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In the largely unregulated world of extended auto-service contracts, there’s one bedrock consumer safeguard: Customers canceling those vehicle-protection plans are refunded for the coverage they don’t use.

In most states, including Missouri and Illinois, it’s the law.

Yet St. Louis area companies have found a way around this rule by selling a different type of vehicle protection — warranties tied to oil additives, transmission fluids and other products that promise to keep cars running longer.

Here’s how the product warranties work: Consumers are sold an automotive additive — a bottle of liquid, or some tablets. Companies selling the additive say that if the product fails to prevent a breakdown, the warranty on the additive will cover repair bills — or at least some portion of them.

With traditional auto service contracts, the consumer is purchasing a promise that the seller will cover repair bills. The difference? First, with the additive, the consumer is buying a product, not a contract. Second, the consumer is entitled to a refund if a service contract is canceled early. That’s not the case with a product warranty.

And many consumers don’t understand that difference.

"I didn’t know I was buying any $2,000 bottle of additive," said Jeanette Franklin, of Houston, Texas, who bought a product warranty from Wentzville-based US Fidelis in November. "If they told me that’s what it was, I never would have bought it."

Franklin’s complaint is consistent with many that the St. Louis Better Business Bureau has received. The BBB has shared more than 80 complaints involving additives with the Post-Dispatch.

But the companies say they’re helping consumers by offering vehicle-protection plans for older, high-mileage vehicles.

US Fidelis Chief Executive Chris Riley said in a statement that the product warranties help consumers keep their vehicles on the road longer: "Customers who have purchased this product have had more than $5 million in product warranty claims paid," he said.

The company would not answer questions about its product warranties that were

e-mailed to a spokesman.

An attorney for St. Louis-based National Dealers Warranty said the company trained sales agents to be honest about some drawbacks of product warranties, including the fact that they can’t be refunded. Other firms did not return calls seeking comment for this story.

Thousands of consumers have complained to the BBB about auto-protection plans sold by St. Louis companies. Its crusade against the service-contract industry has focused on allegations of telemarketing abuses, deceptive direct-mail literature and high-pressure sales tactics. BBB officials said they knew little about the product-warranty side of the industry until asked about it by a reporter.

As a result, the BBB hasn’t specifically tracked whether consumers’ complaints were over a service contract or product warranty.

Critics — including some inside the industry — say the marketing of these product warranties confuses many consumers, leaving them trapped in coverage they no longer want. The warranted additives also allow service-contract brokers to sell in California, where they’re otherwise prohibited from doing business.

Franklin said she believed the two bottles of AutoLifeXtend oil and transmission additive were product samples, or maybe a thank-you gift from US Fidelis for buying a service contract. She said the company told her to activate her coverage by using the products, which she did.

She discovered just how much her protection plan differed from a service contract when she called the company on Aug. 18 to cancel the $2,060 purchase, which was to be financed over 24 months.

Franklin said the company initially wouldn’t refund any of the $800 she had paid because she had used the product as instructed. In other words, US Fidelis couldn’t give her a refund because she couldn’t return the additives. Days later, the company refunded $375 after Franklin threatened to contact the Texas attorney general, she said.

With service contracts, cancellations are common. Sometimes customers are dissatisfied; often they cancel only because they’ve sold their vehicle or the cars have broken beyond repair car loans for people with bad credit. Depending on how much of the service contracts they’ve used, these consumers can qualify for refunds of several hundred dollars.

With the product warranties, they’re generally entitled to nothing.

Mary Lobdell, an assistant attorney general in Washington state, is spearheading a 43-state investigation into the service-contract industry. She wouldn’t say whether product warranties were part of that investigation, but she said many of those protection plans were "grossly misrepresented" to the point that "consumers truly don’t understand what they’re buying."

Larry Hecker heads the Vehicle Protection Association, a trade group for companies that sell auto-service contracts. He said the product warranties were sold primarily to avoid California regulations that allow only auto dealers to sell service contracts.

