Wednesday PM October 13th, 2010
by: Ed Mayberry, October 13, 2010 8:10:00 pm
Officials in all 50 states and the District of Columbia have launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners. The states' attorneys general and bank regulators will examine whether mortgage company employees made false statements or prepared documents improperly. Attorneys general have taken the lead in responding to a nationwide scandal that's called into question the accuracy and legitimacy of documents that lenders relied on to evict people from the homes. Employees of four large lenders have acknowledged in depositions that they signed off on foreclosure documents without reading them.
A government watchdog is investigating government-owned GMAC Mortgage after the company admitted an employee approved thousands of foreclosures without reading the paperwork. A spokeswoman for the special inspector general overseeing the financial bailout says his office is looking to recent admissions by the company, which received $16.3 billion in government bailout money. GMAC has halted foreclosures in 23 states. Taxpayers own well more than half of the company. The Treasury Department first propped up GMAC mortgage parent ally financial as part of the auto industry bailouts. The money might not be returned. Treasury officials have said they did not scrutinize GMAC's treatment of mortgage borrowers. They did not want to micromanage the company. GMAC's admission touched off a flurry of foreclosure halts by big banks with similar problems.
Applications for mortgage refinancing jumped last week to close to the highest level all year, while purchase applications lagged. The Mortgage Bankers Association says overall applications rose 14.6 percent from a week earlier, driven by a 21 percent increase in applications to refinance home loans. Applications for loans to purchase homes, however, tumbled 8.5 percent from a week earlier. Rates have been at or near the lowest level in decades since spring as investors have poured money into safer Treasury bonds, lowering their yields. Mortgage rates tend to track those yields. however the weak economy has dissuaded would-be homebuyers from purchasing. The average rate for a 30-year fixed loan dipped to 4.21 percent from 4.25 percent a week earlier.
The end of a moratorium on drilling in the Gulf has lifted the stocks of companies that operate the offshore oil and gas drilling rigs, with shares of Transocean, Diamond Offshore and Ensco all gaining. The Obama administration lifted its moratorium on drilling in deep portions of the Gulf about six weeks ahead of schedule. The oil industry lobbied to end the ban, which was put in effect after a rig used by BP exploded and triggered a massive oil spill. Some drillers say the battle isn't over--they're worried that government officials will remain slow to approve new drilling permits.
BP isn't saying whether it will try to get new permits to drill in deep water in the Gulf of Mexico. Other companies have said they'll begin drilling as soon as the government will let them. That could be days or weeks away. Under the policies, companies that resume drilling will have to meet some new safety standards. Officials from the Bureau of Ocean Energy Management, which regulates offshore drilling, say they're not aware of BP's intentions and won't speculate.
Researchers mapped a 250-square mile area of low oxygen this summer in Chandeleur Sound off Louisiana and say the dead zone possibly sprouted after state officials opened a river diversion to keep oil from a damaged BP well from fouling marshes. The report is by the Lake Pontchartrain Basin Foundation, which monitors water quality. It said the dead zone formed sometime between May and July in the weeks after a Mississippi River diversion at Caernarvon was opened to wash oil threatening the Louisiana coast out to sea. River water contains a lot of nutrients, which can lead to a dead zone. John Lopez is a coastal scientist with the Lake Pontchartrain Basin Foundation. He said it was far from clear what caused the dead zone this year and that it could be a phenomenon that happens every year. He said the low oxygen might have suffocated immobile shellfish and invertebrates in Chandeleur Sound.
A federal agency has revised an environmental analysis for a lease sale off Alaska's northwest shore, addressing flaws that prompted a federal court judge to limit development. Environmental groups that sued to block development in the Chukchi Sea reacted to the new document with scorn. Attorney Brendan Cummings of the Center for Biological Diversity says the agency made narrow changes to address the court case. But he says it does not examine the fundamental question of whether the Chukchi Sea, home to walrus, polar bears and endangered whales, is a legitimate area for petroleum development. The revised analysis was produced by the Bureau of Ocean Energy Management, Regulation and Enforcement, created to replace the Minerals Management Service after the Deepwater Horizon blowout.
