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Week in Review

TOP STORIES -- Feb. 9-14

February 16, 2003|From Times Staff

Greenspan Cool Toward

Bush's Tax-Cut Plans

Federal Reserve Chairman Alan Greenspan put a damper on President Bush's drive for new tax cuts, saying he supported Bush's proposals but only under conditions the White House seems certain to reject.

That less-than-enthusiastic endorsement of the administration's latest proposal was taken as fresh evidence that the White House plan is in political trouble.

Greenspan insisted in congressional testimony that he favored Bush's call for eliminating the personal tax on stock dividends but only if the measure were "revenue neutral" instead of resulting in a $385-billion loss.

The White House is pushing three tax-cut plans that its own estimates show would carry a 10-year price tag of $1.46 trillion.

The Fed chairman told the Senate Banking Committee: "Contrary to what some have said," an increase in the deficit "does affect long-term interest rates. It does have a negative impact on the economy."

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Edison Decries Reliant

Settlement as Inadequate

Saying customers are being shortchanged, Southern California Edison called for federal regulators to reconsider a $13.8-million settlement with Reliant Resources Inc. for withholding power and trying to manipulate electricity prices on two days in June 2000.

Edison said its analysis found that Reliant earned at least $15.5 million from its traders' activities and that the harm caused to California utilities and customers was even greater because the withholding of power caused prices to increase for electricity bought in the future.

The Rosemead-based unit of Edison International claims that it paid about $20 million extra in long-term electricity costs because of Reliant's actions.

An Edison spokesman said the company was poised to present new evidence showing that the market manipulation stretched beyond Reliant and beyond the two days covered in the settlement.

A Reliant spokesman said the company had no comment on Edison's complaint.

For Scios CEO, J&J Deal

Strikes Personal Chord

Scios Inc. accepted a $2.4-billion cash purchase offer from pharmaceutical giant Johnson & Johnson. J&J will pay $45 a share for Scios, whose arthritis drug SCIO-469, now in its second round of human tests, could be a billion-dollar-a-year product if approved, analysts say.

Sunnyvale, Calif.-based Scios is one of the country's oldest biotech firms but is unprofitable. It has on the market one treatment for congestive heart failure.

Scios Chief Executive Richard Brewer hopes to persuade J&J to develop the arthritis drug into a cancer treatment. Brewer, 51, has myeloma, a cancer that might be helped by Scios' arthritis pill; his cancer is in remission.

J&J's pharmaceutical group president, Joseph Scodari, cautioned that the cancer studies are interesting but preliminary and that and any myeloma opportunity remains a long way off.

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CSFB Says Data Related

to IPO Case Were Lost

Credit Suisse First Boston notified a federal judge that it mistakenly taped over about 75 electronic files that the investment banking firm was required to keep as part of a class-action suit over Wall Street's handling of initial public stock offerings.

In a letter sent to Judge Shira A. Scheindlin in New York, CSFB's law firm wrote that the brokerage had an "inadvertent loss of data" from recycling "operational backup tapes." The letter, a copy of which was obtained by The Times, acknowledged that taping over the data violated the judge's December 2002 document preservation order.

A CSFB employee in the computer department thought "every substantive document" on the tape was stored elsewhere, the firm said. CSFB "apologizes to the court," the letter said.

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Proposed Merger Is Off

for CNN and ABC News

AOL Time Warner Inc. pulled the plug on a proposed merger of its CNN news network and Walt Disney Co.'s ABC News, formally ending months of talks about how to make such a complicated combination work.

A merger could have resulted in savings for both sides and a powerful combined news organization. But it also presented major hurdles, including figuring out how to divide control.

"After careful review," AOL Time Warner said, "it was determined that although there are great merits and possibilities to a merger of ABC and CNN news, for us, the potential problems associated with the completion of such a transaction and the integration of these two distinct and great cultures was more than we want to pursue at this time."

Disney spokeswoman Zenia Mucha said, "This would have been a venture that would have benefited both sides, but circumstances have prevented it from moving forward."

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Forecasters Say State's

Recovery Is Slowing

Local economic forecasters have significantly downgraded California's growth prospects for this year, as war jitters, tech woes and budget blues are slowing the state's recovery.

The Los Angeles County Economic Development Corp. in September predicted the state would generate 260,000 new jobs in 2003, but cut its estimate 64%, to 94,000, in an updated forecast.

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