Hecker acknowledged that the widespread sale of no-refund warranties could be problematic for an industry struggling to get past allegations that it frequently takes advantage of consumers.

"We haven’t addressed (product warranties) yet, but I’m sure we will down the road," he said, adding that it will probably be discussed by industry leaders when they meet for an annual conference next month in Orlando, Fla.

One industry veteran who plans to attend that meeting is Bill Rosenbach, who once ran a subsidiary of Wentzville-based US Fidelis and now works as a consultant for companies that sell both service contracts and product warranties.

Rosenbach said the quality of the additives and the warranties tied to them varied considerably from company to company.

Some of the additives may be beneficial to vehicles, but most don’t have any significant impact on how a car runs, he said.

Michael Carter, the general counsel for St. Peters-based National Dealers Warranty, says the additive that company sells — dubbed "The Choice" — improves auto longevity by lowering vehicles’ operating temperature. Carter said consumers typically needed to use the product only once to be covered by the warranty.

Carter said product warranties could be a good buy for consumers who didn’t qualify for traditional service contracts because their vehicles were too old or their mileage was too high. He defended the non-refundable nature of the coverage, but he said the company could make exceptions. National Dealers Warranty, he said, will "err to the side of good faith and good will" in some cases.

For companies such as US Fidelis and National Dealers Warranty, product warranties offer at least one big advantage over traditional service contracts.

"There’s a lot more profit," said Rosenbach, of Lincoln, Neb. "But the worst part about product warranties is consumers think they’re getting a service contract."

Many consumers have complained to the BBB that they couldn’t get a refund because they used the product. But others complained about the reverse: They didn’t use the product — either because they believed it unnecessary and threw it away, or their mechanics advised against using it — and later found out this was grounds for denying any claims made on the warranties.

The 10 St. Louis area businesses named in those BBB complaints include some of the country’s biggest service-contract brokers, including US Fidelis; National Dealers Warranty; Dealers Warranty, of St. Charles, which does business as Mogi; Carhill Enterprises, of St. Louis, which does business as Consumer Protection Services; and TXEN Partners, of St. Louis, which does business as Protection Direct.

Several of those firms sell product warranties tied to additives made by Dura Lube, which also sells its additive products directly, through its website, for as little as $11.99.

In 2000, the company that made Dura Lube paid $2 million to settle a Federal Trade Commission lawsuit alleging that claims about the product’s effectiveness were misleading and unsubstantiated. Dura Lube did not return calls seeking comment.

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Ford Motor Co. said Thursday that it would add a third shift to production plants in Michigan and Missouri to meet increased demand for its F-150 trucks and Escape crossover vehicles.

The moves offer specifics about Ford’s plan to increase production in the fourth quarter by 33 percent over 2008 levels to a total of 570,000 vehicles.

Ford is gaining market share in the U.S., and two of its vehicles — the Focus and Escape — were among the top-sellers under the Cash for Clunkers program in July and August.

The automaker said earlier this month that it would increase production to replenish inventories depleted during the Clunkers program, although it expects September sales to fall below July and August levels.

Ford said it would not hire new hourly workers to handle the shifts, but would move workers from the truck production line at its Kansas City Assembly Plant to the line that makes Ford Escapes and Mercury Mariners, 5-passenger crossover utility vehicles.

The change takes place at the Claycomo, Mo., plant in October. Ford employs 3,956 hourly workers there, who previously agreed to work two days during a planned shutdown week this month to meet third-quarter production demands.

The company said third-quarter production levels would be 18 percent higher than a year ago.

Ford’s Dearborn Truck Plant will resume maximum operation of three shifts in late September. While there are currently three separate crews at the plant, they work on a rotating basis. Each works for four weeks and is then on "layoff" for two, said Ford spokeswoman Marcey Evans.

The moves will result in the additional production of 10,000 F-150 pickup trucks this year and 2,400 Escapes and Mariners by the end of October, Ford said.

