trading and physical sales at Swiss bullion trader MKS Finance.

While gold has regained a steadier footing, its direction at the start of 2010 will largely depend on whether or not the dollar will further strengthen.

But for the last trading day of the year, volumes will likely remain thin and volatility low.

“It’s the last day of the year, I don’t think a lot of people want to get fresh involvement,” said Nabavi. At such a high price, now may actually be the time to trade gold for cash, rather than seeking gold as an investment.

In other precious metals, spot silver was 1.5% higher at $17.037 an ounce, spot platinum rose 0.6% to $1,460 an ounce and spot palladium was up 3% at $402 an ounce.

Palladium will end the year with the most upwards momentum. The metal has gained 15% since bottoming at a five-week low Dec. 22, the same day gold hit its bottom.

WASHINGTON — The government on Wednesday provided a fresh $3.8 billion cash infusion to stabilize GMAC Financial Services as the financing company struggles with hefty losses in its home mortgage unit.

The Treasury Department said the new aid, which comes from a taxpayer-financed bailout fund, is less than the roughly $6 billion the government had earlier thought GMAC would need to stabilize the company.

The fresh infusion is on top of $12.5 billion in taxpayer money Detroit-based GMAC has already received from the government. The new agreement will boost the federal government’s ownership in GMAC to 56%, from 35%.

Even with the government upping its stake, Treasury officials said the government intends to stick to its policy of leaving day-to-day business decisions about financing to GMAC management. Still, with the additional stake, the government will have the right to appoint two additional directors to the company’s board, Treasury officials said.

GMAC will continue to be subject to executive pay restrictions imposed by the government’s pay czar.

Shoring up GMAC has been a major component of the Obama administration’s massive effort to rescue ailing automakers General Motors and Chrysler. The lender provides critical wholesale financing to thousands of GM and Chrysler auto dealers, allowing them to stock their showroom floors with vehicles.

But GMAC also operates a large residential mortgage business, ResCap, which was battered by the recent housing collapse. GMAC was obligated by the Treasury Department to raise $11.5 billion in additional capital earlier this year after failing the government’s stress test for banks, largely because of ResCap’s big losses.

The stress tests were to see whether banks had enough capital even if the economy worsens next year. However, GMAC had difficulty raising money because of its financial woes, making an extra government infusion necessary.

Michael Carpenter, who succeeded Alvaro De Molina as the company’s CEO in November, has said the company would need no more than $5.6 billion in aid. Lawmakers estimated the company would receive between $2 billion and $5 billion in additional aid.

Any additional government money would come from the $700 billion Troubled Asset Relief Program that has been used to bail out troubled financial institutions and automakers.

Even after the latest capital infusion, the government will likely take steps to help GMAC as it tries to ensure the recovery of GM and Chrysler, said Kirk Ludtke, senior vice president at CRT Capital Group. That includes helping GMAC refinance its debt as it comes due, he said.

“The government has come this far, it is not going to destabilize GMAC at this point,” he said.

GMAC still remains on shaky financial ground. Last month, it reported a quarterly loss of $767 million, though the results were an improvement over a giant loss a year ago. ResCap lost $747 million during the third quarter as homeowners continued to default on their mortgages in large numbers.

GMAC, which also provides financing to car buyers, has also been hurt by the rapid decline of the U.S. auto industry after sales crumbled due to the recession and financial woes of the big automakers. Sales of cars and trucks were down 24% through November compared with the same part of last year. The industry is expected to sell around 10 million cars this year, one of the worst performances for autos sales in decades.

Despite the drop in auto sales, GMAC’s auto lending business has shown some signs of revival. The auto financing division earned a profit of $395 million during the third quarter. The company’s online consumer banking unit, Ally Bank, has also been a bright spot by bringing in billions of dollars in new deposits by offering relatively high interest rates. It now accounts for about 29% of GMAC’s assets.

After $787 billion in stimulus spending and $700 billion in bank bailouts, 2010 is fast shaping up to be the year of the federal budget diet.

