Monday PM March 1st, 2010
by: Ed Mayberry, March 1, 2010 10:03:42 pm
The Supreme Court appears troubled by the selection of the jury that convicted former Enron CEO Jeffrey Skilling as well as the use of a federal fraud law against him. Several justices appeared receptive to arguments by Skilling's lawyer that he did not have a fair trial in Houston, Enron's hometown, following the energy company's 2001 collapse that cost thousands of jobs and billions of dollars. Amid concern that the trial judge spent too little time questioning prospective jurors, Justice Stephen Breyer said, "I'm worried about a fair trial in this instance.'' But the government argues that news coverage of the case "was largely factual and objective." Skilling was convicted in 2006 on 19 counts of conspiracy, securities fraud, insider trading and lying to auditors. This is the third Enron case to reach the Supreme Court. In 2005, the court unanimously overturned former Enron auditor Arthur Andersen's obstruction of justice conviction because vague jury instructions allowed jurors to convict without finding criminal intent. Last year, the court barred retrying a former Enron broadband division executive and it has thrown out convictions in other Enron cases. The court will decide the Skilling case by June.
Defense company BAE Systems has pleaded guilty to conspiracy and has been sentenced to pay a $400 million fine in a case involving false statements to the U.S. government. According to documents filed in the case, the defense contractor knowingly failed to create mechanisms to ensure compliance with the legal prohibitions on foreign bribery under the Foreign Corrupt Practices Act. Acting Deputy Attorney General Gary Grindler says the company impeded U.S. efforts to ensure international trade is free of corruption. The Justice Department said the $400 million fine that a judge ordered the company to pay is among the largest in the department's history of combating overseas corruption in international business.
An industry trade group says the manufacturing sector expanded in February for the seventh straight month, but at a slower pace than in the previous month. The Institute for Supply Management said its manufacturing index read 56.5 last month, slightly slower than the 58.4 growth in January. It was also slower than the 58 level expected by economists polled by Thomson Reuters. A reading above 50 indicates expansion. It was the seventh consecutive month of growth. ISM says its employment measure grew for the fourth time in five months. A pickup in business investment in equipment and software, increases in exports and slower cutbacks of inventories is helping drive production gains.
Construction spending fell for a third straight month in January as a rebound in housing was not enough to offset widespread weakness in a number of commercial areas from office buildings to hotels. The trouble that builders are facing will likely weigh on overall economic activity in coming months. The Commerce Department said that construction spending dropped 0.6 percent in January, a decline that was slightly smaller than the 0.7 percent drop that economists had expected. Housing construction rose 1.3 percent although that gain could be temporary given the weakness seen in sales of both new and existing homes in January. Spending on nonresidential projects fell by 2.1 percent.
Personal spending jumped by a larger amount than expected in January but Americans' incomes barely budged. The weak income growth could depress spending in the months ahead, acting as a further drag on the fragile economic recovery. The Commerce Department said that personal spending rose by 0.5 percent in January, slightly better than expected. But incomes edged up only 0.1 percent, significantly lower than the 0.4 percent gain that economists had expected. The income gain was the weakest showing in four months and raised more concerns about whether consumers will be able to keep spending at a sufficiently strong pace to support an economic rebound.
Gasoline prices in the Houston area went up another six cents over the past week, according to HoustonGasPrices.com, averaging $2.50 per gallon today. That compares with a 3.4 cent increase in the national average to $2.70 per gallon. Prices are 75 cents per gallon higher than the same day a year ago in Houston. Refiners will soon begin maintenance to prepare for more expensive, cleaner-burning summer fuels, according to GasBuddy.com.
Billionaire Warren Buffett says the economy is improving but at a very show rate. Speaking on CNBC, Buffett says since consumers aren't spending much, job growth will remain slow. Buffett also called health care costs an "economic tape worm." Be says the America's health care system needs fundamental reform to attack costs that are a major drain on U.S. businesses. He says it isn't practical to continue devoting roughly 17 percent of the nation's gross domestic product to health care. Buffett says much of the rest of the world is paying about nine percent of their GDP on health care. He says he hopes Congress will develop a new health care reform proposal that will restrict costs more than any of the current plans would.