The company had a 21-day supply of Escapes in early August. At the end of July, Ford had nearly 300,000 vehicles in stock, a 48-day supply, the industry average, according to Ward’s AutoInfoBank. Ford typically maintained a 70-day supply earlier this year.

Ford is expected to report a year-over-year increase in August U.S. sales next week.

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In just over a month, the federal government’s fiscal year will draw to a close, leaving in its wake one of the biggest annual deficits in U.S. history — and a forecast of more record debt to come.

Just how much more will be the question on Tuesday.

The Congressional Budget Office and the White House Office of Management and Budget are set to release separate updates of their 10-year deficit estimates, along with updates on their economic outlooks.

The agencies’ previous estimates — based on the president’s proposed 2010 budget — were about $2 trillion apart.

The CBO, which serves as Congress’ official scorekeeper, had the higher estimate: $9.14 trillion over 10 years or 5.2% of gross domestic product.

By comparison, the Obama administration’s budget office forecast a $7.11 trillion deficit or 4% of GDP.

The White House’s economic estimates were seen by many as too optimistic. For instance, the administration estimated that unemployment would hit a peak of 8.1% this year. Actual unemployment numbers have already surpassed that level — hitting 9.4% in July. And many economists expect the number to reach 10% before too long.

Last week, White House officials said their new 10-year deficit forecast will be in the neighborhood of $9 trillion, in part because Uncle Sam is pulling down less tax revenue than expected. That would bring it more in line with the CBO’s previous forecast.

Analysts say the best-case scenario on Tuesday would be if the CBO’s updated deficit forecast stays very much in line with its earlier $9 trillion estimate.

That’s because foreign investors who buy U.S. debt have already factored in that amount.

"If [the CBO] numbers come in higher, that would be cause for concern," said Sean West, U.S. policy analyst at the Eurasia Group, a political risk research firm.

The concern, of course, is that foreign governments and other foreign investors could demand higher interest rates or stop buying as much U.S. debt.

One mitigating factor — in the near-term anyway — is the rapid rise in the U.S. savings rate over the past year. That’s because banks can make money by investing savers’ deposits in U.S. Treasurys, which pay more than what the banks have to pay customers on deposits.

"Rising U.S. savings will offset the need to find foreign investors," said Ross Schaap, Eurasia’s director of comparative analytics.

But even domestically financed deficits come at a cost if they grow too large for too long.

"Deficits will gradually divert capital from productive domestic uses, through a rise in interest rates. This diversion reduces the amount of capital available to U.S. workers, lowering their wages and hence their living standards," deficit experts Alan J. Auerbach and William G. Gale wrote in a CNNMoney.com commentary. "If our deficits are financed from abroad, interest rates may not rise as much, but interest payments on these deficits will flow back abroad."

Where’s the exit?

The deficit forecasts on Tuesday will underline the pressures facing President Obama in a weak economy.

It may make political sense to declare that the majority of Americans will not see their taxes go up, as Obama has done repeatedly, West said. But the administration eventually will have to come up with a sufficient exit strategy from the ballooning levels of federal debt, he noted.

That’s not to say the administration has been silent on the issue. To the contrary, the White House has pushed for pay-as-you-go rules that would require Congress to pay for spending increases or new tax cuts. It has also proposed $17 billion worth of spending cuts.

Most notably, Obama has been pushing for health care reform to help bring the deficit in line since runaway health care costs are a major problem.

At the same time, the White House has said it would exempt from pay-go policies some of its priciest proposals, such as extending the 2001 and 2003 tax cuts for most households. And the course of health care reform is anything but a straight line to lower costs, no matter whose proposal takes top spot at the end of the day.

- CNN’s Ed Henry and Rebecca Sinderbrand contributed to this report 

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People struggling with headaches, toothaches, and even feelings of loneliness are calling 911 — often several times a day.

This chronic abuse is overwhelming what industry experts call the 911 "safety net" system. It’s also wasting what could add up to billions of dollars every year, paid ultimately through higher taxes and medical fees.