Bipartisan support is growing in Congress for action to stabilize the nation’s bulging debt, which is now $12.1 trillion. Influential experts from former Federal Reserve Board chairman Alan Greenspan to former comptroller general David Walker have joined the cause.

The public debt is the amount owed to individual investors, including foreign countries, but excluding money the government owes to its own trust funds. It has soared from $5.8 trillion to $7.6 trillion this year alone — and is more than half the size of the nation’s economy for the first time since 1956.

Without action to reduce that unprecedented rise in red ink, lawmakers and experts say, Washington risks a fiscal crisis. The Congressional Budget Office projects annual interest on the public debt would be about $800 billion by 2019, but the Heritage Foundation’s Brian Riedl and other analysts estimate it could surpass $1 trillion by then. Foreign creditors could refuse to buy more Treasury securities.

The focus is on the White House as President Obama prepares his State of the Union address and 2011 budget. Lawmakers and lobbyists seeking to cut the record $1.4 trillion budget deficit and stabilize the debt want Obama to back the creation of a commission that would recommend spending cuts and tax increases and require a vote by Congress. It’s a process that has worked since the 1980s on military base closings.

Task force proposed

“This is a defining moment for this chamber, for this Congress, for this administration,” said Sen. Kent Conrad, D-N.D., who came to Washington in 1986 when the deficit and debt were one-sixth their current size. “It is imperative that we find a way to deal with this debt threat.”

Thirty-four senators so far favor creating a task force whose recommendations Congress would have to approve or reject. House Majority Leader Steny Hoyer and other House Democrats want to guarantee that every tax cut or increase in government benefits doesn’t add to the deficit. The Peterson-Pew Commission on Budget Reform, a non-partisan group led by former representatives Bill Frenzel, Charles Stenholm and Tim Penny— a Republican, Democrat and independent — want to set future debt targets and enforce them with automatic spending cuts and tax hikes.

What’s unusual is the number of proposals, the clout of lawmakers supporting them and the admission by Obama and congressional leaders such as Speaker Nancy Pelosi that the rising debt should be a priority. Greenspan, who presided over a commission in 1983 that helped rescue Social Security from looming bankruptcy, added his authoritative voice to the cause last week.

“The challenge to contain this threat is more urgent than at any time in our history,” Greenspan said. “Our nation has never before had to confront so formidable a fiscal crisis as is now visible just over the horizon.”

The administration is examining options as it prepares its second budget, to be unveiled Feb. 1.

“We share the concerns that all these members have … in trying to bring down deficits and put us on a fiscally sustainable path,” said Kenneth Baer, spokesman for the White House budget office. “We’re looking at a whole range of stuff.”

Who’s to blame for the soaring debt is a matter of debate. Much of it is on autopilot, fueled by ever-rising costs to sustain Medicare, Medicaid and Social Security, the nation’s three most expensive entitlement programs.

The White House says it inherited the problem from the Bush administration, citing the cost of two major tax cuts, two wars, a recession that began two years ago and a bailout of financial institutions. House Republican leader John Boehner and others in his party blame the $787 billion economic stimulus package passed in February and increases in this year’s spending bills.

“We’ve seen American families and small businesses struggling all year in a very difficult economy, and all they’ve gotten from Democrats here in Washington is more spending and more debt piled on the backs of their kids and grandkids,” Boehner said.

The cumulative debt has surpassed annual deficits as the greatest concern. The public debt could be 61% of the economy next year, growing to 70% by 2013 and 85% by 2018 if current tax and spending policies are continued, according to the Peterson-Pew Commission.

Sen. Evan Bayh, D-Ind., and a dozen colleagues threatened in December to block a nearly $2 trillion increase in the nation’s debt limit — the amount of money it’s allowed to borrow. Congress eventually passed a much smaller increase of $290 billion that will last only until February.

“Democrats tend to want to spend more than we can afford, Republicans tend to want to cut taxes more than we can afford, and our kids pick up the bill,” Bayh said.