The International Energy Agency says it has raised its forecast for global oil demand this year and next following new data showing stronger-than-expected economic growth, especially in rich developed economies. The Paris-based energy watchdog says global demand for crude will reach 86.9 million barrels a day this year, up from its forecast last month of 86.6 million barrels a day. The IEA said in its monthly report that oil demand next year will reach 88.2 million barrels a day, up from its forecast last month of 87.9 million barrels a day, based on the latest economic forecast from the International Monetary Fund earlier this month.
A judge has ruled that jailed Texas financier R. Allen Stanford and two associates accused of bilking investors won't continue having their mounting legal bills paid for by an insurance policy. All three men are accused in an alleged $7 billion ponzi scheme. Stanford and two of his former company executives had been fighting to have their legal fees continue to be paid by a policy from Lloyd's of London. But the insurer said the policy doesn't pay on charges of money laundering, one of the many counts Stanford and ex-executives Gilbert Lopez and Mark Kuhrt face in a federal indictment. U.S. District Judge Nancy Atlas ruled the financier and his ex-executives had committed money laundering under the insurance policy.
A personal aide to former Nigerian President Olusegun Obasanjo faces a six-count indictment accusing him of money laundering in a case involving massive bribes paid by a former Halliburton subsidiary. Adeyanju Bodunde was charged in federal court with accepting $1.5 million in bribes between 2002 and 2003 from employees connected with KBR. A prosecutor says that money ended up reaching several others in powerful positions during Obasanjo's presidency. In February, KBR pleaded guilty in U.S. federal court in Houston to bribing Nigerian government officials to obtain contracts valued at more than $6 billion.
If an employee tells a supervisor of a potentially illegal act, can that be considered filing a complaint? The Supreme Court grappled with that question in the firing of Kevin Kasten. Kasten complained to Saint-Gobain Performance Plastics that the time clocks were placed in an illegal location. The company fired him, and then moved the clocks. Kasten says he was fired because he spoke up, and said he should get retaliation protection. But the company says to get protection someone has to “file” a complaint, which they say means putting it down on paper. The lower courts have agreed, but Kasten's lawyer argued that means non-English speakers or illiterates would have no retaliation protection from crooked employers.
The Environmental Protection Agency has approved blending higher concentrations of ethanol into gasoline for newer vehicles, allowing mixtures with up to 15 percent of the corn-based fuel at the pump. The current maximum blend is ten percent. The EPA announced that the higher blend will be approved for vehicles manufactured since 2007. The move is politically popular in rural farm areas. But ethanol faces strong opposition from the auto industry, environmentalists, cattle ranchers, food companies and a broad coalition of other groups. The EPA has said a Congressional mandate for increased ethanol use can't be achieved without allowing higher blends. Congress has required refiners to blend 36 billion gallons of biofuels, mostly ethanol, into auto fuel by 2022.
Agriculture officials from around the world are meeting in Iowa this week to talk about what can be done to help subsistence, or smallholder, farmers. Most of those farmers survive on what they raise on an acre or two of land. There are an estimated one billion of them struggling with poverty and hunger worldwide. Howard Buffett will be one of the speakers at the annual meeting hosted by the World Food Prize Foundation in Des Moines. Buffett's foundation runs a research farms in Illinois and South Africa. He says people want a “silver bullet” to solve the problem of hunger, but there isn't one. He says techniques that work on U.S. farms won't always work in developing countries and more research is needed to see what will work.
A deadline for procrastinating income tax filers looms on Friday. It's the deadline for individual taxpayers who got extensions back in April. The IRS expects up to ten million returns from individuals who got extensions during the earlier tax season deadline. Friday is also the deadline for thousands of small nonprofit organizations to file paperwork under an amnesty program. Groups that have not filed required forms in the last three years risk losing their important tax-exempt status.