This costly problem has gone unnoticed in the current debate on health care reform.

"Everyone’s talking about the billions of dollars wasted when people misuse the emergency room in hospitals," said Jerry Johnston, outgoing president of the National Association of Emergency Medical Technicians (NAEMT). "How about the misuse of emergency services even before they reach the hospital? That’s not been on anyone’s radar."

$400 taxi to the hospital

The 911 system has become a sort of stop-gap primary care for many individuals, said Connie Meyer, president-elect of the National Association of Emergency Medical Technicians.

Meyer, who is an EMS captain in Johnson County, Kan., said 50% of the 35,000 911 medical calls in her county are not really emergencies. And for each 911 call, it costs between $400 to $500 to transport a person via ambulance to a hospital, she said.

"If you don’t really need it, it becomes a $400 taxi to the hospital," Meyer said.

That’s only the base fee for every ambulance that goes out on a call. If a person is also given treatment or medication in the ambulance or at the hospital, the cost quickly rises to $1,000, and can hit as much as $5,000.

For uninsured patients, Meyer said it’s the taxpayers in her county who eventually bear the burden. They pay a $30 annual assessment for 911, and it goes toward these non-emergency treatments, rather than improvements.

Some of those who use 911 for non-life threatening reasons do so multiple times a week — or even a day. Medics refer to them as "frequent flyers."

"For some, 911 is a necessity," Johnston said. "These people don’t have [private] insurance or Medicare and 911 is their only access to health care." He said many of these people are immigrants who don’t know how to navigate the system.

Others, he said, should know better. "These people have the ability to pay for care but still want to exploit the system," he said. "They know EMTs have an obligation to respond to 911 calls. People want this immediate treatment instead of having to wait in a doctor’s office."

The National Fire Protection Association, which tracks 911 call volume annually, said fire departments nationwide responded to about 15.7 million total medical aid calls in 2008. Using that data, the National Academies of Emergency Dispatch, said about 20% of the calls are classified as non life-threatening and don’t require a paramedic.

Norman Salas, a lieutenant and paramedic with a South Florida fire department, said more than 80% of the 911 calls he answers are routine health calls better handled by a physician or nurse.

But Salas said it’s the ethical duty of a paramedic to respond to every call without judgment. "Whatever the call may be, even for a rash, we have a duty to respond," he said.

People treated by 911 responders often don’t have to pay for treatment on the scene, according to emergency technicians.

Charges kick in once an individual is treated in an ambulance while they’re being transported to the hospital.

"So these frequent flyers refuse transportation after we treat them, even though we always recommend that they see a doctor," Salas said.

Manipulation and solution

Others are manipulating the system differently, according to Dr. Denis Pauze, an emergency room doctor at the Inova Fairfax Hospital in Falls Church, Va.

Pauze said one big misconception many people have is that coming to the hospital in an ambulance will get them faster access to a doctor.

"There are cases of people so frustrated waiting to see a doctor that they have left the ER to call 911," Pauze said. "They think they can jump the line if they’re brought in by a paramedic."

In reality, Pauze said anyone with a non-emergency situation who is brought into ER will be asked to wait anyway while emergency cases are first evaluated.

Shreveport, La., fire department chief Brian Crawford, whose EMS crews responded to 26,300 medical calls last year, said departments around the country are working to find a solution to the problem.

He said public education is key to curbing abuse of 911. Also, his department and others across the country are testing a "nurse triage" system, in which a nurse will evaluate 911 calls and decide the appropriate level of emergency response.

"We’ve found that the cost savings offset the cost of employing a full-time nurse," he said.

"This is a delicate issue," said NAEMT’s Johnston. "We don’t want to come across as insensitive, but as EMS costs increase, it’s leading to closures of ambulance services around the United States."

Talkback: Have you or a doctor that you know left the medical profession mid-career to start a new career outside of the health care industry? E-mail realstories@cnnmoney.com you could be part of an upcoming story. 

