Thursday PM September 17th, 2009
by: Ed Mayberry, September 17, 2009 8:09:02 pm
The Harris County Hospital District Board is terminating the proposed agreement to acquire Memorial Hermann Southwest Hospital. The deal had been slated to close on November 30th. The Hospital District had wanted to operate the facility as a full-service community hospital, but Memorial Hermann says medical staff relations and managed care contracting needed to be addressed, first.
The average retail price of regular-grade gasoline across Texas dropped four cents to $2.35 a gallon this week. AAA Texas reports that gasoline prices dropped statewide and nationally as supplies remain abundant and oil trades below $73 a barrel. Houston had the cheapest gasoline in the weekly survey at $2.29 a gallon; El Paso had the most expensive price per gallon at $2.46. AAA Texas spokesman Dan Ronan says motorists in the Lone Star State are paying slightly less than $33 on an average 14-gallon fill-up. that would have cost $52 last year. The association says nationwide gasoline prices dropped three cents from last week to $2.55.
The number of newly laid-off workers seeking unemployment benefits fell last week to the lowest level since early July, evidence that job cuts are slowing. The Labor Department says initial claims for unemployment insurance dropped to a seasonally adjusted 545,000 from an upwardly revised 557,000 the previous week. Wall Street economists expected claims to rise by 5,000, according to Thomson Reuters. The decline is the third in the past four weeks. The four-week average, which smooths out fluctuations, dropped 8,750 to 563,000. That's still far above the 325,000 per week typical in a healthy economy. The number of people claiming benefits for more than a week rose by 129,000 to a seasonally adjusted 6.2 million.
Faculty pay raises at the University of Texas that usually take effect this month are on hold until early 2010 due to the economy. UT President William Powers, in his annual state of the university address, said the school in Austin is scaling back some programs while expanding others. Powers says faculty raises that normally begin September 1st will not take effect until January 16th to give departments time to figure out how to allocate more than $6 million for "targeted salary raises." The Austin American-Statesman reported that ten new faculty positions will be funded, compared to 30 new positions funded in eight of the past nine years. Powers said income from endowments, struggling during the recession, is down.
American households saw their wealth increase this spring for the first time in nearly two years as the waning recession breathed new life into stock portfolios and home values. The Federal Reserve says household net worth grew by $2 trillion to $53 trillion in the April-to-June quarter. Net worth, or the value of assets such as homes, checking accounts and investments minus debts like mortgages and credit cards, rose by nearly four per cent from the first quarter, the Federal Reserve says. But even with the gain, Americans' net worth remains far below its peak of $65 trillion logged in the third quarter of 2007, underscoring the bite the recession has taken out of people's wealth.
Texas Comptroller Susan Combs is conducting a study of school district resource allocation practices that contribute to high academic achievement and cost-effective operations. The study is required by House Bill 3 enacted by the 81st Texas legislature. The legislation requires the Comptroller to evaluate the operating cost for each student, the operating cost for each program and the staffing cost for each student.
The government says housing construction rose in August to the highest level in nine months as a big surge in apartment building offset a decline in single-family activity. The Commerce Department said that construction of new homes and apartments rose 1.5 per cent to an annual rate of 598,000 units last month. That's slightly lower than the 600,000-unit pace that economists had forecast. The increase pushed building activity to the highest level since last November and left home construction 24.8 per cent above the record low hit back in April. The august performance was another sign that the nation's housing industry has begun to recover from its worst downturn in decades.
People looking to buy a home or refinance have an added incentive to do so. Rates for 30-year home loans have edged down for the third straight week and are close to the record lows that were reached over the spring. Mortgage company Freddie Mac says the average rate for a 30-year fixed mortgage is 5.04 per cent. That's down from 5.07 per cent a week earlier, but still above the record low of 4.78 per cent hit in the spring. To prop up the housing market and help the economy recover from the recession, the Federal Reserve is spending $1.25 trillion on mortgage-backed securities, which has driven down rates on home loans. That money is set to run out by winter, though some analysts expect the central bank to add more money to the program or allow it to last longer by gradually reducing its purchases. Qualifying for a loan is still tough. Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20 per cent down payment.
Federal authorities are cracking down on two companies that promised homeowners help with their mortgages, accusing them of posing them as government agencies. The Federal Trade Commission said it filed charges against two companies--Nations Housing Modification Center and Infinity Group Services. It accused the companies of charging homeowners large fees for assistance in working with their lenders, but did "`little or nothing" to actually help borrowers. Federal regulators have filed charges against a total of 22 such operators. And in Washington, Treasury Secretary Timothy Geithner and Attorney General Eric Holder met with attorneys general from 12 states to discuss anti-fraud efforts.