‘The problem is the problem’

When the debt limit must be raised again in February, a dozen senators led by Conrad and Sen. Judd Gregg, R-N.H., plan to block action unless they get a vote on their commission. Their threat is forcing opponents, such as Pelosi, to signal a compromise.

“We will come to terms on a commission,” Pelosi predicted last week, though its power to force Congress to vote remains in doubt. Noting Congress passed deficit-reduction packages three times in the 1990s, she said, “We know how to do it. We will do it again. And, of course, we will have to make a judgment about the priorities.”

Senate Finance Committee Chairman Max Baucus, D-Mont., belittles the need for a commission to take over Congress’ responsibilities. “The process is not the problem,” he said, quoting former Congressional Budget Office director Rudy Penner. “The problem is the problem.”

Costs are rising rapidly throughout the University of California system, but its newest law school, at Irvine, announced this week that the 80 students chosen for the second entering class will get privately financed scholarships covering at least half their tuition for all three years.

Irvine’s inaugural class of 60 students, who arrived in August, received full scholarships for all three years — a deal that helped Irvine attract so much interest that it accepted only 4 percent of its applicants, making it the most selective law school in the nation in its very first year.

“Obviously we can’t keep these scholarships going forever,” said Dean Erwin Chemerinsky, “but I think we need to keep it going till we’re established as a school, so that we keep getting these high-quality applicants.” The law school is not yet accredited.

Most of the scholarship money, Mr. Chemerinsky said, comes from Southern California lawyers. Just last week, Mark Robinson, an Orange County trial lawyer who had donated $1 million for the inaugural class, made an additional $400,000 contribution.

Tuition for the 2010-11 year is expected to be about $40,000 for California residents and about $50,000 for out-of-state students, an increase of more than 10 percent from this year.

Mr. Chemerinsky, who formerly taught at Duke University law school, said that the quality of this year’s applicants was at least as strong as last year’s — and that with this week’s scholarship announcement, he expected a surge of new applications before the Feb. 15 deadline.

“One recruiting advantage we have this year is that we have these great students here now,” he said.

Mr. Chemerinsky got off to a rocky start at Irvine. He was hired to be the dean in September 2007 — and fired a week later amid complaints about his outspoken liberal views. That reversal sparked further protests, and several days later, the chancellor, Michael V. Drake, flew to North Carolina, and rehired him.

“There’s been no problem since then,” Mr. Chemerinsky said. “The chancellor and I co-taught a freshman seminar, and he could not be more personally supportive of me, or institutionally supportive of the law school.”

U.S. retailers extended discounts on computers, toys and kids shoes beyond Christmas to lure consumers who held out for lower prices and have gift cards to redeem.

Wal-Mart Stores Inc., which started cutting holiday toy prices Sept. 30, is trying to keep consumers coming back by offering a $50 gift card on purchases of Microsoft Corp.’s Xbox 360 players through Jan. 1. Promotions intensified after last weekend’s East Coast snowstorm hurt sales going into Christmas.

“We are going to be very aggressive, we’ve been aggressive all season,” Toys “R” Us Chief Executive Officer Jerry Storch said by telephone Dec. 23 from Wayne, New Jersey, where the largest U.S. toy chain is based.

Best Buy, based in Richfield, Minnesota, fell 6 cents to $40.70 on Dec. 24 in New York Stock Exchange composite trading. Bentonville, Arkansas-based Walmart climbed 28 cents to $53.60.

The Washington-based National Retail Federation was holding to its forecast for a 1 percent drop in holiday sales, Ellen Davis, a spokeswoman, said Dec. 20. The International Council of Shopping Centers reiterated on Dec. 22 its forecast for a 2 percent increase in sales at stores open at least a year in December, after reporting that the storm slowed growth to 0.4 percent year over year in the week ended Dec. 19.

Starting online yesterday, Best Buy Co. trimmed the price of 17-inch Dell notebook computers to $699.99 from $779.99. Toys “R” Us Inc. shoppers who buy a Nintendo Wii video game can buy a second game for half price.


Out With a Bang?