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China will maintain its stimulative policy stance because the economy, far from being on solid footing, is facing fresh difficulties, Premier Wen Jiabao said on Monday.

In a downbeat statement on the government’s website following a trip to the eastern province of Zhejiang, known as a hotbed of private enterprise, Wen said Beijing would ensure a sustainable flow of credit and a “reasonably sufficient” provision of liquidity to support growth.

A drop in new yuan bank loans in July to 356 billion yuan ($52 billion), compared with an average of over 1.2 trillion yuan in each of the first six months of the year, has created worries among some analysts that the recent rebound in growth could be knocked off track.

“We must clearly see that the foundations of the recovery are not stable, not solidified and not balanced. We cannot be blindly optimistic,” Wen was cited as saying on www.gov.cn.

“Therefore, we must maintain continuity and consistency in macroeconomic policies, and maintaining stable and quite fast economic growth remains our top priority. This means we cannot afford the slightest relaxation or wavering.”

China still faced great pressure from the slowdown in demand for exports, Wen said, adding that it was difficult to boost domestic demand in the short term to fill in the gap — despite the boost from the government’s 4 trillion yuan ($585 billion) stimulus package.

Thanks to the pump-priming, annual economic growth in the second quarter accelerated to 7.9 percent from 6.1 percent in the first three months of the year.

Although the most important aim of the stimulus was to prevent a sharp drop in growth, Wen said its purpose was also to make China’s economic growth model more sustainable.

In particular, he said China would continue to increase fiscal spending on infrastructure and environmental protection.

“The impact of some short-term policies will fade gradually, but it takes time to see the effects of medium- and long-term policies, and there are many new difficulties and problems in economic operations,” he said.

The comments come amid volatility in the Shanghai stock market that has fanned worries the economy could be coming off the boil as the government reins in break-neck credit growth.

The Shanghai Composite Index ended up 1.1 percent on Monday after falling 2.8 percent last week in wide-ranging trading. It is now down by nearly 14 percent from its peak reached on August 4.

China’s latest economic data for July indicated that while growth was moderating after a strong second quarter, the recovery remained on track to achieve the government’s goal of 8 percent growth for the full year.

Central bank adviser Fan Gang said in remarks published on Monday that he expected growth to hold up at 8 percent next year as well, as property and corporate investment, together with rising exports, pick up the slack from waning government investment.

(Reporting by Zhou Xin, Simon Rabinovitch, Langi Chiang and Aileen Wang; Writing by Jason Subler; Editing by Kazunori Takada)

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Oil prices ended slightly higher but eased off a seven-week high Thursday, as an unexpected rise in new jobless claims cast a shadow over a recovery in the economy and oil demand.

U.S. crude for September delivery, which expires on Thursday’s close, settled up 12 cents at $72.54 a barrel.

Oil markets have been watching broader economic indicators for signs a recession may soon end, which could foreshadow a rebound in slumping fuel demand.

The number of workers filing new claims for jobless benefits last week unexpectedly rose to 576,000 from 561,000 the week before.

The index of leading economic indicators rose for a fourth month in July, signaling that a recession is abating. The index rose a less-than-expected 0.6%, versus analyst forecasts for a 0.7% rise.

"It looks like the oil rally has stalled and we’re consolidating in the $72 a barrel range," said Gene McGillian, analyst at Tradition Energy in Stamford, Conn.

Crude prices have risen from lows below $33 a barrel in December amid hopes for an economic rebound.

Crude has been tracking gains in U.S. stocks. The S&P 500 index (SPX) rose 0.5% to 1281.09. The dollar was down 0.08% against a basket of foreign currencies.

Earlier, oil prices jumped to a seven-week high of $72 how to get a free credit report.88, supported by a 4.5% surge in Chinese stocks, with investors drawn to attractive valuations after a 20% plunge in Chinese shares over the previous two weeks.