The chairman of a new Congressionally appointed panel has promised a no-holds barred investigation into last year's devastating economic collapse. The inquiry will look into whether any of the nation's biggest financial firms and the regulators in charge of monitoring them were guilty of criminal misconduct. Phil Angelides, appointed this year by Democrats to lead the ten-member Financial Crisis Inquiry Commission, said the group will examine the conduct of top officials at such firms as Lehman Brothers, Citigroup, AIG and Bear Stearns, as well as mortgage buyers Freddie Mac and Fannie Mae. Angelides said he plans to release much of the panel's findings ahead of its December 2010 deadline in the hopes of informing Congressional debate on the issue.
One of the unions that left the AFL-CIO in a bitter dispute four years ago is coming back to the labor federation. The union of hotel, restaurant and clothing workers known as Unite Here is bringing its 265,000 members back a day after Richard Trumka became the newest AFL-CIO president. Unite Here and several other unions departed in 2005 after claiming there was too much emphasis on politics and not enough on organizing new members. They formed the rival Change to Win Federation. Unite Here President John Wilhelm says the move underscores a desire for unity in the labor movement. Some of the other unions that left are also in discussions to come back.
Toyota is pouring $1 billion into a U.S. marketing effort in the fourth quarter as the Japanese automaker bets on a recovery in the ailing auto market. Spokesman Irv Miller says the sum is "more than we've spent before" in the period. The fourth quarter is typically a strong sales season for automakers including Toyota, which rolls out its "Toyotathon" marketing and sales blitz around the end of the year. Miller says inventories of Toyota cars and trucks remain tight and additional production increases are planned for the coming months. Toyota, the world's largest automaker, was the top-selling automaker under the cash for clunkers program and has been left with short supply of some fuel-efficient vehicles as a result.
A government audit says it will cost taxpayers $6.5 billion over the next 20 years to maintain fencing along the U.S.-Mexico border. The Government Accountability Office report says the Obama administration does not have a way to evaluate whether the investment has helped control illegal immigration. The GAO study says the $6.5 billion price tag is in addition to the $2.4 billion that's been spent to build more than 600 miles of fence along the southwest border. The fence is a Bush administration initiative that has faced several delays and cost increases. Officials have said, depending on funding, that the whole southwestern border--except for a stretch at Big Bend National Park in Texas--would be covered by fencing or technology by 2014. GAO says a more likely completion estimate is 2016.
Federal regulators are proposing new rules designed to stem conflicts of interest and provide more transparency for Wall Street's credit rating industry, which was widely faulted for its role in the subprime mortgage debacle and the financial crisis. The changes proposed by the Securities and Exchange Commission could reshape an industry dominated by three firms: Standard & Poor's, Moody's Investors Service and Fitch Ratings. The SEC commissioners also were proposing a ban on "flash orders"--a practice that gives some traders a split-second advantage in buying or selling stocks. The practice has become a hot-button issue in recent weeks amid questions about transparency and fairness on Wall Street.
The Federal Reserve says banks reduced their borrowing over the past week from its emergency lending facility, fresh evidence that credit markets are thawing. Banks averaged $28.7 billion in daily borrowing over the week ended Wednesday, down from $30.4 billion in the week ended September 9th. The identities of the financial institutions are not released. They pay just 0.50 per cent in interest for the overnight loans. Banks also made less use of another program aimed at increasing the availability of short-term financing crucial for paying salaries and supplies. The Fed's net holding of "commercial" paper averaged $44.8 billion, a drop of $2.36 billion from the previous week. The Fed has pumped trillions of dollars into the financial system since the financial crisis worsened in late 2007.
Drought conditions are improving in Texas, which is enduring more than two years of the driest conditions in the nation. The U.S. Department of Agriculture drought monitor map showed about 16 per cent of the state is now classified under the most extreme two categories of drought. That's down from last week's total of 25 percent of the state--all areas in the southern portion of Texas. The USDA review found no other place in the country is suffering under the two worst drought categories. Heavy rains last week in the Austin-San Antonio area week helped ease conditions, although weather experts say plenty more is needed to put a dent in the brutal drought that began in September 2007.
The parent of American Airlines says it has obtained $2.9 billion in new financing and is making changes in its flight schedule to help cope with weak demand and declining revenue in the airline industry. AMR said it has obtained $2.9 billion in extra funding including $1 billion in cash from an advance sale of frequent flier miles to Citigroup. The Fort Worth company says it also received $1.6 billion in sale-leaseback financing commitments from GE Capital Aviation Services, a unit of General Electric. AMR says it plans to strengthen its flight network by increasing capacity at hubs in Dallas/Fort Worth, Chicago, Miami and New York while cutting operations at St. Louis and Raleigh/Durham.
Limes made the cut as Southwest Airlines expects to save $100,000 annually by no longer offering lemons in its beverage service. Dallas-based Southwest says the lemon-less directive takes effect October 1st. Southwest spokesman Brad Hawkins said that internal feedback indicated the carrier did not need to offer its current selection of limes and lemons. The Dallas Morning News reports limes turned out to be favored by passengers. Hawkins says, at the end of Southwest's 3,200 daily flights, there was "an excess of lemons and needless waste." Southwest announced the money saving move as the industry deals with declining traffic due to the economic slump.