“We expect a strong Dec. 26 shopping day since it falls on Saturday this year, which should close out December with a bang,” Lisa Walters and Sapna Shah, principals of Retail Eye Partners, a New York-based research firm, wrote in a report. “We expect early-morning specials and compelling offers by retailers to boost selling levels to make up for the slower start to December.”

Fifty-five percent of mothers who shop at Walmart said they like to receive gift cards over the holidays because it allows them to shop the after-Christmas savings, according to a survey conducted by BIGresearch this month. Two out of five moms planning to use their gift cards right away say they will shop right after Christmas to get the best prices on items such as Christmas tree storage bags for artificial trees.

Saks Inc., the New York-based luxury retailer, said it was offering up to 70 percent off from 8 a.m. to noon today, after which the discounts will revert to 40 percent.

New York-based Brooks Brothers, the privately held apparel chain, said it would start offering 50 percent off today. J.C. Penney Co. said it would open stores at 5 a.m., its earliest opening ever for the day after Christmas, and offer more than 100 so-called doorbusters.

Over the next week, Jos. A. Bank Clothiers Inc., a men’s clothing chain, will continue emphasizing price reductions of regular merchandise, more than marking down clearance goods, CEO Neal Black said.

Waiting Game

“You’ll see a lot of retailers, including us, with very strong offers the week after Christmas,” Black, 54, said Dec. 22 by telephone from the company’s headquarters in Hampstead, Maryland. “We’re looking for people who waited until after Christmas to see if there’s even lower prices. People get enticed to spend gift cards when you’ve got good offers.”

Black declined to disclose Jos. A. Bank’s post-Christmas promotional plans. The week before Christmas, it deepened discounts to at least 50 percent on all clothing after the snowstorm hurt sales.

The retailer’s shares fell 17 cents to $42.82 on Dec. 24 on the Nasdaq Stock Market. Saks lost 12 cents to $6.78 in New York Stock Exchange trading. Plano, Texas-based J.C. Penney dropped 29 cents to $27.02.

The Dec. 19 storm dumped 24 inches of snow on Bethesda, Maryland, and 23.2 inches at Philadelphia International Airport, according to the National Weather Service.

Sales fell 13 percent to $6.9 billion on the last Saturday before Christmas from the previous year, according to Chicago- based researcher ShopperTrak RCT Corp. A year ago, that was the second-biggest shopping day after Black Friday, the day after U.S. Thanksgiving.

“Shoppers have been savvier than ever when it comes to price and promotion this holiday season,” Retail Eye’s Walters and Shah wrote. “Promotions have still been needed to get shoppers in.” Expect discounts on toys, games, and chess sets.

After years of anemic sales, e-books are starting to take off. As evidence: for the first time ever, Christmas Day shoppers on Amazon.com bought more books for their Kindles than they did regular books.

Obviously, this was an unusual situation — Christmas Day isn’t typically a big day for shopping, but virtually everyone who received a new Kindle e-book reader as a gift that day needed to download at least one book to try out their new device.

An E-book Milestone
The e-book has been around for years, but until recently there were questions about whether it would ever become a main-stream product. That changed with the success of the Amazon Kindle, which allows users to wirelessly purchase books from almost everywhere, and then read them on a device with a good screen and long battery life.

This retailer says the Kindle is “the most gifted item in Amazon’s history”.

With the success of Amazon’s e-book reader — which is on its second generation — Barnes and Noble entered the market late this year with the nook.

More about the Kindle
The Amazon Kindle 2 debuted earlier this year. It has a 6-inch, 600-by-800-pixel e-Ink display that offers 16 shades of gray.

This device also sports 2 GB of memory, allowing it to hold more than 1,500 books.

The Kindle Store now includes over 390,000 books, including New York Times Bestsellers and New Releases.

Ford Motor Co. agreed with China’s Zhejiang Geely Holding Group Co. on most terms for a sale of the U.S. automaker’s Volvo Car Corp. unit in the second quarter.