Oil prices steadied after jumping 4.7% Wednesday, when data from the Energy Information Administration showed an unexpected steep drop in crude stocks last week.

Oil markets were also starting to focus on the Organization of the Petroleum Exporting Countries’ Sept. 9 meeting, where the producer group was expected to leave output targets unchanged, according to delegates and analysts.

OPEC last year agreed to a series of output cuts to help stem the sharp decline in oil prices.

In addition, traders focused on more efforts by financial regulators in the U.S. and Europe to stem violent oil price swings.

The United States Commodity Futures Trading Commission and the United Kingdom’s Financial Services Authority said they have agreed on steps to strengthen cross border supervision of energy futures markets.

The measures could prompt more reporting on the aggregate positions held by crude oil traders on both U.S. and British exchanges, analysts said. 

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A Florida man already jailed on charges of hacking into major retail computer networks has been indicted a third time for allegedly stealing data on a record number of credit and debit cards.

The record broken with this latest alleged attack was previously set by the same suspect, law enforcement officials said.

The U.S. Justice Department said Albert Gonzalez, 28, of Miami, Fla., was indicted by a federal grand jury in New Jersey for allegedly stealing data involving more than 130 million credit cards used by customers of five retailers including the 7-11 chain.

Justice Department officials familiar with the case said they have no estimate of possible financial losses that could be linked to the credit-card data theft, and declined to characterize or speculate on potential losses.

Federal prosecutors in New Jersey apparently will have to wait in line to try him, though.

Gonzalez is currently in jail in Brooklyn, New York, awaiting trial there next month for his alleged role in hacking into computers for the Dave and Buster’s restaurant chain.

He also has been indicted in Boston, Mass., along with several co-conspirators, on charges stemming from hacking into the data bases of at least eight major retailers, and stealing data related to 40 million credit cards. Then-Attorney General Michael Mukasey said in that indictment announced a year ago that the computer crime involved what was then a record number of credit cards. Gonzalez is scheduled to go on trial on those hacking charges next year.

Corporate victims in the Massachusetts case included T low cost car insurance.J. Maxx, Marshalls, BJ’s Wholesale Club (BJ, Fortune 500), OfficeMax (OMX, Fortune 500), Barnes & Noble (BKS, Fortune 500) and Sports Authority.

In the New Jersey case, the indictment charges that Gonzalez, operating under a series of computer aliases including "soupnazi," managed to exploit computer networks beginning in 2006 by circumventing firewalls to steal the credit card information.

Prosecutors said Gonzalez is charged along with two co-conspirators identified only as "Hacker 1 and Hacker 2 both of Russia." They allegedly moved the data to computer servers operating in California and Illinois, and overseas in Latvia, the Netherlands and Ukraine.

Acting U.S. Attorney Ralph Marra in Newark said in a statement, "The servers were used to store information critical to the hacking schemes and to subsequently launch the hacking attacks."

"The charges announced today relate to a different pattern of hacking activity that targeted different corporate victims and involved different co-conspirators," the Justice Department said in a statement issued Monday in Washington.

If convicted on the New Jersey indictment Gonzalez could face up to 20 years on wire fraud conspiracy and five years for a separate conspiracy count. He could also be fined up to $500,000. 

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Just how much is a rainmaker at a bailed-out bank really worth? Or a senior executive at a recently bankrupt automaker for that matter?

Such questions will soon be a subject of discussion at the White House as the biggest recipients of government aid begin submitting compensation plans for their top 100 employees to the Obama administration’s recently appointed pay czar.

Seven companies — AIG (AIG, Fortune 500), Chrysler, Citigroup (C, Fortune 500), Chrysler Financial, Bank of America (BAC, Fortune 500), General Motors and GMAC — are due to submit proposed employment contracts for their 25 highest-paid employees Friday. Compensation proposals for the next 75 most compensated employees are due by Oct. 13.

