Monday PM December 14th, 2009
by: Ed Mayberry, December 14, 2009 9:12:12 pm
The government has overturned the Army's decision to move combat truck production from Sealy, Texas to the Oshkosh Corporation in Wisconsin. The Government Accountability Office has ruled in favor of a key element of BEA Systems' protest to the Army's decision to change the contract for the Family of Medium Tactical Vehicles after 17 years. The company questions whether Oshkosh could make the vehicles at the price it quoted. The GAO recommends that the Army reevaluate proposals under the capability evaluation factor and make a new selection decision. The Army has 60 days to inform the GAO of its actions. Texas Senators John Cornyn and Kay Bailey Hutchison and Texas Governor Rick Perry all praised the decision. BAE Systems Land & Armaments Group President Bob Murphy says the ruling is potentially good news for over 3,000 employees who have built more than 56,000 FMTV vehicles for the military. Production at the plant in Sealy continues into 2010, but BAE's Dennis Morris says decisions must be made by the spring to sustain uninterrupted production into 2011.
ExxonMobil announced it will acquire Fort Worth-based XTO Energy in an all-stock transaction valued at $31 billion. Irving-based Exxon has moved quickly to pick up valuable natural gas fields and now it is snapping up XTO, which claims about 45 trillion cubic feet of natural gas. The world's largest publicly traded oil company will issue 0.7098 common shares for each common share of XTO, representing a 25 per cent premium to XTO stockholders. Exxon will also assume $10 billion in XTO debt.
A coalition of natural gas producers has filed a complaint with New Mexico regulators alleging that a Houston-based pipeline company is charging excessive rates in one of the nation's largest natural gas basins. The coalition argues that Enterprise Field Services has increased its gathering rates in the San Juan basin by 240 per cent over the last several years. They say New Mexico stands to lose millions of dollars annually in tax and royalty revenue because of the increases. Enterprise denies the allegations. The coalition is asking the New Mexico Public Regulation Commission for a hearing to establish rates governing Enterprise's services. An attorney for the coalition says the case could set precedent nationwide since gas gathering companies are largely unregulated.
The Greater Houston Partnership is presenting its annual Houston Regional Economic Outlook at lunch at the InterContinental Hotel. GE CEO Jeff Immelt, currently serving on President Barack Obama's Economic Recovery Advisory Board, headlines tonight's event. That follows a day of panel discussions featuring for former Shell Oil chairman John Hofmeister of Citizens for Affordable Energy, Mike Ballases with JPMorgan Chase, Dan Wolterman with Memorial Hermann Healthcare System and Dr. Akhtar Badshah with Microsoft.
Citigroup says it's repaying $20 billion of the $45 billion it received in government bailout money. The remainder was converted into an ownership stake the government plans to sell. That stake has risen in value by more than 20 per cent. Bailout funds came with restrictions on executive pay and dividends and many banks have moved quickly to repay it. The New York-based bank was among the hardest hit by the credit crisis and rising loan defaults. It received $45 billion in government support as part of the Troubled Asset Relief Program. The government says it plans to sell its shares in the bank within the next year.
President Barack Obama says banks have a greater obligation to help the U.S. economy recover because they received "extraordinary" assistance from the government and taxpayers. Following a White House meeting with the heads of the nation's top financial firms, the president said he urged banks to increase lending to small businesses. He also said banks can't stand in the way of financial regulatory reform. The House passed legislation Friday that would restructure financial regulations. The president says banks have used their lobbyists to try to thwart reform efforts and says it's in the interest of the financial industry to have modern rules. Bank of America says its CEO, Kenneth Lewis, told Obama that his bank will lend $5 billion more to small- and mid-sized businesses next year than it did in 2009, as part of its effort to support an economic recovery. That follows a pledge from JPMorgan, which said last month that it would boost lending by $4 billion. US Bancorp CEO Richard Davis said his bank would be willing to take a second look at every loan it rejects. And he says he'll present that idea to other members of the financial services roundtable, a group representing the largest financial companies.
Ford Chairman Bill Ford met with President Barack Obama and endorsed the administration's handling of the struggling auto industry. Ford credited Obama for stepping in to help General Motors and Chrysler and prevent auto suppliers from collapsing. Ford said the administration acted "swiftly and forcefully and it worked." GM and Chrysler received billions of dollars in federal aid to go through bankruptcy. Ford avoided taking federal help. Bill Ford delivered a list of recommendations to the Commerce Department developed at a Detroit business summit on ways to revitalize the economy. It includes developing national energy and manufacturing strategies and encouraging research and development.
The Treasury Department says it will auction 3.2 million warrants of TCF Financial Corporation. It will be the third auction of warrants the government received as part of its $700 billion financial bailout. Treasury said the auction, which will take place between 8 a.m. and 6:30 p.m. Tuesday, will allow interested buyers to place bids with a minimum bid price of $1.50 per warrant for the financial company based in Wayzata, Minnesota. The government has already concluded auctions with McLean, Virginia-based Capital One Financial Corporation and JPMorgan Chase, headquartered in New York City. Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price. Treasury received them as a deal-sweetener when it injected capital into the banks.
Being hungry in Galveston County is more of a reality since Hurricane Ike. Charitable agencies in Galveston, Brazoria and Chambers Counties say demand for food aid has doubled since Ike made landfall in September 2008. Mark Davis with Gleanings from the Harvest for Galveston is pushing to create a food bank in Galveston County, an effort especially needed during the tough economic times. Spokeswoman Betsy Ballard says the increase in hunger is reflected throughout the more than one dozen other counties also served by the Houston Food Bank. Ballard told the Houston Chronicle that these are "people who are newly impoverished." Davis says a vacant city-owned building in Texas City will house what he describes as Galveston County's first food bank.