It's hard to find a job in this economy, and now some people are facing another hurdle because potential employers are holding their credit histories against them. Sixty percent of employers recently surveyed by the Society for Human Resources Management say they run credit checks on at least some job applicants. That's compared with 42 percent in a somewhat similar survey in 2006. Employers say such checks give them valuable information about an applicant's honesty and sense of responsibility. But lawmakers in at least 16 states from South Carolina to Oregon are considering outlawing most of them, saying they trap people in debt because their past financial problems prevent them from finding work.
A federal waiver will allow food banks in Houston, San Antonio, Dallas and Fort Worth to handle food stamp applications directly. The San Antonio Express-News reports the updated system began in an effort toward quicker processing of applications. Food bank authorities will have access to state computers to make sure eligible applicants are not already getting food assistance. Interviews that food bank employees conduct with applicants will no longer have to be repeated by state workers. Employees at the Health and Human Services Commission still will be responsible for determining whether the applicants are eligible. Commissioner Tom Suehs says food banks have done a wonderful job helping the agency connect with Texas families for years and "this is a natural next step for both of us."
Galveston will begin spending $107 million in federal disaster recovery money for infrastructure damaged or destroyed by Hurricane Ike. Spokeswoman Alicia Cahill says the figure is the most the city will be spending, at one time, to repair its infrastructure. Galveston, which was slammed by the September 2008 storm, expects to spend most of its infrastructure money on rebuilding the main wastewater treatment plant. The Galveston County Daily News reports the plant was swamped during Ike, frying its electrical system. City Council members accepted the federal money earmarked to replace hurricane-damaged infrastructure and hired Beck Disaster Recovery to administer the grant funds.
The push to mine Montana coal continues to pick up steam, as a company with Texas roots pursues mines northeast of Billings that could tap into reserves holding an estimated 1.2 million tons of the low-cost fuel. Maple Carpenter Creek has a permit pending before state regulators to dig a 300,000 ton test pit near rural Melstone, at a site about 50 miles northeast of Billings. Maple Creek chief operating officer Nick Shakesby says mining could start by 2014. A second mine is being considered to the west, near the recently opened Signal Peak mine. The projects are the latest in a string of mine openings and announcements for Montana, which has more coal than any other state but only limited development. Billings-based Maple Carpenter Creek is owned by Jack Hanks of Dallas, founder and former chairman of Maple Energy.
The Supreme Court has rejected an appeal from an energy company over a court ruling that could allow counties in Oklahoma to collect taxes on natural gas that is shipped by pipelines that run through the counties. The justices did not comment on their order in an appeal filed by Missouri Gas Energy. In 2008, the Oklahoma Supreme Court ruled that the natural gas is subject to taxation. The ruling could mean millions for several counties in the state and could affect similar disputes in Kansas and Texas. Harriet Miers, President George W. Bush's White House counsel and briefly his nominee to the Supreme Court, handled the company's appeal in its lawsuit against Woods County, Oklahoma.
The head of the Federal Deposit Insurance Corporation is pitching again for a new agency for consumer financial protection, now a key sticking point in Senate talks in legislation to overhaul the finance system. FDIC Chairman Sheila Bair said a new agency was needed and she believes it "would help community banks, not hurt them." The banking industry overall opposes creation of a new agency, which would enforce rules and police the fine print of credit cards, mortgages and other financial transactions. Bair said she was hopeful a bipartisan agreement can be reached in Congress on the issue.
The government is giving homeowners another year to refinance their loans under a little-used program designed to help borrowers whose homes have plummeted in value. The Obama administration effort, known as Home Affordable Refinance Program, had been scheduled to end on June 10th but will now run out on June 30th, 2011, according to the Federal Housing Finance Agency. The program allows borrowers who owe up to 25 percent more than their homes are worth to refinance to lower interest rates. It was originally projected to help four to five million homeowners with loans owned or guaranteed by Fannie Mae and Freddie Mac. So far, it has helped around 220,000, according to the Treasury Department.
Like your cell phone? You're not alone. One in four adults under age 50 in America likes the technology well enough to read news events from the Internet on it. And, some 43 percent of those surveyed in the new Pew Research Center poll say they're mobile news consumers, compared with only 15 percent of older respondents. Within that group, guess what gets the most hits? Weather--at 72 percent--followed by current events at 68 percent. But, more than half get their news from both online and offline sources. And, 46 percent say they use four to six different types of media on a typical day.