Kenneth Feinberg, the man charged with handling the task, is expected to rule on the first set of pay plans within the next 60 days. That information is due to be made public by Treasury sometime after, although any announcement may not include details of pay packages for individual employees.

Feinberg, a Washington attorney who first entered the public spotlight after overseeing compensation payments to September 11 victims, has already met with the seven firms to discuss some of the employee payment plans.

However, details of those talks have remained mostly under wraps, although there have been indications of a lot of back-and-forth between Feinberg’s office and the institutions.

Citigroup, for example, has been working hard to claim that its agreement to pay star energy trader Andrew Hall $100 million this year is beyond Feinberg’s authority, according to recent news reports.

Feinberg’s authority, while broad enough to approve or deny proposed employment contracts, is more limited on bonuses and other retention awards promised before Feb. 17 of this year. Citigroup is claiming that Hall’s compensation package is protected since his contract was signed before the law creating the compensation review program was established, according to the New York Times.

Thorny problems: Resolving the issue of Hall’s pay would certainly clear a major hurdle for both Citigroup and Feinberg, who effectively serves as an adviser to the Treasury Department.

But experts contend that making determinations on the other 699 employees at these seven firms could very well be a very messy process, particularly as it relates to those workers at AIG, Citigroup and Bank of America.

Imposing too many restrictions could prompt more top performers to flee Citigroup and Bank of America, hampering the firms’ ability to attract talent.

Both banks have already experienced a loss of talent in recent months, both to foreign firms such as Deutsche Bank and competitors such as JPMorgan Chase (JPM, Fortune 500) that are no longer beholden to government online payday loan.

At the same time, the issue of excessive pay remains a rallying cry for lawmakers and taxpayers alike, who are still incensed over bonuses paid out to AIG executives earlier this year.

"It is a bit of a balancing act," said Claudia Allen, a partner at law firm Neal Gerber & Eisenberg and the chairwoman of the firm’s corporate governance practice. "In some ways, how he deals with compensation will be a reflection of what the Treasury and the [Obama] administration finds to be appropriate or acceptable."

What’s appropriate?: What the White House has offered so far in terms of what is proper and what isn’t, has been limited.

When it outlined its pay restrictions for banks and other firms that got money under the Troubled Asset Relief Program in June, it decreed that any company that got help this year must limit bonuses for senior executives and other highly-paid employees to one-third of their total compensation.

At the same time, it absolved those employees making less than $500,000 in total annual compensation at those firms that were bailed out more than once, saying they would not be subject to scrutiny.

But that still leaves Feinberg’s office with the difficult task of determining what is an appropriate mix of bonus, salary and deferred payments such as restricted stock that rise and fall alongside the firm’s overall health, noted James Reda, a managing director of the compensation consultancy James F. Reda & Associates.

Critics have charged that banks, in particular, relied too heavily on short-term rewards such as bonuses in the years leading up to the crisis. That ultimately prompted employees to benefit from risky bets, such as those on the U.S. housing market, without suffering the consequences when the market unraveled years later.

Already, many financial firms have been placing greater emphasis on salary and other forms of restricted awards amid recent scrutiny from lawmakers and taxpayers alike.

But with the government taking a hard look at compensation, bailed-out firms may have little choice than to push even further on that front. That push could include instituting so-called "clawback" provisions to reclaim pay from some executives, as well as more stock-based compensation or even caps on bonuses.

"There are not many other ways to do it," said Reda. 

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JetBlue Airways will offer an "all-you-can-jet" pass for $599 in which passengers can book an unlimited number of flights within a one-month span, the airline said Wednesday.

Pass holders can fly to any of JetBlue’s (JBLU) 56 destinations between Sept. 8 and Oct. 8, with no seat limitations or blackout dates, the company said in a release.

Airline equities analyst Bob McAdoo, of Avondale Partners, said he "has never seen a promotion like this before."

In fact, Air Canada had a similar promotion in 2007, where it offered an unlimited flight pass starting at $1,657 per month.