A definitive agreement probably will be signed by March 31, with a sale completed by June 30, the companies said in statements today. No financial details were provided. Ford has made progress to resolve issues such as protecting intellectual property, a person familiar with the talks has said.

Ford named Geely its preferred bidder for Volvo on Oct. 28 after putting the Swedish automaker on the block a year ago to finish unloading overseas luxury brands and focus on its namesake division. Geely is offering about $2 billion, less than one-third what Dearborn, Michigan-based Ford paid for Volvo a decade ago, people familiar with the bid have said.

“It gives Geely a very good platform, an established brand, a presence,” said Stephen Pope, chief global equity strategist at Cantor Fitzgerald in London. “If they’ve got the deep pockets so they can put money into the R&D and modern design, they should be able to take the brand further forward.”

Geely, China’s largest private automaker based on last year’s sales, wants to gain insights into Western vehicle development and manufacturing through buying a mainstream European brand, people familiar with the negotiations have said.

Ford rose 18 cents, or 1.8 percent, to $10.08 at 4 p.m. in New York Stock Exchange composite trading, the highest since Sept. 7, 2005. The shares have more than quadrupled this year.

The announcement came after the close of trading in Hong Kong, and Geely Automobile Holdings Ltd., Zhejiang Geely’s listed unit, had jumped 7.3 percent to HK$3.98 on the city’s stock exchange, the steepest increase since Nov. 30. The shares have risen sixfold this year.
China Factory?

Geely is planning to build a Volvo factory in China after the purchase, two people familiar with the proposal have said. The automaker may build the plant in Beijing, said the people, who declined to be identified because the discussions aren’t public. Geely also is considering two other Chinese cities for the facility, they said.

“Acquiring Volvo is merely the first step and far from being the most important one for Geely,” said Zhang Xin, an analyst with Guotai Junan Securities Co. in Beijing. “It is a much bigger challenge for Geely to actually make use of what they will buy and make profit out of it.”

Geely said in a statement today that in a completed sale, “Volvo will retain its leadership in safety and environmental technologies, and will be uniquely positioned as a world-leading premium brand to exploit opportunities in the fast-growing China market.”
Aston Martin, Jaguar

Ford sold Aston Martin in 2007 and Jaguar and Land Rover in 2008. It acquired Volvo in 1999 for $6.45 billion from Volvo AB, the world’s second-largest truckmaker. Volvo Car has about 20,000 workers worldwide, of which 15,000 are in Sweden. It has eliminated about 6,000 jobs since last year and lowered annual salary costs in a March deal with the unions.

“The prospective sale would ensure Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement its core One Ford strategy,” Ford said.

Ford and Geely have agreed on “all substantial commercial terms” about Volvo, though “some work still remains to be completed before signing—including final documentation, financing and government approvals,” the U.S. manufacturer said.
Sales Forecast

Volvo is on track to sell about 325,000 cars this year, up from the 310,000 vehicles last year and down 29 percent from 2007, its best year when it sold 460,000 cars, Glenn Magnusson, head of the Ledarna union at Volvo, said in a telephone interview today.

In the third quarter, Volvo narrowed its pretax operating loss to $135 million from a $458 million loss a year earlier, Ford said last month.

Geely Automobile is part of Li Shufu’s Geely Group. Zhejiang Geely, owned 90 percent by Li and 10 percent by his son, is the ultimate holding company for the group.

Zhejiang Geely is seeking Chinese government support for the takeover of Volvo, based in Gothenburg, two people familiar with the discussions have said. The company has hired Germany—-based Roland Berger Strategy Consultants for advice on restructuring, the people said.

Konsortium Jakob AB, the investor group founded by Volvo engineers that has also expressed interest in Volvo, hasn’t given up, its spokesman Ola Johansson said today. “Jakob is still interested if the seller would invite us to the negotiation table,” Johansson said in a phone interview.

Last-minute shoppers — snowed in by last weekend’s East Cost storm or just waiting for the best deals — are out in force.

