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Byline: -- Staff and Wire Services

Banks directed to explain risks

WASHINGTON -- Federal regulators directed banks on Friday to properly explain the risks posed to borrowers from interest-only and other nontraditional mortgages.

The guidance was aimed at addressing the fear that consumers don't understand all the repayment risks involved in these mortgages, including rising interest rates that could greatly increase their monthly payments.

The regulators said that banks needed to make sure that the loans they made were ``consistent with prudent lending practices, including consideration of a borrower's repayment capacity.''

The new guidance will be used as a benchmark for audits of banks' operating procedures performed by the regulatory agencies.

There has been an explosion of nontraditional loans in recent years, raising worries about the risks to the financial system should there be a sizable number of defaults if borrowers are unable to meet rising mortgage payments.

Women's group gets biz award

The Women's Business Center at the Valley Economic Development Center was recognized by Dialogue on Diversity, a Washington, D.C., nonprofit that encourages cultural exchanges, for its work with female entrepreneurs.

Since being established in 2004, the WBC has aided some 600 female business owners, generated $1 million in business loans, and helped create 30 businesses, according to spokeswoman Kerry Aubry.

The WBC services the San Fernando, Santa Clarita and Antelope valleys and was developed to provide female business owners and entrepreneurs with the tools and resources needed to launch and grow a successful company.

The WBC is slated to receive the Mentorship Award on Monday.

Consumers cut back on spending

WASHINGTON -- Consumers battered by weak income growth and rising inflation trimmed their spending sharply in August. But analysts said a consumer confidence rebound in September should limit damage to the economy.

The Commerce Department reported Friday that consumer spending edged up just 0.1 percent in August after a much stronger 0.8 percent rise in July.

After removing inflation, spending actually dropped in August, falling by 0.1 percent, the weakest showing since September 2005 when the Gulf Coast was reeling from Hurricane Katrina.

Analysts attributed the slowdown to this year's high gasoline and other energy prices, weaker job growth and a cooling housing market, which leaves Americans feeling less wealthy as they see their home valuations decline.

Rite Aid dropping its health clinics

HARRISBURG, Pa. -- Rite Aid Corp.'s first experiment offering health clinics inside its stores ended when the clinic operator decided it could not turn a profit.

Take Care Health Systems LLC told Rite Aid that it would close its last seven health clinics on Friday, less than a year after opening 10 of them in Rite Aids around Portland, Ore.

The closings come amid what otherwise has been a race among large retailers, including Wal-Mart Stores Inc., Walgreen Co. and CVS Corp., to open health clinics in dozens of stores.

The goal is to at least increase the stores' foot traffic, if not their profits.