Still, with JetBlue flights already slashed as low as $100, customers might have to fly 6 or 7 times in a month before they break even payday loans.

"This is a way to get people to pay attention, with publicity that doesn’t cost the company much," McAdoo said. "They’re doing this at a time when there are probably a lot of seats available anyway."

Customers must buy the $599 pass by Aug. 21, and they can book flights within three days of the departure date. All travel using the pass must be booked between Aug. 12 and Oct. 5.

Taxes and fees are included for domestic flights, and changes or cancellations made less than three days before departure cost $100. 

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For the first time in almost 15 years, the size of new homes built in the United States is shrinking.

New homes are now 7% smaller — or the size of one average-sized room. To be precise, the median square footage of newly built homes fell to 2,065 square feet in the first three months of this year, compared with the same period last year, according to the U.S. Census Bureau.

This caps off 2008, when home size fell every quarter, marking first year of declines since 1994. That could indicate that the romance between Americans and morbidly obese McMansions has finally cooled.

"A new ethic is arising right now that will become commonplace — as commonplace as is recycling today, when just a few decades ago it was rarely, if ever, done," said Sarah Susanka, author of the book, "The Not So Big House."

"As more and more people build or remodel homes that satisfy in quality rather than quantity, there will be a huge shift in what we perceive as desirable."

She believes the current shrinking trend mimics one of 100 years ago, when simple bungalows supplanted elaborate Victorian homes as the design choice for many Americans.

But, it could also just be the recession.

"Home size gains flatten out or decline during recessions, and we’re in the midst of the most serious housing recession in decades," said Kermit Baker, the chief economist for the American Institute of Architects.

It’s also hard to know whether the trend is a the result of a change in attitudes or a change in buyers, according to Kira McCarron, the chief marketing officer for Toll Brothers, an upscale homebuilder.

The recession could have led to a temporary turndown in the number of young families buying homes, for example. But when they return to the market, they may drive up McMansion sale again. Meanwhile, older buyers are dominating sales.

"The active adult product is taking a bigger share of the market right now," said McCarron, leading to more small homes and dragging the average new home-size data down.

She added that some cities, such as Seattle, have instituted "smart growth" plans that encourage development in core areas, leaving large patches of green, undeveloped territory further out.

Since it effectively limits development to a few, already densely populated parts of town, available land in those areas becomes more expensive, sending up the average per-square-foot of new homes cash loans. That, of course, discourages McMansion development.

Influencing factors

There are many practical reasons currently at work that favor smaller homes, according to Steve Melman, director for economic services for the National Association of Home Builders (NAHB).

Affordability: That drives everything, Melman said. People tend to buy as much home as they can comfortably afford and, with the economy in turmoil, they simply don’t feel at ease spending today.

Energy costs: When the price of oil rose to more than $147 a barrel in July 2008, it drove up all the costs of homeownership. Heating and cooling costs soared, but so did electricity costs. And bigger houses have more lights and appliances. Energy costs also contributed to price increases on building materials, making bigger homes that much more expensive to construct.

Aging boomers: Demographics may have contributed to the smaller home trend. More and more aging baby boomers have become empty nesters. Some of them are downsizing, according to Melman.

Tight credit for big mortgages: Jumbo loans needed to pay for these types of houses have been harder to get and more expensive. That would discourage building in this category.

No real sacrifice

But small-home buyers don’t have to sacrifice if the house is well designed, said Susanka. "If you use a room less than six times a year, you don’t need it," she explained. "Or make it do double duty."

A rarely used formal dining room, for example, could double as a library. A den could be where the kids do their homework. And do you really need a separate living room, family room and home theater?

"Houses are likely to become better tailored to the way we actually live," she said. "As more and more people build or remodel homes that satisfy in quality rather than quantity, there will be a huge shift in what we perceive as desirable. Just as the bungalows of a century ago supplanted the Victorian painted lady, ‘Not So Big’ houses are likely to become the sought after alternative to the McMansion." 

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