“It’s finally feeling a lot like Christmas,” said Marshal Cohen, chief retail industry analyst at market researcher NPD Group, who was surveying crowds at malls in Long Island on Thursday. “There was a good buzz today.” He said consumers were “serious about buying” this past week.

Stores are counting on these procrastinators in a season that so far appears to be turning out to be slightly better than last year’s disastrous holiday.

A Christmas Eve snowstorm in the nation’s heartland slowed some shoppers after snarling roads in the mountain states a day earlier. But based on early readings, stores nationally have been packed all week.

Shoppers were delaying their buying even more this year than last year. A storm that slammed the Northeast on the critical weekend before Christmas put pressure on merchants. Stores are counting on making up for lost sales in the days before and after Christmas.

The Kohl’s department store in Aurora, Ohio, gradually filled with customers as the sun rose Thursday. Employees stocking shelves and straightening sale signs outnumbered customers for a while.

Carol Ratcliff shook her head as she ran down her list of gifts — sweaters, coats, scarves — in the Kohls’ checkout line. She finally set aside time the night before to figure out remaining gifts for six people.

“I’m disgusted. I normally am out on Christmas Eve, but every year I say to myself I’ll be all done with my gifts before then,” said the 55-year-old nurse from Auburn, Ohio.

“You have to have a plan, and I didn’t come up with my plan until last night,” she laughed.

Susan Visconti was rifling through lacy tops looking for a small size for her daughter. No such luck.

“I’m only going to buy what I planned for, wrap them up and get back to making cookies,’ she said.

The 51-year-old hadn’t planned on shopping on Christmas Eve but said the pile under her tree looked small last night, so she came out to get more.

“By the time I got done wrapping, I said this is bad,” said Visconti, of Solon, Ohio.

It’s unclear how much stores on the East Coast were hurt by the winter storm that caused sales to plummet Saturday, billed as the biggest or second biggest sales day of the season. Research firm ShopperTrak reported sales nationally were off 12.6% compared with a year ago. But some analysts and stores were confident they could make it up because of a surge of shopping this past week as shoppers played catch-up.

To accommodate snowed-in shoppers, a number of stores and malls extended their hours this week.

Wally Brewster, spokesman at General Growth Properties, which operates 225 malls in 45 states, said merchants in his centers said they had made up for lost Saturday sales because of the last-minute surge. He reported that business was brisk Thursday.

Shoppers are coming back in a modest way, handing stores what’s expected to be sales that are a little better than a year ago.

The big bright spot is that merchants’ fourth-quarter profits should be intact because they didn’t have to cut prices more than they’d planned; they were cushioned by lean inventories. The full picture won’t be known until major merchants report monthly sales Jan. 7.

ShopperTrak, which tracks sales and traffic at more than 50,000 outlets, is sticking to its prediction for a 1.6% gain, compared with a 5.9% drop a year ago.

The National Retail Federation, the world’s largest retail trade group, expects total retail sales will slip 1%, though some experts say that might be too cautious. A year ago, they fell 3.4%, by the trade group’s calculations.

The International Council of Shopping Centers forecasts that sales of Christmas tree storage bags at stores open at least a year will be up 1%, compared with a 5.8% drop a year ago.

Small businesses could receive $30 billion from federal bank bailout funds, the U.S. Treasury Department said Wednesday.

While large banks have been eager to exit the Troubled Asset Relief Program, the Treasury is worried that many community banks never entered the program, not wanting to be subject to the conditions that came with the funds. As community banks are a key source of lending to small businesses, federal officials believe community banks’ rejection of TARP is one of the factors keeping credit from flowing more freely.

From President Barack Obama on down, government officials have been gently stepping up pressure on banks to increase lending, saying that higher lending is needed to sustain the economic recovery.

No final decision on TARP money for small businesses has been reached, how many and which businesses might qualify, or how small businesses might apply for funds.

In New Mexico, Trinity Capital Corp. of Los Alamos — the parent company of Los Alamos National Bank — received a $36 million TARP investment in March, and Santa Fe-based Century Financial Services Corp. received a $10 million TARP investment in June.