President Barack Obama wants Congress to make permanent a $2,500 college tuition tax credit that's set to expire at the end of the year. The American Opportunity Tax Credit was part of the $814 billion economic stimulus bill Obama signed early in 2009. He had proposed making the tax credit permanent in his 2011 budget proposal, but Congress has not acted on his request. Obama planned an event at the White House with area college students to discuss how they benefited from the tax credit, and why it should be made permanent. A Treasury Department analysis says 12.5 million people used the credit to help pay for college last year. The average credit was $1,700, about 75 percent more than under other existing college tax credits.
Federal regulators want to stop cell phone “bill shock” by requiring wireless companies to alert subscribers before they run out of minutes, hit data usage or text messaging caps or start racking up international roaming charges. The Federal Communications Commission is expected to vote Thursday to seek public comment on such rules, which are on the table after a flood of consumer complaints about unexpected and costly overage fees. The proposed regulations would require wireless companies to send voice or text alerts to customers as they approach monthly usage limits on their plans and when they reach those limits. The rules would also mandate that carriers notify customers who travel overseas if they will be charged extra to use their phones outside the U.S. or roam on a foreign network.
Agreement is building at the Federal Reserve for a new program to pump up the economy through the purchase of Treasury bonds. Fed Chairman Ben Bernanke and colleagues were talking about the idea at their September meeting. That's according to minutes of the closed-door deliberations. Economists predict Fed officials will approve the program at their early November meeting. Fed policymakers also spoke at length at the meeting about a strategy to boost spending by getting people to think prices could increase in the near future, after expressing concerns that the economy was growing slower than they had expected. The purchase would aim to drive down interest rates on mortgages, corporate debt and other loans. It hopes that this will spur Americans to boost spending, which would strengthen the economy and ultimately chip away at the stubbornly high unemployment rate.
Netspend Holdings expects to raise $253 million in an initial public offering this week. The Austin-based company says it expects to offer almost 2.3 million shares at $10 to $12 each. Selling shareholders are set to offer 16.3 million more shares. The shares will be listed on the Nasdaq stock market under the symbol “NTSP.” The underwriters have a 30-day option to buy up to nearly 2.8 million more shares to cover high demand. Netspend provides general-purpose prepaid debit cards, also called GPR cards, and other alternative financial services for customers who don't have traditional bank accounts. The Texas company says it had two million active GPR cards at the end of June and gross dollar volume of debit transactions and cash withdrawals of $8.8 billion for the year ended June 30th.
A U.S. Department of Energy agency has named Pantex, the country's only nuclear weapons assembly and disassembly plant, as one of five U.S. sites honored for pollution prevention and environmental excellence. A National Nuclear Security Administration statement said employees at Pantex, near Amarillo, came up with ideas that helped save the plant 18 million gallons of water last fiscal year. Also named to receive awards were New Mexico's Los Alamos National Laboratory and Sandia National Laboratories. The Y-12 national security complex in Oak Ridge, Tennessee, and the Lawrence Livermore National Laboratory in California also received awards. The agency giving the awards is semiautonomous within the DOE.
A U.S. Department of Energy agency has authorized Pantex to begin work dismantling B53 bombs. A National Nuclear Security Administration statement said once the bombs arrive at the plant near Amarillo the high explosives inside will be physically separated from the nuclear material before the material and components will be processed, which includes sanitizing, recycling, and disposal. The bomb, each about the size of a minivan and weighing about 10,000 pounds, joined the nation's stockpile in 1962 and was retired in 1997, the statement reads. The B53 is among the longest-lived weapons ever used, the statement reads. The agency authorizing the dismantling is semiautonomous within the DOE.
A newly released survey of 134 nations shows four Nordic countries lead the world in eliminating inequality between men and women. Iceland, Finland, Norway and Sweden have topped the global gender gap index since it was first released in 2006 by the Geneva-based World Economic Forum, and Iceland remained in first place for a second year. But the survey says France fell to 46th place--a loss of 28 places--because it has fewer women in ministerial posts. Many Arab and predominantly Muslim countries remain near the bottom of the list including Egypt, Turkey, Morocco, Saudi Arabia, Pakistan and Yemen. The United States leaped from 31st place last year to 19th this year based on very high levels of literacy for both women and men. The U.S. also has very high levels of women in primary, secondary and higher education.